Home prices serve as one way to determine the viability of a real estate investment, as any form of depreciation on a property’s value can be construed as an unattractive venture.
However, a survey of 1,500 homeowners in Australia showed that 37 per cent prefer lower home prices in the country, according to ME Bank. The respondents said that a price drop would help in resolving affordable housing concerns.
ME Bank’s survey results provided a rather surprising perspective from real estate owners. Those who are “happy to see house prices fall” comprise 25 per cent of respondents, while 20 per cent of them who own properties as an investment feel the same way.
On the other hand, 38 per cent still want to see continuous price growth. Patrick Nolan, ME Bank’s general manager of home loans, said that Australians fall into two groups when it comes to property prices. These are homeowners who want increasing prices and non-owners who want lower prices.
Even if most investors want prices to increase further, Nolan said that sky-high prices have led some of them to reconsider their views. High property prices not only lower the chances for the average Australia’s dream of homeownership, but also for affordable rentals.
In Queensland, for instance, real estate in North Lakes and other regions seem to be a landlord’s market, due to the high prices for rentals. A strong demand partly causes the expensive rents, as the vacancy rate in the Sunshine Coast has been 1 per cent in the last five years, according to the Real Estate Institute of Queensland.
Affordable housing will remain a relevant issue if income growth fails to catch up with rising property prices. As the ME Bank survey shows, some homeowners and investors are beginning to see that higher values do not always mean a good return on investment.