After spending more time at home than ever, more of us are keen to move into a bigger place, borrowing at ultra-low interest rates and spending up big at auction. But there’s a grim flipside: the old chestnut of housing affordability and the prospect that many young people in Australia’s largest cities might never afford their own home. Even with low interest rates, the hurdle is the deposit gap, and that hurdle keeps getting higher.
Sydney’s median house price is now an extraordinary $1.41 million, after spiralling 24 per cent from a year ago, according to the latest Domain House Price Report for the June quarter. Melbourne and Canberra joined the million-dollar club (up 16.2 per cent and a whopping 29.2 per cent, respectively). Spare a thought, too, for Hobart locals, where prices leapt 28.4 per cent in 12 months, with double-digit rises also recorded in Darwin, Brisbane, Adelaide and Perth. Experts are startled and nervous.
ANZ senior economist Felicity Emmett went ahead of the pack in March when she forecast overall capital city housing price growth of 17 per cent this year, warning it would lock some aspiring first-home buyers out. But she was still surprised to see the latest sharp gains.
Although the data is for the period until June 30, when Sydney’s latest lockdown had just begun, the figures are stark reading against a backdrop of new stay-at-home measures that have put many out of work in Australia’s largest city – a reminder of the extended restrictions in Melbourne last year and snap lockdowns in other capitals in between stretches of economic recovery and optimism.
Support payments were on offer, and workers returned to their jobs as the health situation improved, but they bear the scars of income forgone.
Depending on the family situation, first-time buyers could look to apartments instead of houses, where the pace of growth has been more subdued, although four cities are at or close to record unit prices. A widespread shift to working from home allowed some city workers to move to cheaper outer suburbs and commute two or three days a week, pushing up prices in some outer-ring neighbourhoods. A similar move from cities into affordable regional towns has sent regional house prices through the roof, with a dozen regional areas rising more than 30 per cent in a year.