Home » News » Two reasons why house prices are rising: Post-Pandemic Lifestyle & the ‘Bank of Mum & Dad’
12 May, 2021
Two reasons why house prices are rising: Post-Pandemic Lifestyle & the ‘Bank of Mum & Dad’
Autumn auctions have witnessed a spike in the fear of missing outbidding syndrome as buyers are now seeking a new post-pandemic lifestyle. Anyone looking to buy a home in Sydney this year has seen the median house price jump by $103,000 in just three months, with the median house price reaching more than $1.3 million. (Domain House Price Report)
The “life is too short to dally around” philosophy is the key reason for this surge in price in the housing market. Upsizing is also a trend in the market. “A lot of people are looking to go into bigger places; it’s a bit of a COVID impact,” said the CEO of Westpac, Peter King.
The locals, more often than not, are the ones driving up housing costs, sometimes going head to head with expatriates yearning for their homeland after seeing how Australia has successfully handled the pandemic.
Although price boost is more obvious among the wealthiest buyers across the capital cities and region, Australian household wealth is increasing. According to The Australian Bureau of Statistics (ABS) data, household wealth rose by 4 percent in December 2020 to a record high of $12,033 billion or $467,709 per person, the highest quarterly growth rate since 2009.
The effect of COVID-19, according to Forbes Global Properties’ Ken Jacobs, has caused people “to confront their mortality, resulting in a fundamental change of thinking to act now to improve lifestyle rather than accumulate for the future.”
As a result, the ‘Bank of Mum and Dad’ (BOMD) is now assisting the capacity of buyers in securing their upgrade into bigger family homes. The BOMD trend saw deposit funds directed into assisting children into their first homes.
“Over the last few months, there have been first-home buyers getting back into the market in a pretty big way,” said Dr. Martin, a senior research fellow at the UNSW City Futures Research Centre. “But doing that on the back of rising house prices makes me think they are doing it with a lot of help from people who are already in.”
According to an analysis by researchers at Digital Finance Analytics (DFA), BOMD is Australia’s ninth-biggest mortgage lender, as parents are increasingly giving, lending, or underwriting record amounts of home purchases. As reported in DFA, parental contributions are averaging more than $89,000, up nearly 20% from the previous year. Apparently, the BOMD has about $34 billion in loans.
The current trend of “I’ll take it now” is a departure from previous generations, especially those who lived through the last depression, when the loss of wealth and employment prompted extreme household fiscal conservatism.
Are you struggling to enter or invest in Sydney’s Hot and growing property market? Let St Trinity guide you through your property journey and make an impossible task, a simple one. Contact our team today on (02) 9099 3412 or enquire below.
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