Australian homeowners hit by $19,000 annual cost increase due to housing crisis – realestate.com.au

Australian homeowners are facing a brutal financial reality, with new analysis showing their hips are taking a staggering $19,000 hit annually compared to a decade ago.

It’s a figure that exposes the nation’s affordability crisis, and proves that for many, it’s not just about entering the market, but staying afloat.

According to new data from Compare the Market, the average Australian homeowner now spends an eye-watering $1588 more on monthly repayments than they did a decade ago. Over a twelve-month period, that’s an astonishing $19,056 extra drain from household budgets.

The increase comes despite interest rates being at similar levels to 2015, highlighting how the doubling of the average loan size in some parts of the country has caused repayments to skyrocket.

While the national average is dismal, some states are feeling the pressure even more acutely. Queensland homeowners have seen the biggest increase, now paying an average of $22,524 more per year.

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New South Wales residents are close behind, with an average increase of $21,888 per year, while homeowners in South Australia face an additional $21,012 per year.

In Western Australia, repayments have increased by $17,220 per year, Tasmania has increased by $16,764 per year, the ACT is feeling an extra $16,068 per year, and homeowners in Victoria are paying an extra $15,120 per year.

It comes as data from the Australian Bureau of Statistics shows the average price of residential homes has risen by $433,300over the past 10 years, increasing from $612,100 to $10,454 million in the respective December quarters.

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Source: Compare the market

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Compare market property expert Andrew Winter did not mince his words and stated that for many Australians “the battle doesn’t come in, it stays in”.

“The road to home ownership in Australia is not easy, and these figures tell us why,” he said. “So often the emphasis is on attracting a down payment, but for many the real challenge begins when they start paying off their loan.

“The repayments on the average homes in our capital cities are not cheap and for many working Australians they are simply not affordable. So while the government has done a good job of helping people into the market by reducing the amount of money they need to save for a deposit, they haven’t really gotten to the heart of the problem.”

And the pain may become more intense.

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Source: Compare the market

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Mr Winter warned that “if the cash rate rises again this year, I think a lot of people will really feel it”.

A single 0.25 percent cash rate increase could add an extra $110 in monthly payments for an average loan of $694,000 – that’s another $1,320 per year.

In this challenging environment, Mr Winter emphasized the crucial importance of homeowners and homebuyers actively ‘shopping around’ to secure the cheapest rates and keep their repayments as low as possible.

“As the cost of owning a home becomes even more expensive, we should take full advantage of the few ways we can save by shopping around for a better home loan,” he advised.

“A small difference between rates may not sound like much, but remember that it could mean paying hundreds or even thousands of dollars less over the life of your mortgage.”

However, there is a silver lining for existing homeowners.

“If you are an existing homeowner, higher rates are bad news and the cost of ownership is high. However, there is a positive, higher value means greater equity,” Mr Winter pointed out.

“Lenders like homeowners with better loan-to-value ratios, and that equity could be a leverage tool as you negotiate.”