How Are People Affording Properties?

Ljam-donuts on 18/05/2024 - 21:29
Last edited 19/05/2024 - 10:45 by 1 other user

I am genuinely confused and wondering if someone can explain to me how people in Melbourne and Sydney are affording properties. I rent in the eastern suburbs in Melbourne and see a near 100 percent clearance of houses sold at auction for at least $1.7mil+ around me in the Monash area. That is 11k in repayments over 30 years! You wouldn't be able to afford that even with a salary of $250k.

Where is all this wealth coming from? Is the average income of an Australian $400k or am I missing something? And is the only possibility of homeownership for an average OzBargainer (with a salary of $200k -$250k) to buy a property in crime ridden suburbs on the outskirts of Melbourne or Sydney?

Financial

Comments

  • Hybroid on 18/05/2024 - 21:34
    +108

    Some people have dual working incomes.
    Some people work 2 jobs.
    Some people have dividend-generating investments.
    Some people borrow more than they should.
    Some people have foreign funds to bring over.
    Some people have family support networks.
    Some people put up more deposit than base 10%, so the monthly payments are lower.
    Some people dump savings into offset accounts to reduce interest.
    Some people sold their properties they bought for much cheaper prior to the recent increases.

    For a 200k salary with 20% deposit saved up, a $1.2-1.3m home is achievable within an hour train to Sydney CBD.

    • theHMASfriendship on 18/05/2024 - 21:39
      +154

      Some people call me the space cowboy

    • Gervais fanboy on 18/05/2024 - 21:46
      -1

      Wow

        • Aleigh123 on 21/05/2024 - 08:46
          +22

          No idea what you're on about. Sydney is listed as one of the most unaffordable cities in the world in terms of housing - second only to Hong Kong.

        • Drakesy on 21/05/2024 - 16:59

          @Frankensnore lol what planet are you living on?

        • Snakey Chook on 22/05/2024 - 09:47
          +3

          I love it when internet rants like this insert completely irrelevant personal gripes midway through the point they're making (eg. Netflix is evil!). It really highlights how the writer is living on another planet.

          • altomic on 22/05/2024 - 10:27
            +12

            @Snakey Chook: it's those entitled milleniumals!!!
            they want everything for free.
            back in the day I bought my first house for $30,000.
            I didn't pay for netflix or need a new iphone every year.
            I worked hard.
            young people forget that we had 18% interest rates!!!
            the 70s was the gratest deceade.
            we had the best cars and the best music.

            milleminalls just eat too much avacado toast.

            /boomer mentality

            • R4 on 22/05/2024 - 11:40
              -1

              @altomic: 80s rocked it.

              70s music? Apart from punk it was all glam rock and disco!

              • montorola on 22/05/2024 - 12:55
                +1

                @R4: 90s was where it was at.

                Everybodyyyyyyyy……….rock your bodyyyyyyyy……..

            • Frankensnore on 25/05/2024 - 02:44
              -1

              @altomic: This! Read this and learn and stop whinging

            • brad1-8tsi on 26/05/2024 - 09:28
              -1

              @altomic:

              /boomer mentality

              I'm a boomer and I would not be wanting to try and buy a house (or renting) these days.

              Affordability for normal people on average or median wages sucks. Wage growth doesn't keep up with inflation.

              Among my similarly aged cohort the feeling is the same. I'm not sure who these cranky boomers are that would think younger folk are greedy or don't want to work. They they are just dumb sheets that listened to Alan Jones & John Laws too much.

              • justworld on 04/06/2024 - 13:47

                @brad1-8tsi: Life is tough if you're average - not sure why this should be a news flash

          • Frankensnore on 25/05/2024 - 02:45
            -2

            @Snakey Chook: The fact that you say that is why I am comfortable with economy today and you guys aren't.

            Do you want to know how it feels to be me? It's great, I saw something I like, I don't think too long about it, I just buy it. I only worry about how much space it took, how much time to take care of it. That's all.

