The housing market boom brought about by the low-interest rate environment and the (then-relatively) low prices has been a headache for many homebuyers today.
Citing a recent study, Smart Property Investment said many homebuyers believe they would not be able to afford the properties they have now if they were to buy them in the current market conditions.
In fact, prices have skyrocketed significantly especially in the two largest housing markets -- Sydney and Melbourne. While housing costs have continuously risen since 1990, it is surprising to think that in less than a decade, prices in these two cities have increased by 105% (for Sydney) and 93.5% (for Melbourne).
Industry watcher and property expert Steve Jovcevski explained that the housing market was particularly busy post-1990s, causing prices to inflate at an alarming rate.
“Staggering increases in house pricing coincided with record low-interest rates which further fuelled a property buying frenzy," he told Smart Property Investment.
"This has resulted in an Australian housing market that leaves some feeling lucky they got in while they did, but also a large portion of Australians feeling like they missed their opportunity and are now essentially locked out of the property market.”
Most Australians feel priced out of the market due to income growth, which has failed to keep up with the continuously accelerating property prices increases – prices have gone up by sixfold over the past three decades.
“While the housing market has certainly cooled in major metro areas such as Sydney and Melbourne, there’s no way that prices will be dropping back to the price ranges before the property boom," Jovcevski said.
And with the out-of-cycle hikes, homeownership will remain a distant dream for most Australians.
“Many Australians who once dreamed of owning a home are now looking at alternative solutions to financially safeguard their future as they come to face the reality that owning a home may no longer be possible.”