Impact of High Population Density on Unit Value Growth in Australia

Impact of High Population Density on Unit Value Growth in Australia

By: Nfinity Financials0 comments

Recent findings from CoreLogic, show a clear pattern in Australia’s real estate market: places with lots of people living close together tend to see slower increases in the value of apartments compared to less crowded areas. CoreLogic’s latest Property Pulse pointed out the close link between population density and changes in property values.

Experts have noticed that in areas with many apartments close together, property values tend to rise more slowly. This isn’t just a recent trend; it’s been happening over the last ten years.They believe the slow growth in these areas might stem from the frequent construction of new apartments, which can restrain rapid price increases. In fact, in sixteen of the top twenty most crowded areas, the increase in apartment values each year has been smaller than the average increase across the larger cities.

Interestingly, although areas with a lot of people living close together tend to see slower increases in apartment prices, this doesn’t seem to affect the prices of houses in the same way. Over the past year and even the last decade, there hasn’t been a clear connection between how crowded an area is and how much house prices grow. Experts also point out that in these crowded areas, rent prices for apartments have gone up a bit more. This suggests that the relationship between how many people want to rent, how many houses and apartments are available, and how prices change is quite complex.

The issue of slow growth in apartment prices is happening during a wider problem with housing affordability. CoreLogic discovered that with the average Australian family making $100,244 a year, they could afford a home costing about $503,000 if they spent 30% of their income on mortgage payments at the current interest rate of 6.3%. However, this amount is much less than the actual cost of most homes. Right now, the average price for an apartment is $640,000, and for a house, it’s $834,000. This shows that many homes are priced out of reach for average families.

Only 17.4% of homes are priced below $503,000, which is what the average family can afford if they spend 30% of their income on mortgage payments. If families were to spend 40% of their income on their mortgage, they could afford homes priced up to $670,000. This would make 37% of homes affordable to them. However, even with this higher budget, there’s still a big difference between what the average family can afford and the average home price in Australia, which is $773,000.

CoreLogic’s findings show major issues in the housing market, like managing population growth, the number of available homes, and keeping housing affordable. As more people move to cities in Australia, it’s important for government officials, builders, and homebuyers to understand these challenges. This knowledge will help them make smart decisions about real estate and city development.

For more detailed insights and guidance on the complexities of the Australian housing market, consider Nfinity Financials. You can Read our article and also book a consultation call at 1300 GET LOAN! So, why wait?

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