Do we have a housing crisis on our hands?

The Australia Security and investments commission have said we are in a “Bubble”. the reserve bank of Australia has admitted that there is a “build-up of risks associated with the housing market”. So how does that translate to your situation?

The Australia housing market is hot hot hot with an average of 11% growth in the capitals. Although most of it comes from Melbourne and Sydney. To purchase a home in today market as opposed to 5 years ago, the average person is forking out 13 times the national median income. So what’s going on here?

There is no doubt that high house prices have made a small fortune for families, but the big players and regulators have their concerns that an overheating market could potentially threaten financial stability. Having one of the world’s highest debt ratios in the household sector and coupled with wages rising at a fraction of what house prices are, we can make an assumption that if salaries or the value of their homes drop, then family and banks will be in trouble. Very similar circumstance that led the to the property crash in Ireland can be seen in Australia’s market.

But let’s not despair, not all of Australia’s cities are the same. If we take a look at Western Australia, and Perth in particular, we can see the housing market fall along with its dependency on mining.

Regulators have tried to slow down the interest only lending or new residential loans. As new apartments come on the market, experts predict that the growth will cool down. If we turn to the banks, one has said that property investment could fall by almost 6% in 2018. But as in a recent blog post we wrote about the homes in the Greater City of Dandenong, most young Australians polled found that the majority of them were concerned they will never be able to own their own place.