opinion

House prices are rising by $5600 a week. How the f*** am I meant to jump on to the property ladder?

In my childhood I was sold a dream.

Work hard, save lots, spend very little and you will be able to buy a house one day.

It might be a bit of a fixer-upper, it may not be your 'forever home', but it'll be your slice of the pie that you can work on, live in and sell when you need to up-size.

Well, I'm calling bulls**t. Because no matter how hard I save, or how many property must-haves I scratch off my list, I have been well and truly priced out of the Australian housing market. 

Watch: An all-Australian auction. Post continues after video.


Video via YouTube. 

In case you missed it, house prices across the nation - but particularly in Greater Sydney where I live - have outrun inflation rates and increased by 550 per cent since the early 1990s. 

To translate that into dollars, a house that cost $200,000 to buy 20 years ago now costs $1.3 million.

And while that seems like a fantastical and unrealistic growth, it's exactly what I'm seeing on the streets. 

In the last month alone, I inspected three two-bedroom apartments of varying levels of grossness and at the top of my budget, and all three of them sold at auction for $250,000 more than their listed price.

None of them had a garage or parking spot. None of them had aircon or ceiling fans. None of them had dishwashers.

But don't worry, they did have unique features of their own: 

One of them had a missing window. One building had a Soviet-era-esque wooden elevator. And one had toxic black mould. 

All of them sold for over $1 million. 

A wooden lift, a questionable cooker and a v. drafty window, OH MY. Image: Supplied + Mamamia.  

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So how have things gotten so out of control? 

Well, according to ABC TV’s Four Cornersa rather unhealthy mix of increasing demand, low interest rates, and 'panic buying', as first-home buyers are terrified that if they don't buy right now, then they'll miss their chance of ever getting onto the ladder that's running away from them. 

And for chumps like me who thought that one of the silver linings of the COVID pandemic could have been a lull, or perhaps even a burst of the Sydney property price bubble, well... we know how that ended:

With prices going up even more. 

House tours went virtual, auctions moved online, but still homes were flying off the shelves. 

Eliza Owen, head of research at CoreLogic Australia, states: "Australia-wide housing price have increased by 60 per cent in the last 12 months - and that's the strongest annual growth rate we've seen in about 31 years."

That means that a hell of a lot of properties that I may have just been able to scrape the cash together for last year, have shot up in price by nearly half a million dollars. And while I'm bloody good at saving, there's no way in hell I would be able to save six times my entire salary in one year.

It's physically impossible.

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...Yes, even if I cut avocado on toast out of my diet. 

In between lockdowns I went to a few in-person inspections in 2020 and I was stunned. Not by the calibre of property I was seeing - that certainly wasn't the case. But instead, by the fact that any home listed for under $1 million drummed up queues of 50 to 100 people all equally filled with hope that this could be the property that got them on to the ladder.

About half way up the queue of people viewing a two-bedroom flat in Dulwich Hill. Image: Supplied. 

Of course, this very average two-bedroom flat in Dulwich Hill, in Sydney's Inner West, which was listed for $800,000, sold four days after this inspection for $1.15 million. 

$350,000 more than everyone in that queue was hoping for.  

In June, the Australian Beureu of Statistics put the price of the 'average Aussie dwelling' (combining both houses and units in that mix) as $836,000. Real estate agents within the Four Corners investigation say that now (just five months later) this number is north of $1 million. 

Which is an astounding amount of money. For anyone. Let alone first home buyers trying to claw their way onto the market with no chunky financial asset to trade with.

As a quick and rough breakdown of what that can mean in cash terms for new buyers, a million dollar property may require the following:

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  • $200,000 for a 20 per cent deposit.
  • $40,502 for stamp duty.
  • $3,600 on conveyancing and legal fees.
  • $600 for a building and pest inspection.
  • $2,240 for transfer fees.
  • $600 for home loan application fees.
  • $8,000 for mortgage insurance.

So all up, the hard earned cash you'll need in your bank account before you can buy an 'average Aussie dwelling' is: $255,542.

A number that is certainly not reflective of the 'average Aussie' savings accounts.

...Oh, and then you need to sustain monthly mortgage repayments of around $3,088 for 30 years. Which for me, is until I am 57 years old. Just 10 years shy of retirement. 

And before you ask, with a million dollar price tag (the average cost of an Aussie dwelling) you are not entitled to any grants or government support. No first-home buyer grants. No stamp duty waivers. No help at all.

Listen to the latest episode of Mamamia Out Loud right here. Post continues after podcast.

So, how first home buyers getting on the market?

Well, it seems that the only way in is to pay "way over the odds" with significant support from their families. Whether that's by getting lump sum from a family member, or moving back in with your parents or in-laws for over a year to furiously save money for a deposit.

The other popular, and rather saddening 'way in' is with inheritance. 

"Saving as hard as you can to get into the market doesn't tend to matter anymore," explains Eliza Owen in the Four Corners investigation. "It's more about who your parents are and what kind of wealth they have in their home."

Adrian Pisarski, the Executive Officer at National Shelter, backs this theory up.

"Only the children of people who already have wealth will be able to be homeowners. People who come from poorer backgrounds won't. It's really become a class divide."

And that divide is one that will only continue to widen.

With house prices now increasing at a rate of $5600 a week, even if by some miracle first-home buyers are able to scrimp, save and borrow to buy that million dollar home, by March next year the 'average Aussie dwelling' is set to have a $1.1 million price tag instead. A worrying sign that the race to get onto the property ladder is only getting faster and faster.

A race I know I will lose. 

Feature Image: Getty + Supplied.

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