Property market in Australia: how much do you know?

From capital growth, or snagging the best mortgage rate, to managing household debt, research indicates that most Australians don’t really understand the property market or their individual circumstances as well as they should.

Property investment is about long-term results

While Sydney has recorded strong capital growth over the past five years, its long-term performance pales in comparison to smaller capitals, according to the latest analysis by the Property Investment Professionals of Australia (PIPA).

PIPA — which analysed data from the 2002-2017 Australia Bureau of Statistics Established House Price Index — showed that in terms of capital city house price growth, Sydney finished dead last.

The Harbour City’s house price index has increased a mere 142% over the past 15 years, compared to first-place Hobart, which recorded growth of 220% over the same period. Melbourne came in second (208%), Darwin third (161%), and Brisbane fourth (160%).

This research reinforces the notion that successful property investment is all about long-term results, rather than short-term gains. Educated investors understand the importance of time in the market, not trying to time the market, which is essentially just speculation by another name.

The majority of Australians are unaware of their mortgage rate

An overwhelming majority of borrowers do not know their home loan rate, with 86 per cent of Australians also unaware of their monthly expenses, a new study has revealed.

The Know Your Number Index, commissioned by digital bank UBank, examined Australians’ knowledge of their household and entertainment expenses. According to the data, NSW and ACT residents were least likely to know their mortgage rates (15%),

While there was a slight improvement on last year, there are still too many Aussies out there who don’t know their mortgage rate. Further, 59% of Australians claimed that their current financial situation has caused them stress or loss of sleep, with 44% noting that they’re “constantly worried” about their financial future.

We encourage borrowers to do their research and stay on top of their mortgage rate; this is one of the great benefits of using a mortgage broker who can ensure you get a deal that best suits your needs and takes into account your circumstances. With only 28% of Australians stating that they use budgeting tools, the importance of household budgeting must be noted for its role in minimising stress and supporting a balanced lifestyle.

With the latest data from the Bureau of Statistics uncovering that the cost of living in Australia rose by 2% last year and is the strongest pace growth we’ve experienced in three and a half, it’s never been more important to know your numbers.

Having your finances sorted is an important part of maintaining a balanced lifestyle, and unfortunately too many Australians are experiencing the effects of not truly understanding their finances.

The Reserve Bank of Australia keeps calm on debt, but is closely watching Interest Only loans

The average household mortgage debt-to-income ratio rose to around 140% at the end of 2017 from around 120% in 2012. Despite that figure, the RBA doesn’t appear to be ringing any alarm bells.

“While debt levels are relatively high, and there are owner-occupier households that are experiencing some financial stress, this group is not currently growing rapidly,” said RBA Assistant Governor, Michele Bullock, during a speech at Informa’s Responsible Lending and Borrowing Summit in Sydney on Tuesday the 20th of  February.

“This suggests that the risks to financial institutions and financial stability more broadly from household mortgage stress are not particularly acute at the moment.”

Bullock said the rise in mortgage debt-to-income is “not really surprising” given historically low interest rates that have allowed households to service higher levels of debt. One area Bullock highlighted was the potential for investor lending to raise macro-financial risks.

In 2014/15, around 11% of the adult population, or just over two million people, had at least one investment property and around 80% of those were geared, according to ATO data. Most of those investors own just one investment property but an increasing number own multiple properties. There has also been a marked increase in the share of geared housing investors who are over 60.

“These factors do not necessarily increase the risk of financial stress but they bear watching,” Bullock said.

In conclusion, Bullock states that while there are some pockets of financial stress, the overall level of stress among mortgaged households remains relatively low.


To ensure your mortgage best suits your needs and takes into account your personal circumstances, please get in touch.

Matthew Guy has recently been recognised by Mortgage Professionals Australia as one of the industry’s best and brightest, being included in the national ‘young gun’ list. The list of 30 includes emerging mortgage and finance broking elite professionals that are aged under 35, with less than 2 years as a broker and completing more than $15m in loans during the year.


Matthew Guy is an Authorised Representative of Prosperity Finance Advisers Pty Ltd ABN 69 143 861 303, 309 Kent Street Sydney, NSW 2000 is a Credit Representative (No 479852) of Hillross Financial Services Pty Ltd Licence 232705 ABN 77 003 323 055 and is one entity within the Prosperity Advisers Group Ph. 1800 445 767. Any advice contained in this document is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person.

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