Australia's Housing Affordability Crisis

squeeze on 16/04/2023 - 23:02

The average income in Australia is 92K pre-tax. This equates to around 4.7K monthly take-home. To buy an apartment in a desirable suburb in Sydney or Melbourne you are looking at spending AT LEAST $600,000 for something small but liveable (2 bedrooms if you're lucky). The monthly repayments assuming a 500K loan (assuming you have saved 100k deposit) is 3.4K over 30 years (7% interest rate). This leaves 1.3K leftover for body corp fees, car expenses, holidays, food, utilities and life which is not enough to live comfortably.

In other words for a single person to buy their first home without the bank of mum and dad it's really not achievable without making big sacrifices. I wonder where this will leave a generation of low income earners who never make it into the market.

What can be done to address this and get first home buyers / young people into the market?

Personally I think there should be more tax on property investors and restrictions on foreign property investment. In other words - more owner occupied homes. I am interested to see what Labor do with the first home buyer shared equity scheme.

An interesting watch from Friendly Jordies on the housing affordability crisis - https://www.youtube.com/watch?v=lJE3B_ra3lY&ab_channel=frien…

Financial

Comments

  • Protractor on 18/04/2023 - 11:56
    +4

    Solutions? Don't vote for any party who enables negative gearing.
    It's basically game over, anyway. We are importing 900,000 migrants in the next 2 years. Housing them where?
    Landlords will either be holding out, or jacking rent prices at that point.Or sell at inflated prices.There is going to be as many lemon houses as there are vacancies going fwd.(Lack of tradies, lack of govt building inspections etc)
    Perfect shitstorm. Over-population will consume us .

  • pr0o on 18/04/2023 - 12:18
    +1

    Every place where I rent - the owner has multiple places so the scheme is definitely richer keep getting rich and poor will stay poor.

    • GG57 on 18/04/2023 - 13:56

      That sounds like the owner is a business person, whose business is renting properties out.
      The owner is almost certainly making money, but not unlike other business people.

      I agree that there is a widening gap between the 'rich' and the 'poor', but they are currently supporting each other to a certain extent.

  • Brianqpr on 18/04/2023 - 16:57
    +3

    The time this needed sorting out was about 20 years back when Howard was PM. But we got first home owner grants etc that just fuelled prices more.

    Bill Shorten wanted to make changes to negative gearing and was screamed down by the Murdoch press and voters who then decided Scomo seemed like a better idea…

    Feels like it's too late now as too many are invested in prices remaining high and it would be political suicide to try and change it.

  • Dack Smith on 18/04/2023 - 17:57
    +3

    Housing affordability low

    Urban sprawl extremely high

    Environmental destruction is high

    The health system is collapsing all over Australia

    Governments deny responsibility

    What will the people do?

    Will anyone care?

    • Protractor on 18/04/2023 - 22:35

      It's all (every existential problem facing every society) directly linked to global over population. The so called leaders are in denial and policies reward exacerbating the problem.
      The equal and opposite reaction process is stalking us as we all pontificate.

  • [Deactivated] on 18/04/2023 - 18:08
    -4

    I wonder where this will leave a generation of low income earners who never make it into the market.

    It will leave them doing what they do best… whining.

    What can be done to address this and get first home buyers / young people into the market?

    Get first home buyers and young people to agree to REFUSE TO PAY THOSE PRICES. (They can't sell for stupid high prices if no buyers will pay it.) This is the ONLY thing that will work. EVERY SINGLE TIME government interferes with property it goes UP.

    Personally I think there should be more tax on property investors

    This is dumb. More tax means less investors means less rentals. The small and TEMPORARY "drop" (if it even materializes) in prices still won't allow most people to buy… i.e. It might be 10 or 15%… so what… they still can't afford the loan. So now they: a) Have slightly less overpriced property they still can't afford, and b) More of them can't find a rental.

    and restrictions on foreign property investment.

    There should be NO dual citizenship and NO sale of property to foreigners. But that is a moot point and won't bring prices down.

    I am interested to see what Labor do with the first home buyer shared equity scheme.

    This: "EVERY SINGLE TIME government interferes with property it goes UP."

    Mark my words… it will seem a good thing for about 3 months then if everyone is say handing government 40% of their equity, property prices will be something like 60% higher due to the market being stimulated… just like the FHOG did under BOTH Liberal AND Labor.

