“The average new mortgage in Australia is now $443,000, and in NSW $544,000. In Sydney the average property price now equates to around 9 times average household income, up from around 4 times 20 years ago,” the study stated.
“The sheer size of the new mortgages has meant that a disproportionate percentage of household disposable income is now allocated towards paying off a mortgage and therefore less is available to spend on other areas such as food, retailing and entertainment.”
Moore Stephens also warned that if the country continues to see slow consumer spending with the rates at their all-time low, the worse could come for heavily indebted households when rates come rising again.
“The only way for household debt to fall to more manageable levels is for house prices to fall. This can only occur if we see a significant increase in supply of properties to offset demand so that we see both a fall in prices and rents,” the study added.
“Supply needs to continue to build, certainly in Sydney, to address the demand equation.”
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