Despite property prices soaring more than 20 per cent this year, 18 per cent of Australians expect prices to “skyrocket” further at some point in the next two years, according to new research.
Canstar’s fifth annual Consumer Pulse Report also showed 44 per cent of Aussies expect house prices to continue to grow at a steady pace, while 12 per cent believe they will remain at current levels.
Only 7 per cent believe they will gradually ease and 4 per cent tip a crash at some stage.
Canstar Group Executive Financial Services, Steve Mickenbecker, said higher property prices and low interest rates had been a boon for homeowners, who estimate they now have, on average, $312,973 in home equity.
“Rising property values are bad news for first-home buyers, but existing property owners are reveling in a home equity surge,” he said.
“Homeowners in NSW have seen the biggest increase, lifting home equity to $407,299, followed by Victorian homeowners with $312,578.”
The data also showed that homeowners with a mortgage are repaying their loan at an average interest rate of 2.9 per cent, which is down from 3.65 per cent in 2020.
But two-thirds haven’t negotiated a better deal with their lender in the past year and 87 per cent haven’t switched lenders to secure a lower interest rate.
“This means they could potentially be paying a ‘lethargy tax’ and missing out on an easy opportunity to potentially save money on their mortgage,” the report said.
The data also shows that 73 per cent of Australians now live in houses, compared to 66 per cent in 2020.
The pandemic spurred a shift in how people live and many people opted to upsize their homes in 2021.
This trend was significantly higher for families, with the preference for houses increasing from 57 per cent in 2020 to 71 per cent in 2021.
Mr Mickenbecker said the report also showed Gen Z is perceived as finding it the hardest to buy a home (37 per cent) while Baby Boomers were viewed as having it the easiest (7 per cent).
Canstar analysis shows the median home in 1980 cost just $43,014, with a debt-to-income ratio of 2.6, while in 2021 that blew out to a median house price of $744,688 and a debt-to-income ratio of 6.6.
“Canstar’s results show that younger Australians are perceived as being the most hard done by when it comes to buying their first home, though I suspect the debate will continue to rage for generations to come,” Mr Mickenbecker said.
“Runaway house prices in 2021 are making the task of putting together a deposit less attainable for first-home buyers.
“In introducing higher capital requirements for banks, APRA will be hoping to slow housing price growth, but with banks already charging higher interest rates for investment, it may not be enough.
“If the Australian dream of home ownership is to survive this decade we need to slow investment lending by easing the brakes on now.
“If next year is another year like 2021, there will be a need to slam on the brakes.”
The Canstar report reveals the nation’s biggest financial pain points, state of savings and property market outlook for the year ahead with opinions from more than 2000 Australian adults.
Other key findings
Cost of living
- The top financial concerns for 2022 are the price of groceries (14 per cent), petrol prices (11 per cent) and the cost of rent (10 per cent).
- Australians reportedly spend, on average, $174 per week on groceries and 51 per cent say that has increased in the past year.
- National rents rose 8.9 per cent, year-on-year, which is the fastest annual growth rate since July 2008.
- Household expenditure rose 3 per cent in the year to the September quarter.
- Australians’ average quarterly electricity bill is $355 and $234 for gas.
- 66 per cent of Australians say they are living within their means.
- More than one-quarter (29 per cent) of Australians have a debt outside their mortgage.
- Of those with debt, the average amount owed is $46,020 per person, which has risen by 52 per cent, or $15,832, from last year.
- Millennials have overtaken Gen Z as the most debt-saddled generation, with more than a third (35 per cent) of this demographic carrying debt outside of a mortgage.
- Indebted Millennials carry an average personal debt of $56,772, which is $10,752 higher than the national average.
- Half of those Australians with a debt outside their mortgage have credit card debt, but this is down from 67 per cent in 2019 and 56 per cent in 2020.
- 29 per cent of Australians dipped into their savings in 2021.
- 16 per cent said they are saving more and 25 per cent said they are saving the same.
- 10 per cent of Australians have reduced their debt and 14 per cent have more debt than a year ago.
- Savers put aside an average of $671 per month.
- The median amount Australians have saved and invested outside of superannuation and property is $5000, plunging from $15,000 in 2020.
- The median amount males have saved and invested is $10,000, down from $22,000 in 2020.
- For females, the median amount saved and invested is currently $3500, down from $10,000 in 2020.
- Aussies said the main thing they are saving for is living costs such as groceries or bills (15 per cent), followed by a ‘rainy day’ buffer (13 per cent) and a holiday (11 per cent).
- 53 per cent of Aussies keep their savings in a savings account, followed by a transaction account (16 per cent), cash (8 per cent), offset account (6 per cent), term deposit (5 per cent), invested (3 per cent) and salary sacrifice (2 per cent).