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Australians caught up in ‘complicated love affair’ with property market

By Mo Zeitouneh

Australia’s love affair with real estate is growing ever fiercer, with an ardour undimmed by the passing of time and the increasing expense of conducting the affair.

And it’s not a fleeting desire, either. While many of us love the feeling of being in love, we also know that a good, long-term relationship with property will only make us stronger.

“It’s a complicated love affair,” says Ray White chief economist Nerida Conisbee in Sydney. “We may also like gold and shares, but while we love property, the need for shelter is a basic necessity of life.

“And its unaffordability is very much a generational problem now and a huge concern for everyone. While it’s so hard for young people to buy, we know that owning your own home has to remain the Australian dream because all the research shows us that if you don’t own your own home by the time you retire, then you’re likely to live in poverty.”

Property ownership is a big source of wealth generation in Australia. Photo: Greg Briggs

A study from the Australian Housing and Urban Research Institute (AHURI), Transitions into Home Ownership, found that, in the 1980s, 63 per cent of people had bought their first home by the age of 30 and 34. In the last decade, that’s dropped to just 45 per cent.

That means a lot of broken hearts out there, which could end up signalling more anguish and hardship ahead.

Of the top 50 wealthiest people in the world, 60 per cent of them made their money from property, says Ben Armstrong, the principal of LJ Hooker Brisbane. “Young people, in particular, see that and say that’s what they want,” he says. “They have a strong ambition for wealth, so they’re really in love with the idea of owning property.

“Also, it’s human nature to want what we can’t have. There’s a real undersupply of property on the market and huge demand, which makes it even more desirable.”

In Melbourne, the hunger for a home of one’s own is also continuing to gather momentum – despite higher interest rates and less choice of stock on the market. That all serves to make us choose our entanglement more carefully.

“I think we’re all pretty obsessed with property, and that’s only become more intense, if anything,” says Peter Kudelka, executive director of Kay & Burton. “But there has been a bit of a shift.

“While so many still desire the quarter acre block and a garden, the rising cost of houses and the proliferation of apartments means there’s now a push towards right-sizing and downsizing to apartments. That’s particularly those that have access to amenities, transport, schools and shops.”

Space is a valuable commodity, and something most buyers covet. Photo: Vaida Savickaite

Size does matter, however, advises agent Alex Wang of Archer Canberra. The pandemic made us all appreciate having our own space, either when we were locked down or working from home.

“COVID really made people appreciate the value of having enough room in their homes,” Wang says. “Freestanding houses have never been as popular but then interest rates and prices have meant compromises with townhouses and apartments.”

There’s been a significant shift in investors’ appetites for property, too, Wang believes. In Canberra, where rental yields are lower than in other capital cities, with less renter demand from fewer migrants, investors are selling up to buy in Sydney, Melbourne and Brisbane, where rents are much higher.

“We’ve had so much new infrastructure and, with the Olympics coming up, we’ve seen a big influx of capital,” says Hamilton.

COVID shifted people’s thinking about how they live in their home. Photo: Moss & Co Photography

Housing in regional Australia still looks attractive to many after smashing so many price records during the pandemic, but with so many companies now demanding workers return to their offices for more days, there’s a strong move back to homes near good transport links or closer to the centres.

“Both young and old, people right across the spectrum, are now wanting a good lifestyle, close to amenities,” says Knight Frank head of residential Erin van Tuil. “It’s about the quality of lifestyle rather a prestige postcode, and people are willing to make sacrifices in order to be in more desirable areas.”

We’re still not yet besotted with sustainability, although the promise of cost savings wins some admirers, according to Conisbee. “That’s not yet part of our love affair,” she says. “But it probably needs to be.”

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