Are you planning to sell your house in Australia quickly? In the current scenario, it makes more sense to sell rather than buy property in Australia online. The Australian housing market, as it is clear, is overpriced, and homeownership has looked beyond the reach of a vast majority of Australia’s population.
Consider this – median home prices in Sydney rose by 99.4% from 2009 to 2017 – that means home prices in Sydney doubled in just 8 years. In Melbourne, the figure was 85%. This is good news, certainly, for those who have properties for sale in Australia, but perhaps not such good news for the rest of the public.
Now, these stats would make a lot of sense if the increase in wages kept pace with the rise in home prices. But this is not really the case. The increase in wages in Australia has been very marginal – just 0.5% in 2017 so far. In 2016, wages grew by 1.9%, and from 2011 to 2016, only by 13 percent. This in no way mirrors the massive rise in property prices.
What we have on our hands is a possible housing crisis in Australia, as the housing market looks very much over stretched. Interest rates in Australia are expected to get higher over the next few years – they are at record lows right now. This will inevitably lead to higher household debt levels as a result of which many Australians will be forced to sell their homes.
How has the Australian government reacted to this? Not so good. Prime Minister Malcolm Turnbull has done nothing except resorting to tokenism to bring some rationality to the real estate market. The government has taken a hands-off approach, and they are allowed to because a lot of Australians – especially those who own multiple properties, have become rich beyond their wildest imagination.
The government fears that interfering in the housing market would cause it to lose the votes of older Australians – or homeowners – who have benefited from the massive increase in home prices. The interests of the first time buyers have been set aside for now.
For that reason, the government hasn’t really done much to deflate the current high paper wealth of Australian home owners. They have so far preferred to maintain the status quo.
However, the government hasn’t taken the potential risks into consideration. If the home prices were to grow at this rate – it would eventually prove to be unsustainable. The bubble would eventually burst and that would affect homeowners more than most.
Already, the household debt in Australia as a percentage of the household disposable income is at extremely high levels. This is a sign that more money is being invested into the payment of home loans than on discretionary spending – which usually leads to lower productivity and is a negative for the economy.
Fact is inflationary house prices are hurting the Australian economy and one wonders if the government really has any answers to the problem.