Home ownership is looking further out of reach for anyone without family wealth, as property prices soar and wages fail to keep up.
Years of predominantly falling interest rates have fuelled the boom, allowing households to borrow more and bid up prices, then use their rising equity to upsize to a bigger home or buy an investment property.“The two main constraints are, can I afford the deposit and can I afford the repayments?” Grattan Institute household finances program director Brendan Coates said.“At the moment, the deposit hurdle is the number one hurdle.
“If you’re a low-income earner and you don’t have wealthy parents that can help you out, things look very bleak,” he said. “The way that our financial arrangements are structured around housing has allowed it to really depart from income growth and tie more to growth in wealth,” she said.A lot of the demand had stemmed from the ability to access equity, she said, whether for parents to buy property in part ownership with their children, or the ability to inherit property.
But interest rates were high because inflation was high, meaning wages were also increasing, helping many to pay down their mortgages over time, she said. AMP Capital chief economist Shane Oliver said as interest rates have fallen, buyers are also taking on more debt compared to their incomes.“Given that people have to have such a massive amount of debt … they’re lumbered with that debt for much longer,” he said.
elizabethredman The real estate ponzi scheme relies on importing people into Australia
elizabethredman Limit Negative Gearing to one investment only. Stop foreign investment. Never treat people's homes as a commodity. Fixed.
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