House prices in Sydney are not unaffordable, according to the Treasurer, and should continue to keep rising.
Speaking at a press conference yesterday, Treasurer Joe Hockey admitted Sydney house prices are expensive, but refused to admit they were unaffordable.
“Look, if housing were unaffordable in Sydney, no one would be buying it. People are purchasing housing in Sydney, it’s expensive. As a multiple of average weekly earnings it is expensive, it’s an expensive city to live in,” he said.
According to the latest housing data from CoreLogic RP Data, house prices have surged 15% in Sydney over the year to May. However, the Treasurer says he hopes prices continue to rise.
“…you know a lot of people would much rather have their homes go up in value than fall in value. Why? Because when you take out a mortgage, the mortgage is against the assessed value of that particular point in time, whatever’s leftover is your equity in the property.
“If your equity builds in the property not only is that to your financial benefit, but it also gives you the opportunity to borrow against that if you choose to do so for a small business.”
When asked about first home buyers, who are still struggling to get onto the property ladder, Hockey’s advice was to go out, get a good job and take advantage of cheap credit.
“The starting point for a first home buyer is to get a good job that pays good money. If you’ve got a good job and it pays good money and you have security in relation to that job, then you can go to the bank and you can borrow money and that’s readily affordable. More affordable than ever to borrow money for a first home now than it has ever been.”
However, the Treasurer did say that the government is encouraging more construction to ease the price burden in Sydney.
“There are a suite of initiatives we have in place in regard to that, but most obviously, the best way to address inflated house prices in Sydney is to build more properties, build more properties.”