            Whatever I spent now, given I have so many properties I often forgot where they are, the cashflow seems to grow faster still. Of course I still don't buy crazy things like first class or lambo, but be iphone? new macbook? Sure, just buy highest end. New car? Sure let's go European.

            My worry? Whether I have put my investment in the safest growth balance

            This is what different planet like, would love to invite you but you can't afford the ticket

        • morse on 23/05/2024 - 03:08
          +2

          The people in Australia is very spoiled and whinge too much. In Asian countries like China, you won't hear such things.

          People in China most certainly also ‘whinge’ and protest things too. There’s also the whole ‘lying flat’ phenomena in China which is very much related to the cost of property and living.

    • boomramada on 18/05/2024 - 22:09
      +53

      And some people just don't buy a dream house in CBD as a first house, instead of get a shit box from woop woop.

      • MrThing on 19/05/2024 - 01:58
        +30

        no i should be able to afford a house in the inner west of Sydney on a part time barista wage

        • jetblack on 19/05/2024 - 08:22
          +59

          I get your point that we can't have the most amazing, expensive things when starting out, but it doesn't seem unreasonable to want to live within <60 mins (I'm talking door to door, so less than that of actual commute) from your workplace. It's a tragedy that young families on objectively good incomes can't afford to do that.

          The further you live, the greater the commute… That's not great for spending time with young children and it's bad for mental health.

          • brendanm on 19/05/2024 - 08:32
            +3

            @jetblack: They can, don't live in Sydney or Melbourne, or get a job closer to home. Or stop unending immigration.

            • jetblack on 19/05/2024 - 09:20
              +24

              @brendanm: Telling people they should give up their familial and social support network and start fresh elsewhere isn't really a solution, though it may work for some.

              I agree with you that we can't have it all and people need to compromise, the point is that the compromises shouldn't have to be so major.

              Telling people to leave the place they have lived their entire lives is a bit much.

              • boomramada on 19/05/2024 - 09:37
                +5

                @jetblack:

                Telling people they should give up their familial and social support network and start fresh elsewhere isn't really a solution, though it may work for some.

                That is a main problem, I live in a old suburb, there is no free land, and not much new development, or sub division, yet everyone don't want to leave the area and kids need to move out plus all the other ppl who want to move into the area. So cheapest apartment went from 600k to 1M.

                So people like you, get all your resources and a second job to stay within the area. Supply and Demand.

              • brendanm on 19/05/2024 - 09:45
                +6

                @jetblack: People have kids, then their kids have kids, then those kids have kids. Do you really think the area that had enough space for the first generation, will have enough space after the multiple layers of more kids? On top of that, bringing in infinite extras by the way of immigration? It is literally not physically possible for everyone to live in the same place, surely you realise that?

                Telling people to leave the place they have lived their entire lives is a bit much.

                Yet people are happy to say that pensioners should have to sell the homes they've lived in their whole lives and downsize so other people can move in to where they were?

              • ankor on 19/05/2024 - 18:09
                +7

                @jetblack: You move for work, you travel back to see family or you get them to travel to see you.

                If you are established in a new suburb, then other parts of your family might move into a neighbouring suburb or the same suburb later on.

                This is how the immigrants have been doing it since the 1950s.

              • MrThing on 20/05/2024 - 13:10
                +5

                @jetblack: Immigrants are moving countries and starting fresh for a better start at life and their families and we have self entitled little darlings who work part time at Bunnings thinking it's their right to live in whatever suburb they want AND own a property. Wouldn't want to upset them 😂

                Changing populations and dynamics pretty much make this impossible

                Sure if you have rich parents or exceptionally well paid double income household, bloody good on you, you've won at the life lottery.

                But c'mon let's get real here

                • hornoscous on 01/07/2024 - 16:25
                  -1

                  @MrThing: As someone who is lucky enough to have jumped on the ladder just before it got out of reach, I honestly feel for the people trying to do what I did, not that far after me. All those saying 'just get a decent job' or 'stop buying coffees' really are a bit out of touch with how things are now.

