15 January 2012

God the housing shortage in Canberra and Australia is annoying.

| Maxwell
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This is a dead set joke. Don’t try and tell me it has always been like this – I wasn’t born yesterday. Around the year 2000 housing was CHEAP and PLENTIFUL !

I think what happened was around 2006 – 2011 all of the kids of the baby boomers started leaving home and getting jobs and all of that stuff and this created a mini ecoomic boom but also there wasn’t enough housing on the market to cope.

Think about it, in 2004, you had 3 kids at home, 2 at university, then in 2007 they both up and moved to canberra or got jobs in their own towns/cities and wanted to rent a place.

What is the main type of housing being built at the moment ? Apartments. Who wants apartments. Young people. Says it all really.

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devils_advocate said :

NoImRight said :

No I didnt call anyone lazy. How do you get that out of that quote? I suggested they didnt want to do what it takes to get what they want. A subtle difference perhaps but a difference. Bit too close to home ( see what I did there?) perhaps?

While I don’t purport to speak for my generation, I think this post hits the nail on the head – it’s not laziness, it’s just a different attitude toward consumption and money (note I said “different” – not neccessarily wrong).

I suspect that high housing prices even play a part here. As several people have said here, there was once a time when young people saved hard to buy a house. It was the done thing.

But I suspect many young people these days see owning a house as an impossible dream. Since there is no need to save, they consume.

You make a pretty reasonable argument VYBerlinaV8, just a couple of points.

VYBerlinaV8_is_back said :

For those who remember me, I’m one of those evil property investors everyone hates, and have been for some time.

There is nothing inherently wrong with investing in property. What is destructive is where people make speculative investments because they think the capital value of property is going to go up (due to warping of the system via negative gearing, tax incentives, etc or a “better get in quick, before it is too late” type mindset).

VYBerlinaV8_is_back said :

The time when property prices were really tested was in 2007/2008. Government stimulus and drops in interest rate not only propped up the market, but caused it to increase. In 2007 the western world was going to be reduced to a smoking desert. Did we see a crash? Nope. Australia currently has low government debt and plenty of room to move on interest rates.

You have to appreciate that Australia didn’t avoid what happened to the rest of the world so easily, it took the US Federal Reserve bailing out NAB and Westpac to the tune of $5 billion so they wouldn’t outright collapse, an Australian government guarantee on our banks so that overseas lenders would still lend to them, $50 billion in stimulus in Australia, and half a trillion dollars in stimulus in the number one buyer of all the stuff we export (China).

That was what was needed to see that Australia didn’t stumble during the GFC. Now that all the stimulus has worn off, the world (and also Australian) economy doesn’t look so crash hot. The question you need to ask yourself is if something else happens (e.g. a slow down in China, global credit event caused by the shitstorm unfolding in Europe, etc.), is there the financial means and political will to see that we dodge the bullet again? I would suggest possibly not.

As for Australian government debt, it is true that it is low enough to not bother talking about. The elephant in the room is the debt held by private citizens. Australians lead the world in personal debt, we have way more debt per person than the Americans or any of those basket case countries in Europe ever did, and it poses a considerable risk to our economy.

VYBerlinaV8_is_back said :

5) Tradies now earn so much that the cost of building a new dwelling is huge (compared to 10 or 15 years ago). As such, some of the money that would have chased new stock is now chasing existing stock.

Construction costs haven’t actually increased all that much over recent years (see link below), and the amount they have risen by can mostly be explained by the fact that houses have grown a lot bigger and contain more costly inclusions (e.g. air conditioners, granite bench tops, home theatres, etc) in recent times.

http://dl.dropbox.com/u/3827353/Housing%20Graphs/ScreenHunter_03-Aug.-17-21.11.gif

devils_advocate2:01 pm 20 Jan 12

NoImRight said :

No I didnt call anyone lazy. How do you get that out of that quote? I suggested they didnt want to do what it takes to get what they want. A subtle difference perhaps but a difference. Bit too close to home ( see what I did there?) perhaps?

While I don’t purport to speak for my generation, I think this post hits the nail on the head – it’s not laziness, it’s just a different attitude toward consumption and money (note I said “different” – not neccessarily wrong).

Many of my friends earning $100k+ don’t have their own homes, and in my humble opinion their time preference for consumption is large – that is, consumption is heavily weighted towards the present.

I view myself as an exception because I have always had a pathological fear of being poor, as well as a fear of credit; was still a minor when I started my undergrad in law and finance and therefore feared banks before I was contractually capable of dealing with them; and worked in consumer credit regulation, so saw the worst of how banks deal with consumer. So I don’t really have healthy attitudes toward money or banks.

My choices were different to others I know, but certainly I don’t think they’re lazy, just different priorities. And they all seem happy with their choices. The difference is, I wouldn’t abide any of them whinging about the outcomes of those choices or begrudging me any of my “success” (narrowly defined for the purposes of this post) on the basis that it’s anyone’s fault other than their own.

chewy14 said :

NoImRight said :

Yes I can point to where people have complained that house prices arent going up like they used to.

Well do it then. I’m sure I’ve never said anything like that.

NoImRight said :

I have suggested bleating about something you dont like and then demanding someone else pays for it and fixes it for you is not really a practical solution.

I’m assuming you can point to where people have said that someone else should pay for it? Right? I mean you like comments with real content don’t you?

NoImRight said :

The only consensus seems to be some people cant afford everything they want right now and their solution is someone else should fix it by making those that did work for it and can afford it give it away to them. No one seems to want to consider making sacrificing a little and working to achieve something. Thumper is right suck it up, save and buy what you can. If you choose not to well spend some time in the room of mirrors if you want someone to blame.

No, you didn’t call anyone lazy at all.

I’m sure with your A grade grasp of economics you can put together a good argument that refutes a few of the links arescarti and others have provided in this thread? Or are you limited to wild generalisations and making stuff up?

Settle down Angry of Narrabundah its just the internet its not going to get you laid. In any case Ill try again.

TBH its back a few days ago and I really cant be bothered finding it.Its dull enough reading lengthy “why me?” rants once let alone twice. It may even have been one of the other interminable threads on this subject that seem to be popular now.You can believe me or you can look for it yourself. Or can say I made it up if that helps.Ill still be right;-) In any case where did I say you said it? Are you the elected leader now? Or has that damn Lady of the Lake been at it again? Others have been jumping on this jolly bandwagon too you know.

“Others pay for it”. Again its spead over the forum and I dont intend to spend my day going back over it I have useful work to be getting on with. To summarise though some have claimed the Government should provide more support for first home buyers.Where does that money come from? (Actually Im not against a rethink and improvemnt to support for FHO) The bubble fanciers are also eagerly awaiting divine justice falling on those that have dared to already buy and claimed they cant wait to see house prices plummet 50% or some other reasonable figure. In both these cases it would seem they are quite keen for someone else to foot the bill wouldnt you say?

No I didnt call anyone lazy. How do you get that out of that quote? I suggested they didnt want to do what it takes to get what they want. A subtle difference perhaps but a difference. Bit too close to home ( see what I did there?) perhaps?

What links have I suggested needing debunking? I dont recall getting too much into the economics of this more the mindset of those railing against the dark. I dont think Ive made anything up either but I guess for some some cold reality can seem like fantasy or a generalisation. Take it however you will.

NoImRight said :

Yes I can point to where people have complained that house prices arent going up like they used to.

Well do it then. I’m sure I’ve never said anything like that.

NoImRight said :

I have suggested bleating about something you dont like and then demanding someone else pays for it and fixes it for you is not really a practical solution.

I’m assuming you can point to where people have said that someone else should pay for it? Right? I mean you like comments with real content don’t you?

NoImRight said :

The only consensus seems to be some people cant afford everything they want right now and their solution is someone else should fix it by making those that did work for it and can afford it give it away to them. No one seems to want to consider making sacrificing a little and working to achieve something. Thumper is right suck it up, save and buy what you can. If you choose not to well spend some time in the room of mirrors if you want someone to blame.

No, you didn’t call anyone lazy at all.

I’m sure with your A grade grasp of economics you can put together a good argument that refutes a few of the links arescarti and others have provided in this thread? Or are you limited to wild generalisations and making stuff up?

RedDogInCan said :

Grail said :

Stop breeding. Two children is too many. One is not quite enough.

Good God, Gen Y is bad enough. Can you imagine how horrible an ‘only child’ generation would be!

Hey, sometimes that just happens. Not all ‘only’ children are horrible.

Grail said :

Stop breeding. Two children is too many. One is not quite enough.

Good God, Gen Y is bad enough. Can you imagine how horrible an ‘only child’ generation would be!

chewy14 said :

NoImRight,

If prices steady or keep going down for a few years, then yes affordability will increase. Hopefully the government will stop introducing new owner incentives to prop them up.

And can you point to where people have been whinging that prices aren’t going up like they used to?

I think the only consensus seems to be that property spruikers will continue to chant their
“I worked hard, you’re just lazy, things haven’t changed, property always goes up” mantra no matter what evidence is put before them. Just promise us you won’t be back here blaming the government if property prices go down or interest rates go up?

If I don’t buy a house, then I won’t be blaming anyone because I don’t actually need to. You do realise property isn’t the only investment class right?

Sigh.Sarcasm as a substitute for content is so 2011.

Lets see if I can answer your questions in order

Yes I can point to where people have complained that house prices arent going up like they used to.

No one has chanted this mantra of yours yet that I can see. Myself Im quite sure I havent said property always goes up your lazy etc. I have suggested bleating about something you dont like and then demanding someone else pays for it and fixes it for you is not really a practical solution.

No I wont be blaming the Government if house prices fall or interest rates rise. Unless for some bizarre reason its their fault. That same caveat doesnt seem to apply to those beating their chest and tearing their hair right now it seems as nearly every demographic has been trotted out as being the villians denying you your rights to own stuff you cant afford.

Im am aware of many investment types. Yours possibly involve Nigerian Princes given your obvious grasp of the subtleties of economics? Since this discussion seems to be about housing though perhaps its best to focus on that for now. 😉

The gumbymit has been doing OK out of this by increasing land values (for rates) by 20,30 and 40%. 2011/12 increase of 10.37% seems excessive when we are all told to expect the BIG CRASH>

2002-2003 $65,000 30.00%
2003-2004 $97,000 49.23%
2004-2005 $131,000 35.05%
2005-2006 $131,000 0.00%
2006-2007 $137,000 4.58%
2007-2008 $159,000 16.06%
2008-2009 $198,000 24.53%
2009-2010 $198,000 0.00%
2010-2011 $241,000 21.72%
2011-2012 $266,000 10.37%

NoImRight,

If prices steady or keep going down for a few years, then yes affordability will increase. Hopefully the government will stop introducing new owner incentives to prop them up.

And can you point to where people have been whinging that prices aren’t going up like they used to?

