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Property prices hit new record high as home ownership slips ‘out of reach’

Australian housing prices have bounced back to hit record levels, as the staggering salary required to comfortably buy a house is revealed.

It’s good news for homeowners and bad news for those looking to get into the property market, with home prices reaching a new record high in November.

Australian home values have regained the losses from the recent market downturn and have now surpassed their previous peak to hit a new record high, according to CoreLogic's national Home Value Index.

CoreLogic executive research director Tim Lawless said this ‘V’-shaped recovery may seem counter intuitive, given households were struggling with high interest rates, cost-of-living pressures and low consumer sentiment.

Property prices
Getting onto the property ladder is now even tougher, with home values surpassing their previous peak and hitting a record high. (Source: Getty)

Are you struggling to get onto the property ladder? Contact tamika.seeto@yahooinc.com

“However, the recovery can be explained by an imbalance between supply and demand,” Lawless said.

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“From a supply perspective, advertised stock levels have held remarkably low through 2023. … Listings remain 16.6 per cent below the previous five-year average nationally.

“At the same time, demonstrated demand, based on the volume of homes sales, is trending roughly in line with the five-year average."

After reaching a peak in April 2022, national home values fell 7.5 per cent, bottoming out in January 2023. Since then, values have risen 8.1 per cent to hit the record high.

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More areas to reach record highs

While the national index has reached a new high, prices are patchy for some areas.

Perth, Adelaide and Brisbane are all at record highs for the capital cities. On the other end of the scale, Hobart values remain 11.8 per cent below their peak. Sydney and Melbourne are also still below their peak, down 1.8 and 3.6 per cent, respectively.

But, as values continue to trend higher across most regions, Lawless predicts we’re likely to see more areas return to record highs.

“While this is great news for homeowners, for those looking to buy, affordability pressures are becoming more pressing amid rising values, high interest rates and worsening serviceability challenges,” he said.

"The good news for prospective buyers is that the pace of growth is clearly easing in some markets as advertised stock levels rise and purchasing demand remains fragile."

SQM Research this week forecast property prices would decline across most capitals next year, including a drop of up to 4 per cent for Sydney and 3 per cent for Melbourne. Perth and Brisbane were the only cities expected to record price rises.

Home ownership ‘slipping out of reach’

Recent research by Suburbtrends found Aussie households now needed to earn more than $300,000 a year to comfortably afford to buy a home.

The research was based on the median multiple, which is a global standard for housing affordability and compares the median house price to the median annual household income.

According to Suburbtrends, Aussies currently have to pay more than nine times the average annual income to buy the average house. This is way above what is considered affordable.

“To reach the 'affordable' median multiple of 3.0, Australian families need an average income of $301,769,” Suburbtrends chief analyst Kent Lardner said.

This soars for more expensive areas, with Sydney’s Northern Beaches households needing a staggering $600,000 per year to meet the median multiple. Meanwhile, in the city’s outer west and Blue Mountains, this drops to $283,333 per year.

“This isn't merely about numbers, it's about the erosion of the Australian dream. Home ownership is slipping out of reach for average earners,” Lardner said.

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