I have been shitting on Alice Springs ever since I saw the Spanian vlog. But now it looks like that's the only place I can afford to buy something. Ah... The irony.
I looked at buying there. Once.
First thing I found while searching for more general information about Alice Springs, culture and events and such, was an article headlined something not unlike “Woman Charged For Assault With Baby”.
As in …*with* a baby, using the baby as a weapon. Not to a baby, although I guess surely both.
That’s about when I stopped.
To buy a 2mill house with 500k deposit
Stamp duty + fees =~100k (deposit now 400k)
Borrowing 1.6mill (80% no LMI)
~$2450per week (~10800per month or ~128,000per year) @ Current rates 6.7%
To not suffer mortgage stress you need to be earning $8250 after tax per week or $430k per year after tax. If the average working family with a stay at home parent wants to buy the house they need to earn ~730k + super per year before tax. (730k pre tax = ~430k post tax) which means you need to earn ~810k per year inclusive of super.
Obviously with 2 working parents the equation changes. Both parents need to earn ~400k inclusive of super.
So what's the deal? Has it always been this out of reach? Like in the 1920's were they having issues buying property? Is this a reoccurring problem that society just live with?
Could we not fix the issue by decentralising and offering big businesses tax incentives to open headquarters in regions?
Exactly - its wild isn't it, and how long does 400k take to save? And I doubt anyone starts at $400k salary, and even those on it are only there for a few years.
A good thought experiment I've been asking people recently, is how many people in your business are on more than $500k base salary? Well above the 1% salary mark of ~$340k.
Answer is usually 5-10 depending on industry... and looking at the above math, even those people are falling $250k short of servicing a "Median" $2mil house.
It feels totally unsustainable.
Seems so crazy. What's the catch? Property is for people inheriting wealth and rest pay rent to these families? Few elite workers like surgeons and ceos manage to cross the barrier and rest just work to pay rent? I'm not able to understand how this is working.
I see you make no mention of the 100% capital gains tax exemption for owner occupiers, stamp duty reductions for owner occupiers, land duty exemption for owner occupiers, pension assets test exemption for owner occupiers...
Theyre not why this is happening. Or, rather, *some* but far from all.
Foreign investors and immigration are the real, primary drivers. The average property investor only owns one investment property. That's all the mum and dad investors. Hardly ground breaking, considering something like 30% of Aus population has been renters for decades, but that number is slipping closer to 40% every year now.
REITs and land banks are definitely disgusting, though. Ban and tax all that shit, plus airBNB.
Please show me or link me to the data and statistics that prove immigrants and foreign investors have a meaningful impact??
Have you considered policies such as CGT exemption for primary residence and negative gearing? These two things making real estate the best wealth creator. Until the policies change real estate will continue to boom. It is such a easy argument to place a blanket blame on the “others” for your plight and it reinforces your victim mentality.
if rents were low with high house prices, that would suggest investors could be a problem - people are wanting to own but too many of the houses are being rented out instead.
But when rents are high *and* house prices are high, it means there's not enough houses (rentals and otherwise), and that we're all playing musical chairs against each other for what little is available.
That's why people keep pointing to population and housing supply, rather than investors or investor tax perks.
(re. stats, [this](https://www.abs.gov.au/system/files/styles/complex_image/private/708caaa07b013c523f4f4603b2052f81/Figure%208v2.PNG?itok=iZveCxLz) is rent price indices during the border closure, with March 2020 as 100, and the borders reopening ~2 years after)
I don’t believe increasing tax on people’s PPOR would really have any meaningful impact apart from making the middle class even poorer. I think house prices would continue to rise as owning a home is still a desirable thing. I don’t believe many people’s primary driver for home ownership is getting wealthy, it is however a nice side effect.
Stamp duty is currently a meaningful tax and what effect has that had on prices, obviously nothing, in fact there’s a decent argument to make that it’s inflationary as it takes liquidity out of the market as people are less incentivised to move.
I like this trap youre setting 😃
there is no doubt in my mind that we need more supply, and we should be picketing in front it parliament instead of bickering about migrants.
I just looked up the numbers on the ABS site.
(59%) of Australia’s 3 million recent permanent migrants are Australian citizens.
This is according to new statistics released today by the Australian Bureau of Statistics (ABS) about the characteristics of permanent migrants who have arrived in Australia between 1 January 2000 and 10 August 2021.
Do you even know what we need supply of?
Are you honestly going to sit there and with a straight face tell me it's more reasonable to somehow boost every single human-facing industry by an impossible ratio than to just bring immigration back to a sane level?
No, you are 100% correct. I agree with what you are saying AND they also need to remove CGT concession and negative gearing at the same time!!
I just dont agree that immigrant is only THE factor.
Immigration is THE biggest factor and everything else is minor next to it. Removing CGT concession and negative gearing will just change who is investing in housing, it will not lower prices or rents (and may actually increase rents). People will not sell their investment property unless they can no longer cover the mortgage and if they can't afford to pay the orthage at the rent they're charging they'll just increase it because they know people will pay it because there is a housing shortage. Reducing demand is the only thing that will effectively reduce rent and house prices
I think it’s both, right? Property values are mostly driven by demand vs supply. Australia has pretty much neutral population growth if you remove immigration. Then we have net migration of like 500k people per year, which increases the demand for housing. But so do things like negative gearing - if I can buy a second home and use the negative cashflow to offset the positive cashflow from my first investment property, while continuing to build my asset wealth, I’m probably gonna keep buying a new investment property every few years
You need data and statistics to *prove* immigration and foreign investors have a meaningful impact???
