Housing market 2021

[HirdsTheWord]

Australian property market is relatively young - we are only just now entering the phase where it becomes an inherited wealth kind of thing like it is in Europe.

This is exactly why the Government needs to step in and stem it Before it truly gets out of hand, the fact they haven't yet is very alarming for future generations...all they seem to do is fuel it.

No one wants a European situation in Australia, except for those who already have skin in the game.

 

[burge13]

you quoted me without taking the context of my post.

The median free standing house price in Sydney is 1.3 Million, the average median worker in Sydney's income does not stack up against this. Your comment about distance, places that are 30km from the city (1 hour commute) times are well beyond 1.3m. Cheaper houses in Sydney are closer to 2 hour commutes each way to the CBD. Its utterly unsustainable to expect people to do this every day.

No ones suggesting people go out and buy a 2-3 million dollar house. But when they earn a median income, they surely should be able to buy a median house.

I read somewhere that almost 60-70% of first home buyers (think it was closer to the latter) are getting help from parents.......i don't think my comment was that far off the mark.

I agreed with the overall sentiment, it was that one part i didn't agree with, hence replying like I did.

Sydney's market is a shambles, no 2 ways about it. Easily the most overrated city in the world and house prices add to that

Getting help from parents is always going to happen, whether we should rely on that is a different matter. Sydney is probably the only city where people 'have to' go to the bank of mum and dad though Melbourne isn't far off? Adelaide, Brisbane, Perth are very affordable. People complaining in these cities simply aren't willing to compromise on what they 'want'. Adelaide especially. 30-40 mins from the CBD here is about 400k in most suburbs.

 

[HirdsTheWord]

I agreed with the overall sentiment, it was that one part i didn't agree with, hence replying like I did.

Sydney's market is a shambles, no 2 ways about it. Easily the most overrated city in the world and house prices add to that

Getting help from parents is always going to happen, whether we should rely on that is a different matter. Sydney is probably the only city where people 'have to' go to the bank of mum and dad though Melbourne isn't far off? Adelaide, Brisbane, Perth are very affordable. People complaining in these cities simply aren't willing to compromise on what they 'want'. Adelaide especially. 30-40 mins from the CBD here is about 400k in most suburbs.

I cant talk about people in other cities as there's probably other Marco factors etc at play. My advice to younger people is if they can get a job in the cheaper cities than leave and move there. Obviously its incredibly hard for people to leave families, friends, support networks etc but I really don't see how else they can do it if they want a house with a backyard.

Sydney and Melbourne (to a degree) is an absolute basket case, and it will get worse unless the RBA & The Government do their jobs in the best interest of future generations. There is a cliff coming, and when we eventually fall of it, it will be disastrous for everyone including those who want house prices to keep going, having an entire generation of people take on these huge mortgages (currently averaging about $500k in Sydney in 2021 and rising about 6.5% each year) and disproportionate to their incomes will be an absolute disaster for the economy in coming years when consumer spending drops as future generations struggle to pay back these mortgages.

The RBA is essentially creating a storm they cant turn off without inflicting mass damage when they eventually need to raise interest rates.

 

[iluvparis]

The biggest hurdle to young people getting into the housing market right now isn't the prices, it's an unwillingness to deviate from what you 'want'.

Totally and utterly wrong if you even bothered to look at any historical house price to income metric/trend.

 

[HirdsTheWord]

Totally and utterly wrong if you even bothered to look at any historical house price to income metric/trend.

I disagree also.

"young people aren't willing to sacrifice" is typically a throw away line from the older generation who didn't have to deal the levels of income vs mortgage ratio disparity that kids have to do today.

A lot of Boomers for example bought their house when it was like 1:2 (Salary:Mortage) to buy an average home, Right now in Sydney its 1:15 (Salary:Mortage) to do the same.

I don't know many young people expecting to buy a $2 + million dollar house as their first home but absolutely sympathize with those that are willing to make sacrifices but baulk at 2 hour commutes in order to buy a home they can afford.

 

[sabre_ac]

I disagree also.

"young people aren't willing to sacrifice" is typically a throw away line from the older generation who didn't have to deal the levels of income vs mortgage ratio disparity that kids have to do today.