                  A bit of perspective - my parents lived in Sydney's Inner West and when starting a family had the choice of buying a 5 bedroom place in the Inner west for $26,000 or a brand new 5 bedroom house in South-west Sydney for the same price. They chose the latter. And that is my point. They had the choice of where they wanted to buy, and on fairly modest salaries.

                  Inflation aside, why could people choose where they wanted to live then, but now its considered by some generations to come down to poor financial decisions/bad work ethic etc. if you can't afford a place.

                  For comparison: That exact same choice is now $2,200,000 for the place in Inner west, $1m for the place in south west Sydney. $1m is still a huge amount of money/lifestyle to sacrifice to own the roof over your head. Sure, it is still possible to achieve lower end property on a reasonably slightly above average salary with huge sacrifice, but the choice of location was taken away a long time ago.

              • shutuptakemymoney101 on 20/05/2024 - 22:08
                +3

                @jetblack: Better to stay put where they can't afford to buy and can't afford the outrageous rents.

                Many of our forefathers set sail across the ocean with very little money in their pockets seeking a better way of life, that's a lot further than just moving interstate.

              • nikey2k27 on 21/05/2024 - 21:04
                -1

                @jetblack: depend how bad they want a place. willing to do to get it.

            • ColonelSanders on 20/05/2024 - 20:23
              +1

              @brendanm: So all of the baristas should leave Sydney and Melbourne? I guess the finance bros can make their own coffees, it’s not that hard…

          • slacker on 19/05/2024 - 10:44
            +7

            @jetblack: It sucks but with a growing population it is not mathematically possible to keep fitting more and more people within 60 mins of the CBD. We can replace houses with apartments but eventually they will fill up too. What next? Hong Kong style shoe box apartments? At some point we need to either grow regional towns into cities or limit immigration growth to a sustainable level.

          • uzz32 on 20/05/2024 - 07:43
            +4

            @jetblack: It's not tragic at all. Starting a family is a lifestyle choice. People need to live with the choices they make.

          • May4th on 20/05/2024 - 09:12
            +3

            @jetblack: what's wrong with an apartment? you have to make compromises somewhere, whether it be space or location. sure it sucks, sure it shouldn't be this way, but this struggle isn't unique and a problem for every major city in the world

            • brendanm on 20/05/2024 - 21:02
              -5

              @May4th: Apartments suck.

              • May4th on 20/05/2024 - 21:16
                +4

                @brendanm: then earn enough money to afford a house?

                • brendanm on 20/05/2024 - 21:46
                  -3

                  @May4th: I do, and have one. Irrelevant to the question which was "what's wrong with an apartment". Small, right next to people in multiple dimensions, can't do what you want with your own property, have to pay body corp etc etc.

                  • May4th on 20/05/2024 - 22:08
                    +5

                    @brendanm: The question was actually "why can't you live in an apartment which you may actually afford which will also keep you off the streets as opposed to a 1.7m house?"
                    I also prefer a Lambo over my Toyota because it's faster, flashier, and makes me feel warm and fuzzy when I beat the granny in her Getz at the traffic lights, but it's what I can afford and gets me from A to B so I'm not complaining about it

                    • brendanm on 20/05/2024 - 22:15
                      -4

                      @May4th: No, you literally wrote:

                      what's wrong with an apartment?

                      Apartments are garbage, and we wouldn't need to build so many if there wasn't a push for "big Australia".

                      • May4th on 20/05/2024 - 22:41
                        +3

                        @brendanm: Well guess what we can't all have a two storey house with pool and backyard 5min from the beach and cbd. you have to compromise in life. The sooner people realise that the happier you will be

                        • brendanm on 20/05/2024 - 23:03
                          -4

                          @May4th: Yes I'm well aware, however apartments are just garbage.