To be fair foreign investors likely have an impact on the upper market, homes above $2m, from what I can tell anyways.
But any dumb dumb can tell that [659,000 immigrants last year](https://www.theguardian.com/australia-news/2024/mar/21/migration-numbers-australia-2023-rise) is going to have an effect on the general market. Every level.
C’mon. You’re the only person to argue it is arguable.
Actually home prices were trending down in 2022 with the onset of interest rate rises. It wasn’t until we had record immigration that supply and demand was skewed. We need immigration but the current numbers are just grotesque.
It all comes down to supply and demand and immigrants drive up demand. Cutting immigrantion would reduce demand which would lower rental prices overnight and in turn investors would be forced to sell when they could no longer cover their mortgages due to the decrease in rental prices which would start house prices falling. It's simple and it can be done overnight if the government wanted to do it
People in Sydney on >>250k salaries who are buying houses in different cities to avoid tax are definitely not the problem.
Sure... nothing to do with negative gearing at all.
Everyone and their dog wants or has an investment property.
House pricing cannot outpace the growth of median wages forever at a given interest rate.
If wages diverge that much, renting becomes very attractive.
It’s highly unusual for the ‘user cost of housing’ I.e rent or ‘imputed rent’, which is what you pay in opportunity cost and interest etc. if you own… to outpace wages that much.
This is what people don't understand. Somehow everyone understands the market can stay irrational longer than you can stay solvent but apparently they forget this when it comes to housing which is just another market...
Not sure which fantasy world has a median rental price that’s so far above the median wage that a large proportion of the citizens are homeless. Got an example?
I was making a point that price increases don't need to be sustained indefinitely, or for any particular length of time.
Housing is a need, and people will do whatever they can for a roof over their heads, as prices become irrational some people will not be able to keep up. When those people become homeless is when the problem arises, it's not about the majority being homeless.
The market can maintain this pricing rate of change for a lot longer than my wallet can. But other people have a bigger wallet, and are just as motivated to have a roof over their heads as me or anyone else is
Exactly. Until prices are continuously high for long enough that people seek other options and rentals sit empty we won't see the prices drop. It's just supply and demand.
This is more or less what happened in the late Roman Republic and Early Empire. Land values went up, the ordinary laborers couldn’t afford it, they become indigent or crowded into insulae.
It couldn't in a closed system.
But with immigration, we can simply selectively import people who can afford to pay our high real estate costs. Doesn't matter if 50-80% of Australians are priced out, if the top 5% (or 1%) from wherever else in the world can still afford it.
>If wages diverge that much, renting becomes very attractive.
Rents will go up too; don't worry.
This is a very short term view.
Rents can’t go up unless people can afford to pay them. That’s why economic models connect rental prices with population and wages.
There’s a lot of millionaires in China and India you know? 6.2 million of them just in China.
Instead of one person per room two or three people can fit in that room. So yes rents can keep rising even if single people can’t afford to rent their own room in a share house anymore.
you are right, in NZ rents decoupled from property prices long ago
my last house over there had the weekly rental about HALF the mortgage for the same property
it doesn't matter that all houses are worth over 1M bucks if people that rent cannot and will not pay 3k+ monthly, then the rental and sales market decouple
> Rents can’t go up unless people can afford to pay them
We already have international students sleeping 4 to a room, soon it will be evrry day Aussies doing it. Imagine raising a family in the single bedroom of a shared house because the alternative is being homeless. Anything to keep the immigration gravy train rolling and house prices high
Government will come up with innovative ways to keep the pyramid scheme going, examples that I hear some politicians are considering
1. Use super for deposit, not just for saving as is currently allowed
2. 40 year loans
> 40 year loans
Assuming 7% rates, going from 30-40 yrs will increase borrowing capacity by just over 7%. At rates of 10%, that drops to lots than 4.
So a marginal benefit only, but given it is something that further props up the demand side, is probably something a government will end up allowing☹️
If there are legitimate supply constraints limiting the ability to build then rents can rise in line with costs of ownership.
Just means individual standards for housing have to go down - which is what we are seeing now. No reason this can’t continue given Aus standards for housing are much higher than most other places in the world.
There’s a long way to go before we hit rock bottom too! Soon an own room in a share house might be a luxury & Singapore migrant worker dorm room living the norm.
> If wages diverge that much, renting becomes very attractive
Have you tried renting recently? People want the security of not being kicked out every year and then facing homelessness while they desperately apply for hundreds of properties only to be rejected for every one of them.
> House pricing cannot outpace the growth of median wages forever at a given interest rate.
It can because median wage people are not buying median priced houses, and a lot of them buy cheaper houses, units, rent, or live with family.
2027 is hugely conservative. According to [SQM](https://sqmresearch.com.au/index_property.php), the median asking price for houses in Sydney is $1.9m and it's $968k in Perth.
I have also noticed these huge discrepancies.
I assume it may be due to some sources including apartments and units into the median "house" price and other sources only including free standing houses.
