New research reveals buying a place to live is twice as hard as it was 30 years ago, but there is a silver lining.
A comparison between cost of living in 1984 and 2014 by finder.com.au has revealed the average property value is eight times higher than 30 years ago.
However, the upside for those looking to enter the property market is they can expect the average property of $580,000 to be worth $4.6 million in another 30 years time, based on current trends.
"It's a good time to buy property before prices rise further,” says finder.com.au money expert, Michelle Hutchison. “As the
finder.com.au Reserve Bank Survey shows that another cash rate cut is on the cards within the next few months, which is likely to fuel property prices.”
The study showed the average mortgage size for Baby Boomers was just twice the price of their average income in 1984. Whereas today, it is four times the price. The average income to mortgage repayments was 23% in 1984 compared to 29% in 2014.
"This side by side comparison of the cost of living now compared to 30 years ago shows that the average borrower is much closer to mortgage stress, which is when mortgage repayments make up 30 percent or more of your income,” Hutchison said.
Although the average mortgage size is eight times bigger than in 1984, average salaries have only increased by 316%.
"The concerning part is that interest rates are half of what they were 30 years ago, with the average standard variable rate currently about 5.5 percent compared to 11.5 percent in 1984,” Hutchison said.
But Australians are still set on obtaining homeownership and taking on a mortgage, with almost four times more households with a mortgage than 30 years ago.
“Even if it takes you another five years to save for a deposit, it’s worth getting into the property market when you can if you compare it to the past 30 years of returns," she said.
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