How Australian Mortgage Rates Compare Globally

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Have you ever wondered how Australian Mortgage rates compare with other countries? If you want to buy a home, is it cheaper in Australia? Well, if these questions are ringing in your mind, after reading this article you’ll have a clear picture of how the Australian mortgage rates stack up to other countries, specifically Western ones. First, let’s consider the cost of buying a home in Australia.

To accurately capture the house prices, let’s consider some statistics for the capital cities in Australia.

City Median House Price Interest(per 30 years)
Sydney $1,000,000 $676,416
Adelaide $485,000 $328,062
Brisbane $497,000 $336,179
Melbourne $707,000 $ 478,226

The median house prices in four of the major cities in Australia –  Source 1, Source 2

The above shows the median house prices and total interest paid on home loans in the major cities of Australia. Sydney comes off as having the highest house price followed closely by Melbourne.

How do these numbers stack up to other countries? Let’s consider the G8 countries. I converted each respective country’s currency to its corresponding value in Australian dollars. The table below summarizes the median house prices of the G8 countries and the interest paid on a mortgage for a period of 30 years.

Country Median House Rate Interest (per 30 years)
France $374,501 $113,270
Canada $472,834 $ 131,687
Japan $591,321 $37,489
United Kingdom $472,834 193,084
Italy $880,912 $344,981
Russia $333,313 $816,311
United States of America $ 925,529 $408,564
Germany $389,226 $131,822

The median house prices across the G8 countries and the total interest paid over 30 years – Source 1, Source 2

Well, the above figures show that it is much cheaper to own a home overseas as compared to Australia. It is much cheaper to own a home in Russia than it is in all the major cities of Australia and by extension all the G8 countries.Again, the interest paid on home loans is much cheaper in overseas countries in the G8 with Japan being the cheapest.

A closer analysis of some of the countries is given below.

Japan

Japan housing market is quite interesting. Houses in this market have flat or falling prices. Another characteristic of these houses is that they appear undervalued. According to the Statistics Bureau of Japan, owning a home in Japan is usually a tall order since the average wage is quite minimal. However, the homes may be cheap but are also small in size. In fact, the average Australian would have cut down on the possessions they have.

Germany

Germans prefer to rent houses than to buy one. This is manifested on their home ownership statistics.46% of people own homes even with an interest rate of 2.45%.

France

Home ownership rates stand at 64%. Even so, property acquisition is largely hinged on your income and ability to pay. Standard procedure is that you cannot purchase a property if the repayment value is more than 33% of your basic income.

Russia

According to the figures, Russia, by far, has the highest interest rates in the G8. You would wonder how they manage to pay such exorbitant interest rates. Interestingly, about 86% of Russians own a home. However, out of all of the homeowners, few of them purchased the home using a loan. People have more incentive to meet the cost of the buying price than to have to expend so much in interest. As per the median house price, the homes of Russia are much cheaper than Australia.

Summary

Well, our analysis has shown that it is indeed cheaper to purchase a home outside Australia. But all in all, Australia is my home. You can compare home loans here in Australia that are closely reflecting your needs and preferences. No need to shop outside.

 

2019-07-04T20:44:26+10:00

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