Affordable housing continues to be a mere pipe dream for thousands of Australians desperately clambering to get a slice of the real estate market.
Figures from the Australian Bureau of Statistics (ABS) released in March shows that the number of home loans to buy established houses slid from 13,050 in June last year down to 8,457 in January, 2010. Interest rate rises and the withdrawal of the First Home Owners' Grant appear to have contributed to slower rates of lending.
Further rises to follow
Many house hunters were hoping that the housing bubble would burst during the global financial crisis that gripped the nation during 2009 and that prices would fall, but that wasn't the case.
Instead, house prices surged 13.6% last year, according to the ABS capital city house price index released earlier this year, with a robust population growth spurring buyers to push prices higher on limited availability.
But Philip Lowe, assistant governor, Reserve Bank recently told a conference in Sydney that home-hunters should expect housing prices to increase again this year.
The steady price growth makes it increasingly difficult for buyers who continue to spend their weekends searching for a way to realise the great Australian dream of home ownership.
Consumers remain resilient
But despite the rising prices and interest rate rises, consumer sentiment remained resilient, according to the Westpac-Melbourne Institute Consumer Sentiment Index. The index reveals a slight increase in sentiment during the month of March, suggesting mortgage rates have not reached a point where increases have had a major impact on confidence.
Make buying a priority
However the bad news for buyers is that prices are set to rise even further this year.
Matthew Bell, economist, Australian Property Monitors (APM), predicts that housing prices could increase another 8% this year.
APM figures show that prices are rising faster in the more affluent suburbs. The median house price in Sydney is now close to $600,000.
The prediction indicates that house-hunters should strongly consider getting in now before prices inflate further. But as many know, that's easier said than done.
But getting a suitable home loan can save tens of thousands of dollars over the life of a loan, so shop around or get a mortgage broker to compare home loans for you before committing to one particular institution.