Australian Residential – Home Equity

December 17, 2016

Sydney residents are currently the wealthiest Australians in terms of home equity according to data released by the Australian Bureau of Statistics during October.

The median house price in the city is now $1,068,303.

Melbourne home owners are the second wealthiest (in home equity), with a median house price of $780,000.

Melbourne is followed by Canberra ($661,912), Darwin ($595,466), Perth ($566,609), Brisbane ($521,152), Adelaide ($494,911) and Hobart ($338,703).

Dr Andrew Wilson, Domain chief economist, says the statistics are not surprising “as everyone knows Sydney house prices are much higher than any other capital city”.

“Their home loan debt is higher too, but even when that is taken into account they own more equity,” he says.

Dr Wilson says property remains the favoured form of wealth creation in Australia.

“We have a strong connection to bricks and mortar investment as well as a cultural attachment to owning our own home.

“The family home is so important in Australia in terms of wealth creation because it is quarantined from any form of wealth tax. It doesn’t incur capital gains tax or land tax.”

Dr Wilson went on to say that Australians have “a strong appetite for property investment” because they believe it is safer than other sectors and has more incentives. “There’s negative gearing, capital gains tax discounts and tax depreciation allowances,” he says.

The latest findings of the Productivity Commission show that 45 per cent of Australians aged 55 to 64 own their home outright (have no mortgage). It’s even higher (73 per cent) for those aged 65-74, and 80 per cent among those aged 75 and older.

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