    Which brings me to Friendly Jordies… That guy is so dishonest and leads his gullible listeners around by rings in their noses contradicting himself and conveniently leaving out other just-as or more important info. But that doesn't matter, since his listeners never check anything for themselves, and his main objective is to deceive them into voting for who he votes for.

    e.g. In that video he talks about bad Liberal policies increasing property prices but conveniently "forgets" RUDD increased the FHOG from $7000 (from Liberals - which kicked off property price increases) to a whopping $14000 (which inflated prices even further)! Again I quote myself: "EVERY SINGLE TIME government interferes with property it goes UP."

  • MrTruffle on 18/04/2023 - 21:26
    +3

    How many people buying a place solo vs in a relationship or married. Itd be tough to make it work solo on average or median salary but if solo and buying 2 bedroom they can get a flatmate to help pay their mortgage?

  • hawkshead on 18/04/2023 - 22:44

    make charging rent punishable by death?

  • haemolysis on 19/04/2023 - 01:51
    +3

    Ultimately, there isn’t that much of a “crisis” to begin with. The market has changed from owner-occupiers to renters/investors. I’m not a fan of that… at all… and I think we should go back to how it was before. But to call it a “crisis” is a little ridiculous. At the end of the day people still have a roof over their head.

    The system right now is extremely popular. Investors aren’t a small group. They make up millions of direct investors, millions of indirect investors (through super for instance). Further, those who oppose the status quo- really just oppose that they haven’t got their foot in the door yet. Once they do, suddenly those opinions change very quickly. No CGT for me, thank you!

    Acknowledging this reality means acknowledging that the only solutions are painful, divisive, and WILL be economically harmful to a huge, huge number of people. You have to seriously harm investors to fix this mess. Weak measures like helping FHB make higher deposits only exacerbates the situation.

    I think we can and should do it in order to address economic inequality. But there needs to be political will to upset this many people. After failing two elections on housing reform, Labor simply doesn’t have that will anymore.

  • elvislj on 19/04/2023 - 02:17

    What demography do you see at the weekend inspections and auctions around the property hot spots?

    Chinese. Buyers and agents. It's a tradition in China to give full financial support to the young adult children and the Chinese are absolutely property mad. An apartment in the first tier city in China can trade with a large house in Sydney.

    They have been constantly on the news refreshing suburb records for years. The chance to compete with them is very slim.

    • Protractor on 19/04/2023 - 10:17

      That probably explains why 90% of ebay sellers on ebay.au claim to be based in Straya, when in fact they drop ship from China.
      Mum & Dad sending junior the gadget (via cheap China post ) to drop in the post box. The interesting quandary is how they get the item to traverse the globe quicker than APost can move it a single suburb.
      Our residential real estate is going the same way as every other corner of the nation. Owned and exploited by everyone but the locals.

      • TightAl on 21/04/2023 - 12:35

        Who? the indigenous?

  • frostman on 19/04/2023 - 11:06
    +3

    What can be done to address this and get first home buyers / young people into the market?

    Go to your Local MP. Seriously and ask/him her to raise this in Parliament in relation to your locality.

    The 3-4 Factors contributing to this crisis are;

    • Foreign Investment
      These hoarders setup channels in Australia which go through loopholes to buy property thus inflating prices.
      Foreign investors want the same apartments and houses YOU do, close to Transport, Hospitals, Schools, etc this creates a squeeze.
      You have no chance to outbid them.

    • Developers
      These hoarders are on the hunt 24/7 for houses with potential DA approvals, they buy, knockdown (or renovate), and sell for a huge mark-up.
      You have no chance to outbid them, they usually have over $2-10 million line of credit open.

    • Drug Dealers & Money Launderers
      These people need to spend their cash, whether it's depositing cash via Trust Accounts which are then used to purchase the property under a business/company, or whatever means, they have more money than you.

    • Your Local, State and Fed Government
      Your government ultimately doesnt give a toss about you you're not the one of the above making them millions in stamp duty, so yeah/

    • GG57 on 19/04/2023 - 11:27

      Some good points.
      - Developers: it should be considered that if they are buying a 4-bedroom house (currently housing 2 people perhaps) and replacing it with 2 or 3 3-bedroom townhouses, that is a good thing?

  • dlakers3peat on 19/04/2023 - 11:24
    +2

    Is this situation any different to any major capital city around the world.

    • prodrome on 20/04/2023 - 09:20

      No, because it is the same problem globally.

      Massive returns with AirBNB.

