Property prices in Australia have skyrocketed in the past decade, only increasing speed in the last 5. This has been a boon for property investors but it has also been tough for others as they struggle to keep up with the rapidly rise in housing prices.
Just as an example, property prices in Sydney, Melbourne and Brisbane have risen 75, 45 and 30 per cent over the last 5 years. At the same time, low interest rates and growing foreign investment monies, particularly from China, have pushed an increasing volume of properties into the “unaffordable” bracket for many Australians. In situations not unlike Singapore, many millennials now wonder about their future in terms of home ownership. While some young adults who have gotten into the investment game earlier risked a great deal while working exceedingly hard for their down payments are now seeing dividends paying off, many others have to settle for shared housing to make ends meet.
Those who have invested early are able to finance subsequent property buys based on the soaring value of their property assets while lower-income Australians are finding it harder to afford even a deposit. Competing with property investors is simply impossible. Many have submitted to the possibility of renting for the rest of their lives.
Property analysts are however increasingly aware of the danger of a property bubble especially as the lending from the country’s banks may have resulted in an unsustainable rate of growth. Some loans are 4 to 6 times the borrower’s annual incomes and there is a fear that there will be a collapse. The push for the Australian government to ensure homeownership is affordable for the majority may come sooner than later as disinclination grows.
