The great Australian housing bubble creating a generation of poor youth

Discussion in 'Property Market Economics' started by proper_noobie, 20th Mar, 2016.

Join Australia's most dynamic and respected property investment community
Tags:
  1. joel

    joel Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    876
    Location:
    Adelaide
  2. Aaron Sice

    Aaron Sice Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,588
    Location:
    Ocean Reef, WA
    sorry? since when is owning a home a "right"....?
     
    Erida, Francesco, Banawarra and 5 others like this.
  3. Inov8ive

    Inov8ive Well-Known Member

    Joined:
    17th Jul, 2015
    Posts:
    709
    Location:
    Sydney
    There are so many places in the western, South western, Canterbury Bankstown areas where housing is still very affordable. I have people in my office that have purchased in the Central Coast and in Wollongong and commute. The lower mountains is also an option. Affordable housing is not the issue, it's that affordable housing in desirable, convenient areas is not affordable and that's just bad luck. My first purchase was in the western suburbs because that's all I could afford but now I own property in lots of places, some desirable some not so. The media contributes to breeding this generation of entitlement. Everyone wants to start at the top rather than work their way there.
     
  4. Jennifer Duke

    Jennifer Duke Well-Known Member

    Joined:
    23rd Oct, 2015
    Posts:
    346
    Location:
    NSW » Sydney
    Not everyone mate. Quite a few of us in the same age group here with homes/etc.

    We have put off our wedding so we can afford two mortgages. I'm cool with that :).
     
    EN710, Xenia, Perthguy and 2 others like this.
  5. barnes

    barnes Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    674
    Location:
    Adelaide
    If I was young now I wouldn't even consider buying a home. When I started out I could buy a house saving for a year, now I need at least 10 years savings to buy, so why bother.
     
    Xenia likes this.
  6. Sackie

    Sackie Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    25,035
    Location:
    Vaucluse, Sydney.
    Talk to some people who are renting and trying to survive on the pension . I'm sure a fair few of them in hindsight would have bothered to get a place.

    It's a predicament I wouldn't wish on my worst enemy.
     
    Raydar, Xenia, Cactus and 1 other person like this.
  7. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,673
    Location:
    Perth WA + Buderim Qld
    If I was young now, Id be investing in shares for the first ten years, buying a property when I could and winning by having exposure and knowledge of two investment vehicles instead of just one. ;)
     
    Angel, Darren A, WattleIdo and 3 others like this.
  8. Inov8ive

    Inov8ive Well-Known Member

    Joined:
    17th Jul, 2015
    Posts:
    709
    Location:
    Sydney
    Hmm interesting. What shares would you buy?
     
  9. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,673
    Location:
    Perth WA + Buderim Qld
    @Inov8ive Not sure off the top of my head - I'd have to look through the charts to see what's not getting hammered.
     
    Cactus likes this.
  10. Inov8ive

    Inov8ive Well-Known Member

    Joined:
    17th Jul, 2015
    Posts:
    709
    Location:
    Sydney
    Lol yeah, not a lot at the moment. I meant more would you invest in Blue chip stuff for long term gain like top four banks, Woolworths, Telstra or would you mix it with some speculative stuff like mining and technology or perhaps startups? The long term stuff is a bit boring to me and I think as a young person would just feel like my money was just tied up in Super.
     
  11. sanj

    sanj Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    3,461
    Location:
    Perth
    a year long working holiday travelling around for some people could be one of the best investments in themselves they have made, a new found perspective can be priceless.

    also we need to get away from this automatic assumprion so many on PC seem to have that people saying prices are too high are slackers.

    I think they're too high and detrimental to the city as a whole in sydney. I'm hardly a slacker.
     
    WattleIdo, 2FAST4U, Inov8ive and 4 others like this.
  12. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,673
    Location:
    Perth WA + Buderim Qld
    Personally I'm not much into blue chips, prefer things that aren't so sluggish however if I was young and saving for a deposit I would probably go for stuff with a good dividend and low volatility, and keep reinvesting.
     
    Inov8ive likes this.
  13. Plutus

    Plutus Well-Known Member

    Joined:
    30th Jul, 2015
    Posts:
    317
    Location:
    The North
    Personally I think this is definitely true for Sydney & I feel for youth who have to pick between:

    * Moving to a different city / state, leaving family & friends behind

    * Insane, soul crushing commute coupled with a huge mortgage

    * Becoming a life long renter with the risk of being priced out & having to accept one of the two previous options due to not owning property as a hedge against massive price hikes

    I'm lucky enough to not live in Either Sydney or Melbourne, so its not really a concern for me. I do think people oversimplify it with the idea of "why not just move?" its one thing to say, its a very different thing to permanently leave your "home" because you've been priced out.
     
  14. Inov8ive

    Inov8ive Well-Known Member

    Joined:
    17th Jul, 2015
    Posts:
    709
    Location:
    Sydney
    Lol I think soul crushing commute is a bit extreme. Look nobody really enjoys the commute from Penrith or Campbelltown into the city but plenty of people do it everyday, not just young people either. I have done it, express train to the city is 1hr. No biggie. You could also invest out there and continue to rent in the city or beach etc. Or invest in Adelaide or Brisbane, perhaps a regional town. There are lots and lots of options for young people to enter the market and I never get a response that I am happy with in terms of exactly what is wrong with either investing or sprawling at least to begin with.
     
