Home ownership slips further out of reach as houses surge to more than 11 times income
The dream of home ownership has slipped further out of reach for young Australians following a year of sharp price growth across the nation.
A Finder survey of 1,000 participants during the December quarter found 39 per cent of Gen Z respondents felt “extremely negative” about their ability to afford a home, with 23 per cent of respondents across the board expressing the same level of pessimism.
Recent CoreLogic data showed home values increased more than 22 per cent throughout 2021, with Sydney prices surging 25 per cent to a median value of $1,098,412.
For houses, this growth had been even sharper. Finder analysis showed values surged 39 per cent year-on-year to $1.3m – a figure estimated to be more than 11 times the average income of a Sydneysider.
Finder home loans editor Richard Whitten said these price hikes had made more would-be home buyers feel nervous about missing out.
Owning a house is becoming more of a distant dream for many young Australians. Source: Herald Sun real estate
“There was once a time where homes sold for the price they were listed at – but now we see auctions where homes are sold for hundreds of thousands of dollars over the reserve price,” Mr Whitten said.
“Rising house prices can be scary for home buyers, particularly through the pandemic where so many Aussies have struggled to keep food on the table.”
He said this was likely to change as a result of rising interest rates.
“We’ve seen record price growth over the past year, but it won’t continue forever,” Mr Whitten said.
“Once interest rates begin to increase, we can expect housing demand to ease and growth in property prices to mellow.”
“While property affordability is still going to be pretty bad, a market slowdown will give first home buyers more time to save up a deposit.”
He said those looking to buy a property for the first time should put together a savings plan and then aim to leave six months of expenses aside when it comes time to purchase.
“Remember it’s not a race – buying a house before you’re ready could put you at risk of mortgage stress down the line,” he said.