The housing market in Melbourne and Sydney is started to look up, with the market slump of the past couple of years turning around and resulting in higher clearance rates.
In fact economists are predicting that house prices could return to peak levels within the next two to three years.
While this may be good news for investors, home owners looking to sell, and those who have the funds to enter the market right now, for everyone else it is cause for concern, given Australian properties are already some of the most expensive in the world.
Melbourne-based real estate agent, Steve Lazaridis who has many clients who are newly arrived from Greece, says they are often shocked by house prices.
“I see so many of them, and the poor things, they see the market how high it is compared to Greece,” Mr Lazaridis told Neos Kosmos.
“Let’s say you can buy a one bedroom apartment for $330,000-$350,000, but a two bedroom can be anywhere from $400,000 up to $800,000. And for a house, it of course depends on area to area.”
What makes the challenge even greater according to Mr Lazaridis, is that many who migrate to Australia from Greece are paying high rents as opposed to staying with family.
“I met a Greek lady yesterday, she’s been here 11 years and she started a business. If she’s paying even $450 rent a week, that’s $1800 a month, and she’s got two kids going to school. So there are a lot of things people don’t put into the equation. How long will it take you to have 20 per cent deposit for a house?”
When it comes to second and third generation Greek Australians who are first home buyers, Mr Lazaridis says the help of mum and dad that was fairly common when he first started out in the industry 20 years ago, was a lot more prevalent.
“As far as parents helping, the first generation are getting very old, and many are on a pension, so it’s not like they can afford a lot of money. Maybe they can help with two per cent now,” he says.
Those who find themselves with more backing for a deposit, are Greek Australians whose parents have already invested in the market, and have a second or third property to their name.
“Reality is Asian parents can afford a lot more than what the Greeks and the Italians even used to before. You see them coming with very good jobs; they bring $1 million, $2 million – it’s not a lot of money for them. We can’t compete,” he said.
Having said that, Mr Lazaridis is optimistic that it is not impossible to enter the housing market. He has seen newly arrived Greeks buy a property, but with significant sacrifice, something he says many often struggle with.
“What we see with the young generations compared to the old generations, they have four iPads, five TVs, four mobile phones, and there are only four people in the house. Now in the old days they would just have a small TV, maybe just a landline, so their lifestyle was allowing them to save a lot of money,” he says.
“But now, even if a young couple each make let’s say $80,000, that’s $160,000 a year, they need $180,000 because of their lifestyle.”
Looking back to 1999, while house prices were significantly lower, he says people were saving significantly more money, often exceeding a 20 per cent despite.
“Now we want everything: we want the lifestyle, and we want the beautiful house,” he says.
Following the recent Banking Royal Commission, Mr Laziridis says the banking sector have also tightened the reigns on lending, which is posing an additional challenge for first home buyers.
“The biggest problem is the banks. They used to give 90-95 per cent of the loan, now you’ll be lucky if you get 80 per cent. They look at how much you spend at the supermarket, how much you spent to go for a frappe at Oakleigh – every single little thing they’ll ask you. It didn’t used to be like this. They used to be more loose, but now they’re trying to protect themselves, which is the right thing. But for you to go and borrow money, it’s not easy,” he says.
While the Reserve Bank of Australia cut interest rates to a record low 0.75 per cent last week, the real estate agent notes that not all banks are passing it on to clients to see the intended economic benefit.
“There are a lot of changes right now, and I think a lot more are coming. I’m listening to a lot of big developers, they say that things are slowly heading up; it will take a year to two years and they’ll start to pick up again. I hear other people saying we might go through a recession, that you’ve got to be careful. Everybody will tell you their own thing, but nobody has a crystal ball.”
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