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More than a third of Aussie home owners live in properties they could no longer afford to buy if they were in the market today, alarming new research has found.
A new research paper from Mozo has found many current home owners admitting that had they not bought when they did, they’d be locked out now due to skyrocketing prices since the late 1990s.
It also found that the largest increases happened in Sydney and Melbourne, where house prices have ballooned by 105 per cent and 93.5 per cent, respectively, since 2009.
Mozo property expert Steve Jovcevski said that the post-90s was a particularly busy time in the Australian housing landscape.
“A whopping 40 per cent of Australians purchased their home between 2011 and 2018, while a further 28 per cent purchased property between 2001 and 2010,” the expert said.
“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.”
He said that a number of variables came together at the same time.
“Staggering increases in house pricing coincided with record low interest rates which further fuelled a property buying frenzy,” Mr Jovcevski said.
“This has resulted in an Australian housing market that leaves some feeling lucky they got in while they did, but also a large portion of Australians feeling like they missed their opportunity and are now essentially locked out of the property market.”
The Mozo research found that an unsurprising 95 per cent of Australians have no regrets about purchasing their property.
Further, 20 per cent of them estimated that their homes have increased by $151,000 to $300,000 since initial purchase, while another 20 per cent estimated growth of even more, from $300,000 to 700,000.
Mr Jovcevski said that property prices might have risen by over 600 per cent over the past 30 years, but national incomes have failed to keep up.
“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,” the expert added.
“With the introduction of stricter lending criteria, stagnant wage growth and largely unattainable house prices, the Australian property market is now essentially broken for many hopeful property owners looking to make their first purchase.”
But Mr Jovcevski said that while it may seem like many property owners are now sitting pretty, household debt is at record levels — the equivalent of 120 per cent of GDP.
“With wage growth failing to accelerate, staggering debt levels and stricter lending criteria enforced by the banks, some mortgage holders are finding their dream purchase is turning into something of a nightmare as interest rates go up and they find themselves unable to refinance due to tightening lending criteria.
“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.”
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