I think the only consensus seems to be that property spruikers will continue to chant their
“I worked hard, you’re just lazy, things haven’t changed, property always goes up” mantra no matter what evidence is put before them. Just promise us you won’t be back here blaming the government if property prices go down or interest rates go up?

If I don’t buy a house, then I won’t be blaming anyone because I don’t actually need to. You do realise property isn’t the only investment class right?

VYBerlinaV8_is_back10:37 am 20 Jan 12

It’s been a while since I’ve posted, but this thread has made me decide to join in again.

For those who remember me, I’m one of those evil property investors everyone hates, and have been for some time. Several years ago I guessed that we would enter a period of stagnation, and I think that is what we are seeing now. Top end property has definitely fallen off in price, but median and low priced dwellings don’t seem to be changing much. Data from several sources suggests that Canberra (both houses and units) has changed little in the last year, which due to inflation means prices are sagging a bit. I’d expect we will see the same for several years, during which time incomes and and other prices will play catch up.

I don’t think we are going to see a spectacular crash, for several reasons:
1) Employment is unlikely to drop through the floor in Canberra. Every story about a public service ‘razor gang’ is augmented by comment about such cuts being through attrition rather than redundancy.
2) About two thirds of the population live in a home they either own or are paying off, so government will generally act to appease this group.
3) The time when property prices were really tested was in 2007/2008. Government stimulus and drops in interest rate not only propped up the market, but caused it to increase.
4) Canberra still has high levels of expensive dining and entertainment – until this drops off, people have disposable income that could otherwise be spent supporting housing (although I’ll admit it’s not a nice concept).
5) Tradies now earn so much that the cost of building a new dwelling is huge (compared to 10 or 15 years ago). As such, some of the money that would have chased new stock is now chasing existing stock.

Thinking back 15 years or so the govt of the day reduced public service numbers. Did we see a crash? Nope. In 2007 the western world was going to be reduced to a smoking desert. Did we see a crash? Nope. Australia currently has low government debt and plenty of room to move on interest rates. We also have the ACT govt’s approach of trying to sell a postage stamp sized parcel of land for a very high price, meaning our shortage is not going to be fixed any time soon.

For those people who want to own but don’t, I’d suggest saving now, because over the next few years there will be definite opportunities to buy. Unfortunately a lot of stock for sale at the moment seems crappier than usual, but be patient. When you do find something you like, move quickly to put in an offer and get it off the market.

chewy14 said :

People are simply suggesting that the government should stop propping the housing market up with reduced supply, extra incentives and tax breaks which end up in the pockets of property owners and speculators. The government’s policies actively work against housing affordability because their noses are deep in the trough.

Don’t forget that we have too many people on the planet and are approaching a point where we will be cutting back food supply by building houses on farming land. One way to address the housing affordability issue is to make fewer people.

Stop breeding. Two children is too many. One is not quite enough.

chewy14 said :

milkman said :

If property was in a bubble, it would have burst by now. It’s been almost 5 years since the GFC.

If you didn’t notice, we were fairly sheltered from the full effects of the GFC due to our initial position, government intervention and the growing asian economies. We may not be so lucky next time.

Plus as arescarti and others have shown, property prices have already been going down for the last year or so.

If you are correct and property prices are going down then surely thats problem solved?

What gives me LOLs is we have one group complaining that house prices are too high and sub members of the same group complaining that house prices arent going up like they did in the good old days so they cant make the same profits.

The only consensus seems to be some people cant afford everything they want right now and their solution is someone else should fix it by making those that did work for it and can afford it give it away to them. No one seems to want to consider making sacrificing a little and working to achieve something. Thumper is right suck it up, save and buy what you can. If you choose not to well spend some time in the room of mirrors if you want someone to blame.

milkman said :

If property was in a bubble, it would have burst by now. It’s been almost 5 years since the GFC.

If you didn’t notice, we were fairly sheltered from the full effects of the GFC due to our initial position, government intervention and the growing asian economies. We may not be so lucky next time.

Plus as arescarti and others have shown, property prices have already been going down for the last year or so.

If property was in a bubble, it would have burst by now. It’s been almost 5 years since the GFC.

frannjipani said :

I am so sick of Gen Y whinging about house prices and education costs. Most of them live at home while saving for a deposit or while going to uni.

Data point. I know a couple who have two employed adult children in their twenties living at home. Recent quotes from the male parent include “I dunno what I have to do to get my daughter to move out” and “God forbid that my bloody lazy son would come out and help me mow the lawn”, which was in response to my suggestion that he should get his adult son to mow the lawn for him instead of playing X-box games.

I think it’s partially the fault of the parents for being too soft hearted, but mostly the fault of the kids who are taking advantage of their parents kindness.

The kids…I mean adults…have jobs and enough money for cars, iphones etc, so I’m pretty sure they could support themselves independently if they chose to.

frannjipani said :

I am so sick of Gen Y whinging about house prices and education costs. Most of them live at home while saving for a deposit or while going to uni. How real is that? My daughter (Gen Y) moved interstate to University at the age of 18 and has been able to pay off two HECS debts. Admittedly I paid her College residential fees (as a single Baby Boomer mother), but she now pays $460 per week (on her own) for a one bedroom apartment in Sydney. So get real people, the Baby Boomers you criticize are the ones you are sponging off right now. I have even heard of Gen Ys living at home rent free while paying off a house!! And I hate to say it, but Baby Boomers got no Baby Bonus so stop confusing the issues.

Man, there is nothing like wild generalisations and incorrect assumptions for getting in the way of facts and reason, is there.

RedDogInCan said :

Bramina said :

How is housing not a pyramid scheme? Really, anyone please explain.

It fails as a pyramid scheme because receiving payments is not primarily for enrolling other people into the scheme. Your attempt to force fit the property market into the pyramid scheme model ignores the fact that once you sell your property, you are effectively out of the scheme meaning there is no ‘pyramid’ hierarchy which is the distinguishing feature of such schemes. Pyramid schemes work on funnelling payments to the top of the scheme and promising those at the bottom that one day they will be at the top if they pay their membership fee.

Ok, I accept that it isn’t a good fit. (I still think it is a very distorted and informal pyramid).

But it does fit exactly the definition of a ponzi scheme. Wikipedia says:

“A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation.”

In property investment people put more money into the market on the premise that prices are going up, but those price increases are not being paid by investment in housing. Not out of real profits produced by selling goods or services produced using that investment.

But really it is an economic or speculative bubble. Wikipedia says:

“An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania or a balloon) is “trade in high volumes at prices that are considerably at variance with intrinsic values”. It could also be described as a trade in products or assets with inflated values.”

Or to be more precise, it is a real estate bubble. Wikipedia says:

“A real estate bubble or property bubble (or housing bubble for residential markets) is a type of economic bubble that occurs periodically in local or global real estate markets. It is characterized by rapid increases in valuations of real property such as housing until they reach unsustainable levels and then decline.”

Wikipedia even has an article on the Australian property bubble.

I am so sick of Gen Y whinging about house prices and education costs. Most of them live at home while saving for a deposit or while going to uni. How real is that? My daughter (Gen Y) moved interstate to University at the age of 18 and has been able to pay off two HECS debts. Admittedly I paid her College residential fees (as a single Baby Boomer mother), but she now pays $460 per week (on her own) for a one bedroom apartment in Sydney. So get real people, the Baby Boomers you criticize are the ones you are sponging off right now. I have even heard of Gen Ys living at home rent free while paying off a house!! And I hate to say it, but Baby Boomers got no Baby Bonus so stop confusing the issues.

milkman said :

What about in Canberra? How much have prices fallen here?

Not much really. Down 1.6% over the year and 2.4% since the peak, about $12k off the median house.

http://www.macrobusiness.com.au/wp-content/uploads/2012/01/RP-Data-2.png is taken from the RPData December home price data release.

I feel sorry for the people who took out 97% loans on property in cities like Brisbane and Perth in recent times. If you only had 3% (or even 5%) equity in your home to begin with, a 9% fall is going to leave you owing considerably more than your house is worth.

arescarti42 said :

DermottBanana said :

Affordability can’t be too much of a problem or people wouldn’t be buying.
And people are buying, because if they weren’t, the prices would be dropping.

News flash, prices have been falling for well over a year and are tipped to continue falling. Additionally, the number of people falling behind on their mortgages are increasing.

http://www.theaustralian.com.au/business/property/nab-expects-house-prices-to-fall-for-next-year/story-fn9656lz-1226150291461

What about in Canberra? How much have prices fallen here?

Actually and just while I’m at it, just for fun:

http://www.macrobusiness.com.au/2011/10/why-agents-are-nervous-2/

The number of home sales are at lows not seen since 1997. So safe to say that (relatively speaking) no, people aren’t buying.

DermottBanana said :

Affordability can’t be too much of a problem or people wouldn’t be buying.
And people are buying, because if they weren’t, the prices would be dropping.

News flash, prices have been falling for well over a year and are tipped to continue falling. Additionally, the number of people falling behind on their mortgages are increasing.

http://www.theaustralian.com.au/business/property/nab-expects-house-prices-to-fall-for-next-year/story-fn9656lz-1226150291461

devils_advocate said :

This concept of “leveraging” oneself up to the eyeballs to make money (and the related concept of using unrealised paper-based gains on one house to “secure” borrowings on another, and so on and so on till you have these daisy-chained, and ultimately useless, securities) is a relatively recent phenonemon, brought about IMO by this spruiking of housing as a massive get-rich-quick scheme.

Older (dare I say it, baby boomer) investors that I know generally have a more cautious approach to debt and leveraging.

Nope, my pre baby boomer mother has been doing it since the 70’s. As soon as the house was paid off she was down the bank borrowing against the equity to purchase a commercial property.

devils_advocate2:11 pm 19 Jan 12

chewy14 said :

RedDog,
that’s true if you only own one house, property investors on the other hand are in a different boat. They need the capital gains to fund their highly levereged portfolios.

Although you do make a good point in that paper gains aren’t worth anything until you have to sell.

This concept of “leveraging” oneself up to the eyeballs to make money (and the related concept of using unrealised paper-based gains on one house to “secure” borrowings on another, and so on and so on till you have these daisy-chained, and ultimately useless, securities) is a relatively recent phenonemon, brought about IMO by this spruiking of housing as a massive get-rich-quick scheme.

These are the type of “investors” that got burned in the GFC when their (often non-ADI) loans got ratcheted up to 12 pc or more.

Older (dare I say it, baby boomer) investors that I know generally have a more cautious approach to debt and leveraging.

RedDog,
that’s true if you only own one house, property investors on the other hand are in a different boat. They need the capital gains to fund their highly levereged portfolios.

Although you do make a good point in that paper gains aren’t worth anything until you have to sell.

chewy14 said :

They’re happy with massive gains and government manipulation to shore up those gains.

