WA Perth Still not affordable?

According to this annoying article Perth is still out of reach of many...

It will take more than three years of bust to make WA housing affordable

This doesn't seem right. Perth looks totally affordable to me? And that's with my regional/Darwin glasses on?

It must seem like Xmas to anyone from Syd/Melb?

Less young people are indeed buying...but I wonder if cheap plane tickets and travel have as much to do with it as house prices?

 

cool chart, didnt realise the median price tripled in 7 years (155k in 2000 to 455k in 2007).

As for affordability, this is straight up data mining for the sake of a story. There are 1 bed flats 7km from the city in Osborne Park for under 150k. You could make that work on a part time maccas wage. There are so many sub-400k housing options right now that you're bang on the money, it looks like Christmas from Melbourne.

I have lots of friends in their late 20s in Perth who don't have particularly well paying jobs, and all of them can buy a house if they wanted. the reason they haven't for the last few years is pure market fear from the downturn. many of them say they plan to buy in the next year, and none are stressed about repayments as they're paying equal in rent now anyway.

 

Yes, that would be right, rents have also fallen back as much as 25%

 

It's nonsense. Here is why:

Perth's median house price in June was $518,000, a $34,000 discount compared to the same month in 2015.

But that decline has done little to improve long-term affordability, given house prices doubled in the decade from 2005 to 2015.
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I work with young people. They are all buying houses right now. All of them. The key is not buying a median priced house. A median priced house is out of reach for many people.

However, there are many houses that are priced way below the median. For example, this place is a bit run down but with some paint and carpet would be liveable. Sure it doesn't have much going for it but you can't argue that $240,000 is seriously unaffordable. 31 Dwyer Crecent, Gosnells, WA 6110 - Property Details

This one is ok for a first home buyer. Walking distance to the train station and shops. $275K.

5/46 Dorothy Street, Gosnells, WA 6110 - Property Details

Is $275K really that unaffordable? I would not have thought so.

For $275k you can get into a much better area too: 11/45 Dryden Street, Yokine, WA 6060 - Property Details

 

520k is ridiculous for Perth. Whether there are cheaper properties is not really the point - that is an absurd median when you look at the city itself and the economics of it.

300k gets you a median house in like 80-90% of the US including cities that are far bigger or more significant economically. I've posted some examples of this about a month ago if anyone is interested. The boom in Australia has made people lose all perspective.

 

It's relative though, isn't it?

"Canberra’s median house price has surpassed $700,000 for the first time.

The Domain State of the Market Report released on Thursday shows house prices have jumped 10.4 per cent over the past year to a new median of $705,059."
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Canberra's median house price surpasses $700,000 for first time

For my money, I would much rather spend $520k on a median house in Perth than $705k for a median house in Canberra. $705k for a median house in Canberra is absurd. It makes Perth look like good value.

 

this argument has been aropund for a long time, and repeats itself every boom/bust cyclical activity- what is 'worth it' and what is not.
Ofcourse very subjective, but the fact is analyst predictions, recommendations are made on this and many many people spend huge amounts of money on those. So..whilst it may be subjective, the fact is its influential.

 

reporters will look at generalised data such as medians. Not the number of affordbale houses in good areas. Whilst the second part may be true that its easier to get a bargain in perth, the first part is also true. So, if going by the first part ( generalised medians), then it may well be a valid argument that its expensive ( presumably against what it offers).

 

Maybe, maybe not. If you look at each capital city and compare median house price with median wage, that would give you a comparative measure. If you did the same but took first home buyers and then used median house price as a measure of affordability, that would give you another measure. But I don't think it's valid to just look at the median house price in isolation and claim Perth is unaffordable. Since when is a first home buyer entitled to a median priced home for their first home.

The measure of affordability for first home buyers is affordabily prices homes. Perth has a lot of options under $300k. What does Brisbane, Sydney and Melbourne have in that price bracket?

 

The bigger concern is that this is not reporters. The report is from CEDA - the Committee for Economic Development of Australia.

"CEDA - the Committee for Economic Development of Australia – is a respected independent national organisation with an engaged cross-sector membership. For more than 50 years, CEDA has been delivering leading thinking, informed discourse and rigorous research on the issues that matter."​

The newspaper article cites from Housing Australia, a research report released by CEDA in August 2017 on the issue of housing.

Housing Australia

I'm just looking at the recommendations now. They seem to be good.

http://adminpanel.ceda.com.au/FOLDE...nts/36002~HousingAustraliaFinal_Flipsnack.pdf

I don't see anything in the report about Perth being unaffordable so I will have to dig down a bit to find out what the story is there.

 

Affordability trend is global and irreversible.

If you live in a city, the size of what you can afford will reduce through generations as population increases. This is intuitive, yet articles like this forget that. Can we afford what our grandparents could? No. Will our grandchildren be able to afford what we can afford? No.

This has played out in all major population centres and will only get worse as the world's population increases and become more urbanised.

It should not worry property owners that we are in an affordability "bubble" that will pop. If there is a property bubble, it is created by investors with unsustainable incentives (negative gearing, Chinese credit, cheap debt).

Be worried on behalf of your kids instead!

PP

 

Correct, and a reason why it is pointless looking at growth rates over a short period of time to access the future. Take a look at the annual rate from 2001 to 2007 and then 2001 to 2017 i.e. 19% p/yr to 7.5% p/yr. The catch up is completely normal - and it still may have a few yrs to go. Of course, even the 7% is high.

 

I can never remember an article saying that Australian property was affordable.

Maybe it was affordable a long time ago and it then became unaffordable.

That would have all happened before I could afford to buy my properties.

 

This is exactly why Dick Smith is concerned, as am I.

 

Dick Smith needs to get a real job

 

It would be more correct to say house prices doubled between 2005 and 2007. Since then, apart from a rally in 2012, its been flat.

The "7%" isnt real though. The 2017 median is only 14% higher than in 2007. 14% over 10 years is not much.

 

Perth boom cycle started in 2001 - corrected in late 2006, blue chip has still not recovered. We then had a shorter boom cycle from 2013-2014.

I don't bother with stats as they will never give an accurate account/figure on what really happens, its way too broad.
MTR

 

I stand by my comment.

The 7% quote should be attributed to Laken, who made the post. The way your post reads now it looks like something I wrote. If multi quoting doesn't work then it might be easier just to do one post for my quote and a separate post for Laken's quote.

 

100% with you on that @MTR .