  • Guerilla89 on 19/04/2023 - 20:28
    -1

    They could:

    • Get rid of Capital Gains Tax because while it is important that units/houses are rented by investory, that should not be their primary function
    • Stop dividing the have's and have not's by including the home in the means for the pension so that old people dont' feel they need to hold onto a 12 bedroom house they can't even clean themselves
    • The government could incentivise developers to stop slowly releasing suburb homes in stages i.e. they could give a 20% land discount to the developer if they release all homes within a certain time frame for example
    • Zoning laws could be relaxed to allow for higher density living in cities and other things such as allowing kit homes, allowing land owners to live in a caravan on a block while they build their house, etc.

    It blows my mind that you can buy land and not be allowed to live on it until you have a building that meets "neighbourhood standards".

  • SydBoy on 19/04/2023 - 20:45
    +2

    entire Australia rejected Bill Shorten when he actually genuinely going to address this issue with capital gain tax on property investor … so good luck for any change in property market in Sydney or Melbourne unless we get serious recession with world ward or collapse of some of the big banks …. !!

    • infinite on 19/04/2023 - 21:24
      -2

      People rejected Bill Shorten because he was terrible at his job and worse as a leader.

      • ItchyBallsack on 20/04/2023 - 11:10
        +3

        And Scomo was the better choice?

        • infinite on 20/04/2023 - 23:19
          -3

          No one ever mentioned him at all.

          Why does that guy currently live rent free in your head ?

  • fragileheart88 on 20/04/2023 - 08:07

    The wind fall tax, local land owners being greedy and wanted to sell high price, tunnels projects costing x3 than the usual rates, CHMP, bones, stones, grass, trees, birds compliances, all of these contributed to the $600k mark.

  • Juliusdesign on 20/04/2023 - 08:24
    +1

    Each state is different, I do videos for real estate here in NSW not awfully lot but I talk to the agents ocasionally.
    Problem is there is not much supply in the market and lots of demand. Even 2 months ago before the interest rate freeze, when people say house price is going down. The house being sold didn't drop much because of lack of supply.

    Immigration, buying law etc only play a little part on this.

    Increasing supply should be the main thing. However everything is now expensive, building supplies, labour etc.. this also push the price up. And because of the economic condition people are still a bit cautious on developing / building new houses. It'll probably change soon, as now renting is not much cheaper than owning a house if you can afford to pay for a deposit.
    So regulations won't do much, all this incentives will only push the price up as people find holes and try to use it for their advantage.

    I've got family members who want to buy house in Sydney, unfortunately the best option for them is to move state, and find a cheaper property.

  • ItchyBallsack on 20/04/2023 - 11:09
    +6

    Wouldnt the easiest way is to reduce or freeze immigration? That should reduce demand for housing at least

    • daniesaurs on 20/04/2023 - 11:42
      +1

      But then we will have a skills shortage, wages will have to increase and GDP will fall behind, looks like they don't want that

      • Protractor on 20/04/2023 - 19:17
        -1

        That;s the myth, keep peddling it.We got here because of too many people, local and imported. The 'endless growth' nightmare has trapped the sheep into believing more humans fix everything. Baaaaaaaaaaa

        The only thing there isn't a shortage of is humans. And if the migrant tradesman we have received are defined as 'skilled' in the construction, mechanical and other so called wanted positions, Australia should be paying our tradespeople artisan or craftsman rates.

        We need a green card system. Oh wait, ID theft and fake trade certs has basically made every person outside Australia a tradie,doctor,lawyer,engineer,astronaut. I wonder how long before Sydney hi-rises begin to crack?

    • Danger on 21/04/2023 - 12:49
      +2

      Pollies opened the immigration tap to get the GDP up, which is artificial because locals are still worst off with inflation.

  • payless69 on 20/04/2023 - 11:30

    Tinder will fix it!

  • Dack Smith on 20/04/2023 - 12:05
    +1

    So I guess mass immigration will solve every issue…….

    Maybe if Bill Shorten had won, Australia would be in a much better place.

    Now?

    Money hoarding sacks of manure owning multiple investment properties they can’t realistically afford, then pissing their pants when the rates rise and crying.

    Housing prices higher than ever.

    Hmmmmmmmmm

    • Protractor on 20/04/2023 - 19:11

      Bring back Keating.

  • ihbh on 20/04/2023 - 13:46
    -1

    What can be done to address this and get first home buyers / young people into the market?