This is the fallacy of the housing debate – yes my property has doubled in value since I bought it but guess what, if I sell it I can only afford to buy one just like it because all houses have gone up by a similar amount. Home owner capital gains isn’t like winning the lottery.

DermottBanana said :

chewy14 said :

And comments like yours usually come from people who own a house and have no idea how the situation has changed over the last decade or so. They’re happy with massive gains and government manipulation to shore up those gains.
They often talk about all their hard work and never about pure luck or chance.
They expect other people to work far harder than they ever did for the same opportunities.

As for your comment about affordability, yes some people are still buying but are increasingly going into larger and larger debt to do so which is where your growth is (or was) coming from.

Funny thing about luck. The harder and smarter one works, the luckier one becomes.

(No, I don’t own real estate by the way. I just don’t blame that situation on those people who do)

Well, you seem unaware of the situation and the issues.

I was lucky and got a house in Narrabundah for $140,000 when I was earning an average wage.

Today’s average wage is less than twice what it was then, whereas house prices have gone up by a lot *more* than twice, as I quoted above in the HIA report.

So, despite being a “have”, I am actually clever enough to identify my situation is a result of luck and not cleverness.
Those who ascribe their luck to cleverness on their part are actually proving the opposite in addition to demonstrating they lack empathy for their younger fellow human beings.

DermottBanana said :

Funny thing about luck. The harder and smarter one works, the luckier one becomes.
quote]

ORLY?

Please enlighten me as to how someone who bought a house in the 90’s managed through hard work to create massive capital gains out of a non-productive asset?

Or are you telling me that they knew that personal credit would explode and the government would actively protect their investment through market manipulation?

And I don’t blame the current situation on property owners, I just think that some of them need a reality check as to the source of their recent large capital gains. If property prices fall, I very much doubt they’ll all be back in here saying they were lazy and stupid, I’m sure it will all be the government’s fault.

DermottBanana12:05 pm 19 Jan 12

chewy14 said :

And comments like yours usually come from people who own a house and have no idea how the situation has changed over the last decade or so. They’re happy with massive gains and government manipulation to shore up those gains.
They often talk about all their hard work and never about pure luck or chance.
They expect other people to work far harder than they ever did for the same opportunities.

As for your comment about affordability, yes some people are still buying but are increasingly going into larger and larger debt to do so which is where your growth is (or was) coming from.

Funny thing about luck. The harder and smarter one works, the luckier one becomes.

(No, I don’t own real estate by the way. I just don’t blame that situation on those people who do)

DermottBanana said :

Affordability can’t be too much of a problem or people wouldn’t be buying.
And people are buying, because if they weren’t, the prices would be dropping.
Such complaints about the affordability of housing always seem to come from the have-nots, complaining that haves have.
Rather than sook about it, it’d be far more productive to work out HOW to get what they want, rather than sit around carping about what they can’t have, and how unfair it is that other people get ahead.

And comments like yours usually come from people who own a house and have no idea how the situation has changed over the last decade or so. They’re happy with massive gains and government manipulation to shore up those gains.
They often talk about all their hard work and never about pure luck or chance.
They expect other people to work far harder than they ever did for the same opportunities.

As for your comment about affordability, yes some people are still buying but are increasingly going into larger and larger debt to do so which is where your growth is (or was) coming from.

DermottBanana10:47 am 19 Jan 12

Affordability can’t be too much of a problem or people wouldn’t be buying.
And people are buying, because if they weren’t, the prices would be dropping.
Such complaints about the affordability of housing always seem to come from the have-nots, complaining that haves have.
Rather than sook about it, it’d be far more productive to work out HOW to get what they want, rather than sit around carping about what they can’t have, and how unfair it is that other people get ahead.

1 child policy and ban immigration. shrinking population and the current housing supply should fix itself in a generation.

Simple

No wonder I am not in politics. (or a great econimic theorist)

RedDogInCan said :

However the reality is that either side of that 2000-05 period, there has been very little change in the ratio – from 1995 to 2010 the ratio only grew from 2.5 to 4.1, a growth rate of only 3.3% per year.

What an odd take on it. It doesn’t matter how much it goes up in any given year, what matters is that it has consistently and significantly increased, proving that affordability has been on a continual slide since about 1998.

As the report says:
“Clearly, there has been a significant increase in the ratio of house prices to income over the last 15 years.
Unfortunately, this trend has meant that first home buyers have found it increasingly more difficult to
transition from the rental market into home ownership. This growing barrier to home ownership can be
seen in the chart below which shows movement in house price to income ratios across Australia?s capital
cities over a 15 year period.”

Bramina said :

How is housing not a pyramid scheme? Really, anyone please explain.

It fails as a pyramid scheme because receiving payments is not primarily for enrolling other people into the scheme. Your attempt to force fit the property market into the pyramid scheme model ignores the fact that once you sell your property, you are effectively out of the scheme meaning there is no ‘pyramid’ hierarchy which is the distinguishing feature of such schemes. Pyramid schemes work on funnelling payments to the top of the scheme and promising those at the bottom that one day they will be at the top if they pay their membership fee.

Even your logic in comparing house prices to average income is flawed. Yes, house prices do generally double over a 10 year period on average but it isn’t a constant growth. Sometimes, like in the period 200-2007 it will grow faster, other times, like 1995-2000, it won’t grow at all. You are also assuming that average income doesn’t change, which isn’t true.

This research report http://economics.hia.com.au/media/House%20price%20to%20income%20ratio%20-%20FINAL.pdf shows the ratio of house prices to household income (see page 4). You could be selective with the figures and say that the ratio grew 60% from 2.5 to 4 over a five year period (2000-05) and extrapolate that to 6.4 by 2010. However the reality is that either side of that 2000-05 period, there has been very little change in the ratio – from 1995 to 2010 the ratio only grew from 2.5 to 4.1, a growth rate of only 3.3% per year.

Grail said :

Bramina said :

I was thinking of finishing this off by saying that property in Australia is no different from a number of other pyramid schemes…

Superannuation is the greatest pyramid scheme of them all, short of the consumer economy.

Property on the other hand is a solid investment, based on the assumption that no government in the next 50 years is going to propose a population control policy which will lead to reducing the population to levels at which we can afford to keep watering and feeding them domestically.

Expansionism is the game played by cancer and viruses. Any other organism on the planet that practices unbridled expansion ends up extinct, or at least suffering drastic reductions in population due to lack of food & abundance of predators.

Superannuation is just government mandated savings/investment. If super were a pyramid scheme, then all savings and investment would be a pyramid scheme.

Property simply isn’t a solid investment. In part people invest in it because they assume prices will always go up, or at least never go down. But this sustained growth in prices is unsutainable.

Say an average house cost two average incomes in 1992. And lets assume that house prices double every 10 years (that’s a 7% increase per annum).

By 2002 the average price of a house would have been four average incomes. Now in 2012 the average price would be 8 average incomes. That’s pretty close to what has happened.

But in 2022 the average price of a house will have to be 16 average incomes. The price would be 32 average incomes in 2032. The price would reach 1000 average incomes by 2092, after just 100 years and 1,000,000 average incomes in 200 years. Clearly this can not be sustained.

Going back to what Wikipedia said. A pyramid scheme is a…

* non-sustainable business model (as I showed above, price increases cannot be sustained)

*that involves promising participants payment or services, (people who invest in housing think it is guaranteed to generate profits)

* primarily for enrolling other people into the scheme, (well technically housing payments are primarily in return for generating more investment including from people who are already in the market)

* rather than supplying any real investment or sale of products or services to the public. (buying a house and then selling it for a profit doesn’t create anything new).

How is housing not a pyramid scheme? Really, anyone please explain.

“If people want to buy a house then they will just have to suffer like everyone else that owns a property had to do. There will be no miraculous crash whereby cheap houses flood the market and I doubt that we will be a socialist/ communist state in any time soon.”

Thumper,

that’s the point in all these threads. Because housing affordability has gone down so much, it’s not that the current generation has to work as hard as the previous ones, you’re telling them they have to work harder than existing property owners did to pay for property investors retirements.
Don’t mistake luck for hard work.

People are simply suggesting that the government should stop propping the housing market up with reduced supply, extra incentives and tax breaks which end up in the pockets of property owners and speculators. The government’s policies actively work against housing affordability because their noses are deep in the trough.

As for the rest of your comment, you could have just written “property prices always go up”.

Property price crash? probably not. Correction and stagnation? very likely.

DermottBanana8:58 am 18 Jan 12

(Oooooh, I’m going to get flamed for that….)

Or +1’ed

EvanJames said :

PA1 said :

Wealth hasn’t greatly increased over the last 10 year only debt has.

So true. The average income has not increased in step with the increase in house prices. I think someone said earlier in the thread that in the 90s, a basic house cost 3 times the average wage. Now it costs 7 times.

People like Breda seem to have their head in a bag.

Bear in mind that real incomes have increased over the last ten years, and with it disposable income. Disposable income is a better guide to how much someone can afford to spend on a home, because as disposable income rises, so does the proportion of income that can be spent on housing.

For example, if I earn $50k per year and spend 40% of my income on housing, that’s a huge impost, but if I earn $150 and spend 40% on housing my remaining $$ is much more.

Housing IS expensive right now. But unless we have a big jump in unemployment, and people can no longer pay their loans, there really isn’t anything to drive a big crash.

Breda you realise that it is an index of the desperation of your arguments that you attempt to suggest I was comparing Canberra to Mali or indeed to any third world country. You also only lend weight to my argument by saying that Canberra is in any way comparable to New York.

What’s the matter – can’t find any comparable city in the world with similar house prices to Canberra?

Well here is some data (although being a fantasist I suspect you won’t read it):

http://www.demographia.com/dhi.pdf

I’m having a quiet chuckle at all these people claiming it’s the baby boomers responsible for the GFC: it’s not. The people responsible for the GFC are a small handful of executives at financial firms across the Western world such as Goldman Sachs. They engaged in dodgy business such as offering loans to countries who couldn’t possibly pay the loans back, then betting against the country keeping up with the loan repayments.

These financial mavens are folks whose kids are still teenagers. They’re not baby boomers.

The worst sins of the baby boomers are (a) simply existing in such large numbers (meaning huge levels of taxation in the next few decades as we throw good money after the old farts’ health and well-being), and (b) raising the cost of cars and books in Australia through foolish protectionist policies.

If you want to find someone to blame for all the world’s problems, pick on you local 40-year-old derivatives trader.

Bramina said :

I was thinking of finishing this off by saying that property in Australia is no different from a number of other pyramid schemes…

Superannuation is the greatest pyramid scheme of them all, short of the consumer economy.

Property on the other hand is a solid investment, based on the assumption that no government in the next 50 years is going to propose a population control policy which will lead to reducing the population to levels at which we can afford to keep watering and feeding them domestically.

