29 June, 2015. 14:04
ERROL PARKER | Editor-at-large | Contact
A GROUP OF young real estate entrepreneurs have agreed to end their lives should interest rates break through 8%.
Dubbed the ‘Hoxton Park Four’ by the media, the 20-something investors have formed a suicide pact should interest rates unsustainably increase in the future.
Many young property investors have taken out gargantuan mortgages in the past 24 months, with interest rates at all-time lows.
The overwhelming majority of these people are living at home, with little to no overheads – making their dream of home ownership somewhat attainable.
However, the harsh reality is that these people would be in serious financial trouble should interest go up.
Cecil Park investor Kate Greenwood borrowed $725 000 last year to buy a 3 bedroom home in nearby Hoxton Park. The 24-year-old says she joined the property suicide pact because ‘her life wouldn’t be worth living’ if interest rates increased sharply.
“I’m borrowing at 4.02% at the moment,” she said.
“If in five years time interest rates are double that, I won’t be able to afford the repayments and the property will be worth significantly less – meaning I’ll be out of pocket to the tune of about $250k,”
“So me and a few other young real estate investors have agreed to kill ourselves if interest rates break through 8%.” she said.
Ms Greenwood is still living at home with her parents, where she has next to no living expenses besides buying clothes online and going out with friends.
Leading investment commentators and real estate experts have lashed out at the scaremongering surrounding housing affordability, saying that ‘not much has changed’ in the past 20 years besides interest rates.
Giving himself as an example, Darlington bookstore owner Harry Dearden said that while he only paid $390 000 for his 4-bedroom Redfern terrace in 1994, by the time his mortgage was paid off last year, he’d made almost $1.5m in repayments.
“These kids are complaining about entering a property market when the interest rate is 4%,” he said.
“Get a fucking grip. I was paying nearly 16% interest at one stage. While the price of the house was low, the interest rates made it nigh on impossible to afford to buy one,”
“I totally agree with Joe Hockey. Want to own a house? Get a decent job and work your arse off. If you can’t get a decent job, then you can’t afford to have a decent house. Simple as that. We live in a economy that rewards hard work and fiscal courage,”
“But you can take the easy way out and get a menial job that comes with a bleak future and a union card – but that’s OK. People like me will always need tenants.”