We are a proud member of the Financial Services Online network!
Connect with us on your favourite social media platform for the latest financial news, views, tips, tricks, resources and information.
The situation is more dire for median-income renters, who find that they could compete for just 11% of homes sold last year, and an even narrower 9% for standalone houses. This limited access forces many to reconsider traditional homeownership as a viable option.
Surveys are underscoring this crisis. An Accent Research poll revealed a significant gap between aspiration and reality, with only 15% of participants confident that young Australians can secure home ownership without substantial financial support from external sources such as family.
The hurdles to entering the housing market don't end here. Analysis from Money.com.au demonstrated that the journey of amassing a deposit has become more onerous than ever for first-time buyers, who now face the daunting prospect of taking out hefty mortgages for homes that might previously have seemed modest.
Reflecting these financial strains, the average size of owner-occupier mortgages for first-home buyers ballooned to a historic high of $538,200 as of September 2023. This surge represents not just increasing home prices but a shift in expectations and financial commitment needed just to step onto the property ladder.
Adding a historical perspective to this discussion, independent economist Tarric Brooker shared a comparison on social media. His chart contrasted the stark change in housing affordability between 1998 and now. Back in 1998, armed with an average full-time income, Australian households could afford homes virtually everywhere except Sydney.
Examining this longitudinal data—sourced from benchmark rates in 1998 and present-day rates, albeit currently lower than benchmark rates—emphasizes the affordability decline, now with Darwin being the occasional outlier.
Delving deeper into historical patterns, housing affordability actually showed more strain in 2022 compared to pre-1998 levels, even before the Reserve Bank of Australia embarked on its current cycle of monetary tightening. This insight challenges perceptions and encourages reflection on any symmetry between historical and current affordability conditions.
Today's scenario is further complicated by elevated mortgage repayments reflecting a steep rise compared to interest rates touching as high as 17% in the 1990s. This comparative data begs reflection on how consumer expectations and economic realities shape the housing landscape.
Alex Joiner from IFM Investors contributed further historical analysis by demonstrating that mortgage repayments as a portion of income slightly outpaced these present figures in 1989-90, prompting considerations around economic adaptability and inflation-adjusted incomes.
Joiner poignantly remarked, "It will be a story we will tell children in future that there was once a time in Australia when a one income household (or individual) could buy a house" on Twitter. This sentiment encapsulates the gulf between past and current generational experiences.
The original article from PropTrack highlighted these economic divides which stress a narrative of a once egalitarian Australia, increasingly drifting towards disparities tied to class. Intergenerational wealth transfer, rather than earned income, now often defines home ownership possibilities in Australia, significantly altering the modern perception of the Australian Dream.
Published:Wednesday, 6th Nov 2024
Source: Paige Estritori
| Overheads on Enhanced Vetting Could Ratchet Up Wholesale Fund Costs 07 Nov 2024: Paige Estritori The prospect of intensified scrutiny in confirming wholesale investor status could potentially tip the balance of competitiveness away from wholesale funds. According to recent commentary from the Financial Services Council (FSC), implementing added verification processes might impact these funds' ability to compete effectively. - read more |
| RBA Chief Under Fire: Decision on Rate Cuts in the Spotlight 07 Nov 2024: Paige Estritori Reserve Bank of Australia (RBA) Governor Michele Bullock is set to face intense scrutiny over the central bank's conservative approach to cutting interest rates, as apprehensions about inflation persist in Australia. During a regular parliamentary session, Bullock’s policies will draw pointed questions from lawmakers. - read more |
| The Dwindling Australian Dream: Home Ownership Beyond Reach? 06 Nov 2024: Paige Estritori Recent insights from PropTrack have painted a bleak picture of Australian housing affordability, reaching unprecedented lows. In a market where a typical household makes just over $112,000 annually, a mere 14% of homes sold are within their budget. This dwindling accessibility starkly highlights the challenges for would-be homeowners today. - read more |
| CFS Launches New Advisory Initiative with Viridian 05 Nov 2024: Paige Estritori Colonial First State (CFS) is reshaping personal finance support by engaging with Viridian Advisory. This initiative aims to aid FirstChoice superannuation, pension, and investment members seeking guidance without ongoing financial advisement. The collaboration brings a novel approach to receive one-time, topic-focused advice tailored to individual needs. - read more |