Expansionism is the game played by cancer and viruses. Any other organism on the planet that practices unbridled expansion ends up extinct, or at least suffering drastic reductions in population due to lack of food & abundance of predators.

NoAddedMSG said :

There is also the trend of decreasing household size, so coupling this with the gradually increasing population, adds to the pressure on housing. I don’t think the baby boomers can be entirely blamed for the decreasing household size trend.

Ha ha, yeah: an average of 2.4 empty rooms per household. That is to say, professional couples buying up 4 bedroom houses because 2 feels too small for them. In the meantime families with two or three kids are left scrounging around the “not good enough for the dinkys” pile of 2-3 bedroom places with no room for play/entertainment.

PA1 said :

Wealth hasn’t greatly increased over the last 10 year only debt has.

So true. The average income has not increased in step with the increase in house prices. I think someone said earlier in the thread that in the 90s, a basic house cost 3 times the average wage. Now it costs 7 times.

People like Breda seem to have their head in a bag.

The only shortage is of affordable housing. If you look at this ABS data from 1994-2006 you will notice that whilst the number of bedrooms increased from 2.88 to 3.06, the amount of people went from 2.69 to 2.51 per household. So you’d think if there was a shortage they would be packing them in like sardines but it appears to be going the other way.

Whether people like it or not the Australian Real Estate market resembles a Ponzi scheme, with new money required to keep the prices high, but as soon as that credit tap is turned off (which is already starting to happen) the scheme will start to collapse.

Wealth hasn’t greatly increased over the last 10 year only debt has.

Breda,
Did you even read arescarti’s post?

It’s not comparing house prices in third world countries with Canberra house prices, its relative prices compared to other similar countries whose property prices have all recently crashed and crashed hard.

But Australia’s different right?

Those with reading comprehension skills and a basic knowledge of recent global events would also be keenly aware that Canberra house prices are amongst the highest in the world.

Those with comprehension skills will also be aware that this ridiculous state of affairs may at any time come to an end as credit rationing takes effect.

On one side of the argument are those who have made money in the last decade who refuse to believe the good times will end (fantasists) and on the other side are those that realise it is much better to keep your money in your pocket as future capital gains in housing are a mug’s bet (realists).

The fantasists believe that Australia is a magical place that is different to everywhere else in the world – just like the punters did in America, Iceland, UK, Spain, Ireland and Greece. Fantasists don’t like numbers and data, especially recent data or overseas data. Fantasists prefer to believe that because something has happened (a housing bubble) it must continue to happen – fantasists are the only ones still buying in this market. There aren’t very many of them though and that is why the unsold housing stock in Canberra keeps going up and up.

—————————————————————————-

How long, oh Lord, how long?

Those with basic reading and comprehension skills would know than Canberra incomes are among the highest in the world. Funnily enough, housing prices closely track the ability of people to pay.

Housing is cheap in Dust-town, Mali, because no-one has any money. Strangely, housing in New York or Paris or Sydney or even Canberra is more expensive because the people who live there earn a lot more than people in Fleabag, Mali or xxxwhat! village in Mexico.

Get over it.

breda said :

“To shorten this post : Myself and many others would LOVE the opportunity to be able to afford something like that. Sounds like you did it on a low income too.

Many of you older posters are hugely out of touch.”

——————————————

You just don’t get it, do you? When I bought my house about 11 years ago, people said “oh, you are buying in XXX” (pitying look) – then a suburb with a bad reputation. I bought a not very well built house with few amenities in an unfashionable location. It has paid off for me. You can do the same. I am looking at a couple of similar properties to buy as investments as we speak.

Of course, if you want the ensuite and the study, you are on your own.

You don’t get it. The increase in value of property over the last 10-15 years was a complete anomaly, totally unique within the post war period. Look at this and then tell me with a straight face that 2000 to now was typical of the last 50 years.

If you consider the credit environment from the late 1990s up to 2008, and compare it with the current credit environment (and the realisation around the developed world that giving people all that credit was a bad idea), then the chances of a recurrence of the last 10 years is practically zero.

The only way anyone now is going to be do the same as what you did is if they have a time machine that can take them back 10 years.

+1 arescarti
Those with reading comprehension skills and a basic knowledge of recent global events would also be keenly aware that Canberra house prices are amongst the highest in the world.

Those with comprehension skills will also be aware that this ridiculous state of affairs may at any time come to an end as credit rationing takes effect.

On one side of the argument are those who have made money in the last decade who refuse to believe the good times will end (fantasists) and on the other side are those that realise it is much better to keep your money in your pocket as future capital gains in housing are a mug’s bet (realists).

The fantasists believe that Australia is a magical place that is different to everywhere else in the world – just like the punters did in America, Iceland, UK, Spain, Ireland and Greece. Fantasists don’t like numbers and data, especially recent data or overseas data. Fantasists prefer to believe that because something has happened (a housing bubble) it must continue to happen – fantasists are the only ones still buying in this market. There aren’t very many of them though and that is why the unsold housing stock in Canberra keeps going up and up.

Maxwell said :

milkman said :

Maxwell said :

Baby boomer lives were not so different to today, just things were cheaper

Lots of things weren’t cheaper back in the day. Whitegoods, appliances, cars, travel, luxury items, etc…

Yeah so what… a computer was massively expensive in 1995 and can be bought dirt cheap now !

Does that mean my generation suffered due to having expensive computers ?

If a fridge made in 1995 cost $500 in 1995 and it cost $2000 in year the 2012 then that would be a problem.

You expect that with time the price of things should go down due to improvements in technology.

Housing eating up a higher percentage of income is just bad. The fact you get a fridge for $300 cheaper doesn’t really matter, because fridges are old technology (mine cost 50 bucks)

So… you don’t care that quite a few things are a lot cheaper, you just don’t like the idea that houses cost more now?

breda said :

“To shorten this post : Myself and many others would LOVE the opportunity to be able to afford something like that. Sounds like you did it on a low income too.

Many of you older posters are hugely out of touch.”

——————————————

You just don’t get it, do you? When I bought my house about 11 years ago, people said “oh, you are buying in XXX” (pitying look) – then a suburb with a bad reputation. I bought a not very well built house with few amenities in an unfashionable location. It has paid off for me. You can do the same. I am looking at a couple of similar properties to buy as investments as we speak.

Of course, if you want the ensuite and the study, you are on your own.

I’m only going to say this once more in huge capital letters :

THEY WILL BE IN EXCESS OF 350k FOR A HOUSE OR 270K FOR AN X-GOVIE UNIT (most expensive option of all) THAT IS A HUGE AMOUNT OF MONEY AND IF YOU HAVE A 10% DEPOSIT IT IS STILL A HUGE CHUNK OF INCOME LOST IN INTEREST AND REPAYMENTS.

FOR CRYING !!!

SO YOU NEED ABOUT 70K IN SAVINGS AND $1100 PER WEEK NET (minimum) OR YOU ARE TAKING ON A HUGE RISK !!!

dungfungus said :

Maxwell said :

dungfungus said :

arescarti42 said :

PantsMan said :

The Baby Boomers are the biggest freeloading generation in Australian history. House prices, tax free superannuation and handouts from the Government (ie me) if they had not ‘saved’ enough to stop working, tax breaks for going back to work after deciding superannuation was so sweet that they could not be bothered working any longer, a lifetime of free health care, free education. I’m, however, saving for my retirement, trying to buy a house, paying for my healthcare, paying for my education, paying off the accrued Government debts of the previous 40 years in five years (ie Future Fund), saving for my children’s healthcare, saving for my children’s education…

I think Australia could do with a big fat recession to force the Government to dump these ridiculous handouts to people the basis of whose ‘need’ consists of being in an electorally sensitive demographic.

And don’t get me started on the Baby Bonus…

Agreed, the boomers had the best of industrialised society served up to them on a silver platter for most of their lives. My parents got free tertiary education and were able to pay off their first 3 bedroom house in Latham on one income by the time they were 30.

Now I’ve got to pay a fortune to educate myself in the aftermath of the worst economic shitstorm since the great depression (caused by the boomers) with the prospect of becoming a debt slave for most of my life if I should happen to want to buy a house.

And these people are going to continue to kill our country by leeching aged pensions and free healthcare in retirement, further screwing over people my age who will be expected to fund them.

As a “babyboomer” I do not agree with anything you say. I didn’t get any concessions when I started work in 1963 and to save one third deposit for my first house (home loans were regulated in those days) I worked 3 jobs for 2 years without a day off. I didn’t have a car either. I did matriculate but couldn’t afford a tertiary education – don’t know where you got this notion that education then was “free”.
It is insulting and ignorant of you to say the great depression was caused by the babyboomers too. The great depression was in the 1930s and the first baby boomer was born in 1946. The trouble with people like you is that you think the world owes you everything at once. Get off your bum and get a second job if you want to get ahead. Above all, stop whingeing and blaming other people for your deficiencies.

Matriculated ? In 1963 ? My great grand father matriculated because his father was a carpenter and the other brothers all contributed money for him to go to school. He got the second highest possible score and was immediately shipped off to the military, and then ended up fighting in a world war.

Baby boomer lives were not so different to today, just things were cheaper, stop trying to pretend to be apart of the above generation, you’re not.

i.e university I didn’t go straight after school either and I had to work to be able to afford it. You could have gione as a mature aged student if you’d wanted to go and it would have been free. Furthermore having to work 3 jobs is likely your own fault for not finding a better job. You could have easily become a public servant with a matriculation and gotten promoted and bought a house off a single income ike so many others. I’m not comparing someone who worked at kmart and the juicy loosy bar to a hard working professional of today who did practically everything right, or a high earning government worker.

Your comments indicate to me that you haven’t lived or worked outside Canberra. You are very confused about the social history of Australia as well. While your great grandfather may have had his career aspirations interrupted by WW2, so did many other people. I was drafted into national service in 1969 and this had consequences for my workplace future too. I couldn’t afford to go to university simply because I was raised and worked in a country town and my widowed mother simply couldn’t afford it. At that time if one accepted a Commonwealth Scholarship, you were requred to work for the Commonwealth for 5 years after you graduated to satisfy the bond so the “part free” education came with conditions that a lot of people could not abide with so they had to pay off the bond ( a bit like the current HECS)
Moving to Canberra as a public servant did not appeal to me either. When eventually I did move to Canberra to work in financial services (private sector) I started a course at whatever Canberra University was called then and ended up with a group of 25 doing the same subjects. Twenty four of the group were public servants who were able to complete absurdly lengthy assignments at work – I had to work full time in the real world so I only got through one semester. Things were not cheaper when I came to Canberra in the early 1980s – I had to borrow heavily to secure an ex-govie duplex and shortly after I was paying 22.5% interest on the unsaleable house I had left in a drought stricken part of Australia. Houses may be more expensive now, relative to what they were in the 1980s, but everything else is so cheap (cars, clothes, computers, entertainment, travel etc.) All people seem to do in Canberra is talk about the prices of houses – it is so boring.
I find you remark that I am not a member of the babyboomer generation very offensive but that defines the intolerance and ignorance of your generation. I am proud of my humble achievments, unlike you.

