Property prices defy gravity as average households priced out

Property prices are defying gravity, despite the average home buyer’s budget being slashed by about 30 per cent over the past two years.

High prices have left average income earners struggling to save a deposit, especially while paying high rents, or to win at auction, and making compromises such as hunting for smaller or more distant homes as they can no longer afford the average home. “Housing values have defied gravity in that sense, in that they haven’t been weighed down in the same way borrowing capacity has,” she said.“You need something else to bridge that gap, which would be a higher deposit, or capital that comes from, presumably, the sale of another asset,” she said.

“It almost defies logic, if you’ve got slashed borrowing capacity and also the higher cost of debt in the face of high cost of living as well,” she said.“The 2000s was very different economic conditions to today … Both of those periods of time saw really strong rates of population growth and I do think it’s understated, the impact population growth can have.

“The average household is no longer able to afford the average home, so what you’ve seen is home buyers are skewing much higher income and much higher wealth,” he said.“A lot of that would be intergenerational wealth transfer,” he said.

Source: Real Estate Daily Report (realestatedailyreport.net)

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