FIRST 15 YEARS OF MORTGAGE ARE TAXES
The first 15 years of mortgage repayments by homeowners effectively only pays off the equivalent taxes and government costs associated with developing the property.
HIA senior economist, Thomas Devitt, says government taxes, regulations and charges are costing Australians more than ever.
In Sydney, half the cost of a standard house package is made up of taxes of about $576,000.
“This means over a 30-year mortgage, homebuyers are spending the first 15 years just paying off taxes and government costs,” Devitt says.
“With the interest charged on top of that, over 30 years the value of these taxes and government charges amounts to more than the value of the home itself.”
The fees and taxes in Melbourne are on average, $373,000 and Brisbane, is $348,000 while both Perth and Adelaide are just under $240,000.
Devitt says in every capital city the taxes have increased since 2019 and in Brisbane and Adelaide, the costs have doubled.
“Not even the best, legitimate investment strategies could achieve the same level of return,” he says.
PROPERTY LISTINGS DROP
The number of properties listed for sale has dropped in every capital city.
New analysis by SQM Research shows listings are down 3.6% in April to 242,425 properties being offered for sale.
Listings are down the most in Sydney and Canberra (7%), while Melbourne is down 4.5% and Hobart is down 3.5%.
Brisbane listings dropped 3.3% in April, Adelaide is down 3%, Perth is down 2.9% and Darwin is down 2.8%.
Despite the monthly drops, listings are higher in Sydney, Perth, Canberra and Hobart than they were at the same time last year.
SQM Research managing director, Louis Christopher, says low listings, persistently low housing supply and strong population growth are continuing to push prices up.
He says the April results are skewed by the Federal Election, Easter and Anzac Day holidays so it will be interesting to see the results next month.
“Going forward, with the election behind us and a majority government in place, I expect a large uplift in new listings for May as well as a pick-up in auction clearance rates,” he says.
$1 MILLION PROPERTIES
ON RISE
Solid property price growth in recent years means a third of Australian homes are now valued at $1 million or more.
New research from Cotality shows the portion of dwellings valued at $1 million or more has risen from 9.7% in April 2015 to 34.4% as of April 2025.
This includes almost a fifth (19.4%) of homes in regional areas, up from just 0.5% a decade ago.
According to Cotality, housing values have increased 67.3% nationally in the past ten years.
As is to be expected, Sydney had the highest portion (64.4%) of homes valued more than $1 million. Brisbane was next, 40.2%, followed by Melbourne, 30.9%, Adelaide, 27.8% and Perth 26.3%.
The number of million-dollar homes in Hobart is now 11.9%, which is down from 20.3% in 2022, while Darwin had just 1.3%.
Cotality head of residential research Eliza Owen says as property values continue to rise, the chance that homeowners hit millionaire status is increasing.
INVESTMENT SENTIMENT HIGH
Queensland is overwhelmingly the top pick by property investors, with more than a third believing it has the best investment prospects in the next 12 months.
APIM’s Property Sentiment Report Q1 2025 says 35% of respondents picked Queensland as their preferred investment location, 19% selected Victoria, while 14% selected Western Australia, New South Wales and South Australia.
Only 2% of respondents thought Tasmania had the best investment prospects and 1% picked the ACT.
The report also shows growing confidence in property prices, 78% of respondents (up from 68% in the previous quarter) expect prices to rise throughout 2025.
“Only once before has our survey unearthed so few people tipping property prices to fall,” it says.
More than half (54%) of respondents feel positive about the Australian property market.
The report says loan delinquencies remain low and 20% of respondents are planning to buy an investment property in the next 12 months.
RATES DROP AGAIN
Interest rates have dropped again by 25 basis points, increasing the borrowing capacity of buyers and easing repayments for existing mortgage holders.
The Reserve Bank of Australia (RBA) met this week and dropped the official rate to 3.85%.
Many of Australia’s big banks had already started reducing the fixed rates they offered to new customers ahead of the RBA move.
It is the second cut by the RBA in 2025, following a cut in February. According to Canstar data the most recent cut could save an owner occupier with a $600,000 mortgage, $91 per month.
Canstar data insights director Sally Tindall believes the majority of lenders will pass on the full cut.
The RBA says inflation has fallen substantially since the peak in 2022, as result of the higher interest rates.
But it warns the future outlook of the economy is uncertain, particularly as a result of uncertainty around tariffs imposed by the US.
It says real household incomes have picked up and there has been an easing in some measures of financial stress.
