Aussies Swept by Rental-Home Mania Raising Bank Risks

Dharmendra Singh has spent A$1.3 million ($1.2 million) since July on two houses 39 kilometers (24 miles) northwest of Sydney, drawing on an existing mortgage to pay a deposit on one and taking out two new loans.

“Low interest rates and rental yields make it easy,” said Singh, who now has three investment properties with his wife Pranita. “The rental and tax savings can pay off your mortgage. You just sit tight and wait for the property to appreciate.”

Singh, 38, is one of thousands of Australian investors snapping up properties, attracted by the lowest mortgage rates in four years and rising demand for housing. Home prices gained about 5 percent this year in the country’s biggest cities, led by an 8 percent increase in Sydney. With no signs that the central bank will start raising rates, prices will jump as much as 11 percent next year, property researcher SQM Research Pty. said Sept. 17, with Sydney values soaring as much as 20 percent.

See on http://www.bloomberg.com/news/2013-09-26/aussies-swept-by-rental-home-mania-raising-bank-risks.html

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