Rising prices behind Australian Dream evolution

by Miklos Bolza20 Jun 2017
Over 60% of Australians believe that the traditional Great Australian Dream of owning a freestanding home with a yard is slipping out of grasp and is only available to the very wealthy.

These figures come from the Evolving Great Australian Dream whitepaper by Mortgage Choice and CoreData which found that 63.2% of Australians said “only people with a lot of money can hope to achieve the Australian Dream”.

This finding is not surprising given the recent divergence of property prices and wage growth, said Mortgage Choice chief executive officer John Flavell.

“According to the Australian Bureau of Statistics’ Wage Price Index, wages grew 12.6% between March 2012 and March 2017.

“Meanwhile, data from CoreLogic found property values across the combined capital cities rose 21.86% over the same time period.”

While it is becoming more challenging for some buyers to enter the property market, Flavell said this remained a key aspiration for Australians.

“Regardless of how difficult property ownership becomes, people still want to own a home. In fact, our research shows people rate ‘home ownership’ as more of a priority than career success, travel, or having a luxurious lifestyle.”

However current market conditions had resulted in the evolution of the Great Australian Dream, he said.

“Traditionally, the Great Australian Dream has been seen as a freestanding house on a quarter acre block in the suburbs. Today however, that dream has evolved to include different types of dwellings, like apartments.”

Figures from the Australian Bureau of Statistics (ABS) found that 52,000 apartments were approved for construction in 2011. This had increased to more than 100,000 in 2016, Flavell said, proving that apartments were becoming increasingly popular amongst Australians.

“And while some buyers are choosing to purchase apartments for the lifestyle options they offer, a lot of people are seeing them as a cheaper way into the market.”

Flavell said that purchasing a cheaper dwelling wasn’t the only way home buyers were using to enter the market.

“From the data, it is clear that Australians are keen to use a variety of purchasing strategies in order to achieve their property ownership goals.”

According to the whitepaper, 31% of Australians reduced their spending to save a deposit, 24% decided to purchase smaller property, and 20% bought property with family or friends. Additionally, 6% had financial assistance from their parents, 5% moved back home, and 3% chose rentvesting.

These strategies meant that Australians were savvy, understanding that it was easier to purchase their dream home with a foot already on the ladder, Flavell said.

“Home buyers understand that the biggest hurdle on the path to purchasing is saving the deposit and taking that initial step into the property market.

“Consequently, they are happy to try new strategies and make adjustments to their financial situation in order to achieve their goals.”

The whitepaper also found that 63% of Australians had tried different savings tricks to improve their financial situation while an additional 23% asked for professional financial advice.

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