a year ago · 3 min read
Let’s be honest: homeownership is a goal many can no longer afford. Especially for young people, you’re not going to have much choice but to rent. The average starting salary for young graduates is around $60,000 in 2020, not factored in HECS debt. The median house prices in Australia are around $936,073 after rising 5.3 per cent in the last three months of 2020 and have an annoyingly Himalayan trajectory.
Don’t kid yourself, nothing stops their climb – not GFCs, not pandemics, not bubbles, not investor panic. The weekend auctions would still be packed thanks to the historically low interest rates, government grants and incentives as well as fewer listings. These concessions from the government to stimulate construction is adding further fuel to the fire making housing affordability far out of reach.
At the moment, there are plenty of buyers competing in a tight market which resulted in record auction clearance rates around the country. Prospective sellers are adjusting their price expectations from hearing good results from friends, neighbours and holding onto their properties until the end of the year to achieve stronger results.
New Zealand is now on the same chapter with us in Australia with ongoing rapid house price inflation. The Reserve Bank of New Zealand set the cash rate at 0.25%. House prices are predicted to rise by 12.2% this year. Available houses are at an all-time low on one real estate website. Low interest rates are the main driver behind soaring house prices said Westpac’s chief economist for New Zealand.
Ridiculous house prices
Take a look at this one-bedroom property in Wellington, what looks like a converted shipping container home with an open deck, is listed by real estate group Ray White seeking offers over $745,000.
The property was originally designed by FLiP Homes with the aim to build affordable homes for New Zealanders but ultimately prices reflected the tough market.
This listing comes amid the high housing demand in the Wellington region, buoyed by a raft of policy measures. The average house price in the city recently crossed the $1 million threshold for typically 3-4 bedroom homes.
Where next for house prices?
One possible solution is to create more supply in the market. The government has to spend more money to create low-cost social housing to cool down the property market, improve housing affordability and close the growing equality gap.
Due to the soaring house prices, more Australians will be forced i