Your comments tell me that you don’t know me or anyone of my generation at all. I think many people have to work very hard to get through university, not just in terms of studying but also in terms of getting by financially. Fees may not be an issue but living costs and associated study costs can be. Going to university can be a big sacrifice in terms of the lifestyle one is able to live during that period and we have a culture which is partially built around exploiting an excess of student workers. But that is a topic for another post.

The topic of the baby boomers all boils down to the fact that they might not have had iphones but it was still a largely industrialised society. If you took a gen y and placed them in the baby boomer land of growing up things would be vastly similar to how they are now and many things would infact be a lot better.

The main difference would be that housing would be noticeably cheap and more available. And society generally more free.

FYI the personal attacks you levied against me : He fought in WW1 not sure of the exact involvement in WW2. I came to canberra to make my money off the public service cash cow. The point is that to buy a 2 bedroom x govey these days is in excess of $270,000 which is an awful lot of money.

Finally, there are people of all generations who make bad decisions, so comparing a boomer who made bad personal choices and ended up with a dud purchase, or a low income job, or five kids who was “able to do it” to a hard working clean cut professional of today just makes my point more clear.

How many clean cut professionals at a high (relative to what most people earn say 76-85k) had any difficulty buying a house back in the baby boomer days.

This is quickly gettign de-railed, the main point I wanted to make was that Australia and Canberra have housing issues regardless of renting or buying and that I think it may be caused by the population dynamics of gen y mostly looking for their places by moving out of home at around the same time.

“To shorten this post : Myself and many others would LOVE the opportunity to be able to afford something like that. Sounds like you did it on a low income too.

Many of you older posters are hugely out of touch.”

——————————————

You just don’t get it, do you? When I bought my house about 11 years ago, people said “oh, you are buying in XXX” (pitying look) – then a suburb with a bad reputation. I bought a not very well built house with few amenities in an unfashionable location. It has paid off for me. You can do the same. I am looking at a couple of similar properties to buy as investments as we speak.

Of course, if you want the ensuite and the study, you are on your own.

Maxwell said :

dungfungus said :

arescarti42 said :

PantsMan said :

The Baby Boomers are the biggest freeloading generation in Australian history. House prices, tax free superannuation and handouts from the Government (ie me) if they had not ‘saved’ enough to stop working, tax breaks for going back to work after deciding superannuation was so sweet that they could not be bothered working any longer, a lifetime of free health care, free education. I’m, however, saving for my retirement, trying to buy a house, paying for my healthcare, paying for my education, paying off the accrued Government debts of the previous 40 years in five years (ie Future Fund), saving for my children’s healthcare, saving for my children’s education…

I think Australia could do with a big fat recession to force the Government to dump these ridiculous handouts to people the basis of whose ‘need’ consists of being in an electorally sensitive demographic.

And don’t get me started on the Baby Bonus…

Agreed, the boomers had the best of industrialised society served up to them on a silver platter for most of their lives. My parents got free tertiary education and were able to pay off their first 3 bedroom house in Latham on one income by the time they were 30.

Now I’ve got to pay a fortune to educate myself in the aftermath of the worst economic shitstorm since the great depression (caused by the boomers) with the prospect of becoming a debt slave for most of my life if I should happen to want to buy a house.

And these people are going to continue to kill our country by leeching aged pensions and free healthcare in retirement, further screwing over people my age who will be expected to fund them.

As a “babyboomer” I do not agree with anything you say. I didn’t get any concessions when I started work in 1963 and to save one third deposit for my first house (home loans were regulated in those days) I worked 3 jobs for 2 years without a day off. I didn’t have a car either. I did matriculate but couldn’t afford a tertiary education – don’t know where you got this notion that education then was “free”.
It is insulting and ignorant of you to say the great depression was caused by the babyboomers too. The great depression was in the 1930s and the first baby boomer was born in 1946. The trouble with people like you is that you think the world owes you everything at once. Get off your bum and get a second job if you want to get ahead. Above all, stop whingeing and blaming other people for your deficiencies.

Matriculated ? In 1963 ? My great grand father matriculated because his father was a carpenter and the other brothers all contributed money for him to go to school. He got the second highest possible score and was immediately shipped off to the military, and then ended up fighting in a world war.

Baby boomer lives were not so different to today, just things were cheaper, stop trying to pretend to be apart of the above generation, you’re not.

i.e university I didn’t go straight after school either and I had to work to be able to afford it. You could have gione as a mature aged student if you’d wanted to go and it would have been free. Furthermore having to work 3 jobs is likely your own fault for not finding a better job. You could have easily become a public servant with a matriculation and gotten promoted and bought a house off a single income ike so many others. I’m not comparing someone who worked at kmart and the juicy loosy bar to a hard working professional of today who did practically everything right, or a high earning government worker.

Your comments indicate to me that you haven’t lived or worked outside Canberra. You are very confused about the social history of Australia as well. While your great grandfather may have had his career aspirations interrupted by WW2, so did many other people. I was drafted into national service in 1969 and this had consequences for my workplace future too. I couldn’t afford to go to university simply because I was raised and worked in a country town and my widowed mother simply couldn’t afford it. At that time if one accepted a Commonwealth Scholarship, you were requred to work for the Commonwealth for 5 years after you graduated to satisfy the bond so the “part free” education came with conditions that a lot of people could not abide with so they had to pay off the bond ( a bit like the current HECS)
Moving to Canberra as a public servant did not appeal to me either. When eventually I did move to Canberra to work in financial services (private sector) I started a course at whatever Canberra University was called then and ended up with a group of 25 doing the same subjects. Twenty four of the group were public servants who were able to complete absurdly lengthy assignments at work – I had to work full time in the real world so I only got through one semester. Things were not cheaper when I came to Canberra in the early 1980s – I had to borrow heavily to secure an ex-govie duplex and shortly after I was paying 22.5% interest on the unsaleable house I had left in a drought stricken part of Australia. Houses may be more expensive now, relative to what they were in the 1980s, but everything else is so cheap (cars, clothes, computers, entertainment, travel etc.) All people seem to do in Canberra is talk about the prices of houses – it is so boring.
I find you remark that I am not a member of the babyboomer generation very offensive but that defines the intolerance and ignorance of your generation. I am proud of my humble achievments, unlike you.

milkman said :

Maxwell said :

Baby boomer lives were not so different to today, just things were cheaper

Lots of things weren’t cheaper back in the day. Whitegoods, appliances, cars, travel, luxury items, etc…

Yeah so what… a computer was massively expensive in 1995 and can be bought dirt cheap now !

Does that mean my generation suffered due to having expensive computers ?

If a fridge made in 1995 cost $500 in 1995 and it cost $2000 in year the 2012 then that would be a problem.

You expect that with time the price of things should go down due to improvements in technology.

Housing eating up a higher percentage of income is just bad. The fact you get a fridge for $300 cheaper doesn’t really matter, because fridges are old technology (mine cost 50 bucks)

Maxwell said :

Baby boomer lives were not so different to today, just things were cheaper

Lots of things weren’t cheaper back in the day. Whitegoods, appliances, cars, travel, luxury items, etc…

breda said :

JC, do you think that people who buy properties to live in are indifferent to future capital gain? Surely that is the underpinning of the ‘property ladder’ that is considered to be a virtue for young buyers, plus the retirement nest egg for older people. It is absurd to say that capital gain is only evil when it is accrued by investors.

The same argument goes for investors buying property and allegedly pushing up prices. Why do those purchases push up prices, whereas owner/occupier purchases don’t? The experience of First Home Owners Grants is that your ‘virtuous’ purchasers push up prices for everybody not on the ladder as well.

The debate about availability of accommodation is always tainted by moralistic cant. That possibly the richest (in income) jurisdiction in Australia has the highest percentage of government housing says it all. If, as the ideologues claim, the non-needy are paying market rents, why not sell the houses?

Never said capital gain was only reserved for investors. As for how a large investment market ups prices it is simple economics. As you said there is a finite number of properties, one the investor who usually has borrowed against their (paper) equity in their own home to invest, usually for the tax benefit of negative gearing, and then the first home buyer who has scrapped together the basic deposit. Both competing for the same property will force the price up.

As for climbing the property ladder, capital gain is not the way to do it, as the next place will also have been inflated by capital gain. The way to do it is by getting equity through paying off the loan. This is a real and tangible thing that can be used to buy another property. The problem is over the past 10 years the capital gain has been way to much, over pricing houses and depleting equity through paying the loan.

colourful sydney racing identity8:27 am 17 Jan 12

Maxwell said :

$280 for a tin-shed bed sit in someone’s back yard. What is this? A third world country ?

I would imagine that tin sheds in someones back yard in a third world country would cost a fair bit less…

breda said :

The OP and others who complain about housing prices compared to ‘the good old days’ are not comparing like with like.

My house, which was built in 1960 in what is now an inner suburb, is a modest 3 bedroom weatherboard shack with one small bathroom and kitchen. The family I bought it from, who built it, brought up a family of 4 children here. The master bedroom is about the size of a typical child’s bedroom today, and the kids’ rooms must have had double bunks in them, as they can just fit a bed and a chair and a cupboard in them.

There are seven power points in the house, plus one in the outside laundry. There was no garage when it was built.

Not only is the house small and lacking in features compared to any new house today, it had more than twice as many people living in it as the average house today. The number of people issue is important,because it means that we need a lot more dwellings to house the same population as we did in the past, or bigger and more expensive ones. Nowadays every child is ‘entitled’ to its own bedroom, plus there should be a study/spare room, in the ideal family home.

Also, could those who deplore the fact that people own rental properties explain how that affects the supply of housing? The total number of dwellings is the same no matter who owns them, as is the number of people looking for somewhere to live. Properties that come on the market are equally available to all buyers, be they owner/occupiers or renters.

It is especially ironic to read this kind of whining in the context of Canberra, which is better provided with housing than ever in its post war history – or have people forgotten about the hostels?

To shorten this post : Myself and many others would LOVE the opportunity to be able to afford something like that. Sounds like you did it on a low income too.

Many of you older posters are hugely out of touch.

dungfungus said :

arescarti42 said :

PantsMan said :

The Baby Boomers are the biggest freeloading generation in Australian history. House prices, tax free superannuation and handouts from the Government (ie me) if they had not ‘saved’ enough to stop working, tax breaks for going back to work after deciding superannuation was so sweet that they could not be bothered working any longer, a lifetime of free health care, free education. I’m, however, saving for my retirement, trying to buy a house, paying for my healthcare, paying for my education, paying off the accrued Government debts of the previous 40 years in five years (ie Future Fund), saving for my children’s healthcare, saving for my children’s education…

I think Australia could do with a big fat recession to force the Government to dump these ridiculous handouts to people the basis of whose ‘need’ consists of being in an electorally sensitive demographic.

