Last October the first-home buyers ‘grant’ for purchase of established homes was doubled to $14,000, and tripled to $21,000 for new ones. Since then the average first home loan has blown out by $22,400 to $284,700. Of course, any nexus between those similar amounts is purely coincidental.
National house prices increased 4.2% in the June quarter, and declined only 1.4% over the last 12 years. So the Global Financial Chicken has hardly slowed our lemming-like rush into home ownership, particularly as interest rates remain historically low. And you can bet on them not rising again any time soon! So this is the fun of our national sport, Real Estate, with massive bets being laid on capital gains as well – a bet both ways, so to speak. Quintessentially Australian.
Housing in Australia is about 25% over-valued, according to the IMF’s World Economic Outlook, which refers to a ‘house price gap’. Steve Keen (A/Prof Economics & Finance at UWS) reckons the over-valuation is in fact about 60%, compared to consumer prices generally. Strangely, real estate agents don’t agree and reckon prices are about right.
Go you sure thing, the Great Australian Dream!