As the housing market heats up, Australia’s most expensive homes are being sold off in a bid to cool the overheated property market.
The sale of $1.1bn+ homes to investors and property developers has pushed the price of a single house in Melbourne to a record high of $7.6m, according to the Real Estate Institute of Australia.
More:The market is so hot that it’s now almost impossible to find a house that’s worth less than $1m, said RIAA chief economist Chris Williams.
“It’s just absolutely staggering,” he said.
The average price of one-bedroom homes in the Greater Melbourne region is now $3.6 million, according the Australian Bureau of Statistics.
And the average price for detached homes is now around $2.2m, RIAa data shows.
It’s no surprise that prices are skyrocketing in Australia.
The country’s real estate market is now the fourth-largest in the world, according To The Numbers.
And that’s despite the fact that prices in Australia have been steadily declining for years.
The median house price in Australia has fallen from a peak of $973,000 in 2005 to just $1,100,000 last year.
“Australia has become a very expensive country to buy,” Williams said.”[Australia’s] real estate prices are the highest in the developed world, which means that most people can’t afford them.”
The real estate crisis is particularly pronounced in the northern states of Victoria and New South Wales, where median prices have been falling for years, while in the Southern Hemisphere the median house prices have also been falling.
“There are lots of places to live in Australia,” Williams told Al Jazeera.
“We’re seeing the effects of a global slowdown, and I don’t think that the government is responding.”
For those who can’t pay the high prices, they’re often turning to private equity firms to help them.
There are now hundreds of private equity funds that have bought thousands of homes across the country, Williams said, and they’re selling off more and more properties.
“The value of the house has increased significantly over the last couple of years,” he added.
“For example, in February alone, a number of private investors sold more than 1,100 houses.”
And a lot of those houses have been sold in recent weeks.
“If you’ve been looking to buy property for a while, you’re probably getting a little bit more desperate than you should be right now.”
Williams said many investors are selling at a loss, which is why prices have soared.
“Some of these investors have gone through periods where they’ve been losing money on their house, and the market is going through some of the same thing as Australia has experienced,” he explained.
“So, as they’re going through those periods, they are getting a bit desperate, they may be losing money and they are selling their house at a premium.”‘
We’re not a country with a shortage of money’As the real estate industry is currently cooling off, there is no shortage of property investors, and many are selling off their homes at a profit.
“Private equity is now more than 10 per cent of the total capital market in Australia, which represents around 1,400 properties,” Williams explained.
“The average value of a private equity investment property is $2m.”
The RIAAA’s Williams said private equity investors are also taking advantage of the low cost of land in the inner-north, where prices are rising faster than in the rest of Australia, as well as the fact there are fewer restrictions on foreign investment in the property market in Melbourne.
“When we look at the average real estate price in the CBD, there are three major developments going on right now in Melbourne, so you could argue that the CBD has been an international hotbed of development,” he told Al-Jazeera.
“This has really opened up the property landscape, which I think is very favourable for investors.”
“The main reason that you are seeing prices go up in Melbourne is because of the fact it’s the hottest real estate region in Australia right now, and we’re not even in the midst of the hottest property market right now,” Williams added.
But not all of the buyers are willing to pay such high prices.
“A lot of people who have been looking at the market for a long time are now trying to sell their properties,” said Riaha Vellacott, managing director of property firm Vella.
“I think it’s a bit risky at this stage, and you’re looking at people who are very cautious about where they are going to go.”
But for those who do want to sell, there’s a long list of reasons they can’t go through with it.
“Unfortunately, we’re no longer a country where we have a shortage.
There are very many people who can afford to do so,” she said.”
In fact, we are actually the only developed