Affordability crisis fears as property market comes roaring back to life

Australia’s property rebound appears to be in full swing. This couple were relieved to pay $200,000 over the reserve for a two-bedroom Sydney apartment.

In the inner-west Sydney suburb of Ashfield, a young couple score the winning bid on a two-bedroom apartment — for $932,000.

The couple, who had moved back in with their parents to save for a deposit, told the ABC’s 7.30 on Monday they were happy with the result, despite paying about $200,000 over the reserve.

The young woman said they paid “a lot more” than they were hoping “but also you know what the price tag is for the property but it’s also to get out (of home) before it gets any worse”.

So yes, things are pretty much back to normal. With Australia’s property rebound in full swing, prices are on track to recoup their recent losses within the next three months — once again sparking affordability worries.

Deloitte Access Economics partner Nicki Hutley warns Australia is in danger of creating a separate class of Australians permanently locked out of home ownership.

“Are we allowing one class of Australians to build for their retirement more easily than another class of Australians? The answer to that is unequivocally yes,” she told the 7.30.

“What’s happening now is real, but it’s not sustainable. We can’t keep having our house prices rise to these sorts of levels. We certainly have a housing affordability crisis in Australia.”

CoreLogic data for January showed the housing sector continuing its climb, despite a slight easing of momentum in the first month of the year.

The couple wanted to get out of home ‘before it gets any worse’.

The $932,000 offer was about $200,000 over the reserve.

The property market has come roaring back to life.

But experts fear it’s increasingly dividing us into haves and have-nots.

Australian homes gained 0.9 per cent in value for the month, with Sydney up 1.1 per cent and Melbourne up 1.2 per cent. The nation’s annual house price growth rate to January was 4.1 per cent — the highest 12-month rate since December 2017.

The median dwelling price in Sydney for January was $862,814, while Melbourne’s median was $681,925, and Canberra’s $630,078.

CoreLogic head of research Tim Lawless said housing remained more affordable relative to the highs of 2017, though was “still an issue in the bigger cities”.

House prices in Sydney and Melbourne began falling in mid- to late-2017 and only bottomed out halfway through last year. They’ve been on a tear ever since the Coalition’s shock election victory in May.

The Grattan Institute has highlighted the sharply declining rate of home ownership among younger Australians. HILDA survey data shows that in 2002, 34 per cent of 18 to 39-year-olds in Melbourne were homeowners, but that had dropped to 22 per cent by 2018.

“It’s hard to see that that’s anything other than worsening affordability that’s driving that trend,” Grattan Institute household finances program director Brendan Coates told 7.30.

“It is a crisis where, over the course of the next couple of decades, we’re likely to see fewer and fewer Australians — particularly poorer Australians — own their own home, and that will have enormous consequences for all aspects of Australian life.”

Brian White, joint chairman of real estate giant Ray White Group, denied there was an affordability crisis. “If you wish to live in Sydney and Melbourne then you’re going to be stretched,” he told 7.30.

“Of course they’re going to find it difficult buying in some parts of Sydney and Melbourne, but other parts they can afford. They may not want to live there but to say they can’t afford to buy a home is not accurate. It is quite possible for someone to leave Sydney and move to quite a number of major centres where the house prices are only a fraction.”

He conceded, “Work could be a challenge.”

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— with AAP