House prices going up and up – here’s why

Well, it’s tough to watch the price of homes keep rising. I feel like the moment we actually do buy a home, the market will finally stagnate or actually drop.  Not much we can do though until our deposit is saved, unfortunately.

In a newspaper I was reading today, an article said that (in my state) five years ago, the average family could have afforded to buy 76 per cent of the homes on the market. Now, they could afford to buy only 17% of homes. So what does that mean? Who can afford to pay so much for the rest of these homes?

The average price of a home in my state is nearing half a million dollars.  But the average home now is not the average home of a decade ago. Apparently even first-home buyers in their early 20s are going to local builders looking for 4-bedroom homes with polished floorboards, an ensuite and a flash patio or deck … maybe even a pool. One builder in a newspaper article I read recently said when he built his own home 20 years ago, he and his wife went without carpet in the spare bedrooms, recognising they could wait until they actually had kids. He also didn’t have flash bathroom accessories or stainless steel appliances in the kitchen. But now he can’t convince even the youngest  couples to wait six months before they get the landscaping done, or to consider buying a three-bedroom home.

Believe me, this isn’t our problem. We are happy to go for a relatively cheap home until my income builds up a bit (gotta finish uni first anyway), and even after that for a while. I want my kids to share a bedroom for a while (I loved sharing with my sister when I was very little). Once we do buy, I don’t want to overcapitalise on a big, flash house. I would prefer to get our home loan kicking along a bit, then put some money towards other investments. I definitely intend to pay my home off quickly, but I don’t want to put every spare dollar into that at the expense of building a share portfolio or buying into managed funds.

However, I’m getting ahead of myself (way ahead). The shock of having some actual money in the bank must be going to my head. Let’s just see about that deposit first!

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1 Comment »

  1. I totally agree with you. Home prices are out of control around here, too, and the size of homes keep getting bigger. I’m hoping that prices drop off a bit by the time we can afford to buy. And I’ll be happy with a smaller three bedroom home that I can pay off in my lifetime. 🙂

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