Residz Team 3 min read
With house prices falling, you’d be forgiven thinking the housing crisis might be softening for potential buyers. But nothing could be further from the truth. In a new survey by Finder, more than a third (37%) of non-homeowners said they don’t ever think they’ll be able to afford a home.
Affordability is the issue
The shock number of people thinking home ownership is out of the question is 14% higher than it was in 2021, when prices hit record levels and pushed major city home prices to severely unaffordable levels.
This affordability issue hasn’t gone away despite plunging prices in the property market, expected to cool further with more choice for buyers as winter listings roll over to spring.
While the Reserve Bank of Australia’s cash rate rises are having a strong effect on house prices thanks to its effect on ‘normalising’ or ‘correcting’ mortgage interest rates, it hasn’t been enough to make potential home buyers optimistic.
Younger people have doubled their worry
The Finder survey shows that among Generation Z non-homeowners (born 1997-2012) it’s 15% who are despondent about their chances of home ownership, more than double the figure put forward in 2021. No wonder so many are taking to their beds. For Millennials (the age of our case study Tassa), the figure has grown from 21% to 34%. It’s especially unfortunate when you read real estate is a top choice as favourite long-term investment.
Finder home loans expert Richard Whitten said it was sad but understandable that many young people were worried about the prospect of owning a home.
"House prices have skyrocketed over the past few years, and have become downright ridiculous in some areas. But with economists predicting a recession and interest rates finally rising from their rock-bottom lows, it's likely we'll see house prices fall in the second half of 2022, especially in Sydney where prices can be more volatile."
But could prices instead start lifting again?
Real estate expert Catherine Cashmore, editor of The Daily Reckoning, is noticing something curious that counters talk of falls, according to her new article ‘Has the Property Market Turned?’
Catherine says she’s ‘sticking her head out’ and claims there’s a shift in sentiment as she has seen an ‘increase in energy on the ground.’
“More people are walking through open homes, attending auctions, and slightly higher clearance rates are being recorded (a leading indicator of changes in the median),” the Melbourne-based editor writes. She says “we’ll see how it tracks” in the next few weeks.
“As per the cycle, we’re looking for falls in the median to stabilise before trending upwards once again as we move into 2023,” she writes. “At least outside of Sydney, and particularly in the smaller states and territories by population.”
Hard to save a deposit thanks to rising expenses
For potential homebuyers this could be a signal that now is as good a time as any to buy, however many will be smarting from cost of living pressures, making it hard to save a deposit. That’s a tough pill to swallow for Australians trying to get their foot on the first rung on the property ladder.
Residz can help buyers and sellers reduce the stress:
Photo by Austin Distel on Unsplash