          • MrThing on 20/05/2024 - 13:15
            +2

            @jetblack: 60min, is a dream commute, time to get real

            How about all the tradies on the cennycoast who commute to Sydney everyday to work, more than 60min there

            Or people in penrith commuting to the city on the train that's more than an hour

            Hornsby to city, door to door via train would be 60min ez

          • infinite on 20/05/2024 - 20:14
            +5

            @jetblack: Get a job in the outer suburbs so you live close to work in an affordable home - just like what every first home buyer has ever done in every prior generation.

          • AlanHB on 20/05/2024 - 23:30
            +2

            @jetblack: You can live near where you work if you rent dude. It's a strawman argument to claim that you can't "live" somewhere if you can afford to rent there.

          • nikey2k27 on 21/05/2024 - 03:49
            +3

            @jetblack: move find good pay job else where

        • redfox1200 on 20/05/2024 - 09:08
          -1

          and you can, if you are the owner of starbucks

        • Chigglet on 21/05/2024 - 20:10
          -1

          thought you were being sarcastic at first, then realised you were being serious lol….

          • MrThing on 22/05/2024 - 01:33
            -1

            @Chigglet: sarcasm is hard online

            but yes i was being

      • morse on 19/05/2024 - 04:26
        +9

        and some people bought a shit box 10-20years ago, renovated it and/or the property appreciated in value and now they can sell this to upgrade to the property they want in the suburb they want.

        • Benoffie on 19/05/2024 - 09:09
          +10

          Essentially this was us. We purchased a dump in a suburb we could afford at the time. The money spent on renovations wasnt high compared to a general mortgage in other areas.

          Come last year and idiots decided theyd be happy paying $1m for any suburb in Adelaide. Ah ok. So we sold and moved.

          Bought another dump - this time in the eastern suburbs and our mortgage is paying for the renovations that will carry us into retirement.

          • MrThing on 20/05/2024 - 13:16
            +3

            @Benoffie: This is how it's done with a good head of realism

            • jjjaar on 20/05/2024 - 13:43
              +6

              @MrThing:

              This is how it's done with a good head of realism

              This is how it’s done when you are born at the right time so you can afford the dumps.

              Dumps all across Melb are going to people who can pay cash (like the above), so those who have not yet entered the property market are priced out.

              I’ve seen several dumps in my area sell to people with deep pockets, with want-to-be first home buyers missing out, for the property to then be relisted 4 months later for $200k more than sold for after the buyer quickly threw in ~$50k of work.

              The first home buyers can’t afford that. They were happy to live in the dump and fix it up their own way over time, but have been priced out as they require a mortgage and have a firm limit.

              • Benoffie on 20/05/2024 - 15:34
                +1

                @jjjaar: What's driving that though isnt Boomers or Gen X moving (because the numbers arent large enough) but certainly in SA it's interstate and foreign investment.

                Saw a dump down the street from us (albeit not already subdivided) sell for $1.45m. The $ per sqm was way above current average. Local buyers dropped out by $1-1.1 and the final buyer was from overseas.

                In my area, families are resorting to Trust mechanisms to buy properties and go guarantor. It's something we're now considering ourselves as we are equally concerned about out children. And while they have done all the right things (worked jobs, saved etc), theyd currently be better off moving overseas to buy and live than staying here.

                What an absolute embarrassing predicament to put our citizens in 🤦‍♀️

                • jjjaar on 20/05/2024 - 17:12
                  -1

                  @Benoffie: It’s still driven by Boomers and Gen X, regardless of the reason (moving v investing).

                  Just by being born at the right time and having been able to buy homes in the 90s/00s as PPORs has given them a leg up in the property market, whether they are currently investing or not.

                  Downsizing in Melb is definitely part of it, as they’re often buying the “starter homes” that first home buyers are after, the smaller ~2 bed units/townhouses. Selling a larger property and being able to pay cash means they don’t have the same concerns. They can outbid most who will be reliant on a mortgage.

                  This doesn’t mean they won’t enter the market, but usually results in first home buyers making other compromises like looking at other areas or smaller properties (1 bed or apartments, which may not make sense if there are people wanting to start families where having a courtyard or a second bed is important).

