Property shock: 1 in 3 Aussies couldn't afford to buy their home today

Ceyda Erem   |   18 Sep 2018

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There are some things that make the good old days hard to forget - big hair, how far $2 got you at the school canteen, or apparently, being able to afford your first home.

According to recent Mozo research, 35% of Aussies homeowners would not be able to afford the property they own now if they were to try to buy it today, thanks to skyrocketing property prices.

Unsurprisingly, Sydney and Melbourne have seen the biggest price increases, with prices jumping by 105% and 93.5%, respectively.

“A whopping 40% of Australians purchased their home between 2011-2018, while a further 28% purchased property between 2001 - 2010. This period signifies an unforgettable time in Australian property history where prices rose at an alarming rate, auctions ran red hot and properties sold for prices that economists could have never predicted,” said Mozo property expert, Steve Jovcevski.

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And according to Jovcevski, the sky high prices have divided the nation between the lucky ones and those whose luck ran out.

“Staggering increases in house pricing coincided with record low interest rates which further fuelled a property buying frenzy. This has resulted in an Australian housing market that leaves some feeling lucky they got in while they did, but also a large portion of Australians feeling like they missed their opportunity and are now essentially locked out of the property market.”

The research also found that a massive 95% of Aussies have no regrets buying their property, and for good reason, as one in 5 homeowners estimate that their home has increased in value by $151,000 - $330,000 since purchasing.

And while it’s good news for current homeowners, Jovcevski predicts that with the change in lending criteria, there’s no turning back for the Aussie property market.

“Australian property prices have risen by over 600% over the past 30 years while national incomes have failed to keep up. While the housing market has certainly cooled in major metro areas such as Sydney and Melbourne, there’s no way that prices will be dropping back to the price ranges before the property boom,” he said.

“With the introduction of stricter lending criteria, stagnant wage growth and largely unattainable house prices, the Australian property market is now essentially broken for many hopeful property owners looking to make their first purchase.”

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And with the change in lending criteria and rising interest rates, Aussies who purchased their dream home years ago are now unable to refinance.

However Jovcevski said that if you are finding it tough to refinance your mortgage, there are other ways to mend your uncompetitive rate.

“If you’re finding yourself ‘stuck’ with your bank, consider other ways to improve an uncompetitive rate. Whether it’s contacting your existing lender and pushing hard for a lower rate or talking to a non-bank lender that may be willing to take you on as a borrower, there may be ways to slash thousands off the cost of your loan,” he said.

If you are one of the lucky Aussies about to buy your dream property, head over to our home loan comparison tool to find a good deal. And if you’re in the market to refinance, see if there are better options around for you using our Switch and Save calculator.

5 home loan offers - rates updated daily

  • Essentials Variable 80

    Owner Occupier, Principal & Interest

    3.64% p.a. variable

    3.66% p.a.

    A low-rate home loan that could save you thousands. No monthly or ongoing fees. Unlimited additional repayments. Unlimited free redraws with no minimum redraw amount

    • 3.64% p.a. variable

    • 3.66% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $50,000

    • $2,000,000

    • Variable

    • Principal & Interest

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    • Weekly, Fortnightly, Monthly

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  • Base Variable Rate Home Loan Special Offer

    Owner Occupier, Principal & Interest

    3.69% p.a. variable

    3.73% p.a.

    $1,250 BONUS WITH AN ELIGIBLE NAB HOME LOAN BANKING BUNDLE*. Low ongoing rate. Free extra repayments and redraw facility. Only 5% deposit and no annual or monthly fees.

    • 3.69% p.a. variable

    • 3.73% p.a.

    • $600

    • $0.00

    • $350.00

    • yes - free

    • yes

    • no

    • 95.00%

    • $20,000

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    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

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  • UHomeLoan - Discount Offer

    Owner Occupier, Principal & Interest

    3.59% p.a. variable

    3.59% p.a.

    A low rate Home Loan with no bank fees on variable rate loans. Easy & fast to apply. Choose between flexible repayments and make extra repayments for free on a variable rate home loan.

    • 3.59% p.a. variable

    • 3.59% p.a.

    • $0

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    • yes - free

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    • 80.00%

    • $200,000

    • $699,999

    • Variable

    • Principal & Interest

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    • Weekly, Fortnightly, Monthly

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  • Discounted Home Value Loan

    Owner Occupier, Principal & Interest

    3.64% p.a. variable

    3.66% p.a.

    Discounted rate for the life of the loan. A relationship manager to help you through the application process.

    • 3.64% p.a. variable

    • 3.66% p.a.

    • $150

    • $0.00

    • $300.00

    • yes - free

    • yes - free online

    • no

    • 90.00%

    • $50,000

    • $7,500,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

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*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

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