The great Australian housing bubble creating a generation of poor youth

My commute is 2 hours each way from Mount Druitt. I don't live right next to the station nor do I work right in the CBD. It is fairly soul crushing! In saying that, it's my own choice to live where we do and I get Mondays working from home (as work is sympathetic to the commute and trusts me not to bludge!).

The commute is longer than you'd expect door to door.

 

Some of the responses to the various It's all too hard threads seem to imply that ....

1. it shouldn't be hard for a FHB to buy a nice house is a nice suburb with an easy commute
2. a FHB with a median income should be able to replace an existing resident who has a median house but less than a median income. And ignore their 20 yrs of delayed gratification & hard yards, investment income, large deposit, wise investment decisions & can-do attitude.

 

Yes it'll get easier, after a 50% drop in house prices.

 

Easier for everyone else too.

Maybe keeping house prices high in Sydney is a government & developer driven conspiracy to keep FHB out of Sydney (or other major cities) and in the areas which they can afford. It bolsters road construction, facilitates demand for public transport, parking stations, fuel suppliers, long day child care centres etc.

 

A bit off topic but I completely agree. I recently picked up a 2nd job. It's only 1 day a week. They advertised it in December, didn't interview me until 2 weeks ago. Now I can't start until I have a 'Working with Children Clearance' despite the role having no interaction with children...Now it's going to take approximately 8 weeks until I can even commence work as that's how long it takes the Department to process clearances.

 

I know of a married couple both dentists,in their late 30's no kids,rented for the last 10 years,euro leased cars travel ect,that have been looking in inner Brisbane for the past 6 weeks
for their first ppor,and as they are finding in the places that they have rented in that can't afford
where they want to live,even within the inner southside 5klms they still can't buy into because the prices from six months ago go up by a series of different disconnected rules ,and not necessarily consistent with other areas,so there would be a wide gap with people that can't live where they want to live,unless the government rules change on all investing in a few months..

 

Hi Jen,
2hrs door to door seems a lot, but not calling you a liar or anything. How far do you live from the station and from station to work? I used to go from my place in Kingswood into Townhall in around 1hr and maybe 10 -15 mins being door to door. Mount Druitt station to Central is 42mins on the train, see here Trip results using public transport in Sydney and NSW.
Good on you for doing it anyway, its not for ever, not doubt by the time you are 30 you will definitely be in a great place.

 

but these same people who cant currently save a deposit, still wont be able to save a deposit. Not much will change. 50% is dreaming territory

 

Being houseless isnt poor at all
In my mind being poor is not having enough money for basics

And basics dont include a new $1k phone every 12months with 2 international holidays per year

I think the young people today are probably the same as their parents.
They may work a few more hours
But i think their priorities are more in living for the moment than not

 

Sooooo.....

...if the cost of a new build comprises ~40% land cost, 40% construction cost & 20% govt charges.....

Who will be taking the haircut on this flying pig 50% drop of yours ?
Will the builders be doing it for free ?
Will the price of vacant blocks plummet to $0 ?
And will the various levels of govt all be kind enough to forgo their cut ?

Can you be a bit more specific than a blanket 50% drop & let us know which of the above will certainly be happening ?

 

It depends, because their deposit would be 50% less then it was before the crash. Nothing is dreaming territory, it just takes time and I'm a patient man.

 

All of the above. Land values will loose the most. It happened before (overseas).

 

A 50% drop in home prices, across all property markets in Australia is simply not going to happen barring some ww3 type event.

Imo to think otherwise is fantasy.

 

Why not? It happened in US and other places.
12-14 years of price stagnation is also a drop of 50% precent inflation wise. Look at Perth now, some are still searching for 2007 prices.

 

Australia and US is night and day. Banking/financial systems are very different, supply and demand is different, the country landscape of desirable places to live vs much less desirable is also a factor that greatly sustains demand and curves supply.

It just aint gonna happen. Certainty not to the extent of 50% across all suburbs. I don't need a crystal ball to know it's not going to happen.

Its just the basic laws of supply and demand.

But I would like to add. My personal attitude to all this is simple. If i do nothing now, i am screwed anyway come retirement. So I have nothing to lose.

I just cannot think of a worst ending, to work hard all your life and then retire on peanuts, poverty line. It is insane. Better steer your ship now in a different direction for a chance of a decent retirement.

Just my opinion.

 

Everyone gets confused every now and again,with the real face value and the likely scenario
even in America..
'Zombie mortgages' haunt evicted home owners in Cleveland

 

Fair enough. But not everyone will make it to retirement. Why must you limit your life now if the future is uncertain? Live in the NOW and worry about the future later. I lived all my life for the future which I might not have at all.

 

But I am enjoying life now. Thoroughly.

Also personally, i don't believe the future is uncertain. For those who take control of their lives, the future will certainly end up 1 way more or less. And for those who don't, it will also certainly end up another way more or less. Just my opinion.


Listen, I hear what your saying... I just so vigorously disagree with the philosophical approach you lean towards.

But I never wish 'bad' upon anyone. There are those who have their beleifs AND wish bad on those who don't agree. lol

 

Personal choices

 

I don't think this is the case at all, I think the argument is more along the lines of housing prices have massively outgrown income growth + assisting economic factors such as dual income housesholds and decreased fertility rates. I don't think this is the fault of "the older generation", I personally think its just a side effect of population growth + being a very desirable country to invest in.

Its not about "nice house", "nice suburb", "easy commute" its about simple house, safe suburb & a commute that isn't doing long term health & psychological damage. All of which are easily solved via a decent investment in mass transit which for some reason, our governments seem to be totally incapable of doing.

Again I disagree with the assertion that this is an issue of young whippersnappers wanting to have their cake and eat it too. over that "20 years of delayed gratification" that the previous generation did, the price of that property has boomed (see previous comments RE lack of investment in public transport infrastructure, etc)

Personally I think it comes down to a range of factors with the big 3 being:

* mining boom / unionist protectionism = high build cost.
* seeing public transport as something that should make a profit, rather than viewing it like heathcare as something that is expensive but provides indirect benefits/is a necessity.
* Tax laws that make residential property a lucrative investment vehicle.

Expensive property is just a side effect.


EDIT: also for those talking about the "bubble" popping / 50% drop in prices, given that pretty much all of the largest publicly listed companies in the country are banks or tightly interwoven with them, personally I suspect that such an event would result in more of a "Oh no, how am I going to feed my family!" scenario than a "woohoo, property is now affordable!" scenario. The other factor that I neglected to touch on is that other than a few blips (GFC.. etc) the ASX has been solidly on an upward trend since the 50's. Can't really expect one asset class (property) to ignore what others are doing. I do think its somewhat worrying that the stock market is in a flat period and Sydney still seems to be roaring ahead, but I don't track the two enough to know if its typical for it to have a delayed reaction or if like gold, its normal to bounce in a downward swing (I suspect not though..) My gut feeling is that beyond usual market cycles, there is never going to be a pop, family homes within reasonable distance to the CBD will become generational, block/home sizes are going to shrink & we're going to start to see more families long term in high density housing, which I don't necessarily think is a bad thing.