Conversely, first time buyers would be giddy with delight to read such headlines as home ownership becomes increasingly out of reach.
But what goes up must come down right? Seemingly not always.
From a policy perspective, the first home buyer concessions and incentives designed to help Aussies enter a pricey property market are often blamed for falsely inflating prices.
The underlying supply and demand fundamentals can’t be fooled. Prices rise when there are too few houses for too many Aussies, fuelling arguments to build more homes.
So should pollies back policies which inflate or lower house prices?
In an interesting analysis from CoreLogic, their head of research Eliza Owen takes a frank and fearless look at whether or not it’s in Australia’s best interest for prices to continue a relentless rise.
Her conclusion? A price drop ain’t such a bad thing.
Even with a price drop of 30 per cent – which is pretty much unheard of – only one in 10 Aussie mortgage holders would be in a negative equity situation. This means their loan would be worth more than the value of their house.
“But the alternative…runaway prices, deepening inequality, and falling ownership rates – could prove more damaging in the long run,” she writes.
“As a nation, we can’t keep kicking the can down the road on housing affordability. Concessions and incentives for first home buyers might provide a sugar hit to home ownership numbers in the short term, but they do nothing for the long-term viability of home ownership as affordable and attainable.”
If the economics of the housing market floats your boat, it’s a good read. Check it out on the CoreLogic website.
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