SYDNEY, NSW (29 September 2021) With the historic mansion, Rosemont selling for $45 million, the highest price recorded in Sydney this year and a new record for Woollahra, the sale is illustrative of how property owners have experienced the fastest growth in their wealth in more than a decade.
According to figures released by the Australian Bureau of Statistics (ABS)[i] rocketing house prices added $735 billion to Australian household balance sheets in the June quarter of 2021.
Total household wealth increased 5.8% in the quarter, reaching a record $13,433.7 billion. This increase is the most significant quarterly growth since December 2009, the peak of the recovery from the global financial crisis.
Moreover, wealth per capita rose 5.6% to a record high of $522,032, with Australia’s favourite asset class residential property contributing 4.5 percentage points to the growth in household wealth. Next came superannuation balances and directly held shares at 1.1 and 0.3 percentage points.
Angus Raine, Executive Chairman, Raine & Horne, said, “Australian property values are producing the best returns in more than 20 years, which is incredible considering the unprecedented times we’ve experienced over the last 18 months.
“Over this period, we’ve seen closer to a $1 trillion in value added to the market cap of Australian real estate pushing it above $8 trillion, which no one seems to be talking about.
“In Sydney, for instance, values are up an average of 20% over the last 12 months and much higher for houses in the city’s prime inner ring markets, especially with listings down by as much as 20% compared to historical averages.
“The figures from the ABS confirm how important bricks and mortar is as a long-term wealth creation tool and in this booming market, and constant record sales vendors are reaping these huge financial rewards with some vendors making upwards of $1 million above the reserve at auctions, which is fantastic and should be celebrated.
Mr Raine said that the news of price growth had signalled the end of the Great Australian Dream for aspiring first-time buyers is wide of the mark.
“The trouble with affordability is that it is skewed by many younger Australians wanting to skip several rungs on the property ladder and start with bigger homes closer to capital cities,” he said.
“This wasn’t the case 20-30 years ago when first home buyers were happy to start the journey in an apartment with vermiculite ceilings located in less fashionable suburbs.
“Even the use of the phrase ‘property ladder’ has gone out of fashion.
“Many property commentators are always bemoaning the affordability issue but not enough commentary is being devoted to elated vendors who are achieving anything from $100,000 to in some cases over $1 million above expectations.”
Bank of mum and dad more active thanks to real estate growth
Moreover, older homeowners are putting their property wealth to good use by using it to fund their retirements by downsizing or by supporting the homebuying goals of the younger generations.
According to research from Raine & Horne’s financial services division, OurBroker, there has been a 15% increase in first home buyers relying on the bank of mum and dad to help buy their properties. Moreover, the contributions provided by parents can be as much as 20% of the value of the property.
“While ever people see their properties going up in value, they stay active in the market and do stuff such as using the equity in their homes to help their children get into the market,” said Craig Betalli, Senior Broker, OurBroker.
“They are more than happy to see their children in their own well-located homes that will also grow in value.”
Mr Betalli said the first homeowners of 12 months ago are now looking to become investors due to the extra home equity and record low interest rates.
“These first-timers have enjoyed significant growth in their principal place of residence, which gives them ample equity. They also have borrowing capacity because interest rates are so low, which is providing younger Australians with fantastic affordability and the ability to climb further up the real estate ladder,” he said.
For further media information contact:
Angus Raine, Executive Chairman, Raine & Horne on 0438 596 728
Olivia Rowe, Content & Communications Executive, Raine & Horne Group on 0432 113 569