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Home Refinancing At Best Price
Cases such as this have led some finance experts to warn of the ”depreciation time bomb” of negative equity for property owners in fringe suburbs, who owe more towards the bank than the worth of their homes.
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New figures from Commonwealth Bank show the annual average pace of housing appreciation around australia has been 1.8 percent since the financial crisis, substantially underneath the 8 per cent average within the prior 20 years. It warned that the lower pace of appreciation was the ”new normal”.
”There is really a risk that some purchase decisions which were made on the expectation better long-run average growth rates might have to be reassessed,” it said.
Property analyst Mark Armstrong predicted appreciation could be slowest for home owners in outer suburbs, who often see negative to zero development in values for as many as 20 years.
”It’s the perfect storm of conspiring factors,” the director of iProperty Plan said. ”The average parcel in the outer suburbs is [worth] half what it’s in the middle suburbs which is the land that appreciates, albeit slowly around the fringe. The houses they’re building actually depreciate.
”On surface of that, the quality of construction is usually cheap. So that’s what’s behind the negative equity.
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