    Angel, mr500, Propagate and 1 other person like this.
  15. Plutus

    Plutus Well-Known Member

    Joined:
    30th Jul, 2015
    Posts:
    317
    Location:
    The North
    Assuming a standard work schedule, that's 2 hours a day, 5 days a week, 48 weeks a year of commuting, so 480 hours a year.

    Over a 40 year career, (which I suspect is probably shorter than what most of today's youth will end up doing), that's 19,200 hours spend commuting. If we think of a work day as an 8 hour day and a work day as 240 days a year (5*48) that's an extra 2,400 days of work or an extra 10 work years spend commuting. That's a huge amount of a person's life to be spent shuffling from A to B, because poor town planning, limited investment in public transport, abundance of cheap money and limited estate taxes have made a market incredibly expensive.

    There is also a wealth of information available on the psychological impact of long commutes:
    http://www.economist.com/blogs/gulliver/2011/06/perils-commuting

    And the health impacts:
    10 Things Your Commute Does to Your Body

    I can't help but notice you're also only talking about the time from train station A to Train station B, excluding the time to the train station and from the train station to your place of work.

    This Vic Health fact sheet claims that 9,000,000+ Australians are averaging 3.7 hours a day commuting:
    https://www.vichealth.vic.gov.au/~/media/indicators/overview sheets/16/vh_io_commute time.pdf?la=en.

    I believe somewhere between your 2 hours and their 3.7 is probably a reasonable figure.



    * Buying in other markets does not act as a hedge against your own market.
    * Lots of people don't want to take on the risk of buying assets with a huge amount of leverage so they can ~maybe~ buy a property some day where the actually want to live.. depending on what their local market does. Its gambling somewhere else with borrowed money to hopefully see better returns there and spending those locally. It strikes me as a pretty alarming sign that it seems reasonable for people to have to go speculate on borrowed money just so they can buy their own modest home a reasonable distance from the city in what are mostly still working class neighbourhoods.


    I'm sorry that other people's responses don't make you happy. I don't know what I can do to fix that. Property in Sydney has outperformed growth in other markets & has boomed way beyond what can reasonably be accounted to changes such as decreased fertility (less mouths to feed) & double income households. Which is really unfortunate for young people in Sydney & I'm thankful I'm not in that demographic.
     
    Last edited: 21st Mar, 2016
    2FAST4U, Anthony416 and gman65 like this.
  16. sanj

    sanj Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    3,461
    Location:
    Perth
    a poster recently discussed a 4 hour daily round trip commute. that is 20 hours a week just getting to and from work, if 5 days was done.

    think about how much more productive someone could be and by extension the city as a whole, if so much time wasn't wasted like that.

    20 entire hours, half the work week. you could spend that with your kids,on a side business, getting further qualifications, indulging your passions, volunteering, whatever.

    so many people doing long commutes is an issue for the city as a whole and not just those personally doing it
     
  17. Big Will

    Big Will Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,517
    Location:
    Melbourne, Australia
    Not all jobs are in the city though, to get to the office for myself that is about 50 mins each way (normal peak traffic), worst was 1.5 hours best was 20 mins.

    However it is not every day I drive to work as I work all around the city with meetings. Sometimes it can be 2 minutes up the road and other days it is an hour.

    However I wouldn't apply for a job on the other side of the city or if I did I would look at moving.
     
  18. Plutus

    Plutus Well-Known Member

    Joined:
    30th Jul, 2015
    Posts:
    317
    Location:
    The North
    You're correct, not all jobs are in the city, but we refer to them as Central Business District's for a reason.

    There is actually a bit of a fascinating schism at the moment amongst academics who research city planning along the lines of at least 3 distinctive different schools:

    • We need to move away from cities to decentralised business hubs
    • Decentralised business hubs don't work because people get jobs in different hubs and don't move (inflexibility of property, don't want to send kids to a new school, etc)
    • We should stick to a city model but invest in technology like high speed trains, BRT & other forms of mass transit so that people can live a significant distance away but can cover that distance at great speed
    Personally I'm a bit of a believer in all 3. I think we need to push more people out of working in the city via teleworking and convincing large enterprise to relocate out (supporting businesses will follow), build up more regional cities (big biz outside of Syd / Mel) & invest in public transport + other technology (more teleworking)

    I know Inov8ive called the Penrith or Campbelltown to Sydney CBD commute "no biggie" but its pretty ridiculous that tens of thousands, if not hundreds of thousands of people who live in one of the prosperous countries in the world are spending 2hrs a day travelling at a speed of 50km/hr... I mean if Turkey can build 1,500+ km of train line capable of achieving 250km/hr speeds in 7 years, surely Australia can work out a way to get people from Penrith & Campbelltown to the CBD at similar speeds... That's what, 200km of track for both?
     
    Propagate likes this.
  19. larrylarry

    larrylarry Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,386
    Location:
    Sydney
    Theory and practice are different things. You would think that the light rail work should have started early this year but from last peek, they are still drawing and marking stuff on bitumen. To put a speed rail...well, that'd be interesting.
     
  20. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,572
    Location:
    Sid en e - olympic city
    .There are jobs everywhere, even outside of Sydney !

    Re data and costs v income, you would have to look closely at the data and not just average it out.