Sydney Historical House Price Ratio 1970-2016

Discussion in 'Property Market Economics' started by DeanSydney, 15th Mar, 2017.

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  1. VB King

    VB King Well-Known Member

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    Some things have also gotten relatively cheaper over time. What would it look like if the cost of an average family sized car was indexed to wages over time? Air travel?
    Can't look at property in isolation.
     
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  2. WattleIdo

    WattleIdo midas touch

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    A way of covering all bases for prosperity.
    All those words to back a wavering pov which is unclear from the start.
     
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  3. Steven Ryan

    Steven Ryan Well-Known Member

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    Just about everything has become substantially cheaper. Think how much entertainment, information, education, recreation cost now as a % of disposable household income.

    Remember when people would pay $1000 for an Encyclopedia?

    And the internet didn't exist?
     
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  4. hammer

    hammer Well-Known Member

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    This is all well and good...

    It doesn't change the fact that if you're starting out you can earn a similar wage in Brissy, ADL, Perth (if you can find a job) Hobart, Townsville, Darwin etc...

    And pay half or even less for housing.

    This doesn't work for everyone, and some industries are indeed based in Sydney.

    But surely, a lot of people starting out now will be looking at their options.
     
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  5. roots73

    roots73 Well-Known Member

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    True that an Encyclopedia was expensive and we now have all the information we could possibly need in our pockets for virtually free - however, consumer behavior has also changed dramatically:
    back in the day, many 'expensive' products (household goods, tools, furniture, clothes) were built to last.
    Today, we've got 'fast fashion' and inbuilt obsolescence, therefore the individual item is definitely cheaper, but we (or some of us) end up spending a whole lot more to keep up with the Joneses.
    Also, more people can afford these items and leisure activities (cars, flights etc)... it's a complex ecosystem!

    Is there a chart that tracks the turnover/sales of houses as a percentage of available stock?
    As in, is there a higher or lower percentage of houses being bought & sold today in comparison to the 1960s/70s/80s/90s?
     
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  6. Perthguy

    Perthguy Well-Known Member

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    @roots73 keeping up with the Joneses is a choice. I choose not to do this because I have no interest in comparing myself to other people. Life is a lot simpler and much more cost effective for those who choose not to compete.
     
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  7. radson

    radson Well-Known Member

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    I agree..people somewhat rationalising sydney prices based on interest rates, dual income etc should see price rises similar to sydney across the nation. Same goes for negative gearing and capital gains.

    There are commonalities across all australian real estate markets and yet Sydney/Melbourne is presently outstripping the rest of the markets.
     
  8. Steven Ryan

    Steven Ryan Well-Known Member

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    Consumer behavior has changed, but only as a result of having substantially higher amounts of disposable household income available - this trend runs back much further but I haven't time to go dig up the data (have previously examined it):

    [​IMG]

    We're spending more on non-essentials, because we have an abundance of money to spend (historically speaking).
     
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  9. Beelzebub

    Beelzebub Well-Known Member

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    Don't forget you have to consider inflation. I'm not sure this is the reason why Sydney house prices are justified.
     
  10. roots73

    roots73 Well-Known Member

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    100% agree, it was more a description of the mindset of large sections of our consumer society...
     
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  11. Perthguy

    Perthguy Well-Known Member

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    It seems to be the way society is working (or not working). I think Sydney house prices reflect that.
     
  12. Steven Ryan

    Steven Ryan Well-Known Member

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    Above was in "real" (inflation-adjusted) dollars :)
     
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  13. 2FAST4U

    2FAST4U Well-Known Member

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    So real household disposable income per capita was $42,000 in 2009. It's now a tad under $45,000 7 years later. Yet Sydney house prices have risen 70% since that time...on every single indicator of housing affordability the data is clear- House prices have easily outstripped inflation and wages.
     
  14. PandS

    PandS Well-Known Member

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    Technically you can't call anything a bubble until it bursts, you can only call something a bubble after the fact not before and during :)
     
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  15. Perthguy

    Perthguy Well-Known Member

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    I guess that's what makes me uncomfortable about people saying this is definitely a bubble. It hasn't burst so we simply don't know. Any claim that it is definitely a bubble is pure conjecture at this point. As is my claim that it is a boom and not a bubble. History will tell us who is right.
     
  16. Tom Simpson

    Tom Simpson Well-Known Member

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    Apologies if I'm repeating an earlier point, I'm on my phone so I'm not going to trawl through this thread.

    They have the average wage as $79k in Sydney in 2016...

    I doubt people earning $80k pa will be buying a PPR anywhere near Sydney.

    I'd like to see that graph based on household income for those who LIVE in a PPR in Sydney not renters or this who just work in Sydney.

    It's the same old argument as ever. Imagine what the income to house price graph would look like in New York, London, Tokyo or Beijing.
     
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  17. Gockie

    Gockie Life is good ☺️ Premium Member

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    My own income is not much more than that figure (partners is more though) and we bought a PPOR 12 months ago... but only after upgrading from our previous buy at less than half that price.

    Actually...
    * First PPOR (small unit) was 252k (2005) sold 365k (beginning 2011)
    * 2nd (neat older house, good area) 695k (2008) sold 1.345m (2016)
    * 3rd (and final for a very long time, very old house with the works, even better area).... 1.6m (settled Feb 2016). No plans to sell.

    See. It can be done on an average wage... but it helps if you built up equity beforehand!!!
     
  18. Tom Simpson

    Tom Simpson Well-Known Member

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    Awesome example, thanks for sharing.
     
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  19. ORAC

    ORAC Well-Known Member

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    Another example of my Y = A + XB theory!