High house prices in Australia are primarily driven by supply and demand imbalances, tax policies, low-interest rates, and rising household debt.
Prices across the country are set to slide by up to 10 per cent by the end of 2023, with Sydney, Brisbane and Canberra to be worst affected by the downturn. The latest PropTrack report predicted property values in Sydney, Brisbane and Canberra could slump by as much as 11 per cent as successive rate hikes bite.
The Australian state that is cheapest to buy a house is Tasmania, which sits off the southeast coast of the Australian mainland and is the country's smallest state.
House prices in Australia are extremely high compared to income, relative to other countries. The market is propped up by rules that provide tax deductions for property investment, and by repeated state government bonuses for first home buyers. Furthermore, the supply of new homes is hard to generate.
Housing Costs In Australia
Housing in Australia is much more expensive than the UK.
The potential tax benefits and wealth generation make real estate an attractive investment option for many Australians, but it is not without any drawbacks. If done right, investing in property can be an effective way to build wealth and secure your financial future.
The median salary in Australia in 2023 is 6,650 AUD (USD 4,420) per month. The median salary refers to the middle value of all the salaries considered. In other words, around half of the population in Australia earns less than 6,650 AUD per month, while the other half earns more.
It's cheaper to rent than buy a house in 90% of Australian suburbs.
In 1970, the median Sydney house price was $18,700, while in Melbourne, prices were just $12,800. Perth prices were relatively high at $17,500.
New research by Compare the Market has named the most cost-effective cities to live in based on factors such as the average income, utility costs, grocery costs and apartment costs. Melbourne was crowned the most cost-effective city in Australia, scoring 3.36 out of 5 stars.
Sydney, NSW. Median multipe of 13.3. Prices have risen at six times the rate of inflation since 2020.
The average annual growth rate for well-located capital city properties is about 7%, which means that Australia's median dwelling price should be around $1.1 million in 2030. But some properties will outperform others by 50-100% in terms of capital growth, so take these house price predictions with a big pinch of salt.
Australian property values experienced a downturn in 2022 and prices continue to fall—but predictions of the overall peak-to-trough price decline tend to vary between 15-25%. Read more about whether the Australian property market is going to crash.
If the price rises are maintained for the rest of the year, home values will end up about 4% higher in 2023, defying earlier predictions of sharp falls of 10% or more for this year, CoreLogic says. “Economists are shredding their previous price forecasts,” said Sally Tindall, research director for RateCity.
The average annual salary in Australia is $68,900 and $35.30 per hour. It is just the average salary for basic workers but skilled and experienced workers also earn around $108,980 annually. The average salary also varies depending on the field of work and the job role of workers.
Australian house values increased 414.6% in the past 30 years, compared to growth of 293.1% across Australian units. Over this time frame, there have been 7 periods of sustained increase in values at the national level, and 7 periods of decline.
In 1962, land in Penrith in the western suburbs of Sydney (“Sydney's newest suburb”) could be purchased for £595. In today's dollars that would equate to just over $15,000.
You need to come up with a 10-20% deposit to secure a home loan. To avoid paying Lender's Mortgage Insurance (LMI), approximately 20% is required. Low deposit home loans do exist, but your mortgage insurance will be much higher and there can be a few more hoops to jump through. Stamp duty.
Renting offers flexibility, predictable monthly expenses, and someone to handle repairs. Homeownership brings intangible benefits, such as a sense of stability and pride of ownership, along with the tangible ones of tax deductions and equity.
Buying a house can be considerably cheaper than renting in the long term. This is because you will never recover your monthly rent payments. This is a financial setback, as it will be difficult to build enough equity. On the other hand, a home is a stable asset that will increase your equity.
$100,000/year is above an average salary and if you're frugal enough, on $100,000/year, you should be able to live a good life and save some money too. Usually if you consider living in desirable locations of cities like Melbourne and Sydney, most of your income will be consumed in the house rents.
Location – With some parts of Australia (namely: the big cities) having significantly higher costs of living than suburban or remote areas, your location is likely the biggest factor in this discussion. Experience – For someone starting out in their career, $60k is a reasonable pay.
So a taxpayer with an income of $80,000 a year is therefore in the top 20 per cent of Australians.