The term ‘housing bubble’ keeps popping up in the media, but what does it really mean and what does it signify for South Australian homeowners?
The concept of a ‘housing bubble’ is used to explain a significant increase in housing prices and suggests that those prices have been overvalued. Australian house prices have been continually rising relative to income and rental costs, with an increase of around 3% every year since the 1970s, and 6% per year since the 1990s.
With the low interest rates we have seen over recent years, more borrowers have been motivated to enter the housing market, fuelling the demand for houses.
What does this mean for home owners in South Australia?
Adelaide remains one of the best places in Australia to get into the property market. The market has been relatively steady over a number of years now and avoided the extreme peaks and troughs experienced by many other state capital cities. At the same time, Adelaide continues to have one of the lowest median house prices for a state capital city in the country and has the highest level of first home buyer activity.
Adelaide’s median house price for the first 2014 quarter was $410,399, a 4.43 per cent increase for the year, while home values across the state remain at $375,000, up 3.59 per cent on this time last year, according to figures from the Valuer General.
Steadier market conditions, along with government concessions, such as the First Home Owners Grant for those who are looking to build, are great incentives to get more people into the housing market sooner.
What are we actually seeing with potential buyers?
HomeStart put together a Home Truths survey to provide an annual snapshot of the views of 18 to 40 year old non-home owners.
Key findings from the survey of 500 South Australians included:
- 62% still considered home ownership to be of great importance
- 57% of respondents indicated that owning a home was part of a secure financial future
- 21% of respondents felt they would never own their home outright
The research revealed that the top three challenges to home ownership are the rising cost of living, current personal income levels and the difficulty in saving a deposit.
So, what about me?
Owning your own home is a long-term investment and will provide future financial security despite any short term fluctuations in the market. And it should not be forgotten that on top of this, home ownership provides important social benefits – a sense of community, belonging and the pride of owning your own space.