Sydney "haves" and "have nots" and social classism

Reading the article today about the male nurse on 60K but barely able to afford living in Sydney made me reflect on my early days in Sydney.

Living in a big, expensive city, can be really tough. Rent, food, utilities expenses, clothes, maintaining a car, parking, etc all adds up leaving little money for a boys night out once or twice a week.

I noticed a real difference between the "entrenched locals", kids going to private schools, the eastern suburbs social scene, the bars, clubs, restaurants etc that the one type of class had vs the other, and a big distinguishing factor was property ownership. The haves usually had a nice family house, in a prime location, and then a number of investment properties (either houses or apartments). The "haves" kids starting out working lived with their parents, had all expenses covered, and/or possibly "set up" in an apartment where the parents made at least the deposit for them. The have nots rented, and a much smaller portion of more ambitious kids "got into the market".

So, I do feel for the struggle that newcomers face, as well as those born into the "have nots" category. I also think things perpetuate so some extent, as the have nots are usually too busy trying to pay their rent to take a stab at something entrepreneurial, whereas the haves, with no worries about a roof over their heads, may be more inclined to take a shot at running a business and end up employing the have nots. (Of course these are not the only dynamics at play).

Over time cream should rise to the top, yes, but from observing Sydney for over 20 years I can point to many examples of rich kids that really are really pretty hopeless and unproductive, who are still well ahead in terms of wealth, simply due to the fortune of property ownership, as compared to the much harder working have nots.

Which make me wonder, why do so many tough it out in Sydney? In my mind, there are so many lifestyle, career, business, and investment options outside of Sydney, Gold Coast being but one example where pretty much anyone still has a chance at property ownership and "staking their claim" as the city grows, to be "set for life".

So what is it that keeps the "have nots" in Sydney?

 

Sydney is like London, totally unaffordable for the average person. However at least people can move out of London and commute to their job on high speed rail.

What's keeping them there is probably jobs/family etc.

 

Work? Family? Friends?

 

I think that's probably it. I went through the process myself. Work, in most casss should be transferable in that you don't need to live in Sydney to be able to work. Indeed maybe loving elsewhere results in a lower income but yet a higher rate of savings and better lifestyle.

For friends and family one needs to make a choice - is It really essential to live close to "family". Why not move interstate and keep in touch by Skype and have occasional family meetups throughout the year. And as for friends when you move you get the chance to gain new friends and you never really lose your true existing friends.

 

New York is probably the same I expect.

 

True. But you also need a job to be able to work. If a Sydneysider moved out of Sydney to an area with high unemployment, they would have less chance of getting a job.

 

Sydney can be a tough place to live if you haven't been raised in the area and have good contacts to help you. But I strongly still believe that people can still make it in Sydney if they are willing to work hard. I compare Sydney to some of the Asian countries where hard work can only take you so far and it's so reliant on family contacts, name, educational background, your physical appearance and etc.

I think if you just want to work a 9 to 5 job, it's going to be really hard to get ahead. I believe if there is an opportunity to work additional hours, second job and your willing to suffer a short term gain for a long term benefit, you should be ok.

 

Yes true. But there is nothing inherent about Sydney that means workers cannot move. Doctors, nurses, police men, fast food workers, taxi drivers, builders, architects, hospitality, teachers, ballet instructors etc etc. all transferable. And in some cases you would be way better off moving. I know people who have shelf stacking jobs at Woolworths who have been able to buy and significant pay off a family house on the Gold Coast. They are now ensuring real and lasting stability for their family and actaully creating wealth as the market picks up. I can't see the same type of employee being able to do this in Sudney.

 

Yes. I'm inclined to agree. But really, yes I know it can be tough. I was a young banker in Sydney and on a starting salary is was tough to get by! I do wonder though if it's actually harder to become "successful" in Sydney, as a newcomer,
as compared to other more affordable cities.

 

We considered moving to Brisbane before having a kid, but decided against it. Now we have a kid and live close to family, we 'save' 20k per year on daycare by having family close by who help look after her on days she doesn't go to daycare. That will double when the second comes along.
So for some, staying

 

Opportunities within the chosen city play a big role.A lot of occupations like nursing and healthcare are transferable to most areas given there're jobs.
It's not the case with mine and hubby - our choice of cities is currently limited to Sydney and Melbourne (and guess where we are moving to this year?)

