Sydney’s median house price to hit $2m, Perth $1m by 2027 (2 Viewers)

[synthesisFR]

thoughts

Sydney’s median house price to hit $2m, Perth $1m by 2027

Sustained housing shortage and strong demand from surging population would kickstart the next growth spurt, according to Oxford Economics.

www.afr.com

 

[Susu123]

damn

 

[Aeonium]

moving out of aus seems like the best move icl
syd life from what i see
* nice park walks but they're kinda ceebs to go to without a car
* nice beaches but they're gatekept by rich people
* i don't like the property here in general
* very clique-y
* if you drive 3 hours you can go to canberra !! a place so boring that you can literally only get wasted, do drugs (if you're a politician, no "lower" class people allowed) or go to another city !
* but we do have good unis it's just i don't see much for a lot of industries in aus or whatever

melbourne life just seems like if you added more town hall burwood strathfield esq-stuff into the cbd and made it more compact but you also had worse & more expensive public transport somehow

why not just move to like canada or eu tbh even if they have equally bad cost of living at least you can drive for 3h and be in a different country :///

 

[its_ace21]

imma live with my parents till i die, finding a rich man is out of the goal since we're all becoming broke

 

[its_ace21]

here before @scaryshark09 starts saying we need a 1mill salary to afford a mortgage

 

[scaryshark09]

here before @scaryshark09 starts saying we need a 1mill salary to afford a mortgage

1mill salary is only 579k after tax
3 mill mortgage is total of over 7 million repayed with interest over 30 years, which is 240k each year for 30 years (42% of that 1mill salary gone each year to mortgage)
yes you definitely don't need 1mill salary, but probs not too far off

 

[SylviaB]

lol sydney losers deserve this

no matter how bad housing gets they'll still never talk about immigration and foreign 'investors'

hurr its da boomahs!!!

 

[seremify007]

I don't think immigration is the issue since that actually helps fuel the economy, encourage supply, etc... but I'd say foreign investors and CGT/etc definitely distort the market a bit, somewhat offset by banks charging higher interest rates for investors (but that really only impacts people borrowing money from an Australian bank which I suspect at least some of the foreign investors aren't).

 

[seremify007]

1mill salary is only 579k after tax
3 mill mortgage is total of over 7 million repayed with interest over 30 years, which is 240k each year for 30 years (42% of that 1mill salary gone each year to mortgage)
yes you definitely don't need 1mill salary, but probs not too far off

With some broad assumptions that a family earning that amount, the couple would presumably be on higher level roles which means their income isn't always in cash/paid monthly, and maybe they're a bit older so they've recently started a family with say two kids in childcare (which wouldn't be eligible for CCS) or private school, and you can quickly see how even a $1m family income doesn't actually stretch that far and the borrowing capacity may actually be only $2.5m or so, since monthly repayments after tax would be in the $15-$20k vicinity depending on deposit. You can make some broad assumptions around how much they get in hand but say they only get about $40-$50k per month which granted is still a lot of money (and more than double my initial starting salary back in the day) but once you factor in those other committed costs of living at day 0 (eg $8k per month on childcare, car lease, utilities, interest/costs on investment properties negatively geared, etc) and you can see how the net disposable income doesn't leave as much leftover as you'd think.

 

[SylviaB]

I don't think immigration is the issue since that actually helps fuel the economy,

"Fuelling the economy" doesn't mean more houses get built proportional to increases in population. It doesn't mean every immigrant generates enough economic value to make construction of an additional housing unit economically feasible. And let's not even begin to discuss the impact on physical and social infrastructure more broadly.....

encourage supply, etc...

No, higher prices encourage supply. Investors and developers don't stand at the sydney airport arrivals lounge with a clipboard counting how many people are getting off the plane.

But housing is strongly supply limited. Material and construction costs have risen sharply, building companies are failing, there's a shortage of workers (not least because the unions conspire with labor to keep migrant workers out of the constuction industry while creating more demand for construction jobs through population growth) and so on. The issue is not and cannot possibly be a lack of demand. And of course, the issue is a lack of supply relative to the number of people. If immigrants do 'encourage supply', this cannot possibly make things better unless they magically encourage supply to increase to a greater extent than the population increases, but this simply isn't happening.

If what you are saying were true, there wouldn't be 100 people queuing up around the block for every rental viewing in sydney. There simply aren't enough houses compared to people, it's getting worse every year, and there's no magic fix for it. Things clearly aren't keeping up with the current population size, but the population is continuing to grow every year.

but I'd say foreign investors and CGT/etc definitely distort the market a bit, somewhat offset by banks charging higher interest rates for investors (but that really only impacts people borrowing money from an Australian bank which I suspect at least some of the foreign investors aren't).

CGT can't explain why there's a shortage of places to rent unless investors are deliberately choosing to leave properties vacant long term instead of renting them out at significant numbers, which is unlikely. And of course, everyone is already blaming domestic property investors while screeching about "racism" if you so much as mention 'foreign investors'.

 

[seremify007]

Thanks for putting in the effort to provide a meaningful response. I don't disagree with the points you're making and your observation about rental property viewings, but I still don't chalk it all up to too much immigration (although it is still a contributing factor). I personally subscribe more to the view that the supply issue we have is due to housing density and zoning which prevents higher density living where it matters, and the structural changes which need to take place in order to facilitate this. It's simply not viable to have low density housing which makes up a large proportion of the residences (at least in Sydney) and expect all the conveniences, amenities and infrastructure which would require a much larger (and hence denser) population to sustain. In other words, whilst there is some increase in demand arising from migration, the economic benefits which come from more migrants to add to the skilled workforce, pay taxes, create demand for all the other things which the community needs, etc. outweigh this and should make it even more appealing for developers/builders once the regulations allow for it.