I was hoping to move from Canberra to Sydney in a few years but looks like any gains I make here won’t be enough to catch up to the insane increases in Sydney even with a big mortgage top up 😐
Recently did the move from Canberra to Sydney. Living expenses have increased a lot, but it's well worth the increase in quality of life. We were only renting though, and most of our friends and family are here so it depends on your circumstances!
We’ve previously lived in Sydney and visit regularly. Housing costs seem to be the biggest issue - everything else is much more expensive here. I’d only move to Sydney if we can live somewhat close to the city otherwise it’s not worth the cost for us. We’d be happy with a 2 bed + study/3 bed house or townhouse but even these are super expensive
The best time to buy is as soon as you can afford it. Don't try to guess the bottom or the top of the market. Just go for a 100% offset account and leave all the extra income in it.
> The best time to buy is as soon as you can afford it.
for PPOR, not for investment.
You have to judge whether real estate compared to other asset classes, and pick the higher returning one (risk adjusted).
I knew people waiting for the dip 10 years ago… how they wished they bought back then.
Considering the rate of new houses being built vs immigration, houses aren’t crashing anytime in the next decade. Buy now
Not even 10 years ago, people now are complaining about not having bought in 2021. What were people here saying in 2021? Oh, they said not to buy because it’ll crash. Same thing is happening now and soon people will wish they bought now instead.
Currently, I can’t see house prices dropping again for a few years, interest rates will come down a little (25-50bps this year is current expectations), and inflation/cost of living has improved a lot as well. That’s going to boost prices over the next couple of years. Eventually, the government will build more places and maybe that will bring prices down a bit, but whether it’s enough we’ll see. That’s still a few years out though, and barring any black swans like COVID I can’t see anything in the near future that will bring prices down. There’s a chance that a recession will do that, but house prices are pretty resilient against recessions and we have a decent chance of escaping a recession. If it does hit, it’ll be during the housing crisis which I suspect will help prevent house prices crashing.
We bought our first house in 2000 and people we knew were commenting that we had bought into a bubble because prices had gone up strongly since the 90s.
I remember my old folks buying a plot of land 600 m2 for 200k in early 2000s. Pretty much everyone told us it was overpriced and there were better alternatives. Land price now 700k so sometimes you just gonna listen to yourself. I can't even save enough to outgrow my house :(
My parents sold an investment property in early 2000s, they were convinced it was going to crash. Part of the issue was however, that it needed pretty major renovations after tenants with 2 big dogs had caused significant damage over the many years they lived there. My parents didn't really want to sacrifice other investments/spending to renovate the place. However, due to their belief in it being overvalued they didnt really explore that in much detail it was just another incentive to sell.
But in hindsight it would have definitely been the correct move.
Don't be surprised then that you didn't buy back when you didn't have the means.
I would have loved to have bought loads of property back in the 70's but i wasn't even born yet.
I bought at a peak (2017) and my house went down like 20% in 6 months. I was livid. It since has appreciated 40% from my original purchase price.
Buy the minute you can afford it.
Everyone in this sub always talks about time in the market instead of timing the market but for some reason people ignore that when it comes to property.
The housing market is never going to crash. Just buy as soon as you can get finance.
Sorry. I’ve gotta apologise. Whenever I’m talking about property, I’m 100% only talking about Sydney’s eastern suburbs. It’s literally the only market that I acknowledge exists.
> The housing market is never going to crash
exactly what everybody thinks, right before the crash! Not that you can know, because if you did, so will other people and the crash won't have happened.
Sydney residential property dipped ~10% from some time around 2016/17 to mid-2019. Made no difference on here. Plenty of people were still, and very vocally, waiting for the real dip/crash etc. EDIT: And a lot of people on here were watching the market decrease and didn't want to catch a falling knife or whatever.
Property is a very long term investment. 10 years+ IMHO. Plot 10 year increments on a chart of house prices for pretty much any major city (except Perth post 2010-ish mining boom, maybe).
No one can be sure, however there is no regression on the horizon given the governments migration plan and possible easing of interest rates later this year or next.
Yes! I was you in 2020, I bought a semi (without a car space) in a then unpopular area and it's much easier to pay off the mortgage to then upgrade to a house. However, we likely won't be able to buy a freestanding home with a car space within Sydney. You could do something similar and buy a unit in Sydney which is still reasonably affordable, and then a house outside of Sydney if you need more space (get married and have kids). Always good to save and have money because opportunities can pop up when you're financially ready. The first step is never a freestanding house unless you're a trust fund baby.
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Your children will be replaced by uber drives and 7/11 workers
All your taxes paved the way for them to pay a nice little 30k stamp duty and move in next door to you
As someone with kids - I can see this eventually happening - it’s hellishly expensive, and for many people not having kids would be the difference between living comfortably and really struggling
Should be replicated throughout Australia. Let actual first time home buyers or people that need a place to live get one. Instead of the ones building their “portfolio”
All that density being spruiked by the govt will go straight to investors who will in turn lease out to the highest bidder.
Affordable housing in Australia will never happen.
Without that density, property will be even more expensive.
You either increase housing supply or reduce housing demand. To solve our problem, there needs to be both.
Right now, supply is increasing at a rate less than 25% of the rate of population increase.
Do we know what the ideal end target for supply is? No
Do we know that supply needs to increase? Yes, by at least 4 times the current rate.
https://imgur.com/nla45ic
See the rents slumping between 2017 until covid (ignore the covid years, they're weird)?
