Weekly Update 9th September 2021
This week, I will take a look at which Australian capital city suburbs have our biggest and smallest homes. And why now is a good time to sell your home, before regulators step in to restrict finance.
Where are our biggest (and smallest) homes?
One of the main trends coming out of COVID has been a greater desire for more space. Being stuck at home a lot is tough, but more challenging if you don’t have enough room to easily work or study. Because of this, suburban living is having a renaissance at the moment, something that has not been seen since the 1970s. Despite this, living in a big house in the outer suburbs is still far more affordable than an inner city terrace.
Looking at all sales over the past two years, we have taken a look at the suburbs with the biggest and smallest houses. Topping the list for big properties are the outer eastern suburbs of Melbourne, as well as the Adelaide Hills. The suburb of Park Orchards tops the list with the average sized home more than 1,700 sq.m, well over three times the average sized block of land.
At the other end of the scale, houses in North Sydney are less than a tenth the size of houses in Park Orchards but cost on average $1 million more. And while the big house list is dominated by Melbourne and Adelaide suburbs, the small house list is dominated by Sydney and Brisbane suburbs. This perhaps reflects the more difficult geography to build large homes, and to adequately service them.
Regulators likely to step in to curb home loan lending once lockdowns end
As discussed in our most recent Ray White Now, housing debt is rising all around the world. At the same time, central banks are not in a position to start increasing interest rates - inflation is starting to creep up but there is still too much uncertainty. In Australia, we are still not sure what the eventual impact will be of extended lockdowns in Victoria and NSW but it is likely to lead to a big hit on economic growth, even if it is temporary.
With house debt rising, and limited likelihood of interest rates rising any time soon, it is looking like regulators are ready to step in. We have already seen this happen in New Zealand where 40% deposits have been required for investors since the start of May. In China, regulators have decreased leverage available to developers and implemented price controls in several cities. For now, it is unknown exactly what date regulators will move, although it is unlikely to happen until Victoria and NSW are out of lockdown. As to what it will do to prices, it will depend on what restrictions are put in place. Once they are implemented, it will slow down price growth. Until then, it will remain a sellers market.
