Despite the fact that the average homebuyer's budget has shrunk by about 30% over the past two years, Australian property prices are still bucking the trend.
According to The Age, many homebuyers in the market have above-average incomes or large savings, so they are less reliant on home loans.
This week's data shows that Melbourne's house prices fell slightly in the first quarter, but have seen increases in Sydney and all other capital cities except Darvin over the past three months.
Domain data shows that house prices are higher in every capital city than they were a year ago. High housing prices make it difficult for average income earners to save for a down payment, especially if they have to pay high rents at the same time.
This forces them to make compromises, such as looking for smaller or farther homes.
According to another CoreLogic metric, the median price of homes (including houses and apartments) in Australia is now over $772,000 and will be even higher in capital cities. But for a middle-income family, assuming they have saved up for a 20% down payment, they can afford less than $503,000.
(Image source: The Times)
Their ability to buy a home is down 30.7 per cent compared to two years ago, when middle-income families could buy $726,000 in homes.
Eliza Owen, head of research at CoreLogic, noted that while some banks may lend more, the data reveals a disconnect between house prices and incomes.
Part of the problem, she points out, is inequality of access: "If you sell one property to buy another, you have a much better chance of keeping up with the market, or if you have a 'mom bank', where your parents can help you get more money to buy a house." ”
Carlos Cacho, chief economist at Jarden, said there had been a strong correlation between borrowing power and property prices for 20 years, but now that relationship has broken down.
"The average family can no longer afford a normal house, so what you're seeing is that the income and wealth levels of people who can buy a house are on the high side. ”
(Image source: The Times)
He said almost a third of the CBA's mortgage borrowers now have a total income of more than $200,000, with more buyers paying high down payments and fewer low down payments.
"It's very much an intergenerational transfer of wealth. ”
Shane Oliver, chief economist at AMP, also pointed out that buyers in the market now rely on other sources of financing other than mortgages, such as household help or cash.
Research from property trading platform PEXA found that 28.5% of residential property sales were cash transactions last year, up from 25.6% a year ago.