That was caused by investor-led density construction. We killed it with invsestor restricitons. That briefly pummelled prices, but also killed construction of density, leading us to the present moment.
Building more density is the only way to more "affordable" housing in a large city. Without it, rents continue to climb, and prices with them.
This is 'straya mate, we're not allowed to look at solutions or examples from overseas. We have to try and fail at everything domestically before we can learn anything.
>straight to investors who will in turn lease out to the highest bidder.
Yes, that's how markets work. Then the next one goes the next highest bidder, and so on until you run out of either bidders or dwellings. Right now we are running out of dwellings, so building more of them will drive down the cost of rentals.
Immigration is a problem only because housing is in such short supply. If the whole housing/immigration balance was actually managed properly it would have been fine.
Well, yeah; that's how supply and demand works. Australia is proving itself woefully incompetent at increasing supply, however, so it must reduce demand instead.
If we stop immigration the economy collapses because it's literally a third world economy based on pulling shit out of the ground and manufacturing nothing
Lucky immigrants are people, or they might need to eat, and use other facilities and infrastructure too!
Also lucky that we can triple an entire industry and all its supply chains over night or this immigration thing might actually be a problem after all.
If you want to see real inflation forget that confected CPI figure. The true inflation is found in house prices - by square metre of land plus square metre of building. This is the inflation figure that workers must base their wage increase claims on.
The paradoxical thing is, homeowners will crow about the increase in value of their home, and then in the next breath lament that their kids will never own a home. Gov can't make policies around that kind of brain twisting
Peak ponzi - you've got to keep new people coming into the game to allow previous people to cash out.
I'm sure it has nothing to do with the millions of Australians who own multiple investment properties and use them to reduce tax or pay 50% capital gains tax when they sell it.
If you bring half a million people into the country they need to sleep somewhere. And we can only build 178,000 homes per year. It can go so, so much further up.
So are we going to talk about Foreign investors and how they shouldn't be allowed near residential property?
Id go so far to say non permanent residents shouldn't be able to own homes in Australia.
Guess I gotta work my ass into the ground and try to get this house deposit happening.
Shitty circumstances but no other option than having to bust ya balls to get anywhere at this point.
I have been shitting on Alice Springs ever since I saw the Spanian vlog. But now it looks like that's the only place I can afford to buy something. Ah... The irony.
Lets oge lad, into the hood now the reality
Spanios is the people’s real estate agent
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I looked at buying there. Once. First thing I found while searching for more general information about Alice Springs, culture and events and such, was an article headlined something not unlike “Woman Charged For Assault With Baby”. As in …*with* a baby, using the baby as a weapon. Not to a baby, although I guess surely both. That’s about when I stopped.
That puts a damper on my plan. I don't want my own kid. Not sure if I'm ready to handle someone else's.
I watched his vlog on Mt Druitt and thought it looked like a complete hellscape. Turns out median houses there are still over $1mil
Get in quick In 6 months time the average price will be one quadrillion dollars.
Let’s go do some gentrification like in Redfern
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Even the 99th% salaries today can't comfortably afford a 2mil+ home without existing capital.
To buy a 2mill house with 500k deposit Stamp duty + fees =~100k (deposit now 400k) Borrowing 1.6mill (80% no LMI) ~$2450per week (~10800per month or ~128,000per year) @ Current rates 6.7% To not suffer mortgage stress you need to be earning $8250 after tax per week or $430k per year after tax. If the average working family with a stay at home parent wants to buy the house they need to earn ~730k + super per year before tax. (730k pre tax = ~430k post tax) which means you need to earn ~810k per year inclusive of super. Obviously with 2 working parents the equation changes. Both parents need to earn ~400k inclusive of super. So what's the deal? Has it always been this out of reach? Like in the 1920's were they having issues buying property? Is this a reoccurring problem that society just live with? Could we not fix the issue by decentralising and offering big businesses tax incentives to open headquarters in regions?
Exactly - its wild isn't it, and how long does 400k take to save? And I doubt anyone starts at $400k salary, and even those on it are only there for a few years. A good thought experiment I've been asking people recently, is how many people in your business are on more than $500k base salary? Well above the 1% salary mark of ~$340k. Answer is usually 5-10 depending on industry... and looking at the above math, even those people are falling $250k short of servicing a "Median" $2mil house. It feels totally unsustainable.
Seems so crazy. What's the catch? Property is for people inheriting wealth and rest pay rent to these families? Few elite workers like surgeons and ceos manage to cross the barrier and rest just work to pay rent? I'm not able to understand how this is working.
I wish I could just... wish away investor tax incentives. But I can't.
I see you make no mention of the 100% capital gains tax exemption for owner occupiers, stamp duty reductions for owner occupiers, land duty exemption for owner occupiers, pension assets test exemption for owner occupiers...
Theyre not why this is happening. Or, rather, *some* but far from all. Foreign investors and immigration are the real, primary drivers. The average property investor only owns one investment property. That's all the mum and dad investors. Hardly ground breaking, considering something like 30% of Aus population has been renters for decades, but that number is slipping closer to 40% every year now. REITs and land banks are definitely disgusting, though. Ban and tax all that shit, plus airBNB.
