Australians own the biggest houses in the world

Australians own the biggest houses in the world

Australians like their property – in fact, their homes are some of the biggest in the world but new minimum land size laws look set to restrict Australia’s love affair for big homes.

New state planning laws introduced today will see the minimum legal block size reduced from 350 square meters to 250 square meters in lower-density areas of Sydney.

In a move set to encourage terrace-style developments and home affordability, some developers will even be able to offer lot sizes as small as 125 square meters in Sydney’s new growth areas.

Australians say bigger is better

But for now – Australians still rule the world in terms of house size, which may pique the attention of those contemplating home loans.

“Australian houses, measured in terms of floor space per capita, are the biggest in the world,” Chris Caton, BT Financial Group’s Chief Economist, revealed.

The average Australian house has 89 square metres of floor space, according to findings published by BT Investment Management.

In a comparison of 14 countries, Australia came out on top, followed by the United States (77 square metres), Canada (72 square metres) and Denmark (55 square metres). 

Italy, the United Kingdom, Germany, France, Taiwan, Japan and South Korea followed, with the average housing floor space ranging from 43 square metres to 36 square metres.

Those living in Spain and China are feeling the squeeze – houses have 34 square metres and 33 square metres of space, respectively. While homeowners and tenants Down Under had ample room, those living in Hong Kong had an average of just 19 square metres in their homes. 

Where are Australia’s biggest houses?

However – where are Australia’s biggest houses actually located?

It appears that those in Western Australia are big fans of expansive properties. The state had the lowest proportion of medium density dwelling approvals (20 percent) compared to all approvals in the year to October 2013, according to Bankwests’ Housing Density Report, released earlier this year.

“Western Australia is the only state where the proportion of medium dwelling approvals has fallen over the past 12 months,” the report stated.

By contrast, medium density housing approvals are gaining popularity over stand-alone homes in other areas, making up 56.4 percent of total approvals in New South Wales, 67.2 percent in the Northern Territory and 68 percent in the ACT.

It could be said that areas with booming populations, such as Sydney, Melbourne and Brisbane will see demand for property in upcoming years result in a shift away from the big home dream, with more units and apartments becoming the norm. If you’re thinking about leaping into real estate ownership, be sure to use a home loan calculator – no matter the kind of property you’re buying.

A burgeoning property market

The findings from Westpac Group-owned BT Investment Management could have interesting ramifications for Australia’s property market and those taking out home loans.

For instance, while house prices are rocketing in areas like Sydney and Melbourne, spacious homes by global standards could appeal to foreign buyers.

Sydney’s dwelling prices lifted 2 percent quarter-on-quarter to July 31, marking 14.8 percent annual growth, according to the RP Data-Rismark July Hedonic Home Value Index Results. In Melbourne, quarterly growth was 1.8 percent, with year-on-year growth reaching 11 percent. 

Canberra and Darwin were the only other capital cities to experience quarterly dwelling price increases (2.1 percent and 0.8 percent, respectively), but all capital cities posted annual growth.

“With interest rates remaining low and fixed rates seeing further downwards pressure, we are expecting that capital gains will continue into the foreseeable future,” Tim Lawless, RP Data Research Director, explained.

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Learn more about home loans

Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

Can I get a home loan if I am on an employment contract?

Some lenders will allow you to apply for a mortgage if you are a contractor or freelancer. However, many lenders prefer you to be in a permanent, ongoing role, because a more stable income means you’re more likely to keep up with your repayments.

If you’re a contractor, freelancer, or are otherwise self-employed, it may still be possible to apply for a low-doc home loan, as these mortgages require less specific proof of income.

Will I have to pay lenders' mortgage insurance twice if I refinance?

If your deposit was less than 20 per cent of your property’s value when you took out your original loan, you may have paid lenders’ mortgage insurance (LMI) to cover the lender against the risk that you may default on your repayments. 

If you refinance to a new home loan, but still don’t have enough deposit and/or equity to provide 20 per cent security, you’ll need to pay for the lender’s LMI a second time. This could potentially add thousands or tens of thousands of dollars in upfront costs to your mortgage, so it’s important to consider whether the financial benefits of refinancing may be worth these costs.

Is there a limit to how many times I can refinance?

There is no set limit to how many times you are allowed to refinance. Some surveyed RateCity users have refinanced up to three times.

However, if you refinance several times in short succession, it could affect your credit score. Lenders assess your credit score when you apply for new loans, so if you end up with bad credit, you may not be able to refinance if and when you really need to.

Before refinancing multiple times, consider getting a copy of your credit report and ensure your credit history is in good shape for future refinances.

I have a poor credit rating. Am I still able to get a mortgage?

Some lenders still allow you to apply for a home loan if you have impaired credit. However, you may pay a slightly higher interest rate and/or higher fees. This is to help offset the higher risk that you may default on your repayments.

I can't pick a loan. Should I apply to multiple lenders?

Applying for home loans with multiple lenders at once can affect your credit history, as multiple loan applications in short succession can make you look like a risky borrower. Comparing home loans from different lenders, assessing their features and benefits, and making one application to a preferred lender may help to improve your chances of success

Will I be paying two mortgages at once when I refinance?

No, given the way the loan and title transfer works, you will not have to pay two mortgages at the one time. You will make your last monthly repayment on loan number one and then the following month you will start paying off loan number two.

If I don't like my new lender after I refinance, can I go back to my previous lender?

If you wish to return to your previous lender after refinancing, you will have to go through the refinancing process again and pay a second set of discharge and upfront fees. 

Therefore, before you refinance, it’s important to weigh up the new prospective lender against your current lender in a number of areas, including fees, flexibility, customer service and interest rate.

Can I refinance if I have other products bundled with my home loan?

If your home loan was part of a package deal that included access to credit cards, transaction accounts or term deposits from the same lender, switching all of these over to a new lender can seem daunting. However, some lenders offer to manage part of this process for you as an incentive to refinance with them – contact your lender to learn more about what they offer.

How do I know if I have to pay LMI?

Each lender has its own policies, but as a general rule you will have to pay lender’s mortgage insurance (LMI) if your loan-to-value ratio (LVR) exceeds 80 per cent. This applies whether you’re taking out a new home loan or you’re refinancing.

If you’re looking to buy a property, you can use this LMI calculator to work out how much you’re likely to be charged in LMI.

How common are low-deposit home loans?

Low-deposit home loans aren’t as common as they once were, because they’re regarded as relatively risky and the banking regulator (APRA) is trying to reduce risk from the mortgage market.

However, if you do your research, you’ll find there is still a fairly wide selection of banks, credit unions and non-bank lenders that offers low-deposit home loans.

How do I take out a low-deposit home loan?

If you want to take out a low-deposit home loan, it might be a good idea to consult a mortgage broker who can give you professional financial advice and organise the mortgage for you.

Another way to take out a low-deposit home loan is to do your own research with a comparison website like RateCity. Once you’ve identified your preferred mortgage, you can apply through RateCity or go direct to the lender.

How much of the RBA rate cut do lenders pass on to borrowers?

When the Reserve Bank of Australia cuts its official cash rate, there is no guarantee lenders will then pass that cut on to lenders by way of lower interest rates. 

Sometimes lenders pass on the cut in full, sometimes they partially pass on the cut, sometimes they don’t at all. When they don’t, they often defend the decision by saying they need to balance the needs of their shareholders with the needs of their borrowers. 

As the attached graph shows, more recent cuts have seen less lenders passing on the full RBA interest rate cut; the average lender was more likely to pass on about two-thirds of the 25 basis points cut to its borrowers.  image002