You’d be hard pressed to escape a weekend BBQ without the conversation being directed to “the price of proprty these days”. Afterall, navigating, and talking about, the ups and downs of the state of the property market is an Aussie sport.
There’s no doubt household budgets across the country are being stretched to accommodate increased interest rates and growing property prices but just how do current market conditions really compare to previous generations?
Here’s a summary of how the housing market has changed in just three decades – from 1994 to today:
In August of 1994, the average house price in capital cities was $133,363. Fast forward to August 2024 and that average was $997,352. An increase of 748%. At the same time, the average unit price in capital cities rose from $134,614 to $679,849 – an increase of 505%.
Based on average property prices, a 20% deposit for a house in 1994 was $26,673, compared to $199,470 in 2024. For a unit, this has moved from $26,923 in 1994 to $135,970 in 2024.
Interest rates were higher in 1994, and in 1995 they hit a peak of 10.5% with the average interest rate on an existing home loan sitting at approximately 8.75% p.a.. In June 2024 this was 6.4% p.a..
While there has been a significant increase in property prices, so to have incomes, just not quite at the same rate. This gives you an indication of how long it may have taken to save a deposit and how much of the household income was directed toward loan repayments.
In May 1994, the average annual income was $32,032 or $616 per week. In 2024 the average was $99,996 for 12 months or $1,923 weekly. That’s a 312% change.
Based on this data, approximately 43 weeks of income was needed in 1994 to save for a house, compared to, almost three times as much, now at 104 weeks in 2024. And once the house was purchased, around 31% of the weekly income went toward the loan repayments in 1994. In 2024, this number was 59%.
Looking at units, around 44 weeks of income would pay for a 20% deposit in 1994. In 2024 it was 71. In 1994, 32% of the weekly income went towards loan repayment compared to 41% in 2024.
In 1994, mortgage broking had just started in Australia. Today, an incredible 70%+ of borrowers choose to find a better home loan through a broker. And it isn’t just home loans they can help with. The number of businesses choosing specialist commercial finance brokers over going to the bank direct is also on the rise. After all, it pays to work with a professional who is across your home, business and personal finance situation and needs.
The team at GFG are experienced ex-bankers who help borrowers of all types from first home buyers to landlords to small business owners and experienced commercial property investors. We’ve got the lending knowledge, track record and established banking relationships to find a better finance option for you.
Contact your Green Team finance broker today and we’ll help you to:
We have offices from Brisbane to Darwin and work with clients based in all states of Australia. Don’t just take our word for it, check out what our clients have to say with over 400 five-star google reviews and counting – click here.
Published: 16.10.24
THE FINEPRINT: The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. While all care and attention are taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances.
Green Finance Group Pty Ltd ACN 145 035 221 is authorised under LMG Broker Services Pty Ltd ACN 632 405 504 Australian Credit Licence 517192.