I think there are many reason why people don't want to move - the most common is as mentioned before, work opportunity, family, friends... I also think familiarity has a lot to do with it. Changes are scary. You'll need to make new connections, new social support, new everything.

In not so related topic... I think those in the developed cities are more prone to being unhappy.

 

I don't think New York or London are anything like Sydney. There are some pretty big differences - land area for a start (and population density and distribution flowing on from that), infrastructure, housing types, economic importance and diversity, etc.

 

Family daycare is a plus for sure!

 

Some of my friends reckoned living in London was pretty tough.

 

Wow, I was just thinking along the same lines....except for me it was Darwin of all places.

I had just scored a good job 70kpa but it was the middle of the mining boom. And we were paying $450 a week rent. Wife was studying at the time.

I distinctly remembering feeling like I had missed the boat and was looking down the barrel of giving 70 percent of my take home salary just to buy a poo box in the worst part of town.

Never ever will I forget that.

Our bags were packed and we were set to leave. Even if I had to take a 15k pay cut we were still better off in Brisbane.

Anyway. I got a better job, my wife started working and we had a huge housing crash so I have stayed....BUT if I was in Sydney right now on a normal wage....I honestly would feel much the same as a lot of Millennials currently do.

As for why they don't move....I think it's because humans hate change, job opportunities and family.

People who move away for greener pastures are in the minority. Although, if possible it'd be a no brainer for anyone starting out in Sydney at the moment....


Anyway, thoughts from the other side of the fence..

 

There's no prerequisite that requires large cities be unaffordable - just look at New York. It has a median multiple (the most common and useful affordability ranking) of 5.7 - compared to Sydney's 12.2. Housing is expensive, sure, but it's not out of reach of median buyers.

Sydney is only unaffordable because of unusually high investment - there's nothing 'special' or inherent to being a large city that makes Sydney unaffordable. Some of the largest most sought after cities in the world are very affordable - Washington 4.1, London 7 (a bit on the pricey side and some have argued a bubble - it is much higher than the long term average of OECD cities but prices are also coming down - London is likely to hit 6 this year, so if there was a bubble it was barely there), Singapore 4.7. The vast majority of cities in advanced economies sit between 2 and 5. Australia dominates the top 20 and even our cheapest capital, Perth, outranks New York.

When prices in a city move out of reach of the median buyer, you do have to start to worry. Prices in bubbles rise because of a strong increase in investment, but if people on average incomes can't afford to buy in Sydney (especially if oversupply of physical homes and of landlords competing for tenants), and average buyers are no longer willing or able to buy in (i.e. they can't borrow as much, rates make it less affordable, they have too much choice to want to pay high prices), who are investors going to sell to? Other investors? And who are they going to sell to? This is why bubbles are self bursting.

 

If you are talking about the corrupt Asian countries (Cambodia, Laos, Thailand, Philippines, etc) then this is a very loose comparison because yes hard work only takes you so far, but being born in Sydney is no way a parallel to that.

In Australia, someone born to a wealthy family has huge unfair advantages that ordinary people don't have, but there is an enormous middle class in Australia who have the opportunity if they so wish to work hard and improve their life. You get a free education that is not the same standard as in private schools, but is usually not terrible. In Asian countries where 95%+ of the population are in the lower socio-economic class there is NO opportunity whatsoever to get ahead. If you are in the 95% there, there is no escape from their nightmare and no way to get ahead (unless you enter into the rampant corruption).

I very much agree with the original post that it is not fair in Australia. Unfortunately life is very unfair in general, not only financially. I do like that Australia does (or did?) have more income equality than many many countries (last time I read it, top 20% had 6x the income of the lowest 20% and it was 15x for the US, and I am sure it is some frighteningly high number in corrupt Asian countries). So I don't agree with a comparison to Asian countries. They are incomparable because the difference is in having an opportunity and having none at all.

 

If it wasn't for work, family and friends we wouldn't live in Sydney!

 

I may be a bit tough but it is cruel and uncaring to expect that you can simply dump your kids on parents so that you don't pay $20k in childcare fees. You wanted children, your obligation to look after them.

 

I'm surprised nobody has mentioned because higher salaries are obtainable in Sydney. All comes down to $$$ in the end.