Over the last few years, it’s been impossible not to notice the rising house prices across Australia. While the extended growth spurt appears to be slowing in regions such as Perth and Darwin, the same cannot be said of Sydney. Residential property prices in the capital city have continued to soar skyward, with a first quarter year-on-year increase of 13.1 per cent as of March 2015, according to figures released by the Australian Bureau of Statistics.
What’s causing the sky-high property prices?
Many experts believe Australia’s rising population can be blamed – at least in part – for the rising cost of property. The influx of both foreign investors and interstate migrants to the country’s major urban centres means that demand is far outweighing supply – an imbalance that is pushing prices up across the board and making it challenging for anyone looking to buy a house. Money Morning found that Sydney, for example, requires 29,630 new dwellings every year to keep up with the city’s population growth, yet only 22,750 are being built annually.
Naturally, the ones who are suffering most from the inflated property prices are first home buyers. This demographic – often young families, typically with little collateral to use as financial leverage – is finding it difficult to even catch sight of the property ladder, let alone climb it.
The future of property prices
The 2015 Intergenerational Report estimated that the Australian population will continue to rise 1.3 per cent per year, reaching about 40 million by 2055 – with the vast majority of these people centred around the country’s capital cities, much as they are now.
Already in Sydney and Melbourne we’re seeing a growing demand for apartment dwellings in response to the need for people to live near city centres. With the population set to grow, we’re this trend is likely to continue in the future. Some experts forecast that the growing prevalence of apartment buildings will cause a price split in the market between flats and standalone houses, causing home buyers to pay a premium – even more so than at present – for the latter.
Amidst the challenging economic environment, here at G.J. Gardner, we’re committed to keeping the cost of building down. Our superb purchasing power combined with our competitive pricing has enabled thousands of first home buyers to design and build the home of their dreams.