New figures released show that the average price of a home in Australia has increased significantly over the last ten years. Back in 1996 the average Australian was estimated to be paying approximately 17.5% of their income on their mortgage repayment. Today that figure has skyrocketed showing that most Australians are paying an average of 31.7% of their salaries on their mortgages.
Why So High?
One of the reasons for the high percentage of income that is being spent on mortgages is the increasing cost of homes. The housing market is very tight right now although there are not a lot of available homes to purchase. This supply and demand issue has caused the prices of homes to continue to rise in most of the major Australian cities. Australian home prices rose during the third quarter of this year and there doesn’t seem to be any sign that they will go down any time soon. Across the continent house prices have rose from between 3.4% in the Sydney area over the last year to as much as 10.7% in Adelaide.
Still Growing
Despite the rising cost of homes, the limited number of available homes, and the increase in the amount of income being spent on home mortgages, the housing market continues to experience a steady growth according to the president of the REIA, Noel Dyett.
No matter which way you look at the current housing situation, the average Australian looking to buy a home can count on having a hard time. Some people are blaming the low interest rates for the housing crisis citing the fact that people have built bigger homes and borrowed more money because the interest rate was so low. In addition to that there have been nine back to back interest rates rises over the last few years making it more difficult for first time home buyers to be able to afford a decent home.
Lining Up To Invest
None of this is necessarily bad news for property investors, but it is news worth knowing. Keeping a pulse on industry news will benefit you as you align yourself to maximize the opportunities that are out there, and help you plan your own strategy for success in real estate.
Sean Rasmussen
Property Options Australia
Property Options Blog © 2006 – 2008
Hi Sean,
On the one hand the cost of homes is rising and it’s harder for people to get into their own homes. On the other hand though, if you already have a home; it’ll be increasing in value.
Still in 2009, the slowing economy and the First Home Owners Grant helped to boost the real estate market and it was a lot easier to buy a home. Sooner or later in the property market; there’ll always be a good time to buy. You just have to wait.