                  But you’re absolutely right, investors in the cities are causing issues. Looking at census data for Greater Melbourne, in 2001 only 24% of occupied private dwellings were rented. In 2022, that has increased to 31%. That’s wild! Especially when you consider that the quantum of dwellings has increased from 1.18m to 1.76m.

                  Australia-wide the story isn’t as strong, with 28% of occupied private dwellings rented in 2001, to 31% in 2021.

                  I’m keen to look at more numbers now…

                  • gromit on 20/05/2024 - 19:12
                    +2

                    @jjjaar: The Youngest Boomer is now 60. Boomers represent a tiny portion of new investing, most likely they are selling more than buying and are a net positive to real estate at this point. retirees generally aren't running around buying up investment properties. Gen X definitely still investing though. Really though there is no right time. For every rich Boomer or Gen X you will find a dozen struggling to get by. It is no different now when it comes to buying, you have to set your target at outer suburbs. The concept of buying in the centre of a major city wasn't viable for Gen X or Boomers starting out and it certainly isn't viable for current first home buyers.

                    • Baghern on 24/05/2024 - 11:10
                      -1

                      @gromit: … they own most of the investment properties… they were the ones driving the investor boom of the last 10-15 years.

                      Previously they relied on interest based savings for Pension, but when interest rates dived they all jumped into Property…

                      During the whole China buying property scare campaigns I went to inspections and auctions for apartments… it was all old farts

                      The reasons property havnt dropped the last year with interest rate raises is that people who have been saving for the last 10 years are over paying out of desperations

                      Most investors have left the market

                • Creamsoda on 20/05/2024 - 18:11
                  +1

                  @Benoffie:

                  Local buyers dropped out by $1-1.1 and the final buyer was from overseas.

                  i thought overseas buyers can only purchase new off the plan properties? unless they are students?

                  • gromit on 20/05/2024 - 19:21
                    +3

                    @Creamsoda:

                    i thought overseas buyers can only purchase new off the plan properties? unless they are students?

                    its funny, I used to see this all the time at auctions. People would assume anyone not Caucasian was a foreign buyer. One of my mates has asian heritage and he would constantly get accused of being a foreigner buying up property (he has never lived a day of his life outside Australia and doesn't speak any other language either).

                    • Benoffie on 20/05/2024 - 19:48

                      @gromit: I do not make that assumption. I know and work with several local agents and the number of either FIRB approved buyers or those funded from overseas here is high atm. In addition to continuing interstate movers.

                      Big influx into SA from India, Malaysia, China and, to a lesser extent, HK (although the movement of money out of HK is generally being done via children).

                      SA property prices have recently overtaken Melbourne but without the income increases to match. Homelessness has now become terrible (Adelaide I think recently hit 2nd in the world in one ranking) and there's no indication of it stopping.

                      We have houses in outer suburbs which locals would regard as 'rough' or low end selling for $1.2m (Parafield Gardens). There is no South Australian paying that kind of money for that location.

                      • gromit on 20/05/2024 - 21:13

                        @Benoffie: The reality doesn't really Gel with what you are saying. unless numbers have absolutely exploded exponentially in the last 2 years (which would require a massive hiring on the FIRB side) then the numbers approved by FIRB are sub 10,000 Australia wide, they are little more than a rounding error in the housing market.

              • morse on 23/05/2024 - 04:05
                +3

                @jjjaar:

                This is how it’s done when you are born at the right time so you can afford the dumps.

                I don’t disagree with this. It’s no secret that the cost of property relative to incomes is getting higher and has been moving in this direction since at least the 60s if not longer. My point was just a statement of fact, that one way people can afford at $1.7million property is leverage through previous investments, which of course you’ve had more opportunity to build the longer you’ve been alive.

                Having said that my parents went through times when there was literally nothing left after keeping up with mortgage payments and very basic cost of living, ie just food and utilities.

