Housing Affordability Australia wide

There are jobs in regional areas for educated and reliable workers. Sure you might take a pay-cut (or not) but there's less consumerism, cheaper rents, less travel time and more space. A good way to save for a deposit or two.

 

Well I guess those who are crammed inside 10km of Sydney or Melbourne's CBD who don't have one of Joe Hockey's jobs are kidding themselves and can have a substantially better quality of life elsewhere IMO.

 

I think the problem is that people want a median house & they want it now. I'm sure previous generations thought the same thing too, but weren't able to voice their feelings to a wide audience.

Past generations didn't have any choice but to grudgingly buy a crappy house way out in the suburbs, stop paying rent & wait for the equity fairy to visit - the only alternative was to keep renting.

Today's generation have a few more choices - they could invest their growing deposit in the ASX, they could buy an investment property with a small deposit & let it grow while they accumulate equity.

Or they could buy an affordable house in the 'burbs & wait for the equity fairy; and only then move a rung up the ladder to get a step closer to a median house (just like the rest of us had to)

Who is supposed to live in the 50% of houses that are below the median ? The answer is.... those who are starting on the bottom rung of the ladder & building up enough equity over 10 yrs to put down a 50% deposit on the next rung up.

 

I've heard this before but I'm not sure it's true. Start talking about housing affordability and within a short time someone will claim people want everything now and aren't willing to climb the ladder, etc. I haven't met these people. Most people I know who want a house just don't want to be in debt up to their ears.

In the past, the market wasn't inflated the way it is now. The average house cost 3-4 x the average wage. Now it's more like 9-10 times.

So the 50% of houses below the median have still been wildly inflated - and wages have been stagnant for a long time.

 

Im sik of hearing this nonsense of baby boomers who bought a 50k house and is now worth 800k like my parents did. It is not relative at all today compared to back then with the house price to yearly earning ratio. Where I live you cant even get a rundown shack that needs exstensive work done for 400k. You guys keep saying go out west and start out there with what jobs?

 

The median salary in Australia is $72,800. According to this article the salary required for each capital city to buy the median house is:

Sydney
Median house price: $900,000
Salary required: $106,000
Hobart
Median house price: $347,000
Salary required: $49,000
Adelaide
Median house price: $430,000
Salary required: $57,100
Brisbane
Median house price: $487,000
Salary required: $62,900
Perth
Median house price: $525,000
Salary required: $66,500
Darwin
Median house price: $585,000
Salary required: $72,500
Canberra
Median house price: $590,000
Salary required: $73,300
Melbourne
Median house price: $615,000
Salary required: $75,400

http://www.businessinsider.com.au/m...ome-in-each-of-australias-major-cities-2015-8

Which means the median salary could purchase (an extra couple of thousand a few) a median priced house in 7 out of 8 cities.

Of course this argument is misleading because the median is an idiotic way to discuss salaries or house prices but it does illustrate that if you wish to use the median to talk about how unaffordable housing is; you only have a point in Sydney and Sydney (despite it being the best city in Australia) is not Australia.

 

I think wages in certain areas/industries have been stagnant for a while.

But clearly there are plenty of areas that haven't been, because folks still continue to buy more expensive properties everywhere.

The other prob with relative affordability lies in the population growth and where the population continues to choose to live.

30 years ago, I could drive down Stud rd in Scoresby, and the road itself was a single lane in both directions; almost all the way from Ringwood to Dandenong, and when you got south of Burwood h'way there was no housing at all west of Stud road.

It was the end of civilization, and the general housing was smaller, cheaper homes owned by younger families of blue-collar workers, who had to commute to places like Dandenong, Ferntree Gully, and the CBD or places near to it.

Go for a drive down there now and see what has changed. It will blow your mind.

It is still miles from the CBD, a terrible commute; even with the freeway, but noone is building those smaller/cheaper first home type places as much - even that far out.