There's a Building Beautifully video which articulates this much better than I can.

 

[cosmo 2]

muh negative gearing

muh capital gains tax concession

muh boomers

everyone who thinks that these are principally responsible for rise in real estate prices rather than ancillary factors that only have an operative effect due to the constant supply-demand disequilibrium created by the mass immigration program and foreign buyers deserves to suffer to be honest

 

[cosmo 2]

I don't think immigration is the issue since that actually helps fuel the economy

i don't understand why people say this

immigration increases population size, which increases the volume of transactions which causes aggregate GDP (which is literally just a measure of the total quantity of final transactions within a particular economy within one year) to increase, but that doesnt mean anyone is actually materially any better off. you've increased the quantity of spending because you've increased the population, but so what, you haven't necessarily made anyone better off in terms of their earning or purchasing power, that only comes by producing more, or producing the same amount with less input. adding more people doesn't and won't do that unless they are all extraordinarily productive and skilled people relative to the people who were already there, and in the case of australia that's not true at all. most migrants aren't especially skilled and even only 27% of the 'skilled' migration stream are actually skilled migrants, the rest is comprised of the long tail of their families and other dependents who are also counted within the same stream. and a lot of those skilled migrants clearly have dodgy or outright fabricated credentials which is why so many of them end up working as uber drivers or food deliverers etc.

australia's economy is extremely dependent upon a fixed resource endowment (that is, agriculture and primary extraction i.e mining) which only needs a certain number of people to operate, and adding people beyond that number, in lieu of the creation of other equally productive industry (not happening) actually makes us poorer on a per person basis. this is because you have to dilute the resource wealth extracted down over a greater quantity of people. it'd be like kuwait increasing its legal population by 50 million via migration; it wouldn't increase the total quantity of gas and oil produced by kuwait but it would mean that the wealth created from that oil and gas would have to be shared with an additional 50 million people, which would make people in that country far, far poorer than they are now. it's not much different in australia, which has one of the most uncomplex economies in the world. it makes far more sense for australia to be as small as possible given its economic structure, not expand its population enormously via a pointless mass immigration program. we are going to (already are) experience real per capita material declines in living standards, just as canada currently is for similar reasons, due to our mass immigration program.

 

[totally_screwed]

yh everyone go back to where you came from!

 

[SylviaB]

yh everyone go back to where you came from!

 

[cosmo 2]

aus would be fuck all without its mining sector tbh

i reckon we'd be poorer than portugal

whole economy otherwise would be wiping ass holes of downs and fetal alcohol syndrome speds

 

[synthesisFR]

yh everyone go back to where you came from!

?

 

[enoilgam]

thoughts

Sydney’s median house price to hit $2m, Perth $1m by 2027

Sustained housing shortage and strong demand from surging population would kickstart the next growth spurt, according to Oxford Economics.

www.afr.com

You know, for all the talk of property prices being out of control and "young people being priced out", people forget to mention that there is actually affordable housing in Sydney - they are called units. You can get a classic, reliable 2-1-1 unit from the 70s within 20 minutes to the Sydney CBD for around $500-$600k - this is more than achievable for a young couple or even a higher earning single. The fact is, people, especially young people are fixated on getting their dream house straight away and aren't willing to consider units.

I own two apartments, one in Sydney and another in Canberra and both buildings are majority tenanted. I know if I sold either they would almost certainly be purchased by investors, there simply isn't much owner occupier demand for these properties. What's sad is both of these properties would easily be within reach of young buyers.

As much as it pains me to say, I share the boomer mentality - young people have outlandish expectations and aren't willing to compromise and/or put in the work needed to get ahead. Im going to outright brag here - Im a millennial and by 29 I owned 3 properties. I acknowledge that I have been fortunate enough to have a great family, however I sacrificed a lot to get here. Namely:

• I finished my degree 6 months early and I choose a path I knew would earn reliable money. Did I like my degree, no. Did I spend 6 years at university "finding my passion" like so many of my contemporaries did, no. I got in, got qualified and got out to start making money
• I have been on 1 holiday in 15 years (a cheap 7 day cruise). I didn't spend 6 months backpacking through Europe to "find myself", nor did I go on yearly overseas holidays
• The majority of my life in my 20s consisted of going to work and coming home to my laptop. I had no car (the first car I owned was at 31 and it was a 20 year old Toyota hand-me-down) and my phones/laptops were old hand-me-downs as well. I lived a spartan existence, I didn't really go out much until I met my partner at around 25. Even then, I took the bus/train to see her.
• Most importantly, I lived at home. Whilst I acknowledge that I was incredibly fortunate to do so, the truth is the majority of young people out there have this option but refuse to take it. I remember being in uni and everyone was crapping on about moving out and living the share house life and being independent. I copped so much shit for choosing to stay at home, but you know what, those same people are now the ones having a whinge that they cant afford to rent much less buy a house

I was raised by immigrants who had the mentality that hard work comes before enjoyment and with a lot of my contemporaries, they want to have their cake and eat it to. I still think young people can get into the house game, but you need to spend your 20s (all of it, not just after you turn 25) focused on getting yourself established financially. Nice cars, gadgets and holidays are for after you have "made it", not before.

 

[its_ace21]

i think living in apartments is fine if its just u/ur partner but if u have kids its actually so hard, plus strata and annoying ass drunk neighbours

 

[enoilgam]

i think living in apartments is fine if its just u/ur partner but if u have kids its actually so hard, plus strata and annoying ass drunk neighbours

It's a good start though and you can raise a young child in a unit. It isnt unprecedented, two of my Aunties now live in multi-million dollar properties but both started out in apartments. They raised their first child in them until they were around primary school age, then they upgraded to an older house and eventually, their dream homes. It's all about having realistic expectations and grinding things out over time.