    Why should we try to get first home buyers / young people into the market "unnaturally"?

    Why can't they do it themselves, rent/share, live with the parents, etc., like previous generations?

    • CrabLord on 20/04/2023 - 16:47
      +2

      Why should old peoples lives be extended "unnaturally"?

      Fall over in your own home, no carers around and break your hip. Just lay there and starve to death like previous generations did.

      OR

      Some thought goes into these issues and we help all people out in the specific ways that they need. Housing is a basic human need.

      • ihbh on 20/04/2023 - 17:46
        +1

        Housing is a basic human need

        Absolutely.

        You are confusing housing with home ownership. You can have housing without home ownership; in Europe, this is by far the most common situation.

  • acersaurus on 20/04/2023 - 14:21

    Crappy problem, some places are still affordable though. E.g

    3/22 Mambourin Street, Werribee, Vic 3030 https://www.realestate.com.au/property-unit-vic-werribee-141…

    That property seems like a fairly typical example of two bedroom unit prices for the suburb.

  • acersaurus on 20/04/2023 - 17:04

    Something easy that could be done to ease the problem is to include the family home in the assets test for the aged pension.

    The system at the moment encourages elderly people at certain wealth levels to hang on to large houses. If they downgrade, they lose their pension if they have enough money from the sale of their house.

    • Protractor on 20/04/2023 - 19:08

      Bugger that. Negative gearing can be scrapped first and foremost after the first investment property or second property registered to the same entity. It's a rort.
      By all means, 'means test' (fully, every asset pensioners have. Plenty of multi millionaires with lawyers and accountants should NOT be on any welfare, but milk it.
      Other less entitled ,less (not) wealthy people just WANT to live in and should be allowed to live in their "HOME" until they decide not to.
      The issue is those at the front end expecting the giant fully furnished mansion and pay squat to get it.
      Stop blaming boomers and older home owners for all the upstream issues. Foreign buyers , dodgy real estate agents and investors broke the system. Penalise them.

      Negative gearing is a trough

      • acersaurus on 20/04/2023 - 19:49

        Negative gearing could be something to look at, there's plenty of things that could be part of the solution.

        By the way I'm not "blaming" boomers for behaving rationally here. I'm blaming inefficient government incentives in the pension system.

        • Protractor on 20/04/2023 - 20:58

          It's clear there are as many billions (if not more) leaking to the rich.Inappropriately
          There needs to be a full audit (Royal Commission) into that parasitism.
          And if govts are gutless because they fear losing an election, we should handball the process to an independent referendum on balancing the ledger.
          Simple question. Would you like the High Court to establish an independent publicly accountable Royal Commission to audit all tax regimes in Australia. (pre-mable says to balance the tax system to restore fairness and to eliminate all tax avoidance. The Murdochs of the world should not be allowed to control our lives, social engineer the west and rape and pillage as he goes.
          The govt could gift houses if 'tax avoiders' and future eaters were paying their share.

  • jeeg on 20/04/2023 - 18:31

    I am of the view that the housing affordability "crisis" as you put it, is primarily caused by the easy access to credits some 10, 20 years ago. During those times, it is easy for many people to go to the bank to borrow to buy a house, and due to the easy access to credit, house prices became significantly inflated.

    The government's FHOG worsen the situation - whilst the intention is noble (i.e. helping first home owners to get into the market) - but the unintended consequence is that this also inflate house prices. There are many other factors such as negative gearings, etc that just compound the problems more.

    I guess what I am trying to say is that we are reaping what we sowed. We have gone way too far down the track to now lament that our house prices have now become unaffordable. To reverse the trend would require a significant deflation in our economy.

    • leiiv on 20/04/2023 - 22:34

      Or the government can release more land, increase density, and invest tax payer money in building housing (a.k.a start government-owned developer to build reasonably priced housing for the masses).

    • Gabbatron44 on 21/04/2023 - 08:53

      Easy access to credit is a huge part of the problem. If we reduce the amount people can borrow by putting huge safety margins on borrowing capacity, wuess what happens? If people can only borrow half of what they can today, houses go down INSTANTLY over night. There's also more require, see my post further below.

  • bobolo on 20/04/2023 - 22:42

    There is no affordability crisis. There is an entitlement crisis

    Plenty of affordable housing in all capital cities.

    OP's keyword is "desirable". I personally desire A5 Wagyu for dinner every night. I guess if we stop migration I could have it?