It's not anyone's specific fault the population has increased so dramatically, and that everyone wants to live near the CBD, and on top of each other.

 

I don't. I'm going to move next door just to disrupt your peace and quiet

 

The market isn't inflated - it's the market - it's exactly balanced. Tomorrow is may be different but as of today every single house that was bought was affordable to that buyer. If it wasn't transactions wouldn't take place & the market would re-adjust.

That metric may have worked for the short period of time between 1980 & 2000. Since then things have changed.....

I see no-one complaining that cars cost around 25% of avg wage (they used to be 200%), white goods fallen 10 fold in real terms, communication costs fallen by 100x, holidays by 5 times, food has halved...... People are spending less on those things & choosing to spend more on houses because they can afford to. Would you rather we go back to those days ?

An increased house price ratio isn't some govt conspiracy, it simply people like you & your parents making choices about how they spend their extra $$$. How do you propose to legislate against people spending their $$$ how they want to ?

You'll be sik in 30 yrs time if you DON'T buy a 800K house today, because by then it will be $3M.... and you know what ? the next generation will be wishing they could be in the position you are today. I think most people accept that buying a 1st PPOR is hard - if it were easy everyone would have a few of them.

My grandfather had to walk 10 miles each day just to see if there was a chance of a job for that day. He built his house with his bare hands. It wasn't easier back then. Would you like to swap with him ?

 

The calculations from that article are missing quite a bit.

Let's take Hobart and our $49K per year job. After tax they have $41,468 left over. The yearly expenses are $17907 (from the article) which is very low. I guess they must be living in a share house, ride a bike, and so on... I mean, we spend over $16K in rent per year.

In any case, they have $23,561 left after these very low expenses. They need to save $69400 deposit so that takes them three years and then they take out their $277,600 loan to buy their $347K house...

If it still is a $347K house of course. They took three years to save their deposit and in that time their wage has barely moved yet the house prices have continued to increase.

Put that $49K figure into How Much Can I Borrow and the Commonwealth bank is only willing to lend $261,000 yet this borrower needs $277,600. I guess they need to keep saving...

 

It's also a sign of our changing times where double income households have become the norm. Maybe those complaining about affordability are just sexist, back to the good old days of only the man being allowed to borrow while the wife stays at home and looks after the kids...

 

Wages are flat as a tack... so how can the $800K property be $3 million when wages aren't moving?

Are they magically going to surge upward to keep pace with housing appreciating by 10% a year?

 

If you believe in perfect markets... but they're not real. The housing market is massively distorted. Wipe out negative gearing and put CGT back where it was and the entire market would collapse like a soufflé.

And as for "affordable to that buyer"... people borrowing ten times their yearly income (even on double incomes) at the lowest interest rates in five thousands years is not affordable. They lose their job, have a baby, have a decrease in income for any reason... interest rates go up, unemployment rises...

In the past because the ratio was lower people were able to handle the ups and downs of life. Now people are balanced on a knife-edge and in crazy levels of debt.

 

Uncool mate.

 

Already bought my first house and put down a 40 percent deposit was a good feeling sending the developers packing. But this was only because of the fanstasy fifo world I live in. Do I think my 700k house is gunna be worth 3 million in 20 years time your kidding yourself if you think that lol.

 

I see you're trying to have it both ways again. You've mentioned earlier a relaxed credit environment is part of the problem but now you use tighter credit restrictions as your argument. What it means is they would not need $69,400, but could afford to purchase on a lower deposit/higher lvr.

 

AHA! Seen the light, hey? Good work.

Make sure you get a gate installed in the fence so I can come in a drink your beer!

And vice versa!

 

I've consigned myself to the fact that I'm never going to have kids. Can't afford to.

 

Amazingly; that is what I did!

 

What? I'm pointing out the calculations are garbage based on even very lax lending standards.

Seriously, you're starting to look like you're just trolling me now. Stop with the personal attacks - I'm not "trying to have it both ways" or anything like that. Discuss the content.