Why are Australian houses so expensive? Australian house prices have been steadily rising year on year as a growing population lifts demand for housing while supply has not kept up with the requirement. A decline in interest rates over the last two decades has also boosted the number of buyers in the market.
How does the Australian housing market compare to other comparable countries? Australian house prices are considerably higher than in many other comparable countries, largely due to factors such as supply and demand imbalance, tax policies, and low-interest rates.
Observers including the Organisation for Economic Cooperation and Development (OECD) and International Monetary Fund (IMF) have raised concerns about Australia's high property value-to-income ratio. For example, in May of 2022, the median dwelling value was 8.5 times the median household income.
Strong population growth in Australia has boosted demand for housing while a supply shortage and persistently low levels of advertised listings are also fueling prices.
Prices in Australian cities are as high as they've ever been with Sydney's median house price hitting $1,123,991, according to Domain Group data. Even the median price in New York City is much cheaper than Sydney's at $US626,600 which in Australian dollars is $829,179.
Why are Australian houses so expensive? Australian house prices have been steadily rising year on year as a growing population lifts demand for housing while supply has not kept up with the requirement. A decline in interest rates over the last two decades has also boosted the number of buyers in the market.
Outside Sydney and Melbourne, life can be relatively affordable, but a good basic standard is to use $600 per week as a starting point for a minimal lifestyle for an individual, and add one-third for Sydney and Melbourne or about 10 percent for the other major cities.
Sydney house hunters need to earn more than $250,000 to borrow enough to purchase a typical home, while their Melbourne counterparts need almost $180,000, making homeownership near impossible for the average Australian.
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.
Sydney was this year dubbed the 10th most expensive city to live in the world, according to a report by the Economist Intelligence Unit. Finder has also reported that the most expensive place for housing in Australia is Sydney.
Various industry professionals have argued that it is not a bubble and that house prices have the potential to keep rising in line with income growth.
Property Prices Could Potentially Surge in 2024
Evans and senior economist Matthew Hassan in a market update. "Prices are now expected to increase by 5% in 2024, revised up from 2%." Westpac predicts that by 2024, house prices will rise by 5% in both Sydney and Melbourne, 6% in Brisbane, and 8% in Perth.
The June increase in the national house price reflected yet another strong rise over the quarter for Sydney house prices – increasing sharply by 2.0% compared to the May quarter result. Canberra house prices were higher by 3.0% with Adelaide up 1.0%, and Perth and Brisbane each increasing by 0.8%.
In recent decades there has been a decline in home ownership, especially for younger people with mortgages buying their own home. The rise in precarious employment through casual and fixed-term jobs is further hampering young people's ability to buy a house.
Lack of housing is an issue that's plagued Australia for the past 20 years. A 2021 report from Grattan states that there are around 400 dwellings for every 1,000 people. This is amongst the lowest supply rates when compared to developed nations.
The downturn in the global housing market is set to continue in 2023, with most Australian cities expected to fall by double digits in what is shaping up to be the deepest property correction in more than 30 years. Few people are willing to buy or sell in a falling market, and stock is hard to find.
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.
Analysts believe property price growth will slow, and possibly reverse, as rates keep rising and Australia flirts with recession.
A $70,000 annual gross income with a mortgage at 5.99% p.a. equates to a loan amount of up to $391,222. With a 10% deposit contribution, the maximum affordable property price would be $434,691, or with a 20% deposit $489,027.
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.
You'll need to earn between A$5,000 and A$6,000 per year, or approximately A$95,000 before taxes, in order to live comfortably in Sydney. So, before investing time in a transfer to this pricey metropolis, you'll need to be sure your income is safe.
According to Expatistan, this means Australia is one of the most expensive places to live (ranked 10 out of 71). Generally, a higher cost of living means that basic expenses have become – well, expensive.
Australia has one of the strongest economies in the world. Its economy is dynamic and the country continues to grow and present many opportunities of employment. Even if the Australian job market for foreigners can be quite competitive, it is not impossible to get a qualified job in Australia.
Gold Coast is one of the cheapest places to live in Australia (89th globally). It is known for its high-standard education and academia and its budget-friendly living. International students will find the Gold Coast the perfect combination of study and social life, with its magnificent beaches and nightlife.