House prices are booming, prices are slumping, record prices being paid, auction clearance rates skyrocketing, buyers loose out, sellers desperate! If you've ever researched the property market these are, no doubt, terms you are familiar with.
Now, I do empathize, especially if you are a struggling first home buyer feeling out priced or a hard working family just wanting a decent home that you can actually afford. Here I am talking about the great Aussie dream of home ownership still being the keystone for our modern economy.
It clearly is very much still the case according to detailed research analysis undertaken by CoreLogic, published earlier this year in their report Housing Market and Economic Update – 2016.
The headline statistics are simply the fact that the money invested in residential real estate across Australia doesn’t just surpass its nearest competitor it wallops it by nearly three times. Our wealth in housing equated to an eye watering figure of $6.4 trillion. Runner up is Superannuation at $2.3 trillion, followed by Australian Listed Stocks at $1.6 trillion and finally trailed by Commercial Real Estate at $0.7 trillion.
Just in case you weren't sure, I had to check too, one trillion is equal to one million, million. Therefore residential real estate wealth in good old fashioned numbers is equal to $6.4,000,000,000,000. This considerable sum and the fact it is so obviously ahead of all other major forms of wealth almost justifies our nations fascination with the topic.
That is no consolation for those who don’t own property but perhaps it does affirm why we are a nation obsessed. For example the breakdown shows 52.1% of a households wealth is the equity in their home, now that could be any amount large or small. Superannuation again is the next major player at 21% which probably comes as no surprise.
What I do find very revealing in this section of the research, is the composition of household wealth in 2015, placed at just over 50%, is the wealth in residential real estate. Going back ten years to 2005, that figure has hardly changed still at around 50%. All the way back 25 years ago in 1990 it is actually quite surprising that the percentage figure seems to remain at a constant 50%.
In my opinion, it is that fundamental factor that protects house values in a country like Australia. I am sure there will be another far more formally educated expert that will endeavor to argue this point and dispense words of pending doom, but modern history has shown us that whilst the humble Aussie home or unit or townhouse may fluctuate in value and there are periods of lows; the periods of gain allowing for sufficient time will repair that loss. It may even turn a profit given a sufficient duration and you the homeowner's patience.
If housing and property ownership is not for you and it isn't for everyone, I apologise on behalf of home owners across the land, but perhaps you can see why the obsession continues.