Prospective home buyers have been “locked out” of the property market off the back of “alarming” price growth, with over a third of Australians unable to afford their own home at its current value, according to new research.
According to a survey of 1,002 Australians by comparison website mozo.com.au, 35 per cent of respondents said they wouldn’t be able to afford their own home if they tried to buy it today, with 18 per cent of home owners estimating that their homes have increased in value by $151,000 to $300,000 since initial purchase, 20 per cent estimating growth of $300,000 to $700,000, and 10 per cent estimating price growth of over $700,000.
The research also revealed that 40 per cent of respondents purchased their home between 2011 and 2018, while a further 28 per cent purchased property between 2001 and 2010.
“This period signifies an unforgettable time in Australian property history where prices rose at an alarming rate, auctions ran red hot and properties sold for prices that economists could have never predicted,” Mozo property spokesperson Steve Jovcevski said.
“Staggering increases in house pricing coincided with record low interest rates which further fuelled a property buying frenzy.”
The research also found that 95 per cent of Australians did not have regrets about purchasing their property. However, Mr Jovcevski said that he believes a “large portion of Australians” would feel like they have “missed their opportunity”, claiming that they are “essentially locked out of the property market”.
“Australian property prices have risen by over 600 per cent over the past 30 years while national incomes have failed to keep up,” Mr Jovcevski continued.
“While the housing market has certainly cooled in major metro areas such as Sydney and Melbourne, there’s no way that prices will be dropping back to the price ranges before the property boom.”
Mr Jovcevski also claimed that with property prices largely “unattainable”, “stricter lending criteria” in place and “stagnant wage growth”, the Australian property market is “essentially broken for many hopeful property owners looking to make their first purchase”.
He concluded: “Many Australians who once dreamed of owning a home are now looking at alternative solutions to financially safeguard their future as they come to face the reality that owning a home may no longer be possible.”
However, CoreLogic’s latest Hedonic Home Value Index has reported a year-on-year decline in national dwelling values of 2 per cent, driven by an annual decline of 2.9 per cent across Australia’s capital cities.
Further, some observers have predicted price declines in Sydney and Melbourne of up to 25 per cent, with other observers, including ANZ, anticipating a more modest peak-to-trough decline of 10 per cent.