First home buyers baulk as average home in Australia passes $1 million

Australia Broadcast Center

16 hours ago

As the average price of a house in Australia passed $1 million, 37-year-old Nick Muldoon could only sigh.
He moved from Melbourne to Perth last year to stay with his partner's family to save for a deposit for their first home — but he feels like the goal posts keep shifting.
"It is also just exhausting, hearing that the prices are going that high is like it makes you feel a little bit sad. Like it, you know that dream is almost like out of reach," Mr Muldoon told the ABC.
"You almost feel like you're disenfranchised a little bit, because especially, you know, everyone was sort of told that they could achieve [home ownership].
According to the Australian Bureau of Statistics the average dwelling in the country has reached $1,002,500 in the March quarter.
That's the first time the average house price in Australia has surpassed $1 million, rising by about 0.7 per cent.
The bureau said that Western Australia, South Australia and Queensland were the key drivers of the rise.
Queensland has now reached the second highest mean price in Australia, behind New South Wales.
The total value of residential dwellings in the country rose by $130.7 billion, about 1.2 per cent, to $11.4 trillion in the March quarter.
Dr Michael Fotheringham from the Australian Housing and Urban Research Institute (AHURI) said this new milestone, while compelling, was just another small shift in what has been a continuing trend of higher house prices in the country.
"It's not a sort of dramatic shift in circumstance … [but] it's sobering to look at that number," Dr Fotheringham told the ABC.
"And when you think about average wages, average household incomes, and compare it to that figure, it does give a real sense of the scale of the challenge we have."
Australia's housing crisis did not spring out of nowhere, Dr Fotheringham said.
Decades of neglect by both sides of politics and governments at all levels was a major factor.
However, he believed the Commonwealth was engaging in housing supply for the first time in long time.
The federal government has targeted to deliver 1.2 million new homes by mid-2029.
Some of the housing policies the Commonwealth pledged at the last election included allowing first home buyers to get into the property market with just a 5 per cent deposit without having to pay lender's mortgage insurance.
The Commonwealth extended their first term policy "Help to Buy" to allow homebuyers to co-buy property with the government.
It also committed $10 billion to facilitate the construction of 100,000 new homes for first home buyers. The policy, Dr Fotheringham said, was the first example of the government getting directly involved in housing supply.
"It takes several years for these programs to really bear fruit. So we won't have huge amounts of new supply suddenly generated between now and Christmas. It's going to take time," he said.
"The good news is that federal and state governments are treating housing as a top order issue these days. It's right up there with health, education and the environment.
With the rise of house prices, some experts such as the Grattan Institute's Matthew Bowes fear inequality will likely continue to grow because housing represents most of the wealth held by Australians.
Home ownership rates have been decreasing for those on the lowest incomes over the last few decades, and that was now increasingly also impacting middle income earners too, Mr Bowes said.
"The main reason that is a problem is because of the role that home ownership plays, both in housing security, because renting is very insecure in Australia, and in wealth creation," Mr Bowes told the ABC.
Mr Bowes said when low to middle income earners were locked out of home ownership, governments at all levels should be ensuring the rental market was both more affordable and secure.
He said those on low incomes were struggling the most with housing costs.
"They're the people who have faced the most dire consequences," he said.
"So I think that focus on the people who are struggling most in the short-term is something that could be brought to Australian housing policy better."
The Australian Bureau of Statistics highlighted Western Australia, South Australia and Queensland as the main drivers of the rise in the average house price in the country.
Dr Fotheringham explained Australia had many housing markets, not one.
Different markets even existed within each state and across a city.
But the consistent pattern across the country was that housing was getting more expensive, and wages were not keeping up.
"For a long time, Sydney has had the most unaffordable housing in the country, and amongst the most unaffordable housing in the world relative to incomes," he said.
Data from Cotality (formerly CoreLogic) for the month of May found that Melbourne, once the second most expensive capital to buy a home, has a median house price lower than every capital city except for Darwin and Hobart.
Aspirational first home buyer Nick Muldoon escaped "the rental trap" in Melbourne in exchange for Perth to save for a deposit with his partner.
He pays about $600 a month for board at his partner's parents' home in Perth.
But Mr Muldoon despairs when he reads that Perth is among the capital cities with the highest growth in prices.
The couple have put off having children until they manage to buy a home.
"We would want to build a family in a house that's our own, that we could build together," he said.