And don’t get me started on the Baby Bonus…

Agreed, the boomers had the best of industrialised society served up to them on a silver platter for most of their lives. My parents got free tertiary education and were able to pay off their first 3 bedroom house in Latham on one income by the time they were 30.

Now I’ve got to pay a fortune to educate myself in the aftermath of the worst economic shitstorm since the great depression (caused by the boomers) with the prospect of becoming a debt slave for most of my life if I should happen to want to buy a house.

And these people are going to continue to kill our country by leeching aged pensions and free healthcare in retirement, further screwing over people my age who will be expected to fund them.

As a “babyboomer” I do not agree with anything you say. I didn’t get any concessions when I started work in 1963 and to save one third deposit for my first house (home loans were regulated in those days) I worked 3 jobs for 2 years without a day off. I didn’t have a car either. I did matriculate but couldn’t afford a tertiary education – don’t know where you got this notion that education then was “free”.
It is insulting and ignorant of you to say the great depression was caused by the babyboomers too. The great depression was in the 1930s and the first baby boomer was born in 1946. The trouble with people like you is that you think the world owes you everything at once. Get off your bum and get a second job if you want to get ahead. Above all, stop whingeing and blaming other people for your deficiencies.

Matriculated ? In 1963 ? My great grand father matriculated because his father was a carpenter and the other brothers all contributed money for him to go to school. He got the second highest possible score and was immediately shipped off to the military, and then ended up fighting in a world war.

Baby boomer lives were not so different to today, just things were cheaper, stop trying to pretend to be apart of the above generation, you’re not.

i.e university I didn’t go straight after school either and I had to work to be able to afford it. You could have gione as a mature aged student if you’d wanted to go and it would have been free. Furthermore having to work 3 jobs is likely your own fault for not finding a better job. You could have easily become a public servant with a matriculation and gotten promoted and bought a house off a single income ike so many others. I’m not comparing someone who worked at kmart and the juicy loosy bar to a hard working professional of today who did practically everything right, or a high earning government worker.

dungfungus said :

I did matriculate but couldn’t afford a tertiary education – don’t know where you got this notion that education then was “free”.

First of all I said my parents got free tertiary education, not you.

Secondly, the Whitlam government completely abolished all university fees in 1974. Prior to that 3 out of 4 tertiary students had full government scholarships so weren’t paying any fees anyway. This ended when the Hawke government set up HECS in 1989 (under which fees have been rapidly increasing ever since).

dungfungus said :

It is insulting and ignorant of you to say the great depression was caused by the babyboomers too. The great depression was in the 1930s and the first baby boomer was born in 1946.

Yeah, it’d be completely retarded to claim that the great depression was caused by the babyboomers. Those with reading comprehension skills and a basic knowledge of recent global events would have noticed I was blaming them what is more commonly known as the Global Financial Crisis of 08-09.

dungfungus said :

As a “babyboomer” I do not agree with anything you say. I didn’t get any concessions when I started work in 1963 and to save one third deposit for my first house (home loans were regulated in those days) I worked 3 jobs for 2 years without a day off. I didn’t have a car either.

Well good for you. You’ve just pointed out that you could have completely paid off a house in a little over 6 years if you’d wanted to. The shittiest house in Canberra is now about $350k. I don’t care how many jobs you are working, unless you are earning extremely good wages or not supporting yourself, it is going to take you 2 or 3 times longer to do that nowadays.

dungfungus said :

I did matriculate but couldn’t afford a tertiary education – don’t know where you got this notion that education then was “free”.

dungfungus said :

First of all I said my parents got free tertiary education, not you.

Secondly, the Whitlam government completely abolished all university fees in 1974. Prior to that 3 out of 4 tertiary students had full government scholarships so weren’t paying any fees anyway. This ended when the Hawke government set up HECS in 1989 (under which fees have been rapidly increasing ever since).

dungfungus said :

It is insulting and ignorant of you to say the great depression was caused by the babyboomers too. The great depression was in the 1930s and the first baby boomer was born in 1946.

Yeah, it’d be completely retarded to claim that the great depression was caused by the babyboomers. Those with reading comprehension skills and a basic knowledge of recent global events would have noticed I was blaming them what is more commonly known as the Global Financial Crisis of 08-09.

arescarti42 said :

PantsMan said :

The Baby Boomers are the biggest freeloading generation in Australian history. House prices, tax free superannuation and handouts from the Government (ie me) if they had not ‘saved’ enough to stop working, tax breaks for going back to work after deciding superannuation was so sweet that they could not be bothered working any longer, a lifetime of free health care, free education. I’m, however, saving for my retirement, trying to buy a house, paying for my healthcare, paying for my education, paying off the accrued Government debts of the previous 40 years in five years (ie Future Fund), saving for my children’s healthcare, saving for my children’s education…

I think Australia could do with a big fat recession to force the Government to dump these ridiculous handouts to people the basis of whose ‘need’ consists of being in an electorally sensitive demographic.

And don’t get me started on the Baby Bonus…

Agreed, the boomers had the best of industrialised society served up to them on a silver platter for most of their lives. My parents got free tertiary education and were able to pay off their first 3 bedroom house in Latham on one income by the time they were 30.

Now I’ve got to pay a fortune to educate myself in the aftermath of the worst economic shitstorm since the great depression (caused by the boomers) with the prospect of becoming a debt slave for most of my life if I should happen to want to buy a house.

And these people are going to continue to kill our country by leeching aged pensions and free healthcare in retirement, further screwing over people my age who will be expected to fund them.

As a “babyboomer” I do not agree with anything you say. I didn’t get any concessions when I started work in 1963 and to save one third deposit for my first house (home loans were regulated in those days) I worked 3 jobs for 2 years without a day off. I didn’t have a car either. I did matriculate but couldn’t afford a tertiary education – don’t know where you got this notion that education then was “free”.
It is insulting and ignorant of you to say the great depression was caused by the babyboomers too. The great depression was in the 1930s and the first baby boomer was born in 1946. The trouble with people like you is that you think the world owes you everything at once. Get off your bum and get a second job if you want to get ahead. Above all, stop whingeing and blaming other people for your deficiencies.

JC, do you think that people who buy properties to live in are indifferent to future capital gain? Surely that is the underpinning of the ‘property ladder’ that is considered to be a virtue for young buyers, plus the retirement nest egg for older people. It is absurd to say that capital gain is only evil when it is accrued by investors.

The same argument goes for investors buying property and allegedly pushing up prices. Why do those purchases push up prices, whereas owner/occupier purchases don’t? The experience of First Home Owners Grants is that your ‘virtuous’ purchasers push up prices for everybody not on the ladder as well.

The debate about availability of accommodation is always tainted by moralistic cant. That possibly the richest (in income) jurisdiction in Australia has the highest percentage of government housing says it all. If, as the ideologues claim, the non-needy are paying market rents, why not sell the houses?

breda said :

The OP and others who complain about housing prices compared to ‘the good old days’ are not comparing like with like.

My house, which was built in 1960 in what is now an inner suburb, is a modest 3 bedroom weatherboard shack with one small bathroom and kitchen.

That’s all well and good. But the problem isn’t that houses are more expensive. The problem is that the unimproved value of land is increasing. Put it this way:

In Australia, if a person has enough money, be it saved or borrowed, they can buy into a scheme called property. This scheme claims to grant people significant returns on investment with no work whatsoever. In the past returns have been as high as 20%, 30% per annum and upwards.

Australians love this scheme. They buy into it in their millions shovelling ever increasing amounts of their money into it.

And being lazy, Australians love the fact that there is no hard work involved. There is no need to create something of value to others or be a productive member of society.

All a member has to do is watch the value of the investment increase as others shovel their money into the scheme (and of course keep shovelling their own hard earned money into it).

I was thinking of finishing this off by saying that property in Australia is no different from a number of other pyramid schemes (perhaps something less obscure than tulip mania). I thought the Wikipedia page on pyramid schemes might have some good examples, but the opening paragraph sums this up so nicely that I’ll just post it verbatim:

A pyramid scheme is a non-sustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or servicesto the public.

breda said :

Also, could those who deplore the fact that people own rental properties explain how that affects the supply of housing? The total number of dwellings is the same no matter who owns them, as is the number of people looking for somewhere to live. Properties that come on the market are equally available to all buyers, be they owner/occupiers or renters.

I am not against people owning rental properties, but can answer the question however. Whilst it is true that the supply is the same, by buying an investment property you are helping to fuel unrealistic prices which puts some people out of the buying market then becoming captive to the rental market. Also presumably you have brought the rental for capital gain so hope the value goes up, again the more the better again thus fueling value growth which completes the circle.

The OP and others who complain about housing prices compared to ‘the good old days’ are not comparing like with like.

My house, which was built in 1960 in what is now an inner suburb, is a modest 3 bedroom weatherboard shack with one small bathroom and kitchen. The family I bought it from, who built it, brought up a family of 4 children here. The master bedroom is about the size of a typical child’s bedroom today, and the kids’ rooms must have had double bunks in them, as they can just fit a bed and a chair and a cupboard in them.

There are seven power points in the house, plus one in the outside laundry. There was no garage when it was built.

Not only is the house small and lacking in features compared to any new house today, it had more than twice as many people living in it as the average house today. The number of people issue is important,because it means that we need a lot more dwellings to house the same population as we did in the past, or bigger and more expensive ones. Nowadays every child is ‘entitled’ to its own bedroom, plus there should be a study/spare room, in the ideal family home.

Also, could those who deplore the fact that people own rental properties explain how that affects the supply of housing? The total number of dwellings is the same no matter who owns them, as is the number of people looking for somewhere to live. Properties that come on the market are equally available to all buyers, be they owner/occupiers or renters.

It is especially ironic to read this kind of whining in the context of Canberra, which is better provided with housing than ever in its post war history – or have people forgotten about the hostels?

andym said :

PantsMan said :

And don’t get me started on the Baby Bonus…

Awww – I like(d) the Baby Bonus – only money the government has ever given me……

didn’t you get pennies from kevin? aww…

There is also the trend of decreasing household size, so coupling this with the gradually increasing population, adds to the pressure on housing. I don’t think the baby boomers can be entirely blamed for the decreasing household size trend.

arescarti42 said :

And these people are going to continue to kill our country by leeching aged pensions and free healthcare in retirement, further screwing over people my age who will be expected to fund them.

No anywhere near harsh enough.

