In Australia, Sydney’s housing market shows no signs of slowing. Skyrocketing prices have propelled it into one of the least affordable cities in the world. And researchers said they already seeing the consequences from market fueled by property investors.
CCTV’s Greg Navarro has more.
Australia housing boom creates difficult market for youngIn Australia, Sydney’s housing market shows no signs of slowing. Skyrocketing prices have propelled it into one of the least affordable cities in the world. And researchers said they already seeing the consequences from market fueled by property investors. CCTV’s Greg Navarro has more.
Chinese university student Ruiqun Miao is well on his way to reaching one of his goals, to become a language teacher in Australia.
“I am learning Spanish, so for me I can communicate with people from Spain in Australia and people from Latin America,” Miao said.
The 19-year old’s second goal is becoming increasingly unattainable, to one day move from being a renter in Sydney to a homeowner.
“Every time I talked about buying a house with my mom, I think it’s just a big problem, it is a problem because it’s going to be very expensive, even more expensive in a few years,” Miao said.
Housing prices have jumped in Australia’s biggest city by 60 percent in the past 5 years. That’s not only impacting a market boasting million dollar views, but also modest properties. Sydney’s median housing price has surged past the $1000 mark.
“The prices that are being demanded at the moment are stretching people, there are whole segments of the community that are being locked out of home ownership,” University of New South Wales Research Associate Laurence Troy said.
Record low interest rates have prompted a spike in home loans.
More than half of those loans have gone to property investors looking to capitalize on a red hot market.
“It’s a dysfunctional system, the emphasis on building wealth rather than building shelter is a fundamental problem,” The Tenants Union of New South Wales Senior Policy Officer Ned Cutcher said.
The Tenants Union of New South Wales has seen a jump in the number of people renting homes, especially among middle income families.
“I think a lot of people have given up on the idea of ever owning a home which is a pretty big deal for an Australian, from an Australian perspective, we are a nation of home owners,” Cutcher said.
Experts one of the biggest factors fueling Sydney’s housing market, more than a lack of supply, is tax concessions for investors, which essentially offset any losses on rental properties.
There’s another impact from Australia’s current tax laws regarding property investment and that’s an alarming number of vacant homes like this one. It’s estimated there are now more than 110,000 in the greater Sydney area.
“The way that the tax system treats those capital increases you can invest in a property, leave it vacant for number of years and still come out making a profit,” Troy said.
Many experts believe Sydney’s current housing prices trend is unsustainable. But they said until the price bubble bursts, the dream of one day owning a home for an increasing number of people here, including Ruiqun Miao, is slipping further away.
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