A lot of Boomers for example bought their house when it was like 1:2 (Salary:Mortage) to buy an average home, Right now in Sydney its 1:15 (Salary:Mortage) to do the same.

I don't know many young people expecting to buy a $2 + million dollar house as their first home but absolutely sympathize with those that are willing to make sacrifices but baulk at 2 hour commutes in order to buy a home they can afford.

The salary to house price argument certainly makes sense, if you compare the exact same home to salaries now vs the 60's/70's, it's also a little naive.

I don't think its a matter of "young people aren't willing to sacrifice" its more a case of "Young people should accept reality". House prices are driven by increasing income, increasing population, migration to cities, and where Australia stands from a quality of life metric. These realities have nothing to do with any grand conspiracy, they are a function of progress. First home buyers can accept smaller lots/apartment living for amenities or move to more affordable cities.

Given the choice of being 30 and being forced to buy an apartment in a major city in 2021 while having all the modern advantages compared to 30 in the 60's and getting the quarter acre, I'll sacrifice the yard for modern technologies, travel, and progress made on individual rights any day.

Governments could certainly help with removing red tape in terms of development, almost all density restrictions should be removed immediately, it's insane that desirable cities around Australia can prevent density and multi-story residents.

There are also some significant wealth creation opportunities if people are willing to rent long-term and invest the difference between homeownership and renting in sharemarket (must also include beyond the ASX), this takes serious self-control which is very difficult.

 

[HirdsTheWord]

The salary to house price argument certainly makes sense, if you compare the exact same home to salaries now vs the 60's/70's, it's also a little naive.

I don't think its a matter of "young people aren't willing to sacrifice" its more a case of "Young people should accept reality". House prices are driven by increasing income, increasing population, migration to cities, and where Australia stands from a quality of life metric. These realities have nothing to do with any grand conspiracy, they are a function of progress. First home buyers can accept smaller lots/apartment living for amenities or move to more affordable cities.

Given the choice of being 30 and being forced to buy an apartment in a major city in 2021 while having all the modern advantages compared to 30 in the 60's and getting the quarter acre, I'll sacrifice the yard for modern technologies, travel, and progress made on individual rights any day.

Governments could certainly help with removing red tape in terms of development, almost all density restrictions should be removed immediately, it's insane that desirable cities around Australia can prevent density and multi-story residents.

There are also some significant wealth creation opportunities if people are willing to rent long-term and invest the difference between homeownership and renting in sharemarket (must also include beyond the ASX), this takes serious self-control which is very difficult.

Most of your points are correct. But housing price increases have been proven to actually have nothing to do with Income increases, especially in 2021.

The income increase in Australia has been stagnant at best for years. Yet housing prices continue going up at record rates, totally disproportionate to income increases. People are just taking on more debt & risk in order to secure housing. The average mortgage is rising at an alarming rate. The Average mortgage in NSW grew something like 20% through 2019 alone for stand alone homes. it seems people would rather take on this risk instead of settling for apartment style living.

Personally I think the effects will show themselves over the next 10-15 years. When you have an entire generation taking on these levels of debt it will impact the economy badly when consumer spending eventually plummets as people struggle and prioritize mortgage payments. I think there is well and truly a cliff on the horizon. Just a matter of time when we fall off it, The bank of Mum and Dad can only last so long and it will eventually run out as future generations wont be able to provide the same help to their kids as they wont have the windfalls.

State Governments will never do anything worthwhile to change the course we are on. Most of the voting power is held by those who own property. It is against their short term interest to do what actually needs to be done to stem housing price growth. If anything they are actively driving prices up!

 

[burge13]

Governments could certainly help with removing red tape in terms of development, almost all density restrictions should be removed immediately, it's insane that desirable cities around Australia can prevent density and multi-story residents.

Agree with your post but not this. Part of what makes our cities desirable is being able to move still

We have a good mix of high density living with some space, reduced traffic, and inner-city parkland imo. Apartment buildings are popping up everywhere, that's fine but there's definitely a point where they ruin things

 

[HirdsTheWord]

Agree with your post but not this. Part of what makes our cities desirable is being able to move still

We have a good mix of high density living with some space, reduced traffic, and inner-city parkland imo. Apartment buildings are popping up everywhere, that's fine but there's definitely a point where they ruin things

Building Apartments is not the answer to the housing issue.