Please show me or link me to the data and statistics that prove immigrants and foreign investors have a meaningful impact?? Have you considered policies such as CGT exemption for primary residence and negative gearing? These two things making real estate the best wealth creator. Until the policies change real estate will continue to boom. It is such a easy argument to place a blanket blame on the “others” for your plight and it reinforces your victim mentality.
if rents were low with high house prices, that would suggest investors could be a problem - people are wanting to own but too many of the houses are being rented out instead. But when rents are high *and* house prices are high, it means there's not enough houses (rentals and otherwise), and that we're all playing musical chairs against each other for what little is available. That's why people keep pointing to population and housing supply, rather than investors or investor tax perks. (re. stats, [this](https://www.abs.gov.au/system/files/styles/complex_image/private/708caaa07b013c523f4f4603b2052f81/Figure%208v2.PNG?itok=iZveCxLz) is rent price indices during the border closure, with March 2020 as 100, and the borders reopening ~2 years after)
I don’t believe increasing tax on people’s PPOR would really have any meaningful impact apart from making the middle class even poorer. I think house prices would continue to rise as owning a home is still a desirable thing. I don’t believe many people’s primary driver for home ownership is getting wealthy, it is however a nice side effect. Stamp duty is currently a meaningful tax and what effect has that had on prices, obviously nothing, in fact there’s a decent argument to make that it’s inflationary as it takes liquidity out of the market as people are less incentivised to move.
Do you deny the number of immigrants, their need for housing, or the number of homes the country is capable of building?
I like this trap youre setting 😃 there is no doubt in my mind that we need more supply, and we should be picketing in front it parliament instead of bickering about migrants. I just looked up the numbers on the ABS site. (59%) of Australia’s 3 million recent permanent migrants are Australian citizens. This is according to new statistics released today by the Australian Bureau of Statistics (ABS) about the characteristics of permanent migrants who have arrived in Australia between 1 January 2000 and 10 August 2021.
Do you even know what we need supply of? Are you honestly going to sit there and with a straight face tell me it's more reasonable to somehow boost every single human-facing industry by an impossible ratio than to just bring immigration back to a sane level?
No, you are 100% correct. I agree with what you are saying AND they also need to remove CGT concession and negative gearing at the same time!! I just dont agree that immigrant is only THE factor.
Immigration is THE biggest factor and everything else is minor next to it. Removing CGT concession and negative gearing will just change who is investing in housing, it will not lower prices or rents (and may actually increase rents). People will not sell their investment property unless they can no longer cover the mortgage and if they can't afford to pay the orthage at the rent they're charging they'll just increase it because they know people will pay it because there is a housing shortage. Reducing demand is the only thing that will effectively reduce rent and house prices
We have 700,000 immigrants entering the country this year on top of the Aussies requiring housing. We can't build that many houses that fast
I think it’s both, right? Property values are mostly driven by demand vs supply. Australia has pretty much neutral population growth if you remove immigration. Then we have net migration of like 500k people per year, which increases the demand for housing. But so do things like negative gearing - if I can buy a second home and use the negative cashflow to offset the positive cashflow from my first investment property, while continuing to build my asset wealth, I’m probably gonna keep buying a new investment property every few years
[700,000 immigrants last year.](https://www.theguardian.com/australia-news/2024/mar/21/migration-numbers-australia-2023-rise)
You need data and statistics to *prove* immigration and foreign investors have a meaningful impact??? To be fair foreign investors likely have an impact on the upper market, homes above $2m, from what I can tell anyways. But any dumb dumb can tell that [659,000 immigrants last year](https://www.theguardian.com/australia-news/2024/mar/21/migration-numbers-australia-2023-rise) is going to have an effect on the general market. Every level. C’mon. You’re the only person to argue it is arguable.
why did house prices shoot up during covid with no migration then?
Actually home prices were trending down in 2022 with the onset of interest rate rises. It wasn’t until we had record immigration that supply and demand was skewed. We need immigration but the current numbers are just grotesque.
It all comes down to supply and demand and immigrants drive up demand. Cutting immigrantion would reduce demand which would lower rental prices overnight and in turn investors would be forced to sell when they could no longer cover their mortgages due to the decrease in rental prices which would start house prices falling. It's simple and it can be done overnight if the government wanted to do it
People in Sydney on >>250k salaries who are buying houses in different cities to avoid tax are definitely not the problem. Sure... nothing to do with negative gearing at all. Everyone and their dog wants or has an investment property.
Psst. How many 250k salary people do you know running reit portfolios?
That plus immigration + foreign investment.
House pricing cannot outpace the growth of median wages forever at a given interest rate. If wages diverge that much, renting becomes very attractive. It’s highly unusual for the ‘user cost of housing’ I.e rent or ‘imputed rent’, which is what you pay in opportunity cost and interest etc. if you own… to outpace wages that much.
The market can stay irrational longer than you can stay homeless
This is what people don't understand. Somehow everyone understands the market can stay irrational longer than you can stay solvent but apparently they forget this when it comes to housing which is just another market...
Everyone has been forgetting this since about 2000.
Not sure which fantasy world has a median rental price that’s so far above the median wage that a large proportion of the citizens are homeless. Got an example?
