It's been an uphill battle for first home buyers trying to get into the property market and now a sobering report from real estate professionals says most Australians may never achieve home ownership.
Australia's property market boom shows no signs of slowing, with this week's CoreLogic data showing Sydney house prices surged 3% in May - the equivalent of $30,000 on the average home in May.
Now, a report from the Australian Property Institute (API) and The Search People says professional property valuers believe property prices will continue to surge, locking more Australians out of the housing market.
The survey of 600 property valuers across Australia found 63% expect house prices in Sydney, Melbourne, Brisbane, Adelaide and Perth to continue rising over the next six months.
“The majority of property valuers surveyed predict a continued positive growth story for property values in the short to medium term,” Rafe Berding, CEO of The Search People said of the findings.
“Whilst most respondents believe a continued boom is set for the Australia property sector, 59% of respondents also believe that Australia is currently witnessing the makings of a property bubble.”
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The report also found more than half (57%) of valuation experts believe the Great Australian Dream of home ownership is now "unaffordable to the average Australian".
More than half (55%) of property valuers also believe Australians are overcapitalising when it comes to purchasing property.
"A combination of record low interest rates and buyer’s uncertainty of investing in other alternatives is fueling high-demand," Mr Berding said.
"This coupled with low supply is driving a ‘fear of missing out’ (FOMO) for many buyers.
"As a result, properties are being snapped up significantly above the asking price within moments of being listed”.
API CEO Amelia Hodge said the property market was "firing on all cylinders" and that real estate professionals were struggling to keep up with the demand.
“With record low interest rates, we’re seeing more and more buyers entering the market,” Ms Hodge said.
“This is great news for Australians selling property, especially with values on the rise in most sectors and selling times decreasing across most capital cities.”
Almost half (47%) of property valuers surveyed said they believe Australians should be allowed to access their superannuation to buy a home.
Sydney's median property price rapidly approaching $1m as house price boom rolls on
Data from property research firm CoreLogic released on Tuesday found that Australia's property market boom rolls on, with Sydney values recording the largest capital gain over the last three months.
Sydney property prices surged 3.0% in May, and 9.3% over the last three months.
The median value of Sydney property (including houses and units) is now $970,355.
The median house price has already reached $1.186 million, while the median unit price isn't far behind at $782,000.
Overall, national home values rose 2.2% in May according to CoreLogic.
May's bump in house prices was stronger than the 1.8% spike in April, but less than the 32-year high recorded in March when national property values surged 2.8%.
CoreLogic research director Tim Lawless said no matter where you were in Australia, property values lifted.
“Values were up by more than 1% across every capital city over the month, with both house and unit values lifting across the board," Mr Lawless said.
"Such a synchronised upswing is an absolute rarity across Australia’s diverse array of housing markets.”
Tighter lending standards to come?
With house prices surging, big four bank Westpac has said moves to tighten lending standards could come earlier than expected.
"We still see prudential policy staying on hold this year but with prices surging more strongly than expected a move to tighten conditions now looks set to come through a bit earlier than we previously thought, most likely in the first half of 2022," the bank said in its Housing Pulse for May 2021.
The predictions come off the back of "the first rumblings of a shift in prudential policy" from the Reserve Bank.
"Most notably, the RBA has shifted its rhetoric on housing in its monetary policy decision statement," Westpac said.
"Whereas in April we had a general comment – 'Lending standards remain sound and it is important that they remain so in an environment of rising housing prices and low interest rates' – May indicated a clearer move into ‘watching closely’ mode – 'Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.'"
It comes after recent data from the Australian Bureau of Statistics (ABS) found investors are flooding back into the market, driven by the prospect of capital gains as house prices surge.
Investor loan approvals were up 12.7% to $7.8 billion in March, accounting for more than half the month's gains.
Noting the sharp rise in investor lending, Mr Lawless said there is a "strong chance" the Australian Prudential Regulation Authority (APRA) could intervene if lending standards worsen.
"We know from previous rounds of macroprudential policy, tighter credit conditions would likely have an immediate dampening effect on housing market conditions," Mr Lawless said.
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