                Also I’m a millennial (just) and was relatively late compared to others getting into the property market. Many in my age group or younger bought a unit first then sold this to upgrade to a house later, or some kept the unit and rent it out and have/had two mortgages on the go. This is still possible now, and there has been genuine wage growth over the last 20years. Young people are still hustling and finding ways into the property market. It is honestly still possible (albeit harder) as a middle class wage earner to save a deposit and buy a place if people do the same things those of us a bit older did, my tips (what I did):
                - live in shared housing. I lived in share houses throughout my 20s until I coupled up so I’ve literally never lived alone. It’s far cheaper not living alone. For people who don’t have/want a partner, the reality is it will take longer and they might need to consider renting out a room in their property, to achieve the same. I don’t own a house alone, I own it with my husband.
                - focus on increasing income. Get the education, go for the higher paying jobs, put time in to becoming valuable to others whether that’s through skills as an employee or something you offer through a business. I worked hard in my field to learn the skills that made me of more value as an employee and my salary steadily went up as I took new opportunities. Side hustles and investments seem to be the new norm too.
                - live cheaply. It’s fine to want nice things but really it’s a trade off. Things like using Ubers, getting frequent takeaway/meals out, upgrading devices frequently, having expensive clothes, aren’t really the go if the goal is to buy property. As a youngster I still did these things to an extent, but getting a taxi was a luxury or shared (I’d often just walk, even 5-10km if public transport wasn’t an option), meals out were cheap options, devices got upgraded every 3-5years, much longer for appliances. All furniture was second hand, most clothes were op shop or discounted, travel was in a group with shared accommodation or in hostels - I still had a lot of fun.

                Regardless it’s definitely harder now, but I think young people need to decide what they want. If it’s a house close to things, they might want to consider moving away from Sydney/Melb if they can get work elsewhere. Internationally most people in big cities are living in units. The idea of having a house in a large city isn’t realistic for the majority of the population. Yes there was a generation that had that in Sydney, but Sydney is a much bigger international city than it was when this was a thing.

        • infinite on 20/05/2024 - 20:16
          +1

          This is what people have been doing around the world for hundreds and hundreds of years.

          It's amazing more people don't get it.

      • t_c on 19/05/2024 - 10:12
        +6

        Question is, after the shitbox in woop woop is paid off in 30 years, will the banks approve another 30 year loan when your 60 to 70 years old?

        • AFOS on 19/05/2024 - 10:25
          -1

          I can assure you that they will. I know already several of such cases. Banks are happy to give you money as long as you have enough equity to feel them secure, and you can afford the repayments. The assumption is that you will sell the property (downsize) at some point and pay them back.

          Gone are the days of conservative approach. Nowadays banks are much more risk-taking than Jesse James in the old West. Take evaluation for example, their evaluation will always come in at least 10% higher than the actual price of property.

          The whole system is rigged and there is no chance to win this game unless you play by their rules:(

          • t_c on 20/05/2024 - 17:59
            -1

            @AFOS: So you're confident you can pull 12 hour days in your 60s and 70s to service the repayments on a 7 figure loan?

        • infinite on 20/05/2024 - 20:17

          You downsize and buy something much smaller and cheaper once you get into your 60's and head into the retirement years.

          Why would you need a new loan to buy something big, new and fancy?

          • t_c on 21/05/2024 - 08:22
            -1

            @infinite: Because you bought a shitbox in woop woop as your first house as @boomramada previously recommended. And its taken 30 years to pay said shitbox off.

            • infinite on 21/05/2024 - 11:01

              @t_c: Again, why would you need to take out a loan to then buy a smaller property once in retirement? Your existing property would have appreciated enough over those 30 years to easily sell for way more money than you'll need to then pay for a retirement home.

              • t_c on 22/05/2024 - 06:16
                -1

                @infinite: Exactly, you go from shitbox in woop woop straight to retirement home.

                • infinite on 22/05/2024 - 22:26
                  +2

                  @t_c: Only if you rented for the first two and a bit decades of your adult life and purchased that shitbox in your 40's.

