New home sales rise and more Bridging Loans are taken out after rate cut
SBS News reports that new home sales have risen since November after the Reserve Bank of Australia (RBA) cut the interest rates, a much welcomed boost since September 2011, where the sales of new homes in the housing market plummeted to an 11-year low. With lowered interest rates more investors enter into the buying and selling game as more and more bridging finances are withdrawn
The reduction in interest rates allow for loans (mortgages, bridging finances, bridging loans, etc) to be more affordable, and in turn allow for families and investors to fund new home purchases. At present, it is particularly a good time for investors. Investors are encouraged to take out a short term, commercial bridging finance loan and invest into real estate now while the purchase of new homes can still be funded and before interest rates rise again.
On Monday, the 16th of January, The Housing Industry Association (HIA) released reports saying new homes sales rose 6.8 per cent in November, a healthy indication that people are willing to buy once more. With this new purchasing confidence in consumers, it is expected that selling homes will be at more ease now in comparison to the static past few months.
As such, investors now see possibilities in buying new homes and selling them at a greater price; with the risk in the investment not selling being significantly reduced. Bridging finances can be used as productive a tool in this investment game. A bridging loan can be taken out to purchase the new property and after its sale, the loan can be repaid with investors keeping the profits. And with people purchasing homes again, the risks in buying and selling are reduced.
HIA chief economist, Harley Dale, say that the rise in sales and investment is healthy but not unexpected.
"From this parlous starting position, and with speculation regarding a rate cut mounting and then delivered upon, anything other than some recovery in sales volumes would have been surprising, not to mention highly disturbing."
However, experts are saying that Australia still has a long way to go before the housing market can completely recover, but the new rise in purchase and investments is a good start. To get the market back to a healthy state, it is actually encouraged that investors start investing again. With investors in the market, more sales can made and the housing market can start recovering from a hard year.
