Australia, and in particular Sydney, is notorious for having expensive housing. High property prices have been a reality in Australia for a long time, with national house prices rising by more than 85% between 2000 and 2010 and growing by over 20% in the decade following. This was felt even more sharply in Sydney, with prices increasing by almost 100% in the 10 years to January 2022.
You would be forgiven for thinking that this might have changed through COVID and that we should have seen some declines in house prices, but in practice the reverse occurred, with national prices growing by more than 7% in 2020 and over 20% in 2021!
There are a number of different factors that contribute to this price situation, including:
- Supply: For a number of years the increase in the supply of dwellings has not kept up with the growth in population, and is particularly problematic given Australia’s population is heavily concentrated into a relative handful of metro cities. This is likely one of the biggest drivers of Australia’s high property prices.
- Low interest rates: Buyers have had access to funds at low interest rates for a long time now, increasing their borrowing ability and buying power and in turn contributing to the increase in property prices.
- Lockdowns: With so much time being spent at home due to extensive lockdowns through the COVID-19 outbreak, buyers were looking for nicer environments in which to spend their time, leading to a competitive environment that boosted prices.
- Buyer incentives: For years there have been number of government initiatives aimed at helping people get into the homebuyer’s market, like the first home buyers grant. Whilst these programs have good intentions, at times they can actually have the opposite effect, leading to inflated demands and prices.
- Low unemployment: Australia has enjoyed a low unemployment environment even through COVID, even seeing 7 consecutive monthly increases in employment since pandemic lockdown restrictions were eased in late 2021, and a jobless rate sitting at historically low levels of under 4%. This strong employment market has resulted in a population of people willing and able to invest in housing, contributing to increases in property prices.
That being said, once you’ve gotten a home then your property will subject to the same conditions, which can see a substantial increase in value over time. It’s important to ensure you’ve built a quality home that won’t lose you value into the future, so why not check out our current house & land packages or our range of new home designs today?