9 Facts About Our Property Markets You Should Know

Since you’re reading my blog, it’s pretty safe to assume you’ve got an interest in real estate or property investing.

So today I’d like to share 9 interesting facts about the Australian housing market:

1. It’s Big

According to CoreLogic there are approximately 9,000,000 dwellings in Australia with a total value of around $6.2 trillion.

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And residential real estate accounts for more than half of all household wealth.

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2. Most of us are home owners

The 2011 Census found that 67 %of households own their own home or are purchasing it through a mortgage – most of the rest are renters.

And despite claims of unaffordability, the proportion of home ownership has been fairly stable for more than fifty years, after rising from 53 per cent in 1947 to 63% per cent in 1954 and hitting 70% in 1961.

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Source: ABS

3. Not surprisingly the level of home ownership increases with age:

  • The younger generation (under 24 years of age) tend to rent – only 22 per cent own or are buying a home.
  • For those aged between 25 and 34, it’s pretty much 50-50 between owners and renters; and…
  • By the age of 75 close to 85 per cent of people own their home outright, less than 3 per cent have a mortgage and less than 10 per cent are renting.

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4. Our homes are getting bigger

house street choice choose buy sell street propertyThe Great Australian Dream of huge houses with extra bedrooms, a study, media or family room may be coming to an end, but our homes are still the biggest in the world.

While more of us are slowly swapping backyards for balconies, new homes in Australia are, on average, bigger than anywhere else in the world at 245 square metres for new freestanding homes and 215 square metres for new homes overall – up around 10% in a decade.

However, with the proportion of new apartments and townhouses being built relative to new detached houses increasing, the size of the average Australian dwelling is likely to decrease.

Most houses have a spare room or two – in 1976 there were 3.1 people per household in Australia, that has since fallen to around 2.6.

In the same period, the proportion of dwellings with four or more bedrooms has risen from 17% to 31% and the average number of bedrooms per dwelling has increased from 2.8 to 3.1.

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5. Our homes are getting more expensive

Over the last 10 years home prices around Australia rose by an average of 5.7% – hardly property bubble material as some doomsayers are suggesting.

As you can see from the following CoreLogic graphics, the Melbourne and Sydney property markets were the star performers over the last year.

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 6. Our house price growth is tame compared to some overseas markets

Sure property prices have been soaring in Sydney and Melbourne, but Australia’s house price growth looks tame compared with some overseas property markets, as can be seen in the following chart of annual house price growth to March 2015.

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Source: Fairfax Media

7. Housing is becoming less affordable

Housing affordability remains an issue for policy makers and those trying to enter the market.

Of course it depends who you ask –those who own properties, especially in Sydney and Melbourne are enjoying increased wealth as the value of their homes increase.

And it depends how you measure it.

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One way to assess house prices over time is to compare them to income.

In 1981-82 the median after tax household income was around $15,000 while the median dwelling price was $48,000.

That works out as a price-to-income ratio of close to three, or in other words in 1981-82 it took a little over three years’ take-home pay to buy a house.

Nationally that ratio has now passed six, or more than twice as much, and in places like Sydney it went above nine during the property boom of the early 2000s.

However what is not taken into account when looking at it this way is that the cost of housing – in other words interest rates – have fallen considerably and the cost of owning a house as a proportion of disposable income hasn’t risen substantially over time – see graph 2 below.

8. Renters Are Worse off

Interestingly the Australian Bureau of Statistics found that, over the last 20 years, the cost of renting has increased more than the cost of owning a home.

The graph below shows that between 1994–95 and 2013–14, private renters experienced a 62% (or $144) increase in average weekly housing costs, after adjustment for inflation.

During the same period there has been an overall increase of 42% (or $135) for home owners with a mortgage and 45% (or $46) for public renters.

In March 2015, an average of 31.5 per cent of income was spent on home loan repayments, while renters paid an average of 24.8 per cent of their income.

While in dollar terms people with mortgages spend the most per week on housing at around $408, which represents only 18 per cent of their income.

Renters spend an average of $275 but that’s a higher proportion of their income at 20 per cent.

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9. 0.5% of our population are homeless

According to Homelessness Australia there are currently 105,237 people in Australia who are homeless.

Sixty per cent of homeless people are aged under 35, and one quarter are Indigenous Australians.

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So there you have it – 9 interesting facts about our housing markets.

Now you have the information, use it

If you’re looking for independent property investment advice to help you become financially independent, no one can help you quite like the independent property investment strategists at Metropole.

We’ll help you cut through the clutter of mixed property messages.

Remember the multi-award winning team of property investment strategists at Metropole have no properties on the market to sell, so their advice is unbiased.

Whether you are a beginner or a seasoned property investor, we would love to help you formulate an investment strategy or do a review of your existing portfolio, and help you take your property investment to the next level.

Please click here to organise a time for a chat.

OR CALL US ON 1300 20 30 30.

When you attend our offices in Melbourne, Sydney or Brisbane you will receive a free copy of my latest 2 x DVD program Building Wealth through Property Investment in the new Economy valued at $49.


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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au

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