The average house price in Sydney has broken the $600,000 mark in September 2009 for the first time.
This increase augurs well for existing home owners who have bought into the property market in earlier years and this new equity will allow them to upgrade into more expensive dwellings.
However, this news is not good for those who are trying to get into the property market for the first time when interest rates are on the way up as the First Home Owner’s Grant is being wound back.
Factors which are driving prices up include an acute shortage of new dwellings being built. Nationally, new dwellings have decreased from 173,000 in 2002 to 124,000 in 2009. At the same time, net migration into Sydney has increased. Another factor contributing to price increases is strong investment demand from Chinese investors. Reports have shown real estate agents in both Sydney and Melbourne taking on Mandarin speaking agents to cater for a surge of buyers from China. Record low interest rates and the FHOG over the last year have also supported the property market to a large extent.
The unfortunate truth to this price rise phenomena is that established home owners will continue to become better-off while those who are trying to get into the property market will be forced to move further away from suburbs which are close to Australia’s capital cities.
Granted there are those who prefer to stay away from the urban areas and enjoy a more relaxed and laid back lifestyle. However, the reality of a much higher concentration of job opportunities means that many who work in our capital cities have no choice but to either pay higher rents, juggle a huge mortgage with the family budget or forced to commute longer distances often with longer traveling time and having gradually less time for family and friends.