A quarter of Australians (25.9 per cent) now believe $1 million is an average price to pay for a house in their city or town, according to a survey by Slater and Gordon Lawyers.
The survey, which polled 2000 Australians across the country, found the majority (63.9 per cent) thought a million dollars was a lot to pay, while a quarter thought it was about average and 5 per cent thought the figure was pretty cheap for where they lived.
Respondents in NSW were the mostly likely to view a million dollars as average (36.2 per cent) or cheap (8 per cent), compared to those in Victoria (average: 28.4 per cent, cheap: 4 per cent), Western Australia (average: 18.9 per cent, cheap: 7.8 per cent) and Queensland (average: 18.1 per cent, cheap: 2.2 per cent).
People in NSW were also most likely to value their current property at more than $1 million (12.2 per cent), followed by Victorians (8.2 per cent) and West Australians (7.2 per cent). Queenslanders were the least likely, at 4.6 per cent, to believe their property was worth more than $1 million.
Slater and Gordon Conveyancing Works Lawyer Robert Kern said with home values increasing the potential ramifications of issues arising also increased.
“If an issue arises, for example an undisclosed easement, that sees the value of your home drop by 10 per cent, that’s a $100,000 loss if the home is worth $1 million.
“I would encourage anyone considering purchasing a home at this price to make sure that they have conducted proper searches and consider extra searches or further searches that might affect the value of the property now or in the future.
“And as with any home you are considering buying it is imperative to check that any additions such as pools, extensions, decks and the like are compliant and have all the proper council approvals.
“Having to make modifications and/or tear them down can not only be costly but can also potentially knock value off the property,” he said.
Mr Kern said the more they loaned the more banks were going to want to ensure the money they were lending was secure.
“So if you’re considering purchasing a million dollar property be prepared that banks might ask for guarantees or mortgage insurance, which could add to the repayments.”
When Australians were asked if they would consider paying $1 million for a standard three bedroom house in the area they currently lived, nationally 16.2 per cent said that while $1 million was about average for a house that size in their area, they couldn’t afford it and would need to move if they wanted to buy.
Mr Kern said with Australia now considered one of the most expensive housing markets in the world, the results were not surprising.
“There are increasingly areas in our major cities that are out of reach for the average homebuyer and these results confirm that many Australians share that view.
“While $1million may increasingly be considered average, it doesn’t necessarily follow that people can afford to pay that or are paying that,” he said.