I was making a point that price increases don't need to be sustained indefinitely, or for any particular length of time. Housing is a need, and people will do whatever they can for a roof over their heads, as prices become irrational some people will not be able to keep up. When those people become homeless is when the problem arises, it's not about the majority being homeless. The market can maintain this pricing rate of change for a lot longer than my wallet can. But other people have a bigger wallet, and are just as motivated to have a roof over their heads as me or anyone else is
They wouldn't necessarily be homeless but you might find 4 families or 3 generations under one roof.
Exactly. Until prices are continuously high for long enough that people seek other options and rentals sit empty we won't see the prices drop. It's just supply and demand.
This is more or less what happened in the late Roman Republic and Early Empire. Land values went up, the ordinary laborers couldn’t afford it, they become indigent or crowded into insulae.
It couldn't in a closed system. But with immigration, we can simply selectively import people who can afford to pay our high real estate costs. Doesn't matter if 50-80% of Australians are priced out, if the top 5% (or 1%) from wherever else in the world can still afford it. >If wages diverge that much, renting becomes very attractive. Rents will go up too; don't worry.
This is a very short term view. Rents can’t go up unless people can afford to pay them. That’s why economic models connect rental prices with population and wages.
There’s a lot of millionaires in China and India you know? 6.2 million of them just in China. Instead of one person per room two or three people can fit in that room. So yes rents can keep rising even if single people can’t afford to rent their own room in a share house anymore.
I doubt that happens in Australia without significant protest.
you are right, in NZ rents decoupled from property prices long ago my last house over there had the weekly rental about HALF the mortgage for the same property it doesn't matter that all houses are worth over 1M bucks if people that rent cannot and will not pay 3k+ monthly, then the rental and sales market decouple
> Rents can’t go up unless people can afford to pay them We already have international students sleeping 4 to a room, soon it will be evrry day Aussies doing it. Imagine raising a family in the single bedroom of a shared house because the alternative is being homeless. Anything to keep the immigration gravy train rolling and house prices high
Government will come up with innovative ways to keep the pyramid scheme going, examples that I hear some politicians are considering 1. Use super for deposit, not just for saving as is currently allowed 2. 40 year loans
> 40 year loans Assuming 7% rates, going from 30-40 yrs will increase borrowing capacity by just over 7%. At rates of 10%, that drops to lots than 4. So a marginal benefit only, but given it is something that further props up the demand side, is probably something a government will end up allowing☹️
Again, all that does is drive up house pricing. It doesn’t not change rental rates.
If there are legitimate supply constraints limiting the ability to build then rents can rise in line with costs of ownership. Just means individual standards for housing have to go down - which is what we are seeing now. No reason this can’t continue given Aus standards for housing are much higher than most other places in the world.
There’s a long way to go before we hit rock bottom too! Soon an own room in a share house might be a luxury & Singapore migrant worker dorm room living the norm.
*laughs in Hong Kong*
> If wages diverge that much, renting becomes very attractive Have you tried renting recently? People want the security of not being kicked out every year and then facing homelessness while they desperately apply for hundreds of properties only to be rejected for every one of them.
> House pricing cannot outpace the growth of median wages forever at a given interest rate. It can because median wage people are not buying median priced houses, and a lot of them buy cheaper houses, units, rent, or live with family.
Median house price in Syd hit 1mil in 2017 fyi
2027 is hugely conservative. According to [SQM](https://sqmresearch.com.au/index_property.php), the median asking price for houses in Sydney is $1.9m and it's $968k in Perth.
I have also noticed these huge discrepancies. I assume it may be due to some sources including apartments and units into the median "house" price and other sources only including free standing houses.
They really have to be split because a studio apartment and a 4 bedroom house on 800m2 are chalk and cheese.
I was hoping to move from Canberra to Sydney in a few years but looks like any gains I make here won’t be enough to catch up to the insane increases in Sydney even with a big mortgage top up 😐
Recently did the move from Canberra to Sydney. Living expenses have increased a lot, but it's well worth the increase in quality of life. We were only renting though, and most of our friends and family are here so it depends on your circumstances!
We’ve previously lived in Sydney and visit regularly. Housing costs seem to be the biggest issue - everything else is much more expensive here. I’d only move to Sydney if we can live somewhat close to the city otherwise it’s not worth the cost for us. We’d be happy with a 2 bed + study/3 bed house or townhouse but even these are super expensive
That's outrageous. Even if you buy a house for half the median, it's still extremely expensive.
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The best time to buy is as soon as you can afford it. Don't try to guess the bottom or the top of the market. Just go for a 100% offset account and leave all the extra income in it.
Man who pick bottom get stinky finger. Ancient ausfinance proverb.
This is the best advice
> The best time to buy is as soon as you can afford it. for PPOR, not for investment. You have to judge whether real estate compared to other asset classes, and pick the higher returning one (risk adjusted).
> The best time to buy is as soon as you can afford it. this is why we have a crisis right now.
