It should come as no surprise that Sydney homeowners are the wealthiest Aussies in terms of home equity. The median house price in the city is now $1,068,303.

Data released this October by the Australian Bureau of Statistics (ABS) shows that Melbourne homeowners are the second wealthiest in the country in terms of home equity, with a median house price of $780,000. Ranked third is Canberra, with a median house price of $661,912, followed by Darwin ($595,466), Perth ($566,609), Brisbane ($521,152), Adelaide ($494,911), and Hobart ($338,703).

Dr. Andrew Wilson, chief economist at Domain Group, said the latest statistics were “not surprising” because Sydney’s house prices are much higher than any other capital city. “Their home loan debt is higher too, but even when that is taken into account they own more equity,” he said.  

According to Wilson, property remains the favoured form of wealth creation in Australia because the country has a strong connection to brick-and-mortar investments, as well as a cultural attachment to owning one’s own home.

“The family home is so important in Australia in terms of wealth creation because it is quarantined from any form of wealth tax. It doesn’t incur capital gains tax or land tax.”   

Australians also strongly favour property investment because they believe it is safer than other types of investments and has more incentives, including negative gearing, capital gains tax discounts, and tax depreciation allowances.

By comparing the latest ABS home loan figures with housing values in each state, Wilson estimates, that on average, Aussies own approximately 50% equity on their properties. “Of course this is much higher in older age groups as the longer you’ve been in the market the more home equity you’ll have.”

Wilson’s insights are supported by the latest findings of the Productivity Commission, which indicates that almost half (45%) of Aussies aged 55 to 64 own their homes outright (i.e. have no mortgage). The percentages are even higher (73%) for those aged 65-74, and an impressive 80% among those aged 75 and older have no mortgage.

Patrick Nolan, ME Bank’s head of home loans, says the bank’s analysis of property values indicates that Aussie homeowners have accumulated a lot of equity in their homes.

“Australian home owners with a mortgage, on average, hold a great deal of wealth in their residential property,” Nolan said. “ME’s analysis from a leading property information provider shows Sydney property owners have the most equity in their homes, an average of $443,900 per property, compared to $276,845 in Melbourne and $203,813 in Canberra.”
 

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