Sydney and Melbourne continue to lead the rest of the country in soaring house prices with the two cosmopolitan hubs experiencing annual price increases of 15% and 9% (though prices dropped briefly last month).
Brisbane, Adelaide and Canberra experienced modest yearly price rises. There was a slight rise in Perth, while Hobart and Darwin are not having much luck, losing ground over this past year.
Sydney home prices dipped in May 2015 for the first time in 6 months.
Australian capital city home values dropped by 0.9%, with falls across the country, except in Darwin and Canberra.
In Sydney, home values dropped by 0.7%, Melbourne experienced a 1.7% fall and Hobart plummeted the most, sliding by 2.7%.
Over the 12 months leading up to the 31st May, home values jumped by 9% Australia-wide, with average property prices of around $570,000.
In what came as a surprise to market insiders, approvals for new home developments plunged by 4.4% in April, a much worse performance than the expected 1.5% slide.
The Australian Bureau of Statistics confirms that in the 12 months leading up to April, building approvals soared by 16.6%.
Private sector housing approvals jumped 4.7% also in April while ‘other dwellings’ including apartments and townhouses fell by 15%.
Here are some fun facts to consider before jumping onto the home owner bandwagon.
From 1996 - 2014 house prices & mortgage debt considerably outpaced fundamentals like rent, inflation, income and GDP for the average Australian. Based on median multiples, new Sydney home buyers will spend the better part of 6.54 years saving (using 30% of their income) for a 20% deposit to buy a median-priced home.
In economist Lindsay David’s new book, Print: The Central Bankers Bubble, Mr David brings attention to the fact that: “Sydney land prices rose 512 percent faster than inflation between 2001 and 2011, while the city’s population only grew 16 percent.”
Does all that sound fair when we look at the generations who have come before? Many of the Baby Boomers were able to raise a family and pay a mortgage on one income alone? In today’s day and age, that sounds like a far-off and fanciful dream for many of today’s workers. Oh what a debt-induced folly the Australian real estate market has become.
There is much speculation as to when exactly the housing bubble will burst but a consensus among insiders has been reached for around 2017/2018. Until then it seems Australia’s obsession with home ownership will continue unabated despite our economy slowing, start-ups going overseas, business confidence in the government at an all-time low and ever increasing unemployment.
A recession is on the horizon and when it comes, the housing bubble will burst, so you may wish to wait until after 2017/2018 to buy that first home, or dream home.