PantsMan said :

The Baby Boomers are the biggest freeloading generation in Australian history. House prices, tax free superannuation and handouts from the Government (ie me) if they had not ‘saved’ enough to stop working, tax breaks for going back to work after deciding superannuation was so sweet that they could not be bothered working any longer, a lifetime of free health care, free education. I’m, however, saving for my retirement, trying to buy a house, paying for my healthcare, paying for my education, paying off the accrued Government debts of the previous 40 years in five years (ie Future Fund), saving for my children’s healthcare, saving for my children’s education…

I think Australia could do with a big fat recession to force the Government to dump these ridiculous handouts to people the basis of whose ‘need’ consists of being in an electorally sensitive demographic.

And don’t get me started on the Baby Bonus…

Agreed, the boomers had the best of industrialised society served up to them on a silver platter for most of their lives. My parents got free tertiary education and were able to pay off their first 3 bedroom house in Latham on one income by the time they were 30.

Now I’ve got to pay a fortune to educate myself in the aftermath of the worst economic shitstorm since the great depression (caused by the boomers) with the prospect of becoming a debt slave for most of my life if I should happen to want to buy a house.

And these people are going to continue to kill our country by leeching aged pensions and free healthcare in retirement, further screwing over people my age who will be expected to fund them.

NoImRight said :

Wow this is a new topic. Yes lets spend heaps of time working out why its all someone elses fault and the Government should “do something”.

“I cant afford a house thats perfect and therefore houses should be cheaper”

It seems those that dont want to face reality cling desperately to their “bubble” idea as if its going to descend from heaven and drop that 4 beddie ensuite in their lap.Exactly how much do you really expect prices wil drop in this dramatic burst? Id like a new Beemer but cant afford one so accept what I can afford. No point is sooking about how they should be cheaper or how they were half this price in 1755 .Im not sure why people that worked hard, saved and went without are the villians. Petty envy much?

Nice whinge.

Ill have a better response once I find a fact in there to respond to.

It will be interesting to look back in future years, to determine what caused the housing bubble. It puffed up very quickly in the late 90s and continued to puff and grow. I figure it was population growth… the Howard government implemented a huge immigration program as the business lobby required growth and plenty of it to make money. I suspect family-based middle-class welfare played a part also but cannot be the sole culprit.

It’s a pretty sad state of affairs when a full time worker on the average wage cannot afford a home. And you have to wonder how sustainable it is, large numbers of people mortgaged to the hilt, if there is even a small downturn the house of cards won’t have the strength to hold beyond a certain point.

I wish a federal government would have the courage to cut back on the handouts to people who aren’t cold and hungry. In addition to the damage caused by diverting public money into private pockets, it’s creating a generation of people who view the government as some kind of Great Mother who provides everything.

On a slightly different tangent. What do people think the new suburbs of Coombs and Wright will do to house / land prices in outer suburbs of Tuggeranong and Gunghalin?

PantsMan said :

And don’t get me started on the Baby Bonus…

Awww – I like(d) the Baby Bonus – only money the government has ever given me……

PantsMan said :

The Baby Boomers are the biggest freeloading generation in Australian history. House prices, tax free superannuation and handouts from the Government (ie me) if they had not ‘saved’ enough to stop working, tax breaks for going back to work after deciding superannuation was so sweet that they could not be bothered working any longer, a lifetime of free health care, free education. I’m, however, saving for my retirement, trying to buy a house, paying for my healthcare, paying for my education, paying off the accrued Government debts of the previous 40 years in five years (ie Future Fund), saving for my children’s healthcare, saving for my children’s education…

I think Australia could do with a big fat recession to force the Government to dump these ridiculous handouts to people the basis of whose ‘need’ consists of being in an electorally sensitive demographic.

And don’t get me started on the Baby Bonus…

Nice whinge.

Ill have a better response once I find a fact in there to respond to.

The Baby Boomers are the biggest freeloading generation in Australian history. House prices, tax free superannuation and handouts from the Government (ie me) if they had not ‘saved’ enough to stop working, tax breaks for going back to work after deciding superannuation was so sweet that they could not be bothered working any longer, a lifetime of free health care, free education. I’m, however, saving for my retirement, trying to buy a house, paying for my healthcare, paying for my education, paying off the accrued Government debts of the previous 40 years in five years (ie Future Fund), saving for my children’s healthcare, saving for my children’s education…

I think Australia could do with a big fat recession to force the Government to dump these ridiculous handouts to people the basis of whose ‘need’ consists of being in an electorally sensitive demographic.

And don’t get me started on the Baby Bonus…

Its a mixture of things, the government obviously maskes more money dripfeeding to the developers who in turn make a lot of money, but also the current generatiopn of people in their 20’s (irrelevant what generation you class them in and who were their parents) also seem to fuel the developers, because they want everything now and nwant the best now as well.

In 2001 when I bought my property, the banks were willing to lend me a whopping $250k, i decline and borrowed $140k. Today people are much more willing to borrow their maximum.
Its difficult to get a whole generation of people to stop paying for houses that are overpriced and they don’t need, and lower interest rates will just help fuel the overpriced housing market.

What we really need is higher interest rates, reduces demand and thus prices follow suit, still then you’ll have the issue of people hanging onto their properties they paid too much for and expecting to make money because they were told property prices never fall 🙂

Wow this is a new topic. Yes lets spend heaps of time working out why its all someone elses fault and the Government should “do something”.

“I cant afford a house thats perfect and therefore houses should be cheaper”

It seems those that dont want to face reality cling desperately to their “bubble” idea as if its going to descend from heaven and drop that 4 beddie ensuite in their lap.Exactly how much do you really expect prices wil drop in this dramatic burst? Id like a new Beemer but cant afford one so accept what I can afford. No point is sooking about how they should be cheaper or how they were half this price in 1755 .Im not sure why people that worked hard, saved and went without are the villians. Petty envy much?

We hear so much about housing affordability – the homeless – how hard it is for young people to buy their first home etc – I was puzzled to see the advert in the Canberra Times Saturday 14th Jan (World page 16) – spruiking “The ACT Affordable Rental Office currently has 19 rental properties available for older Canberrans.” Anyway, read all about it at;
http://www.dhcs.act.gov.au/hcs
I am surprised that if the need is so great – they have to spend big bucks advertising. GreenLabor giving away taxpayers money again.

Oh, bring on the bubble-burstI say! Then people currently priced out of the market would get a fair go.

Who cares if the value of people’s homes drops temporarily. Sure, they will whinge, but at least they HAVE their own home – and then perhaps they will stop being smug about their own ‘good financial management’ and realise it was all just economic ‘luck’.

That’s my sook for the day. I feel better now.

There was also the introduction of negative gearing on investment properties or some such in about 1985. Cheaper, bigger loans, more tax concessions, real estate industry lobbyists, all combining to produce “unaffordable” housing.

Then there is the attitude of young people looking to buy a three bedroom first home, with double garage attached, air conditioning, ensuite, dishwasher, etc driving up the price of the properties they are interested in. Then they constrict their money supply with two cars for two people, shun public transport, and then complain that they can’t afford a house on top of their convenience based lifestyle.

Now add to this the number of financially motivated professional couples who individually are paid two or three times the average wage, competing against single average income families, while still having the advantage of negative gearing and depreciation.

There is more than one ingredient in the “housing affordability” issue.

I think you will find the prices went up well before 2006, in fact I had my house valued in 2007 and it was already worth about 2-2.5 times what it cost me to build in 2000.

As for the reasons why it went up, I think you will find that in the early 2000’s we went through a period of massive income tax cuts and artificially low interest rates. This lead to people be able afford more (investment) and bigger houses, which has lead to people driving the cost of housing up and indeed the whole cost of living in Australia generally. As the value of these cuts has dropped in real terms due to higher cost of living, so too has demand on wages risen, which in turn leads to even more increases in cost of living and a devaluation of what an $A can buy in the country. Hence why the $A is so high compared to the $US and GBP.

So you get the situation we have today where we have a real estate market that is way over valued, and people even on relatively high incomes struggling with day to day living. A perfect case in point is my own life. I brought my house for $160k in 2000 with an income of about $50k. So the cost of the house relative to my income was 3.2 times. My income is now $100k and the house is worth around $400k (it peaked at about $430k BTW), so the relative cost is 4 times my income. When it comes to repayments, my original $150k loan costs me about $540 p/f, to buy the same house I would need a mortgage of $390k which would cost $1450p/f so the best part of 2.6 times more for the exact same house.

Now considering my income is higher through a combination of inflation and promotion you would expect the repayments relative to income would drop not increase. Afterall isn’t that how our parents climbed the property ladder?

However no government can afford to do anything about it as way too many have invested in over priced housing (these will generally be the same people who will come here and attack my comments as petty jealously). We also have big business, read banks who are profiting from the additional repayments and indeed government itself is being nicely financed by over priced housing. So don’t expect anything to be done by government in a hurry.

So thanks Mr Howard for those tax cuts and your term of low interest rates.

“Around the year 2000 housing was CHEAP and PLENTIFUL !”

According to the ANZ’s Australian Housing Snapshot – January 2011, rental vacancy rate in the ACT is a little higher, and affordability a little better than 2000. http://www.anz.com/corporate/research/australian-industry-economics/australian-property-outlook/

arescarti42 said :

The Traineediplomat said :

Isn’t it more about the willingness of financial institutions in the late 90s till now giving easy loans to almost anyone, both that could afford and those that couldn’t that caused a flow of money / increase in bricks and mortar? Yes I’ll admit that “baby boomers” were more likely to afford the loans and didn’t sell their existing properties, my parents did that as well, but banks giving 100%+ loans also meant that people had ‘more money to spend and so prices went up’

Ding ding ding ding ding! Folks we have a winner.

More than anything else, deregulation of the banking industry and the influx of of non bank lenders (Aussie, Rams, etc.) in the 1990s who were suddenly willing to lend hundreds of thousands of dollars to anyone who could fog a mirror were the driving force behind increasing house prices.

Bramina said :

Don’t worry Maxwell. Housing prices have begun to stagnate. Now people who have bought several houses will realise that they can get better returns on their investment by putting their money in the bank. They will start flooding the market with houses and prices will plummet.

Baby boomers are running out of money as they approach retirement as they’ll need to start saving heavily if they have not already retired..

Their peak spending years are over. The geny and genxers will soon be settled as rental suppy catches up and those who are going to buy in the vast majority will have already done so.

Combine that with poor overall economics and there is some likelyhood of a crash imo.

The Antichrist said :

Maxwell said :

I’m simply referring to a demographic shifts, where a large group of people who used to live at home all moved out at once

Yes I am sure that every baby-boomer kid born, has moved out within a couple of years of every other baby-boomer kid.

Not.

