Home owners are jeopardising their financial future by relying too heavily on household equity, according to an Australian bank.
A study of 1,500 Australians by ME Bank found that one in 10 are completely reliant on future house price growth to achieve their financial goals, and almost half (43 per cent) are reliant on equity in some form.
While the study did not distinguish the proportion of people who own their business, such a reliance on housing equity to finance business growth could be catastrophic should house prices ever face a significant downturn.
Surprisingly, 24 per cent of people who own their home would be happy to see house prices fall, despite the economic risks present in the country.
“Traditionally Australians fall into two camps when it comes to property prices: owners, who want them to rise, and non-owners, who want them to fall. But with high prices disrupting the dream of home ownership and the benefits that brings, views are changing,” said Patrick Nolan, general manager of home and personal loans at ME Bank.
“That property owners were willing to see asset values fall is a sure sign house prices had reached heights many think are unfair.”
It comes after prominent demographer and market commentator Bernard Salt told My Business’ sister publication Smart Property Investment that particularly Sydney house prices are now set to plateau or even decline, while future property price growth opportunities will likely be concentrated outside of Australia’s city centres.