Sat in a departure lounge at Sydney airport after experiencing five glorious weeks Down Under a few years ago, my wife and I mulled over what would / could have happened had we visited 25-30 years earlier.
“I could live in Adelaide, the City of Churches,” mused Clare. “Cultured, sophisticated-yet-casual and ringed by parkland. My kind of town,” she added.
Perth was my favourite. The world’s most isolated city had everything going for it, but if pushed, I could easily handle life in Adelaide.
We contemplated these options while relaxing with a drink, hugely satisfied at having traversed the nation, west-to-east, as planned, via a combination of rail, car and a few internal flights, enjoying every moment, while growing increasingly conscious of the opportunities this enormous, friendly, sun-blessed, sports-mad nation had to offer.
Had the opportunity to visit Oz arisen in the early nineties, for example, we were certain we would have made serious inquiries regarding permanent residence. That never happened, but what a treat Australia was when we finally made it.
There were, however, a handful of downsides that also became apparent as we meandered across this vast country. Property values, in the cities at least, were often eye-wateringly expensive when compared with the UK and three years before we encountered a noticeable rise in the cost of living closer to home, it was frequently evident that Australia was already an expensive place to live.
I revisited this random selection of very subjective pros and cons earlier this week after reading about the government of Western Australia’s attempt to recruit more British nurses, police officers, teachers and a host of other professionals.
It was in February that Paul Papalia, police and defence industry minister of the Perth-based government originally tempted would-be British expatriates, pointing out that they could also enjoy great food, "wine regions" and "coral reefs".
He added: "Our wages are higher and our cost of living is lower. Our health system is world class. You will be taken care of.
"Many of our ancestors were sent from the UK to Australia as convicts. Now, it would be a crime not to make the move."
No doubt many people in their twenties, thirties and forties could be encouraged / tempted by the Perth government’s latest attempts to fill more than 30,000 vacant job positions. After all, when compared with the UK, Australia, land of sunshine, sparkling blue skies, gleaming oceans and friendly, well-maintained cities can look like a modern-day Nirvana.
But hang on: don’t forget Australia’s relatively expensive property market and day-to-day living costs, which are far from what you would call cheap.
Bearing these factors in mind, it’s worth noting a report published by property website Zoopla last week which concluded that UK house hunters currently find themselves in a buyer's market, one in which the average discount to a property’s original asking price is around £12,000.
The company’s property index shows that house prices slipped by 0.5 per cent over the past twelve months and it maintains that further 'modest' falls in house prices are expected into early 2024.
The words ‘buyer’s market’ are likely to be music to the ears to many people currently renting their homes. Such markets tend not to last too long; indeed, it follows that current market uncertainty may offer a rare opportunity for would-be buyers to take advantage of discounted property values, quite probably with a little help from their parents.
According to Zoopla, the average UK home costs £265,000; deducting an average discount of £12,000 reduces the sum required to buy it to £253,000. Even with such an attractive discount, this is a hefty amount for younger people to finance, especially if lenders are reluctant to advance more than 75% of a property’s value; in this instance, let’s call it £190,000. Where could the ‘missing’ £63,000 come from?
Although it’s not quite the mortgage fairy, that much-loved institution, The Bank of Mum & Dad, continues to play an active role in helping offspring onto the property ladder, often by accessing equity in their own property, likely to have accumulated over many years.
According to the most recent figures published by the Equity Release Council, the average lump sum released by homeowners aged 55 and above during the second quarter of 2023 was £94,266, ie comfortably more than the ‘missing £63,000’ referred to above. Homeowners who preferred to release equity on a drawdown lifetime mortgage basis, ie a smaller lump sum with regular additional future payments, was £59,294.
Protracted buyer’s markets are rare in the UK because property supply is traditionally very tight. Nevertheless, Mark Gregory, founder and chief executive of Equity Release Supermarket, the UK’s largest independent equity release firm, suggests there are four signs which identify a buyer’s market, each of which is currently evident to some degree.
“The signal for the start of a buyer’s market is a noticeable increase in supply of property, or what estate agents call ‘inventory’, listed for sale,” says Mr Gregory. “ As in any other marketplace, if supply increases without a corresponding rise in demand, prices eventually fall.
“Subsequently, as supply increases and demand falters, property starts to take longer to sell. Vendors who might be under pressure to sell, or simply impatient if their property has been on the market for a while, begin ‘relisting’ their homes, lowering asking prices.
“This process can gather pace, which may result in asking prices undergoing a series of reductions, with an eventual selling prices significantly lower than their initial level.
“Finally, and much rarer in the UK than in, say, the USA, there are incentives. Property vendors may offer tempting incentives to sell their home, by, for example, undertaking to exchange contracts within a much shorter timeframe than normal, or by making an allowance to cover renovation or decoration expenses.”
All four of these characteristics can be found in towns and cities across the UK, presenting first time buyers in particular with a relatively rare opportunity to jump onto the property ladder, albeit with the help of the nation’s favourite bank, the one operated by Mum & Dad. They too play a role, often by releasing equity from their homes with which their adult children can finally bring their monthly rental payments to an end by acquiring a property of their own.
Equity release is not for everyone: it can have a direct affect upon the value of an individual’s estate and may impact upon homeowners’ eligibility for means-tested benefits.
As autumn slowly blankets us with predictably inclement weather, so the southern hemisphere’s warmth and sunshine appears even more seductive than usual. Australia’s weather is undeniably tempting, but so too is the UK’s property buyer’s market.