Anyone thinking of purchasing a home in Sydney, Australia might need to budget for $1 million or more the end of 2015. According to an article in news.com.au, the median price for a detached home in the city increased by 3.6% during the first three months of this year to cost more than $914,000.
Experts feel that if these increases continue for the rest of the year then house prices will go past the million dollar mark. While this might be good news for homeowners, it’s not so great for others and there are concerns that a lack of affordable housing in Sydney could see an exodus of skilled workers who are able to transplant their talents to any other city or area. Highly trained workers, including teachers, nurses, policemen and fire-fighters would have trouble buying a home in Sydney, but wouldn’t have a problem finding work elsewhere.
A recent article in The Daily Telegraph showed entry level buyers were unlikely to be able to afford anything within fifty kilometers of Sydney’s central business district. It also revealed 45% of purchases in Sydney are by investors. This means thousands of young couples are unable to purchase a home within a reasonable distance from work. The average first time buyer in Australia purchases a property worth $393,000 and has a mortgage of $279,000, but it is quite a different story in Sydney.
The average yearly salary in New South Wales was $77,600 during the last quarter of 2014, so even a two income family would struggle to purchase a property in Sydney. Over the last few years, house prices in Sydney have seen double digit growth, nearly double the rate of the next best performing Australian city which is Melbourne. The latest CoreLogic report showed price increases in Sydney of 14.2% over the past year, while in Melbourne the figure was a far more reasonable sounding 7.4%.
There are calls for the government in New South Wales to take action to help make housing more affordable through encouraging the construction of more new homes which should help to slow down further price increases. Another solution being suggested is that the government should make it easier for builder to actually construct new homes by freeing up the planning system. These measures would go some way towards dealing with the supply problems currently driving up the prices of homes.