menu

House prices in Australia compared

Financial Planning  |  18/08/2017  |   10 min read

Housing affordability continues to be a major concern in Australia and not just for would-be first home buyers. It also affects pre-retirees forced to work longer to repay bigger mortgages and older Australians unable to downsize from large family homes due to a lack of affordable options. 

The latest 2016 Census revealed a gradual decline in home ownership over the past decade from 68% of all Australian households in 2006 to 65% in 2016. And those of us with mortgages are more likely to be stretched to the limit, with over 7% of home buyers paying more than 30% of their income on mortgage costs. 

It’s not only homeowners feeling the pinch. Rising house prices mean more of us are renting in the private market. Almost 25% of households are renting privately, up from 21% a decade ago; a further 4.2% are in public housing. This puts upward pressure on private rents and increases demand for public housing.

Price growth easing

The national debate about housing affordability is understandably loudest in Sydney and Melbourne where the median price of houses and units is $880,000 and $675,000 respectively. But residential property is always a tale of many markets
 

Home price movements as at June 2017

Region Quarter Annual Median Price
Sydney 0.8% 12.2% $880,000
Melbourne 1.5% 13.7% $675,000
Brisbane 0.5% 2.0% $497,000
Adelaide -0.2% 2.4% $440,000
Perth 0.1% -1.7% $484,000
Hobart -1.3% 6.8% $355,000
Darwin -5.2% -7.0% $480,000
Canberra -0.4% 9.6% $625,000
Combined capitals 0.8% 9.6% $635,000
Rural and regional 0.0% 4.7% $390,000

Source: CoreLogic


While the constant warnings from some quarters that Australia’s housing boom is about to bust has not yet come to fruition, the rapid price growth of recent years appears to be slowing. 

According to the CoreLogic Home Value Index, annual price growth eased from 12.9% in March to 9.6% by the end of June. In Perth and Darwin prices actually fell, while Brisbane and Adelaide posted modest gains. Hobart remains our most affordable capital city with a median price of $355,000 despite annual capital growth of 6.8%.

Retiring with debt on the rise

The census also revealed that fewer of us own our homes outright. Mortgage-free home ownership is down from 32% to 31% over the same period. This could be due to more of us borrowing against the mortgage for renovations or investment, and higher home prices resulting in bigger mortgages that take longer to repay. 

If this trend continues it could have implications for our retirement income system, which assumes that most people will retire with a home fully paid for. In a little over two decades the incidence of mortgage debt among people aged 55-64 has more than tripled from 14% to 44%. As more of us delay buying our first home until later in life, this trend is likely to continue. 

To tackle housing issues at both ends of the age spectrum, the federal government announced some new measures in the May 2017 Budget.

New government incentives

The first of these is the First Home Super Saver Scheme. If the proposal is passed, first homebuyers will be able to make voluntary contributions of up to $15,000 a year to their super fund which they can withdraw to use towards a deposit, up to a maximum of $30,000. While the scheme is welcome, $30,000 doesn’t go far when a 10% deposit on the median-priced Aussie home is already $63,500, and much higher in Sydney and Melbourne. 

That said, state governments have also stepped up assistance for first home buyers. For example, Victoria offers a grant of $20,000 for first home buyers purchasing a new home and stamp duty savings for existing homes valued up to $600,000. 

In NSW, first home buyers will not have to pay duty on new and existing homes up to $650,000, and reduced duty on purchases up to $800,000. They can also access a grant of $10,000 for new homes up to $600,000, or $750,000 for owner builders. 

Queensland has extended its $20,000 grant for first home buyers purchasing a new home to December 2017, while Western Australia offers a grant of $10,000 for new home purchases and reduced rates of duty. 

It remains to be seen whether these measures will significantly improve housing affordability for first home buyers or encourage Baby Boomers to downsize to a smaller nest. It’s likely that more will need to be done to help Australians of all ages achieve home ownership. 

 

Speak to an Equip Financial Planner about your housing options, superannuation, and how they may impact your tax. Learn more here

 

This information is provided for general information only. It does not take into account your personal objectives, financial situation or needs and should therefore not be taken as personal advice. You should consider whether it is appropriate for you before acting on it and, if necessary, you should seek professional financial advice. Before making a decision to invest in the Equipsuper Superannuation Fund, you should read the relevant Equip Product Disclosure Statement (PDS). Past performance is not an indication of future performance. Issued by Equipsuper Pty Ltd ABN 64 006 964 049 AFSL 246383.  MySuper Authorisation Numbers 33813823017672 and 33813823017518  (‘Equip’, ‘the Fund’ and ‘the Equip Rio Tinto Fund’).

Equipsuper Financial Planning Pty Ltd (“EFP”) (ABN 84 124 491 078, AFSL 455010) is licensed to provide financial planning services to retail and wholesale clients. EFP is owned by Equipsuper Financial Holdings Pty Ltd (ABN 11 604 515 791). You can obtain the EFP Financial Services Guide and/or Privacy Statement by contacting our Helpline 1800 682 626.

How long will your super last? Check the MyFuture calculator