Alan Kohler on ABC iView lays out the numbers
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The State of the Housing Market in Australia
- Increase in Housing Value: The Australian Bureau of Statistics (ABS) reported that the total value of all Australian dwellings increased by $209 billion in the past quarter, reaching $10.7 trillion. This is positive news for those who own property, but it presents challenges for potential homeowners.
- Record High New Housing Loans: The average new housing loan for owner-occupiers has reached a record high of $625,000, or approximately 80% of the median Australian house price, which stands at $785,556. This highlights the growing difficulty for new buyers to enter the housing market.
Affordability Challenges
- Increased Saving Period for a Deposit: Twenty years ago, it took approximately six years to save a 20% deposit on an average home if you could save 15% of your salary. Now, that period has increased to 14 years, making it significantly more challenging for the average individual to save for a deposit.
- Parental Assistance: For many, purchasing a home is only feasible if they receive financial help from their parents. Without such assistance, servicing the average loan is unattainable for those earning less than the average wage.
Financial Strain on Average Families
- Monthly Salary vs. Mortgage Repayments: The average monthly salary after tax following the tax cuts is $6,500, while the monthly repayments on an average mortgage are $4,353, leaving $500 per week if the household has a single income.
- Childcare Costs: If both partners work full-time, managing the mortgage is more feasible, but having two children introduces additional financial strain. Childcare costs can exceed $5,000 per year, which is significantly more than the monthly mortgage repayments.
General Living Expenses
- Surviving on Leftovers: After accounting for mortgage repayments and childcare costs, a family's remaining budget must cover utilities, food, and medical expenses. With $873 left per week for these essentials, many families find it insufficient.
- Infeasibility of Home Ownership: The overarching theme is that home ownership in Australia is becoming increasingly unattainable for average wage earners. Those without significant financial support or incomes well above the average wage find it nearly impossible to afford a home due to high costs and insufficient disposable income.
