Soaring home prices have reduced the supply of low-priced homes for sale as affordable homes have fallen.
Searches for $ 1 million or more properties listed on realestate.com.au are now more than double the search for less than $ 500,000 levels, and there is a shortage of affordable properties. I understand.
Cameron Kusher, director of economic research at realestate.com.au, said affordability has deteriorated over the past year. Soaring pricesPresents challenges, especially to first-time homebuyers.
“”Reducing borrowing costs since the pandemic hit has led to improved borrowing capacity and contributed to the significant price increases experienced, “said Kusher.
“High prices lead to affordable declines, especially for those who are trying to enter the market for the first time at higher prices. Larger depositAt the same time, record low interest rates mean that when saving these borrowers, there is no return on savings. “
“This, along with government inspiration in the form of HomeBuilder, has attracted more buyers to the housing market and raised prices,” Kusher explained.
He said the combination of these factors led to higher prices and lower affordable prices for first-time buyers.
Real estate prices are skyrocketing across Australia, with median home prices rising 15.8% in the capital to $ 1.1 million over the past year, according to new realestate.com.au data. Recorded the largest rise.
However, realestate.com.au economist Paul Ryan said market activity would be suspended while the blockade of COVID-19 in Sydney was extended.
“Price growth is likely to slow until the market is fully functional,” Ryan said after the blockade was extended for another two weeks on Wednesday.
Rising prices are pushing buyers’ budgets
Buyers are looking for more expensive properties across Australia, and searches for properties over $ 1 million continue to grow at the expense of properties under $ 500,000.
In June, 39% of nationally price-filtered searches on realestate.com.au were listed for at least $ 1 million, compared to 15.5% for searches under $ 500,000.
Kusher said people are looking for something available.
“The number of properties that can be sold for less than $ 500,000 has dropped significantly,” he said.
“This will force buyers to spend more on real estate.
“If there is a significant increase in properties priced under $ 500,000, especially in the capital, there is no doubt that there will be a significant increase in buyers seeking it.”
Kusher said the lack of low-priced properties was a problem in all cities, but the problem was most severe in Sydney, Melbourne and Canberra.
“In each of these cities, we’ve seen less than 10% of all filtered housing (houses and units) searches for less than $ 500,000 in the past year,” he said.
“These are the markets with the lowest share of property searches under $ 500,000, but have seen significant declines over the past year, with rising prices and a declining supply of properties for sale at the following prices: It’s embossed. $ 500,000. “
Kusher said the capital has far fewer low-priced properties than the local market, but the supply of low-priced homes for sale in rural areas has declined significantly over the past year.
“”This is a function of much more supply and demand in the regional market, “he explained.
“Because far fewer people live in rural areas, a significant increase in demand in these areas can have a much greater impact on prices, which has happened in the past year.”
Searches for properties in regions listed for more than $ 1 million have more than doubled in the past year, and due to the pandemic, Changes in the sea and trees And driving Record movement Of people from the capital to the provinces.
The· latest REA Insight Housing Market Index Report 23.5% of price-filtered searches in the non-capital market in June were for properties over $ 1 million, up from 11.9% in the previous year.
Kusher said realestate.com.au’s share of searching for at least three-bedroom properties has increased to 66.9% in the capital over the past year, but has declined slightly to 73.4% in the regional market. ..
“Sure, in the capital, people are looking for bigger homes, but in rural areas, more investors are moving to these markets, and the search rate for three or more bedrooms is one year. I think it’s a little lower, “he said.
Buyers Agents in Victoria and Kate Bacos, Chairman of the Australian Real Estate Buyers Agents Association, said COVID and telecommuting have changed some buyers’ minimum requirements, such as the number of bedrooms and surveys, in the $ 1 million or higher price range. Said that the activity of.
“Many people who would have been happy with the small and cheap ones raised their search criteria to three large bedrooms, which cost the wishlist a lot,” says Bacos.
“There aren’t many three-bedroom and three-bedroom properties under $ 500,000, and at the moment it’s the taste of the day.”
Kusher said buyers could choose more affordable property types such as units and townhouses, but they were still more expensive in most parts of the country and units were not a suitable housing option for everyone. I did.
Affordable first homes have declined as prices soared
Kusher said first-time buyers faced the biggest affordable challenge, but existing owners trying to buy again in the hot market also faced the challenge.
“The problem is that if you’re trying to sell and repurchase, the price rises so rapidly that the market can move away from you.”
Median home prices in Sydney have skyrocketed by 15.8% over the past year to $ 1.1 million, according to data from realestate.com.au in June.
Median Hobart home prices rose 14.7% to $ 585,000, Darwin rose 14% to $ 490,000, Median Canberra rose 13.2% to $ 781,125, and Perth rose 10.3% to $ 520,000. became.
Median home prices rose 9.6% to $ 523,000 in Adelaide, up 9.5% to $ 810,000 in Melbourne, and up 7.6% to $ 582,000 in Brisbane.
Most of the economists and experts surveyed by the comparison site Finder agree that housing is becoming more affordable for the average Australian and many point to low wage growth and interest rates. did.
Finder Graham Cook’s head of consumer research felt in August and September last year that more than half of the economists surveyed were willing to afford affordable homes, but the latest survey plummeted to 3%. He said he did.
“For first home buyers, the bottom of the home ladder is getting higher and higher above the ground,” Cook said.
“Challenging it is an increasingly steep step.”
Cook said the total amount of mortgages to own homes has set a record for several months, with the latest Australian Bureau of Statistics data showing a record high of $ 23.4 billion in May. ..
Economists at the Big Four expect real estate prices to rise by at least 10% and up to 17% this year before growth slows to still strong 5% or 6% in 2022. Affordability and other factors such as rising fixed mortgage rates and potential regulatory action Cool the market..
While two-thirds of the experts and economists surveyed by Finder are expecting New South Wales real estate prices peak in late 2021Cook said Sydney is expected to see prices rise 21% this year.
“The first homebuyers saving for deposits are most affected as the number of people who need to save continues to grow and they need 20% deposits to avoid lender mortgage insurance. “That’s what Cook said.
“If you want to buy somewhere in Sydney where the median home price is $ 1 million, that’s a big savings.”
Cook said 2022 could be a much better year for affordable homes if prices slowed as expected next year.
“It seems that this rate of price increase will not last indefinitely,” he said.
“It seems that economists are approaching the end of this year to show that they can start slowing down, and perhaps next year the savings requirements will grow exponentially in front of those who are trying to save as before. You won’t do it. “
“Disappointed” buyers adjusting expectations
Bacos said many buyers are discouraged by the pace of the market.
“Many people are disappointed when they see price trends last year,” Bacos said.
“Many people expected a crash, so they decided to wait for it. JobKeeper has come off I wanted some easing at the end of the fiscal year, but I don’t see it because the supply and demand is so imbalanced. “
Bacos said buyers need to adjust their expectations and search, taking into account sharp price increases, after accepting that opportunities in the old price range are gone.
“They will either downgrade their expectations, they will start looking further, or they will start at a completely different price,” she said.
“We’ve seen a lot of it, whether it moves to the area or not-the perfect pivot- Accepting that the townhouse is within budget or whether it will move to the next suburb. “
“The competition for real estate for sale remains fierce and it is reasonable to expect prices to rise in active markets despite the seasonal slowdown.”
Affordable Homes Decrease As Real Estate Prices Soar
https://www.realestate.com.au/news/affordable-homes-dwindle-as-property-prices-surge/ Affordable Homes Decrease As Real Estate Prices Soar