House prices break records as rent unaffordably high

7NEWS

4 days ago

After years of rent rises and blocks of land priced out of reach, aspiring home owner Matthew David looked to the sky.
The 31-year-old sales worker from Melbourne had dreams of buying a house, but adjusted his expectations to focus on buying an apartment instead.
'It would have been great to have a house, but look, as a single it was just completely unattainable,' he said.
'Apartment living was realistically all that was going to be within aspiration for me.'
It's an increasingly common story across Australian cities, with June-quarter data from real estate portal Domain showing all eight capitals had simultaneous house price growth for the first time in four years.
Sydney's median house price soared to a record high $1.7 million, while Brisbane, Adelaide and Melbourne medians are above $1 million, according to Domain, and Perth's median house price grew above $950,000.
Unit prices experienced their strongest quarterly growth in two years, jumping to a national median price of $689,588 and record highs in four capital cities in the Domain data for the June quarter.
Unaffordably high rent was the catalyst for David knuckling down to save for his apartment, with his previous one-bedroom rental jumping to almost $500 a week.
'What I was paying in rent plus what I was saving was actually less than what the mortgage repayments were going to be,' he said.
Limited housing supply is driving prices higher, Domain research and economics chief Nicola Powell says, with the market continuing to outperform expectations despite cost-of-living pressures and economic uncertainty.
'We're still not building fast enough to meet population growth,' she said.
'Without a substantial boost in new housing, price pressures will remain, regardless of further rate cuts.'
Rental supply is a major concern, with property analyst Cotality observing the number of listings is about one-quarter less than the five-year average.
Rents rose 1.3 per cent nationally over the June quarter and remain unaffordable for many tenants, according to the company's economist Kaytlin Ezzy.
'While the moderation in the pace of rental growth is welcome news to many tenants, rents are still increasing,' she said.
Rents have jumped more than 40 per cent in the past five years to reach a national average of $665 per week according to Cotality.
That equates to almost $200 more per week and more than $10,000 a year and is well below the 15 per cent rise in average wages during the same five-year period.
Many home buyers are also under the pump, according to Roy Morgan research showing mortgage stress affecting more than 28 per cent of households in the June quarter.
This figure is higher than when the Reserve Bank started cutting rates in February, which Roy Morgan attributes to increased borrowing by purchasers and larger amounts owing on homes overall.