                  You can easily afford a shitbox in your 20's and that's still the case now. Pay down the interest for the first 10 years, then use the equity gained to buy a rental unit that will earn more in rent than your mortgage repayments will be on it. By the time you hit 45 you'll have paid off at least one of the two properties and by the time you hit retirement you'll easily own both outright, unless you used some equity to obtain another rental unit.

                  Everyone who is gainfully employed can easily afford to do this, they simply just have to be realistic about where their financial positions will allow them to get into the market to begin with.

        • morse on 23/05/2024 - 04:12
          +1

          It shouldn’t be taking 30years to pay off a shit box. A couple on an average salary who live sensibly, maximise their income, use an offset facility should be able to pay off a property within 10-15years. Remembering in the past it was primarily not single people buying properties alone. Most people got married, owner occupied and have dual incomes.

        • alexdagr8 on 23/05/2024 - 11:37
          -1
          1. Wages increase higher (often) in line with inflation and the debt of the mortgage decreases. So if you’re good, you pay it off before 30 years.
          2. Banks will lend to you if you say at 60 or 70 years old “my super will pay off the remainder of the balance when I retire”

          Main thing is: get in anywhere, look interstate and then buy where you want in time. Not everything happens when you click your fingers

      • skidexa on 19/05/2024 - 11:44
        -1

        I don't hear anyone wanting to do this….

      • Brianqpr on 19/05/2024 - 12:37
        +19

        An average income should buy an average home in an average suburb. It doesn't.

        • smartazz104 on 19/05/2024 - 13:02
          -2

          All suburbs are average, except when it comes to housing prices.

        • Powershopz on 19/05/2024 - 14:07
          +3

          What on earth is an average suburb? That's a very sweeping generalisation.

          People need to buy within their means. Yes, every younger generation is getting shafted and it's even more challenging but it's not completely out of reach.

          E.g
          Dual income couple w/ no kids on median income in Melbourne (65K) could buy a 2 bedroom townhouse in Jacana for ~$500K (not the best area, but better than living in whoop whoop). You'll be able to get a loan on those salaries and service the mortgage.

          It's not median (which is roughly double that) but it's within a couple's means.

          Tough luck if you're single, you are proper (profanity) :-(

        • cfuse on 19/05/2024 - 14:10
          +2

          What does the market price of human labour have to do with the market price of real estate?

          • Brianqpr on 19/05/2024 - 22:23
            -1

            @cfuse: That's kind of my point.

            It should relate but no longer does thanks to the tax breaks available to investors who get to pay less interest on their borrowing, given them an advantage.

            • cfuse on 19/05/2024 - 23:16
              +2

              @Brianqpr: When you double the availability for something the price drops. Guess what reliable contraception did to the number of available workers?

              When the computer didn't exist and spreadsheets were on paper then human skilled labour was very important and paid to account for that. Now anyone can make a spreadsheet with effectively zero knowledge. The labour involved is almost worthless.

              We didn't used to have satellites, subsea cables, or an internet. Sending work offshore wasn't a possibility. And student visas were actually for students rather than food delivery workers.

              Now we're looking down the barrel of AI. What do you think that's going to do to wages?

              Wages are going to continue to drop no matter what we do. This is going to get a lot worse.

              Conversely, real estate will only continue to rise in price. Firstly, no government is going to bite the boomer hand that feeds, they're going to kick that can down the road. Secondly, we cannot make more land. Supply and demand determine price. Whether you're fighting with 40 other people to rent a hole, or putting yourself in hock to the bank for more than a million dollars, the market set that price.

              A market correction only happens when the good is overvalued. Barring a massive depopulation event the need for housing isn't going to diminish any time soon. Not that we're building enough already. Or that you can find a builder that won't go bust in the middle of the build.

              This is a no win situation for any government that tries to address it. To increase supply would require war time levels of funding and labour commitment to build housing that would suppress the value of existing real estate. That's an instant no vote from boomers. Even if they could get around the boomers the population can't afford these houses in the first place. What job is going to pay enough for it as labour prices drop in a manner that the government cannot stop.