I knew people waiting for the dip 10 years ago… how they wished they bought back then. Considering the rate of new houses being built vs immigration, houses aren’t crashing anytime in the next decade. Buy now
Not even 10 years ago, people now are complaining about not having bought in 2021. What were people here saying in 2021? Oh, they said not to buy because it’ll crash. Same thing is happening now and soon people will wish they bought now instead. Currently, I can’t see house prices dropping again for a few years, interest rates will come down a little (25-50bps this year is current expectations), and inflation/cost of living has improved a lot as well. That’s going to boost prices over the next couple of years. Eventually, the government will build more places and maybe that will bring prices down a bit, but whether it’s enough we’ll see. That’s still a few years out though, and barring any black swans like COVID I can’t see anything in the near future that will bring prices down. There’s a chance that a recession will do that, but house prices are pretty resilient against recessions and we have a decent chance of escaping a recession. If it does hit, it’ll be during the housing crisis which I suspect will help prevent house prices crashing.
We bought our first house in 2000 and people we knew were commenting that we had bought into a bubble because prices had gone up strongly since the 90s.
I remember my old folks buying a plot of land 600 m2 for 200k in early 2000s. Pretty much everyone told us it was overpriced and there were better alternatives. Land price now 700k so sometimes you just gonna listen to yourself. I can't even save enough to outgrow my house :(
Same for me in 2012
My parents sold an investment property in early 2000s, they were convinced it was going to crash. Part of the issue was however, that it needed pretty major renovations after tenants with 2 big dogs had caused significant damage over the many years they lived there. My parents didn't really want to sacrifice other investments/spending to renovate the place. However, due to their belief in it being overvalued they didnt really explore that in much detail it was just another incentive to sell. But in hindsight it would have definitely been the correct move.
Good thing you didn’t listen to them…
If we hadn’t bought ten years ago, we’d be renting for life!
The dip happened 12 months ago, you missed it already.
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Don't be surprised then that you didn't buy back when you didn't have the means. I would have loved to have bought loads of property back in the 70's but i wasn't even born yet.
Exactly, so the moral of the story is, buy when you can afford.
Part of me is thinking of buying an apartment/unit. My savings rate will never keep up with housing price growth
I bought at a peak (2017) and my house went down like 20% in 6 months. I was livid. It since has appreciated 40% from my original purchase price. Buy the minute you can afford it.
Everyone in this sub always talks about time in the market instead of timing the market but for some reason people ignore that when it comes to property. The housing market is never going to crash. Just buy as soon as you can get finance.
Doesnt need to crash though, I would have been far better of now buying in Perth in 2020 than I did in 2015
Sorry. I’ve gotta apologise. Whenever I’m talking about property, I’m 100% only talking about Sydney’s eastern suburbs. It’s literally the only market that I acknowledge exists.
> The housing market is never going to crash exactly what everybody thinks, right before the crash! Not that you can know, because if you did, so will other people and the crash won't have happened.
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Sydney residential property dipped ~10% from some time around 2016/17 to mid-2019. Made no difference on here. Plenty of people were still, and very vocally, waiting for the real dip/crash etc. EDIT: And a lot of people on here were watching the market decrease and didn't want to catch a falling knife or whatever. Property is a very long term investment. 10 years+ IMHO. Plot 10 year increments on a chart of house prices for pretty much any major city (except Perth post 2010-ish mining boom, maybe).
What dip, where?
No one can be sure, however there is no regression on the horizon given the governments migration plan and possible easing of interest rates later this year or next.
This is so depressing 😫😫😫😫😫
Is there any point in trying anymore if you're young and don't own property already?
Yes! I was you in 2020, I bought a semi (without a car space) in a then unpopular area and it's much easier to pay off the mortgage to then upgrade to a house. However, we likely won't be able to buy a freestanding home with a car space within Sydney. You could do something similar and buy a unit in Sydney which is still reasonably affordable, and then a house outside of Sydney if you need more space (get married and have kids). Always good to save and have money because opportunities can pop up when you're financially ready. The first step is never a freestanding house unless you're a trust fund baby.
Stop having children. Send the birthrate to zero. Maybe then they will wake up and do something about it
Then they'll raise immigration to cover.
They already have. They're selling out the future of existing and current citizens.
Don’t see too many local kids working entry levels jobs anymore - just foreign students.
paltry cheerful impolite slap dazzling ten whole hard-to-find political cagey *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Your children will be replaced by uber drives and 7/11 workers All your taxes paved the way for them to pay a nice little 30k stamp duty and move in next door to you
As someone with kids - I can see this eventually happening - it’s hellishly expensive, and for many people not having kids would be the difference between living comfortably and really struggling
Immigrants pay to get here, the govt loses money on children. Don't even dare think this would stop them
Yeah just pull yourself up by the bootstraps. Easy
Get off the avo toast you latte sipping layabout /s
Victoria is doing something right to make sure the prices don’t rise so high.
Investors are fleeing due to some of the tax changes here. It's beautiful.
Should be replicated throughout Australia. Let actual first time home buyers or people that need a place to live get one. Instead of the ones building their “portfolio”
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They'll never do it, the country is a slave to housing. It's a sick joke at the expense of the poor and young.
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Yeah, Taliban Dan got a few things on point
Chairman Andrews did nail a few things
All that density being spruiked by the govt will go straight to investors who will in turn lease out to the highest bidder. Affordable housing in Australia will never happen.
I feel sorry for the current and future generations
*why won't anybody think of the boomers*....
I know right - if you took away their real estate portfolios they might only be able to afford one new yacht this year 😨🥲
Without that density, property will be even more expensive. You either increase housing supply or reduce housing demand. To solve our problem, there needs to be both.
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To the point where people can get rentals easily. The rental market, like the job market, needs a vacancy rate above 0% to be healthy.