    Also, who gets to live in the "undesirable" suburbs?

  • hasher22 on 21/04/2023 - 01:25

    Can we stop using average? Use median…… median is around 60k

    Here's a crazy idea, what if….. what if…… properties weren't 'investments' to private investors? The property investment boomed in the 80's? There was a great doco regarding the great property investment boom, prior to that houses/homes were considered just homes to live in nothing more. Some houses were cheaper than cars!

    I wonder what world we would live in if properties weren't a business. Everything is a business now, if you market it right, you can sell it for profit.

  • BluebirdV on 21/04/2023 - 06:34

    I read somewhere ANZ said 15 percent of borrowers will default on their mortgage by the end of this year. What kind of financial crisis are we in for? If the average person can't afford to buy a house won't the market correct itself eventually? Or are we forever priced out?

    • Surfsalot on 21/04/2023 - 19:18

      If you don’t own now all over red rover

  • rando88 on 21/04/2023 - 08:25

    Did you mean 72k annually? 72k after tax is around $4700 with no HECS debt.

    92k would be be over $5800

  • Gabbatron44 on 21/04/2023 - 08:51
    +1

    If you want affordable housing, this is what we need to do to:

    • Reduce the amount people can borrow by putting huge safety margins on borrowing capacity. Guess what? If people can only borrow half of what they can today, houses go down INSTANTLY over night
    • Get rid of negative gearing
    • Stop international investment in residential housing
    • Stop self manage super funds buying residential housing
    • Bring in proper anti money laundering rules to the real estate industry
    • Significantly reduce immigration counts. Let the country catch up with roads, hospital, education and many other things

    Otherwise my kids will never be able to afford a home

    • hasher22 on 21/04/2023 - 14:19

      That will slow it down but it will take time.

      Other few measures that could help
      - Limit what the average person can invest in a property by 1
      - Have the homes that are vacant and put it up for rent, from stats one suburb had a wopping 30% vacancy because business investors are trying to build units and they still can't get approval for now 6 years now, imagine in that 6 years people can live there. Based on current data, around 160,000 homes in sydney are vacant, now I am not saying it's all due to investments, alot of reasons why a home could be vacant but I assume a nice chunk of that could be rented to people…..

    • tomfool on 21/04/2023 - 16:08
      +1

      What about the build costs?

      https://www.domain.com.au/advice/how-much-does-it-cost-to-bu…

      Latest figures from the Australian Bureau of Statistics (ABS) put the cost of building a house in February this year at $449,436, slightly higher than it was the month before, at $445,664. In February 2022, that figure was $391,937, and in February 2021 it stood at $319,261.

      Labor costs have increased significantly in the trade sector due to over stimulation by government, floods etc. Material cost have increased and even though supply has normalised those prices are not going to go down.

      • Felixrising on 22/04/2023 - 18:20

        This! There has been a huge stimulation of renovations and builds, but the pipeline capacity of the construction sector was undermined with cuts to Tafe for over a decade, plus slow down in shipping and supply of materials. So we have a potent mix of overdemand, under supply in labour and materials… Prices went one way… Encouraged by extremely low interest rates and cash being poured into the economy. It's not a wonder we have inflation through the roof! Keeping in mind the real-estate market drives costs for lots of things!

  • Baghern on 21/04/2023 - 10:28
    +4

    To buy an apartment in a desirable suburb in Sydney or Melbourne

    Thats where you lost me, those aren't prices for average income. They're limited supply.

    If you want to use "average income" which is across the nation, you should be looking at "average apartment" across the nation

    The "average wage" of people living in an apartment in a desireable suburb in Sydney or Melbourne is significantly higher than 92k

    • bobolo on 22/04/2023 - 10:06
      +1

      It's so painfully obvious it hurts.

      The problem is that everyone wants to live in a waterfront home at Bondi.

      Not long ago people used to just start out with a compromise and work their way up to it over time. Nowadays its just about whinging online until they get what they want

  • Surfsalot on 21/04/2023 - 19:17

    Only benefit in owning your own home for life is 1: you get to leave it to kids etc. 2: you don’t have to pay rent when you get to pension age.

    • Protractor on 25/04/2023 - 11:26
      +1

      You don't have to pfaff around moving, you keep contact with long term neighbours,you don't have to buy a worse or unknown issue property. It's a 'home'.
      There probably more pros to keeping the home 'for life' if you think about it.
      I wouldn't also assume the house being 'left to kids'. Aged care is a thing now. It costs big time. Junior can look after him/herself.