        • justworld on 19/05/2024 - 22:17
          -1

          Not really. Given that a lot of people can't even afford to own - they rent. So home ownership is concentrated in the wealthier part of society already. Further, most of those households have two incomes for a reason.

          Unless you propose that every single household be a single-income household, and that every household own one (and only one) house, your statement makes no sense whatsoever.

          • Brianqpr on 19/05/2024 - 22:28
            +2

            @justworld: You are missing the point.

            Around a generation of mismanagement and generous tax breaks to investors have us where we are now.

            People could once afford an average suburb on one average income, my parents generation. Now they can't do in it on two average incomes. Largely due to investors who get tax deductions on interest so have lower repayments.

            I'm talking average household income, not single income as that's not really a thing anymore. And what's wrong with owning one house? There are plenty of other things to invest in that perform as well or better.

            • pogichinoy on 20/05/2024 - 01:34
              -1

              @Brianqpr: Times have changed buddy. It would be disingenuous to think everything will remain the same.

              Decades ago the working class suburb was Balmain and the average home is a 2 bedroom bungalow.

              Today, the working class suburb is now Liverpool and a two bedroom apartment.

              What’s different? Availability of credit, population, and available properties in established areas. Note the last, they’re not creating more houses in established suburbs at the rate they did decades ago.

              • noisymime on 20/05/2024 - 15:48
                +1

                @pogichinoy: A critical thing missing from your list of what's changed is relative wages and purchasing power. Compared 20, 30, 40+ years ago our wages are a LOT lower, they simply haven't grown at the same rate during that period as practically all prices have.

                Wages as a % of food, housing, transport etc are all considerably lower than they used to be, which is a huge part of why smaller and more remote properties have become the norm.

                • pogichinoy on 20/05/2024 - 17:58
                  -3

                  @noisymime: What you described in the first paragraph is availability of credit, which enables purchasing power.

                  You also described the devaluation of currency, which is expected with fiat currency.

                • Discombobulated on 21/05/2024 - 12:56
                  +2

                  @noisymime: Not correct. Real wages (wages adjusted for inflation as measured by the CPI) have not grown much in the last decade - they have just started to rise again in the last year. Bur for the decades before, real wage growth was substantial.
                  House prices however have risen much faster than general inflation.

                  • noisymime on 21/05/2024 - 14:29
                    -1

                    @Discombobulated: CPI isn't the right measurement to be comparing to for this and doesn't given an accurate view of the true situation. Look at consumer purchasing power since the 1970s and it paints a VERY stark picture.

                    Housing purchasing is simply weighted too low in the CPI basket (8% and FALLING) to let it be an accurate reflection of overall household spending these days.

            • justworld on 20/05/2024 - 03:30
              +1

              @Brianqpr: Why do you say investor tax breaks have such a big effect when 80% of homes are owner-occupied homes and the value of owner occupier 100% capital gains exemptions and land tax exemptions far outweighs negative gearing and 50% CGT exemptions for investors?

        • alexdagr8 on 23/05/2024 - 11:38

          It does if you save hard and don’t squander your money

    • HeWhoKnows on 19/05/2024 - 08:19
      +1

      Any money grows on trees these days!

      or just grab some from your Monoploy set

      After all, its all Monopoly money these days.

    • Sinnerator on 19/05/2024 - 09:09
      +8

      and another
      Some people live MULTI-family per household
      go to western sydney and see the houses with 10-20 people living there and cars parked absolutely everywhere in yards, on footpaths etc

    • Homr on 19/05/2024 - 11:51

      For a 200k salary with 20% deposit saved up, a $1.2-1.3m home is achievable within an hour train to Sydney CBD.

      1hr train ride!! So you're saying places like Penrith, Marsden Park and Edmonson park?

      • Brianqpr on 19/05/2024 - 13:55
        +3

        The percentage of people earning 200k is very small, unless you mean household income and even that is a pretty small section of society.

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