Your logic is intrinsically flawed. The age spread of those kids will be 15 to 20 years. A generation of kids are not all born within 3 or 4 years of each other.

if the first were born in 1980 that means they’re 32 now, the youngest for arguments sake, say born in 1995 will be 17 .. thats puts the majority of the generation in around moving out age a few years ago, with many already settled. If you can’t work out how that works then don’t worry.

Don’t worry Maxwell. Housing prices have begun to stagnate. Now people who have bought several houses will realise that they can get better returns on their investment by putting their money in the bank. They will start flooding the market with houses and prices will plummet.

The Antichrist10:40 pm 15 Jan 12

Maxwell said :

I’m simply referring to a demographic shifts, where a large group of people who used to live at home all moved out at once

Yes I am sure that every baby-boomer kid born, has moved out within a couple of years of every other baby-boomer kid.

Not.

Your logic is intrinsically flawed. The age spread of those kids will be 15 to 20 years. A generation of kids are not all born within 3 or 4 years of each other.

The Traineediplomat said :

Isn’t it more about the willingness of financial institutions in the late 90s till now giving easy loans to almost anyone, both that could afford and those that couldn’t that caused a flow of money / increase in bricks and mortar? Yes I’ll admit that “baby boomers” were more likely to afford the loans and didn’t sell their existing properties, my parents did that as well, but banks giving 100%+ loans also meant that people had ‘more money to spend and so prices went up’

Ding ding ding ding ding! Folks we have a winner.

More than anything else, deregulation of the banking industry and the influx of of non bank lenders (Aussie, Rams, etc.) in the 1990s who were suddenly willing to lend hundreds of thousands of dollars to anyone who could fog a mirror were the driving force behind increasing house prices.

The Traineediplomat said :

Maxwell said :

Gen y are regarded as the children of the baby boomers, gen x (which you are part of), are too, however the whole point of gen x is that they’re a relatively small minority that no one really notices or cares about. So the impact of you moving out of home would have been small.

What a load of crap. Firstly you can’t slice and dice generations ‘since’ the baby boomers that easily. I’ve seen Gen X and Gen Y’s “dates” listed as all over the place. Given my parents were born in the mid-late 1940s and qualify as Baby Boomers by that definition, I fall into the child of a baby boomer definition as well. Just like the earlier poster I am well into my 30s.

But stating that Gen X doesn’t ‘count’ simply because they don’t fit into your whinging definition or that it is a minority is a bunch of crap. Isn’t it more about the willingness of financial institutions in the late 90s till now giving easy loans to almost anyone, both that could afford and those that couldn’t that caused a flow of money / increase in bricks and mortar? Yes I’ll admit that “baby boomers” were more likely to afford the loans and didn’t sell their existing properties, my parents did that as well, but banks giving 100%+ loans also meant that people had ‘more money to spend and so prices went up’

Just getting my knickers in a knot I guess, for no reason. But the OP started the whinge!

Golly gosh. I don’t expect people to agree with me but what an emotional tangent !

I’m simply referring to a demographic shifts, where a large group of people who used to live at home all moved out at once.

You can carry on all your like about whinging or about how cosmo quoted a different date for gen y when you were reading about nail polish but it is really beside the point.

“Think about it, in 2004, you had 3 kids at home, 2 at university, then in 2007 they both up and moved to canberra or got jobs in their own towns/cities and wanted to rent a place.”

If you had five kids, then you’re the source of the problem.

The generation argument is moot as it is completely subjective depending on who’s is drawing the line when. In 2000 I was 16, however my father was born in 1935. Does this make me Gen X or Y (as I have seen my birth year inside the “definitions” of both)? However I have baby boomer friends who have parents the same age as my father. Does that make me technically a boomer?

Our “generations” that are referred to culturally, including in the OP, are flawed and arbitrary. It just comes down to our need to define the “other”.

The Traineediplomat7:20 pm 15 Jan 12

Maxwell said :

Gen y are regarded as the children of the baby boomers, gen x (which you are part of), are too, however the whole point of gen x is that they’re a relatively small minority that no one really notices or cares about. So the impact of you moving out of home would have been small.

What a load of crap. Firstly you can’t slice and dice generations ‘since’ the baby boomers that easily. I’ve seen Gen X and Gen Y’s “dates” listed as all over the place. Given my parents were born in the mid-late 1940s and qualify as Baby Boomers by that definition, I fall into the child of a baby boomer definition as well. Just like the earlier poster I am well into my 30s.

But stating that Gen X doesn’t ‘count’ simply because they don’t fit into your whinging definition or that it is a minority is a bunch of crap. Isn’t it more about the willingness of financial institutions in the late 90s till now giving easy loans to almost anyone, both that could afford and those that couldn’t that caused a flow of money / increase in bricks and mortar? Yes I’ll admit that “baby boomers” were more likely to afford the loans and didn’t sell their existing properties, my parents did that as well, but banks giving 100%+ loans also meant that people had ‘more money to spend and so prices went up’

Just getting my knickers in a knot I guess, for no reason. But the OP started the whinge!

It will really be annoying when the housing “bubble” bursts to own a mortgage worth much more than the property!

screaming banshee said :

Check your dates, baby boomers kids would have well and truly moved out by 2000.

I’m the eldest child of two baby boomers (Dad from the start of the boom and Mum from near the end – a fair age gap). In 2000 I turned 17. In 2000 my sister turned 12.

Children of the eldest of the baby boomers would likely have moved out by 2000, however the majority would not have.

dixyland said :

Maxwell said :

screaming banshee said :

{insert miscellaneous housing affordability whinge here}

Check your dates, baby boomers kids would have well and truly moved out by 2000.

What is the best way to pack more ‘homes’ into a given area of land? Apartments. Who builds apartments. Builders who want to make money. Says it all really.

The oldest of the baby boomers kids (gen y) would have been 16 in the year 2000.

The reason apartments are built is because you can house more people on a small amount of land. t
There is a shortage of apartments in Canberra for single people to live.

When was the last time you tried to rent (or even buy) one ?

$280 for a tin-shed bed sit in someone’s back yard. What is this? A third world country ?

Very little if any of what you said makes sense. I have no problem with people ranting – that is one thing the internet is great for – but yours seems as factual as Today Tonight.

The baby boomer generation started after WW2 which finished in 1945. I’m the youngest child of baby boomers and I’m 35 – so I was 23 turning 24 in 2000, not 16 like you mentioned.

Also, do you even know what a third-world country is? $280 is a lot of money for people in one of those countries.

Gen y are regarded as the children of the baby boomers, gen x (which you are part of), are too, however the whole point of gen x is that they’re a relatively small minority that no one really notices or cares about. So the impact of you moving out of home would have been small.

Also, yes $280 is a lot of money in the third world, which is why it is astounding that sub-standard accomodation is so expensive in first world country in a supposedly well off part of the country.

Maxwell said :

screaming banshee said :

{insert miscellaneous housing affordability whinge here}

Check your dates, baby boomers kids would have well and truly moved out by 2000.

What is the best way to pack more ‘homes’ into a given area of land? Apartments. Who builds apartments. Builders who want to make money. Says it all really.

The oldest of the baby boomers kids (gen y) would have been 16 in the year 2000.

The reason apartments are built is because you can house more people on a small amount of land. t
There is a shortage of apartments in Canberra for single people to live.

When was the last time you tried to rent (or even buy) one ?

$280 for a tin-shed bed sit in someone’s back yard. What is this? A third world country ?

Very little if any of what you said makes sense. I have no problem with people ranting – that is one thing the internet is great for – but yours seems as factual as Today Tonight.

The baby boomer generation started after WW2 which finished in 1945. I’m the youngest child of baby boomers and I’m 35 – so I was 23 turning 24 in 2000, not 16 like you mentioned.

Also, do you even know what a third-world country is? $280 is a lot of money for people in one of those countries.

screaming banshee said :

{insert miscellaneous housing affordability whinge here}

Check your dates, baby boomers kids would have well and truly moved out by 2000.

What is the best way to pack more ‘homes’ into a given area of land? Apartments. Who builds apartments. Builders who want to make money. Says it all really.

The oldest of the baby boomers kids (gen y) would have been 16 in the year 2000.

The reason apartments are built is because you can house more people on a small amount of land. t
There is a shortage of apartments in Canberra for single people to live.

When was the last time you tried to rent (or even buy) one ?

$280 for a tin-shed bed sit in someone’s back yard. What is this? A third world country ?

Felix the Cat2:51 pm 15 Jan 12

I doubt there would be enough builders to do the work even if LDA did release more land.

As for apartments, it’s a bit like the chicken or the egg and which one came first. Developers build them because they make more money buy squeezing multiple dwellings on the same block that would normally only have one but then more and more people only want (or can afford) an apartment because of their busy lifestyle and don’t want to be a slave to a garden.

screaming banshee2:49 pm 15 Jan 12

{insert miscellaneous housing affordability whinge here}

Check your dates, baby boomers kids would have well and truly moved out by 2000.

What is the best way to pack more ‘homes’ into a given area of land? Apartments. Who builds apartments. Builders who want to make money. Says it all really.

Weird post.

The notion of a “housing shortage” is mostly bullshit pedaled by the HIA, REIA and other groups with a vested interest in the housing market. The way markets work is that when there is a shortage, the price rises until supply meets demand and there is no shortage anymore.

At the moment what we have is an oversupply of housing in most places in Australia, with the possible exception of NSW. This is evidenced by the massive amounts of housing stock sitting on the market and not selling, with Melbourne and Brisbane in particularly bad positions. Canberra is not an exception to this.

The comment you make about the children of the baby boomers is interesting but unsubstantiated. The baby boomers are a generational cohort spanning 20 years, the children of the oldest boomers would have started leaving home in the 1980s.

As for why apartments are currently so popular, I’d suggest that it is not that young people want apartments, but that land is so expensive that apartments are all that young people can afford. It is also true that apartments are very popular as speculative investments.

justsomeaussie2:36 pm 15 Jan 12

It’s simple economics. The baby boomers cashed in on their massive real estate win post 2000. They saw their properties double and triple in value. They didn’t sell their properties, only leveraged the equity to buy more apartments for rent. So we have a high number of 50+ aged people owning multiple homes keeping the prices way too high. The LDA won’t release too much land as the managers are the same group of baby boomers. Releasing land would lower their equity, so they don’t want that.

Look at it this way. Houses can only be built at a set rate. So that’s a medium to low level of supply. But demand is high. So we have high prices. What does the government do? It creates more incentives for people to buy. Further increasing the demand and further increasing the prices.

The system is backwards.

What they should be doing is encouraging people to sell who have multiple investment properties. By doing so increases the level of supply and therefore levels out the demand and prices.

Any more first home grants, stamp duty exemptions and incentives just go to the seller not the buyer. If I give everyone 10k to help buy a car the dealerships can just charge 10k more because you still need a car.

But we are screwed in the end because those who make the rules have the most to lose if the property market changed.

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