| NSW Takes Decisive Steps Against Unlawful Merchant Fee Practices 04 Nov 2024: Paige Estritori The New South Wales (NSW) Government is taking robust measures to rectify years of unlawful merchant fee surcharges on customer transactions. Despite ongoing legal concerns, these fees persisted for nearly a decade, a legacy of policy directives laid out by the former Liberal-National government. - read more |
| Planning for a Better Future: Exploring Refinancing Options for Aussie Homeowners As a homeowner in Australia, it is essential to stay informed about the current mortgage interest rate and inflation situation. This knowledge is crucial for effective financial planning and making informed decisions regarding your home loan. Understanding the impact of rising interest rates on Australian homeowners is particularly important. - read more
|
| Avoiding Common Pitfalls: How to Streamline Your Home Loan Pre-approval Stepping into the realm of homeownership begins with a critical financial milestone: securing home loan pre-approval. This inaugural step paves the way for homebuyers to gain a clear understanding of their borrowing capacity, directly influencing their purchasing decisions. In Australia, where the real estate market teems with competitive energy, effective navigation through the pre-approval process offers a competitive edge. - read more
|
| The Insider’s Guide to Reducing Mortgage Stress and Staying on Track Mortgage stress is a common concern among homeowners worldwide, with the potential to cause significant financial and emotional strain. It often occurs when mortgage repayments consume a large portion of your income, leaving little room for other expenses and causing anxiety over financial security. The impact of not managing this stress can be far-reaching, affecting not only one's financial health but also overall wellbeing. - read more
|
| Take Back Control: Mortgage Refinance and Debt Consolidation Tips for Aussie Homeowners As mortgage interest rates continue to rise in Australia, it's becoming more important than ever for homeowners to take control of their finances. This article will provide valuable tips on mortgage refinance and debt consolidation for Aussie homeowners. With the potential for future rate increases by the Reserve Bank of Australia due to inflation concerns, many homeowners are feeling the financial burden. However, by exploring options like refinancing and consolidating debt, homeowners can regain control of their financial situation. - read more
|
| Creating a Personalized Savings Plan for Your Home Deposit Buying a home is one of the most significant financial commitments you will make in your lifetime. Without a solid savings plan, you may find it challenging to gather the necessary funds for a home deposit. This can delay your home-buying journey and add unnecessary stress to an already high-stakes process. - read more
|
|
|
Take Back Control: Mortgage Refinance and Debt Consolidation Tips for Aussie Homeowners As mortgage interest rates continue to rise in Australia, it's becoming more important than ever for homeowners to take control of their finances. This article will provide valuable tips on mortgage refinance and debt consolidation for Aussie homeowners. With the potential for future rate increases by the Reserve Bank of Australia due to inflation concerns, many homeowners are feeling the financial burden. However, by exploring options like refinancing and consolidating debt, homeowners can regain control of their financial situation. - read more
|
|
Unlocking the Hidden Value of Your Mortgage Offset Account A mortgage offset account is a financial product that allows homeowners to use their savings to reduce the interest charged on their mortgage. It is a transaction account linked to your mortgage, and the balance in this account is offset against your outstanding mortgage balance when calculating interest charges. - read more
|
|
|
Creating a Personalized Savings Plan for Your Home Deposit Buying a home is one of the most significant financial commitments you will make in your lifetime. Without a solid savings plan, you may find it challenging to gather the necessary funds for a home deposit. This can delay your home-buying journey and add unnecessary stress to an already high-stakes process. - read more
|
|
Interest Rates and Investment Properties: What Aussie Investors Need to Know For potential and seasoned investors alike, the Australian property landscape offers a plethora of opportunities. Investment properties have long been a favored asset class in Australia due to the potential for capital growth and rental yield. However, diving into the property market without a solid understanding of the financial mechanics, specifically interest rates, can be akin to sailing without a compass. - read more
|
|
Exploring Different Refinancing Strategies to Ease Your Mortgage Stress When it comes to managing finances, one of the biggest stressors for homeowners is their mortgage. In Australia, many individuals and families struggle with mortgage stress, which can have a significant impact on their overall financial well-being. - read more
|