People are clearly showing that they would rather take on more risk/debt and move to free standing houses than move to apartments, especially with the new normal of WFH. There is actually an over supply of apartments in Sydney for example that are sitting vacant. Weather you agree that people should be doing this or not, that is the reality. Having future generations with huge levels of debt does absolutely NO good for future economies, regardless of how stupid they are for doing it.

The real solution and really the only way there is going to be significant change for free standing homes is that State Governments need to further limit or totally remove investors (people who already have an owner occupier dwelling) & overseas buyers ability to buy existing free standing homes as investments. Home ownership is plummeting in lower age groups yet houses are still selling at record rates. Why? Investors. It is as clear as day that this is the crux of the housing issue.

 

[Jimmy_the_Gent]

The real solution and really the only way there is going to be significant change for free standing homes is that State Governments need to further limit or totally remove investors (people who already have an owner occupier dwelling) & overseas buyers ability to buy existing free standing homes as investments. Home ownership is plummeting in lower age groups yet houses are still selling at record rates. Why? Investors. It is as clear as day that this is the crux of the housing issue.

I don't hate it but without investors, you don't get rental properties.

So what happens if you're 19 and want to move to the city go to uni? Save a deposit first?

Or what if you immigrate to Australia, do you have to stay in a hotel until you save a deposit?

We can't just ditch investors.

 

[iluvparis]

I don't hate it but without investors, you don't get rental properties.

So what happens if you're 19 and want to move to the city go to uni? Save a deposit first?

Or what if you immigrate to Australia, do you have to stay in a hotel until you save a deposit?

We can't just ditch investors.

He is saying they (investors) can only buy apartments - so those people moving can rent in apartments is most have done for the last 10-15 years anyway.

 

[HirdsTheWord]

I don't hate it but without investors, you don't get rental properties.

So what happens if you're 19 and want to move to the city go to uni? Save a deposit first?

Or what if you immigrate to Australia, do you have to stay in a hotel until you save a deposit?

We can't just ditch investors.

I didn't say ditch investors, i'm just saying that investors should not be allowed to buy multiple free standing houses. These should be limited to owner occupiers only. Government could easily regulate this. Taking Investors away from free standing homes would drop house prices over night.

The data is crystal clear. an ever growing smaller group of people are owning more houses, that being +55's. This clearly shows investment into housing is now a critical issue that needs to be addressed.

Apartments etc they can still invest in, so like you said there is still rental for people who cannot afford to buy who want to live near things like uni etc.

 

[Jimmy_the_Gent]

I didn't say ditch investors, i'm just saying that investors should not be allowed to buy multiple free standing houses. These should be limited to owner occupiers only. Government could easily regulate this. Taking Investors away from free standing homes would drop house prices over night.

The data is crystal clear. an ever growing smaller group of people are owning more houses, that being +55's. This clearly shows investment into housing is now a critical issue that needs to be addressed.

Apartments etc they can still invest in, so like you said there is still rental for people who cannot afford to buy who want to live near things like uni etc.

So what happens if you have a family of 4 and cant afford to buy?

 

[Jello_B]

And as I said, I disagree with this being a sound policy approach.

Why do you disagree? It sounds reasonable, if you have $1M equity in an asset you can draw down on that at say $50k for 20 years before accessing a pension. Otherwise when they pass they have an unused asset.

 

[HirdsTheWord]

So what happens if you have a family of 4 and cant afford to buy?

not sure what you mean? Its pretty obvious.

If we remove investors from the free standing housing market than prices will reduce drastically. This will allow greater access to people who cant afford prices now.

it will drastically increase supply which will drastically lower costs.

roughly 70% of housing wealth in Australia is owned by 16% (+65's) of the population for gods sake. How drastic policy has already not been introduced to amend this is seriously alarming.

 

[HirdyLannister]

not sure what you mean? Its pretty obvious.

If we remove investors from the free standing housing market than prices will reduce drastically. This will allow greater access to people who cant afford prices now.

it will drastically increase supply which will drastically lower costs.

roughly 70% of housing wealth in Australia is owned by 16% (+65's) of the population for gods sake. How drastic policy has already not been introduced to amend this is seriously alarming.

