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Media Release |
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Forecast Interest Rate Rise Sparks Buyer Beware Warning
Monday, 04 October 2010 14:57
The predicted Reserve Bank interest rate rise, expected tomorrow, have sparked a buyer beware warning with home buyers urged to plan their property purchases to avoid the double whammy of increased interest rates and facing the cost of undetected expensive faults in their new home or investment property.
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Edward Lukac, South Australian Archicentre spokesperson said, "buying a property is a complex exercise and if people purchased a lemon, or a property they could not afford, or which had major faults, it could lead to a major personal and financial crisis.
"With rising interest rates the financial risk increases, and the ability for people to fund the repairs without adding possibly tens of thousands to the already hefty mortgage, decreases.
"This predicted interest rate rise is also being compounded by massive increases in the cost of water and energy prices which are cutting into household budgets around Australia by hundreds of dollars a year."
Archicentre often receives calls from home buyers, after they have moved in, to provide solutions and cost estimates to repair their new home.
Mr Lukac said with the current housing affordability crisis and rising interest rates home buyers need to be far more methodical and realistic in purchasing a home, as the room for making a mistake without serious consequences has disappeared.
"To limit the risk of financial stress in purchasing a home prior to making an offer, arrange a pre-purchase inspection to ensure the house is safe and sound from an independent professional and trained person such as an engineer, architect or registered builder.
"A professional inspection of the home will assist buyers in determining the condition of the property, the value of the property and the cost of repairs providing them with a bargaining tool to factor in repair or maintenance costs into their budgets."
According to Archicentre, health and safety risks exist in about one quarter of older Australian homes, and expensive hidden defects in about one in three properties.
Mr Lukac said people buying a property for investment and renovation could also face major issue in that the property may not be suitable structurally for the planned renovation because of its condition, existing layout or structure - such as not having suitable foundations for a double storey extension.
"On the other hand," Mr Lukac says, "the impact of rising interest rates could also see a spark in renovations where existing home owners decide, in tightening economic conditions, to invest the cost of moving home - around $50,000+ on average, into their own homes to increase its value and create a more pleasant lifestyle."
Media Enquiries:
Ron Smith, Corporate Media Communications, Archicentre - Mobile: 0417 329 201