It’s no secret that property prices in Australian capital cities have gone through the roof.
So will houses ever be affordable again?
Five years ago, a one-bedroom apartment in Sydney would set you back about $300,000. Today? You’d be looking at more than double that — with a median price of about $610,000, according to realestate.com.au.
So what’s going on? And why do people keep blaming a “housing bubble”? (Also, what even IS a housing bubble? And while we’re at it, why do experts keep talking about whether it will “pop”?)
What is a ‘housing bubble’, and are we in one?
A housing bubble is a period of seriously high house price growth, followed by a price drop back to or lower than the point where the growth started.
It’s actually very hard to know if a bubble exists until it “pops” — because if no fall eventuates, then by definition it’s not a bubble. (The rising property prices might have just been due to basic supply and demand, instead.)
A few indicators show a bubble can currently be seen in Melbourne and Sydney right now: low interest rates, more investors in the market and a sharp rise in house prices, according to news.com.au.
But there’s actually no consensus on whether Sydney and Melbourne are in a bubble. In fact, social demographer Bernard Salt believes investors shouldn’t buy into the hype at all.
“I am not convinced that there is a housing bubble,” he tells Mamamia. “I think that Sydney house prices were depressed for many years and I think in some respects, this is just catch-up.”