      • Surfsalot on 25/04/2023 - 11:35

        sure there is other reasons, I was being a bit flippant, have just been down the nursing home route with the in-laws over the last 5 years, they suck you dry, house was sold and a big wack went to the home to bring the fees down, still waiting near on 6 months now for probate to get the deposit back.

        • Protractor on 25/04/2023 - 12:26

          The parasites who control aged care ( contracts via slimy politicians) milk it. Most of this was allowed in to the back door by the LNP. Heaps of foreign money behind this cash cow model. If you compare what is paid to what you get, it's a crime.The ppl running aged care are the only winners. By a fat margin. That's why they are resisting 24hr nursing arrangements. (1) Money [eating into their profits] and (2) oversight

  • ChupaCabra on 21/04/2023 - 19:34
    +1

    First step if you actually care about it then vote for an independent who's policies align with housing affordability.

    We need to shift the Australian view away from housing as purely an investment and incorporate that it is a necessity.

    Also think a cap on the number of old houses you can own (say 3-5) would be interesting. Why do you need 5+ houses? Only exception I see is if you are renovating them for resale as a business. I'm sure the fine details could be nutted out.

    • pogichinoy on 27/04/2023 - 11:09

      As much as I agree, there is not one country in the world that bars residential housing investment.

      It's a futile hope.

  • Nost on 21/04/2023 - 20:04
    -1

    Until Gen Z and young millenials become a powerful voting bloc and if they don't manage to get themselves on the property ladder, nothing will change.

    If you take a look at all the positive (societally beneficial but requires individual sacrifices) policies that Labor put through over the past decade from a carbon tax to the negative gearing changes and then lost the election based off that and can you now see the problem? Even Super changes are a sacred cow, to be touched lightly so as to not hurt a lot of people.

    • Protractor on 23/04/2023 - 10:22

      Yes, agree. Bluntly >stupidity elected their own fate, which includes affordable or non existent housing, and that fate has now flowed on to the vulnerable. A few elections before that the LNP voters re-elected the foreign buyer model. So there has probably been a great swathe ( 3 decades) of domestic real estate swept away from under their feet of big city urban properties to OS buyers. (That is likely to include entire unit blocks.) Add to this the investor pool absorbing property at pace.
      TLDR: Self inflicted misery at the polling booth, or via the apathy ( DILLIGAF) when they should have paid attention & stepped up.

  • Tiredman on 22/04/2023 - 09:16

    Just have to work twice as hard and twice as smart. If you don't do it, someone else will.

  • Blargman2001 on 22/04/2023 - 11:21

    Double median income in Sydney can still afford an older 2 bed apartment out West in Sydney which is enough for a couple with 1 child. A young couple on the median income can still afford a place even in one of the most expensive places on Earth. Or just move, everyone in Sydney/Melbourne complains there are no jobs in Adelaide, Darwin, Perth, Hobart but if you're only making the median income in Sydney/Melbourne it's not like you're going to have trouble finding a similar income interstate.

  • conza on 22/04/2023 - 16:46
    +1

    By the way, $92k is not the 'real'* average income, it's probably closer to the average household income. The Median income I can find from 2020 was $52,338, the average gets brought up to $75k, but that's not what's important as that's throwing in big and mega incomes to bring it up.

    I don't have the latest data but it's probably around $60k-$65k as a median and if you've got $92k average I'd believe it.

    • ssfps on 22/04/2023 - 17:22
      +1

      Several years ago when I last looked, median income aus wide was $70k-80k, but places like NT, SA and TAS bring that down a fair bit, whereas NSW was a fair bit higher. Nowadays WA and VIC are pretty close to NSW too I believe. I wouldn't be surprised if the difference between TAS and NSW median income was ~$20k.

      tldr, OPs "$92k average" is probably not that far off for Sydney, which is what the house prices he's quoting are from. Sure, in rural SA you're probably on $60k but you can pick up a cheap house for $250k

      • conza on 22/04/2023 - 18:04

        Point taken, I didn't consider that data sets for different states almost certainly scale with local prices to some degree. There's more opportunity in VIC/NSW even QLD compared to WA, SA, NT and TAS for sure. I'd like there to be data on that to verify, but I don't think it exists, so you're probably close.

  • ssfps on 22/04/2023 - 17:11

    What can be done to address this and get first home buyers / young people into the market?

