Aussies watch their dollars
SPENDING on big-ticket items such as a house, a car, or a luxury holiday is down, according to a new poll.
The survey of 2000 Australian first-home buyers, homeowners and investors by Homeloans Ltd shows almost half the home buyers would delay buying a property in 2011 because of rising interest rates and the cost of living.
One-in-three of those would put all major household spending on hold for 2011.
Homeloans chairman Tim Holmes said the recent floods and the just-announced flood levy were creating some uncertainty.
“While it is difficult to predict what the Reserve Bank of Australia will do with official interest rates in the light of recent disasters, it's clear that concerns about finances are keeping Australians on their toes,” he said.
Lismore economist Dr Lawson Savery said Northern Rivers residents were definitely nervous about spending and that two factors were likely to put increased pressure on local budgets.
“The price of food is spiralling upwards and there is an increasing shortage of skilled labour,” he said. “The latter means it will be more expensive to do something such as have a house built.”
Dr Savery said economists had tipped a one per cent increase in home loan interest rates between now and the end of 2011.
“That will mean we are looking at a mortgage rate of 8.8 per cent to 9 per cent,” he said
Natalie Wilkin, 29, and Fiona Tate, 29, both of Lismore, said they were more conscious of how they spent their money.
“I did recently buy a car, but I thought about it seriously for six months,” Ms Wilkin said.
“I have also fixed my mortgage rate for two years and that has given me a lot of peace of mind.”
Ms Tate said she would soon buy a house with her mother.
“I'm studying at university and I'm a single mum, so that's the only way I would be able to get into the housing market,” she said.
Mr Holmes said mortgage repayments accounted for a substantial portion of household income and the risk of such repayments becoming unaffordable, whether because of rising interest rates, an increase in other living expenses, change in employment circumstances, or other factors, was something all borrowers must consider.
Of those surveyed, 52 per cent plan to save for a larger deposit, with more than a third admitting they will follow a strict budget to achieve this, followed closely by cutting back on luxuries such as eating out.