Why is the Australian property market so expensive?
Posted On August 3, 2021
More than half of the Australian population owns a home.
That’s a significant percentage, and one that has grown over the last decade.
In 2017, the average price of a detached home in Australia was $2.5 million, compared to the median of $1.8 million, according to the Australian Bureau of Statistics (ABS).
The ABS also reports that the average house price in Australia increased by 0.2 per cent in the same period, while the median price of all properties increased by 3.4 per cent.
The ABS reports that Australians are spending more money on home ownership, with house prices increasing by 12 per cent between 2015 and 2017.
This means that more Australians are buying properties than renting, and that’s a trend that could only continue.
And the trend is only going to get worse.
The average household income in Australia in 2017 was $50,842, up from $48,811 in 2015.
This is a drop of 9 per cent from 2016.
The number of people living in their own home has also risen by a huge 23 per cent, and is now over one million.
So, what are some of the reasons for the surge in property prices?
Many people have noticed an increasing number of properties listed for sale across Australia, particularly in the outer suburbs of Melbourne, Sydney, and Brisbane.
These properties have been selling at record prices, as the Australian real estate market continues to grow.
These listings are mostly in the city, but some are in suburban areas.
According to property broker The Humble Property Group, there have been over 40,000 listings on the market in the past 12 months, and more than 12,000 properties are listed for purchase in the inner suburbs alone.
These prices are a lot higher than what people are used to, and many buyers will not be able to afford them.
In Sydney, the median property price has increased by 7 per cent over the past year, to $1,099,000.
That is a jump of 30 per cent since 2016.
Property prices in Melbourne, meanwhile, have risen by 13 per cent to $917,000, and in Sydney alone, prices have increased by 11 per cent at a whopping $1 million.
What are the risks to buying property?
Although most Australians don’t want to live in a property bubble, there are risks to owning a home that aren’t necessarily obvious, such as fire, floods, and major storms.
And, the cost of a property can increase over time as interest rates rise.
According the ABS, the amount of debt that households carry is rising, with the average debt level rising from $7,200 to $14,600 over the next five years.
However, the majority of this debt is owned by people who are over 65.
According a study by the National Centre for Housing and Urban Research, the proportion of the population aged 65 and over with credit scores of 300 or higher has grown by just 8 per cent year on year.
The report found that the increase in credit scores over the years was largely driven by young people who have had their debts reduced by their parents.
But it’s not just young people that are affected by rising interest rates.
The cost of renting a property also increases over time, with an average rent of $6.40 per week for a two-bedroom house in Sydney, up to $12.80 per week in Brisbane, and $16.80 in Melbourne.
So how can you avoid becoming a mortgage debt trap?
The only way to avoid becoming trapped in a mortgage bubble is to stay away from property listings that have increased significantly over the year.
And if you have already bought a property, there’s another way to keep yourself out of the rental housing bubble.
You can sell your home, or rent it out, which will help reduce your debt.
According The Humbug Property Group’s Matthew Ward, a real estate agent, “The trick is to find a place that you can actually live in and make it affordable, so that you’re not stuck in a rental housing cycle.
Then you’ll be able [to] save money for the next couple of years, because you’re only renting for a few years.”
This is an excellent option if you’re willing to put in the work, and you’re looking for a place to live that’s not too far from work.
However the main thing is to be sure you can afford to pay off the mortgage before you buy.
For example, if you already own a property and want to sell it, it may be easier to rent it.
But if you’ve already paid off your mortgage, it could be better to buy it now, to help you save money.
Read more about real estate: The best place to buy A house in Brisbane is a good choice if you need a place in a specific location, but don’t need to rent.
It is the safest option if the house has lots of amenities such as a swimming pool, indoor fitness room, gymnas