    1. Destroy the corrupt banking cartel, fractional reserve banking and the debt-based money creation.

    2. Slow immigration to the point the population at large isn't growing (still some immigration as fertility rate is below replacement).

    3. Seize all houses owned by foreign and corporate owners (except perhaps apartments).

    These are the root causes, everything else is a bandaid or misdirection.

    Number 3 isn't even really a root cause, but is a 'nice to have' and will speed up the slow correction if #1 and #2 are addressed.

    • hasher22 on 26/04/2023 - 00:22

      The root cause is making homes investments in the first place

      • ssfps on 26/04/2023 - 09:31

        That's not the root cause. Everything is/can be an "investment" / speculative "asset" these days. What makes houses keep going up instead of having a temporary bubble that bursts? The points I outlined.

        Regulation might prevent temporary bubbles but at a great cost.

        • hasher22 on 26/04/2023 - 12:32

          But it actually is, prior to early 80's, homes were considered non financial gain assets like a car. Some homes were cheaper than cars. It's not until late 80's and early 90's where homes were considered 'valuable' or 'investment opportunity' where capitalists saw future gains and built businesses and models around it. Thus the government saw this wave of investors and wanted in creating policies and laws. Just like how the government now wants a piece of the Crypto and BNPL pie.

          There are docos regarding the great real estate boom, not only in Australia but America and around the world. But the general consensus is that it started in the 80's

          • ssfps on 26/04/2023 - 23:54

            @hasher22:

            It's not until late 80's and early 90's where homes were considered 'valuable' or 'investment opportunity' where capitalists saw future gains and built businesses and models around it

            As far as i know, Australia's mass immigration policy was established around that time, which could explain why property suddenly was perceived as an investment opportunity, which was my #2 point. Wealthy people and underhanded/unscrupulous people didn't just appear in the 80s, and i refuse to believe in a world where millions of people are just too stupid to see such low hanging fruit if it were just sitting there. I.e. some changes had to precipitate this perception change and speculative asset housing market. The huge influx of immigrants through the 90s is a pretty good reason, although certainly not the only reason.

          • pogichinoy on 27/04/2023 - 10:42

            @hasher22: Agree. It was not mainstream until the 80s.

            It was inevitable though. In the 80s and earlier, properties in Aus were severely undervalued compared to other world cities. It was a next to a sure thing that they would increase exponentially.

            The Sydney olympics in 2000 really put us on the map at the world stage.

  • Felixrising on 22/04/2023 - 18:07

    Let's face it, the whole idea of "investing" in real-estate is predicated on the idea that it will grow faster than inflation. But that means it's becoming progressively more expensive. That is a dead end for the housing market and cost of living. So what is this? A ponsi scheme? Crypto? It grows because more people want in because it grows?! It's not a good idea.

    • amazonaddict on 22/04/2023 - 20:12

      Exactly, I don't understand it either. People buy with the hope that the price doubles every 6 years. And there are people who can afford that too. For example, look at this property. It was sold for $950 4 years ago. 4 years later, it is sold for $1.58m. More than 10% annual growth for a house on a main street with a lot of noise. Also, the house was not in a good state either. So, it is a no brainer to invest in properties in Australia.

      Next is renovating and selling. Look at this property. The price guide is $2mil and I bet it will sell for more based on the interest in the property. It was sold for 1.35mil just 2.5 years ago. After putting $200K in renovation (source: REA) they are expecting min 400K profit.

      I think everyone has figured out a way to 1.2x their income every year, while I have peaked a few years ago. Need to find more ways to generate more income to catch up.

      • rambao9 on 23/04/2023 - 00:29

        Your first link judging from 2019-2023 photos was completely renovated from interior to exterior, probably cost about 300-400k for mat + labour. So realistically, went up 300k in 4 years, which is decent but no 10% p/a…

    • pogichinoy on 13/06/2023 - 11:29

      It's also predicated on the idea that the properties are undervalued, which was the main reason as to why the 90s and 00s booms occurred.

  • xdigger on 11/06/2023 - 21:48
    +3

    Australia has the most overpaid tradies in the world, and are relatively under-developed compared to continental USA which is of a similar land mass.

    Import cheaper tradies from overseas to develop regional Australia, that will fix our housing and regional crisis. We are already importing cheaper fruit pickers and even doctors from the third world, why can't we do the same for tradies? Given the shoddy build quality of new builds anyway the overseas tradies might even be higher quality!

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