As well as financial security for retirement and unemployment, this equity also provides benefits such as collateral for loans for purposes such as cars and holidays, and for other investments. The location of the dwelling is a major factor, with dwellings in capital cities having the highest home values within each State. These differences in home values result in very different housing wealth holdings for families across Australia. The value of homes also varies markedly across different capital cities. Dwelling values also vary according to the type of dwelling structures.
Separate houses are, on average, worth more than other types of dwellings.
It is accumulated through the deposit placed at the time of purchase, through paying off the mortgage principal, and through capital gains and losses as the market value of the dwelling rises and falls over time. The equity is measured as the value of the dwelling, as estimated by the householders themselves, less the reported value of any outstanding loans secured against the dwelling. For some buyers, high interest payments, combined with falling dwelling values in some periods and some locations, as well as any additional borrowings they have made, may even result in negative equity some years after purchase. In general, however, the amount of equity held in the family home follows a life-cycle pattern. People accumulate a larger financial stake in their homes as they grow older.