You do realise alot of the 65+ don't have super or very little of.
It wasn't a mandatory thing when they were working, just newly implemented.

I'm early 30s and I have the same amount of super than my folks who are late 60s, they own one residential investment property and another warehouse one.

The income that comes in from those two properties offsets the lack of super and they can't claim pension due to too much is assets.

The mum and dad investors ain't the wealthy, my folks was a nurse and boilermaker not rolling in cash. Once they pass most likely the properties will be sold and the younger generation can buy, it's a natural circle.

There will be an influx of properties available in the next 15-30 years when all the boomers die off.

 

[Jimmy_the_Gent]

not sure what you mean? Its pretty obvious.

If we remove investors from the free standing housing market than prices will reduce drastically. This will allow greater access to people who cant afford prices now.

it will drastically increase supply which will drastically lower costs.

roughly 70% of housing wealth in Australia is owned by 16% (+65's) of the population for gods sake. How drastic policy has already not been introduced to amend this is seriously alarming.

There is a section of people you're idea lets down. These are people with 2 or more kids where mum and dad make very little money.

It doesn't matter to them if the median free standing house costs $350,000 because they'll never be able to borrow that much.

Units, apartments and most duplexes won't have enough space for both parents and the kids. What should they do?

To make matters worse, these people are the more vulnerable in society but we're going to jam them in apartments? Sounds bad.

 

[HirdsTheWord]

You do realise alot of the 65+ don't have super or very little of.
It wasn't a mandatory thing when they were working, just newly implemented.

I'm early 30s and I have the same amount of super than my folks who are late 60s, they own one residential investment property and another warehouse one.

The income that comes in from those two properties offsets the lack of super and they can't claim pension due to too much is assets.

The mum and dad investors ain't the wealthy, my folks was a nurse and boilermaker not rolling in cash. Once they pass most likely the properties will be sold and the younger generation can buy, it's a natural circle.

There will be an influx of properties available in the next 15-30 years when all the boomers die off.

no scenario will work for everyone. They never do. Maybe there's a scenario that can be implemented that suits all. I don't know

But having 70% of the countries property value in 16% of its population is ******* disgraceful. something drastic needs to be done.

 

[HirdyLannister]

no scenario will work for everyone. They never do. Maybe there's a scenario that can be implemented that suits all. I don't know

But having 70% of the countries property value in 16% of its population is ******* disgraceful. something drastic needs to be done.

Agree no scenario works, maybe a bar on how many properties one can own? I have no issue with anyone having 1,2 or even 3 investment properties but when you hear those stories of 20, 50 and 100 property portfolios maybe there should be a cap?

When is enough enough for these people? That's when they can diversify in other assets/projects.

 

[owen87]

Why do you disagree? It sounds reasonable, if you have $1M equity in an asset you can draw down on that at say $50k for 20 years before accessing a pension. Otherwise when they pass they have an unused asset.

And then they have to find somewhere to rent having mortgaged their home to the bank?

 

[HirdsTheWord]

Agree no scenario works, maybe a bar on how many properties one can own? I have no issue with anyone having 1,2 or even 3 investment properties but when you hear those stories of 20, 50 and 100 property portfolios maybe there should be a cap?

When is enough enough for these people? That's when they can diversify in other assets/projects.

maybe a calculation of super vs income vs assets etc im not sure.

But this is a turning point IMO. something has to be done to reduce peoples amount of property ownership. We can tell kids to move out to the suburbs as much as we want but there is a fundamental issue when such a small % of people own such a large chunk of the housing market. It is flawed no matter how you look at it.

How it even got to this point shows absolute ineptitude from success governments, that and the fact they probably own multiple properties each so why cut off your own income stream

 

[Jello_B]

And then they have to find somewhere to rent having mortgaged their home to the bank?

After the 20 years? How old are these people living until?

 

[iluvparis]

And then they have to find somewhere to rent having mortgaged their home to the bank?

Lol wut?

 

[owen87]

After the 20 years? How old are these people living until?

Retire at 65, live past 85? Not that outlandish.

 

[owen87]

Lol wut?

I've done further reading, you can only access ~ 25% of your home's equity. So that $1m home nets you $250k at best. Then what?