Great article about Sydney affordability and stats about Australia in the last 5 years

Been reading an article about the growth in Australia in the past 5 years. Sydney and Melbourne going well as we all know but sobering to see some of the negative growth in other Australian cities

Who'd move to Sydney? The harbour city has priced itself out of reach | Greg Jericho

 

Some great stats:

Relative to Sydney 2017:
Melb: 0.69
Brisbane: 0.54
Adelaide: 0.48
Parth: 0.56
Hobart: 0.41
Darwin: 0.58
Canberra: 0.58

 

Growth since 2011:

Sydney: 63.9%
Melbourne: 31%
Brisbane: 15%
Adelaide: 13.9%
Perth: 7.4%
Hobart: 12.8%
Darwin: 5.8%
Canberra: 24.3%

 

Median mortgage repayment:
Sydney: $3787
Melbourne: $2629
Adelaide: $1823

 

Median House price:
Sydney $928000
Melbourne: $645000
BrisbaneL: $505000
Adelaide: $447000
Hobart: $378000
Darwin: $535000
Canberra $637900

 

As a ratio in 2011 Melbourne was 0.87 of Sydney, Canberra 0.91 and Perth 0.85 and Brisbane 0.77 Adelaide 0.69.

As we know Sydney has well and truly streaked ahead in the last 6 years with Melbourne and partially Canberra making a go of it now. With immigration, new banking rules and all the changes I can see one of two things happening.

Either Sydney slows down and the other cities play catch up as the ratios are quite surprising with the median of Brisbane being half of Sydney's and Melbourne is 2/3's of Sydney.

The alternative would be Sydney pulling back a bit which I don't see happening with the immigration and demand for housing. It could be a good sign that there may be a bit more runway for Melbourne, Brisbane to move and the other cities to play a bit of catch up.

 

my reading on that is that perth,darwin and canberra are overvalues relative to sydney.
Melbourne and brisbane look like good value.
Hobart and adelaide are cheap, but for definite reasons are they cheap.
Interestingly enough, Melb and brisbane are the markets ( in addition to sydney) that are adding the most muscle. Seems like a lot of people agree.

 

bris is cheap... bloody cheap

 

Perth overvalued vs Sydney despite Sydney being close to double? That's an odd viewpoint, what makes you say so? Sydney wages are only a small amount higher than perths on median or average basis, with WA overall still higher than NSW. Unemployment levels are lower in NSW for sure but WA is I believe around 0.2% higher than national average only.

Teachers, nurses, cops etc earn similar amounts, with teachers or nurses in Perth being the highest paid in Australia I believe

What supports the idea that house prices in Sydney should be more than double Perth?

 

the market seems to think so as well.
Yes, its cyclical based and that does skew things and makes it more complicated especially since perth and sydn are near opposites in their cycles.
Long term averages ( numbers like the above expet averaged over say 30 years and not snapshot of today) could give a view, but what more important is the direction they are heading in and that has a large bearing on valuations of any stock. the direction will determine where it will likely be in the near and med future. This is more important for RE than say shareas as RE cannot move as quickly ( e.g. change direction) as shares can.
Which direction is perth heading in?
Which direction is Sydney heading in?

 

Be careful with articles like this that seem to collate a whole stack of data into a nice readable format, often there are so many assumptions and context-specific points that make the conclusion a total distortion of reality. On note of repayments in particular, i think I've read stacks of different "statistical reports" lately that give conclusions more than 100% out from each other.

For example, Sydney may have higher mortgage repayments if you were to take out a loan today, but that only affects FHB's, and even then its only those whose parents dont help out. Local buyers have significant equity that other states dont have, and many new jobs in sydney are in the professional and financial services sector; you can guarantee the people moving there for those jobs have a bit of coin behind them.

The data doesn't have any data input from banks - the people who actually administer and receive payment from home loans. So when the article says "average repayments", who exactly is that an average of?

GDP is also a rather useless comparator thanks to our GST and government grants system, which totally distorts allocation of funds to each state despite their economic contribution to the country.

I'm not nay-saying on the extreme prices of Sydney, but just pointing out that the way data has been used is entirely non-comparative, ignores too many variables and in general to me has been well constructed for the sake of Guardian click bait and not much more. After all, almost identical articles have been spread which compare Chinese cities to Sydney in the exact way and make Sydney look cheap and justify why people are flocking to Sydney from overseas.

 

.That hasn't addressed a single thing I mentioned, overvalued refers to current, ie that Perth prices relative to Sydney should be lower than they currently are, so less than the 0.56 or so ratio at the moment.

I can't think of any justifiable reasons that overall Sydney prices should be double those in Perth, not with the income and employment levels as they are atm

 

Its because Sydney is an international city. Perth doesn't draw international visitors, it doesn't have a significant international import/export trade, and international companies generally don't pour billions of dollars into investments in the state. Oh wait...

 

Hahahaha you had me going for a bit you ******

 

Take these articles with a grain of salt, in other words pretty much ignore this stuff, meaningless to me

MTR