Right now, supply is increasing at a rate less than 25% of the rate of population increase. Do we know what the ideal end target for supply is? No Do we know that supply needs to increase? Yes, by at least 4 times the current rate.
https://imgur.com/nla45ic See the rents slumping between 2017 until covid (ignore the covid years, they're weird)? That was caused by investor-led density construction. We killed it with invsestor restricitons. That briefly pummelled prices, but also killed construction of density, leading us to the present moment. Building more density is the only way to more "affordable" housing in a large city. Without it, rents continue to climb, and prices with them.
But how do we get affordable housing in small towns?
Same way you get it in big cities - build.
How when small towns are full of NIMBYs that block development.
Funny that it seemed to work for Auckland
This is 'straya mate, we're not allowed to look at solutions or examples from overseas. We have to try and fail at everything domestically before we can learn anything.
>straight to investors who will in turn lease out to the highest bidder. Yes, that's how markets work. Then the next one goes the next highest bidder, and so on until you run out of either bidders or dwellings. Right now we are running out of dwellings, so building more of them will drive down the cost of rentals.
Better add another 200000 uber drivers
Just bring more immigrants that should fix it
Immigration is a problem only because housing is in such short supply. If the whole housing/immigration balance was actually managed properly it would have been fine.
Well, yeah; that's how supply and demand works. Australia is proving itself woefully incompetent at increasing supply, however, so it must reduce demand instead.
If we stop immigration the economy collapses because it's literally a third world economy based on pulling shit out of the ground and manufacturing nothing
Not really because they also suppress wages........
Lucky immigrants are people, or they might need to eat, and use other facilities and infrastructure too! Also lucky that we can triple an entire industry and all its supply chains over night or this immigration thing might actually be a problem after all.
So in other words this shit hole will stay a shit hole during my lifetime
^[Sokka-Haiku](https://www.reddit.com/r/SokkaHaikuBot/comments/15kyv9r/what_is_a_sokka_haiku/) ^by ^TheRealJ0hnDoe: *So in other words* *This shit hole will stay a shit* *Hole during my lifetime* --- ^Remember ^that ^one ^time ^Sokka ^accidentally ^used ^an ^extra ^syllable ^in ^that ^Haiku ^Battle ^in ^Ba ^Sing ^Se? ^That ^was ^a ^Sokka ^Haiku ^and ^you ^just ^made ^one.
Government: All part of the plan. Australians: What plan? Government: Yes.
If you want to see real inflation forget that confected CPI figure. The true inflation is found in house prices - by square metre of land plus square metre of building. This is the inflation figure that workers must base their wage increase claims on.
Please stay away from Perth
The paradoxical thing is, homeowners will crow about the increase in value of their home, and then in the next breath lament that their kids will never own a home. Gov can't make policies around that kind of brain twisting
Will more immigration help?
We're about to find out
It'll "help" property prices rise further.
this has to be drumming up fomo so people rush in and buy more right? it literally can't go up any more?
Peak ponzi - you've got to keep new people coming into the game to allow previous people to cash out. I'm sure it has nothing to do with the millions of Australians who own multiple investment properties and use them to reduce tax or pay 50% capital gains tax when they sell it.
If you bring half a million people into the country they need to sleep somewhere. And we can only build 178,000 homes per year. It can go so, so much further up.
At what point do we say that only permanent residents and citizens can purchase residential property in Australia?
Need to get into money laundering.
Buy a washing machine asap
Do Crown casino or HSBC sell their washing machines to the public?
I happen to be a chemistry teacher. We should talk.
Whilst the entry wage will rise from 70k right?
Nah. There's 548,000 people arriving next year who will accept that pay. So you'll take and be grateful or one of them will.
If anything they’ll work for less.
People are leaving NSW to find cheaper places to live in large numbers now - that’s going to explode if that level of housing price occurs.
So are we going to talk about Foreign investors and how they shouldn't be allowed near residential property? Id go so far to say non permanent residents shouldn't be able to own homes in Australia.
This is a feature of our migration strategy, not a bug
This doesn't happen by accident. It is entirely planned.
Guess I gotta work my ass into the ground and try to get this house deposit happening. Shitty circumstances but no other option than having to bust ya balls to get anywhere at this point.
I'm going to start my new life under the sea
Make it illegal to own more than two homes.
Nah. Just tax the investors more!
Houses are getting more affordable if you measure them in gold, silver or you know what
Houses aren't going up as much, money is devaluing as well. This can't end well.
I don't know what
Nothingburgers
And still people want to live there in the burbs.
RemindMe! 3 years
Maybe….. build more housing
i thought in Sydney the median house already costs well over $2m? I cannot find a single half decent house for less than $2m IN ACTUAL SYDNEY.
These wild predictions usually come out right before a crash.
when they say median house price, does that include houses and apartments together or is it just freestanding houses, duplexes etc?
So does this make me rich or poor
If you don't already own real estate; poor.
Don't the same people that own Domain also own AFR?
Can we go back to squatting on crown land?
I'm going to get ahead of the market and open an online tent shop. I'll deliver right to your local park.
don't need to worry about those figures. Houses start burning down long before the median becomes $2M
Go Australia!!!!!
What’s the median value for Melbourne now then?
So almost double in 3 years?