Why Australia’s Housing Crisis Is a Warning for the World [video]

https://www.youtube.com/watch?v=IqKIlLS7ln4

by thelastgallon • 3 years ago

55 125 3 years ago

ChatGTP• 3 years ago

If Sydney is too expensive, I don't see why people don't move elsewhere?

I wanted to live in Sydney, I moved, I haven't noticed any decrease in my quality of life except I'm 100% less stressed about money.

The thing that strikes me about Australia's property prices are, who will be the generation to pay prices like this again? I personally can't imagine the prices to eventually go anywhere but down.

erklik• 3 years ago

Considering Work from Office is the norm, good jobs that have career growth are largely on the East Coast i.e. Melbs, Sydney. Both are "too expensive" ... so where else should people move where it's less expensive and they can easily find a job there?

I am genuinely curious where you moved.

The thing that strikes me about Australia's property prices are, who will be the generation to pay prices like this again? I personally can't imagine the prices to eventually go anywhere but down.

I imagine the opposite. Price will keep going up and up. It's a ponzi scheme, it's literally "too big to fail". The government cannot allow a fall in prices so it will simply never come.

Regarding who will pay again? No-one, land will concentrate amongst the few who already own land and can use that equity as leverage, while the rest of us will live via rent. I am 80% sure that most people born after 2000 will never own a home.

api• 3 years ago

This is why remote work is so important. It’s not about not going to the office. It’s about breaking real estate.

nayuki2• 3 years ago

This is why we must implement a land value tax as Henry George proposed. People should not be able to profit from squatting on / hoarding land.

mjevans• 3 years ago

Viva la revolution.

Or alternately see the 'homeless' problem in the US which IMO is a combination of lack of mental healthcare, broken or absent social integration and support policies generally, a lack of common space protection laws or enforcement of them, and a failure of civic planning to provide enough places people can afford to call home.

friend_and_foe2• 3 years ago

Nothing stops the tide. The pressures of systems like this build up until not even the government can stop it. The biggest dam in the world cannot stop dead in it's tracks even the tiniest trickle of water. Something will give, could be the entire financial system collapses, could be guillotines, but the government is not omnipotent.

AYBABTME• 3 years ago

Prices will stall and inflation will erode the actual value of real estate.

justinclift4• 3 years ago

I personally can't imagine the prices to eventually go anywhere but down.

People have been saying that for years. It's gotten a lot worse rather than improving though.

pm• 3 years ago

Sydney was always expensive, but there was a reason for it; now everyone has caught up thanks to the economic climate, and it's just because they think they can get away with it.

I've lived in Adelaide my entire life, and it's impossible to find reasonably priced accommodation currently, and I'm saying that as a working class software engineer. You might not feel the pain, but there's an entire corpus of people besides you who do.

xcdzvyn• 3 years ago

I too live in Adelaide and yes, the housing is just as screwed here as Sydney. I hear Melbourne isn't much different either.

theironhammer• 3 years ago

Jobs!

russdpale• 3 years ago

baaaahahahaha, you think this ponzi scheme is going to end any time soon? Think again.

rufus_foreman• 3 years ago

If it doesn't end any time soon, it wasn't a Ponzi scheme.

000ooo0002• 3 years ago

I don't see why people don't move elsewhere?

Did you even try? Jobs, careers, social networks, familial support networks.

invalidname2• 3 years ago

TL;DR it's expensive in Sydney. Lot's of speculation and no real solutions...

I live in Tel Aviv and actually found that refreshing. We've been in a housing bubble since 2000. Here the main claim is that since the country is small, prices will always go up. This is BS since if you step out of Tel Aviv prices are still higher but fall drastically. This also shows it's BS, if there's one thing Australia has it's land.

This is due to government decisions in development. The problem is that these policies take a decade+ to show the full impact and the political incentive is problematic.

YZF2• 3 years ago

I don't think it's that simple.

I live in Vancouver, I'm pretty familiar with Tel-Aviv, and I visited Sydney ;)

Tel-Aviv is expensive because it's the place people want to be. As you say, it's cheaper outside of Tel-Aviv and there's a reason for that. Vancouver is like that as well, there are more amenities, more jobs, a better "life style" so to speak, in Vancouver. And people are willing to pay for that. And part of why it's like that is because of the density and the people that live there. So sure, in theory you could build another city like Vancouver on the Sunshine Coast, or on Vancouver Island, but in practice you can not - it's the results of decades of evolution.

In Israel lessay Hadera or Netanya could be Tel-Aviv... But they're not. And so you pay less to live there.

There's plenty of "land" in Australia but most of it is a) desert you don't want to live in, b) too far from anything. The Sydney metropolitan area is very large. Not unlike Gush Dan or Greater Vancouver. And in that area there isn't "more land" so all the other land, like all the other land in Canada, doesn't matter. Israel being a speck compared to those does actually have a shortage of land since you aren't going to turn the entire country into a city (one would hope).

That said it's true there's been a bubble, mostly related to interest rates. But as they say the market can remain irrational longer than you can remain solvent. Even if prices correct in Israel or in Canada or in Australia the highly desirable areas are likely to still remain relatively, and absolutely, expensive. Things that can change that are reduced demand, economic downturn, those areas becoming less desirable, etc.

People keep talking about lack of affordability, but the reality is there are (a lot of!) people that can afford to live in those places, the 1%. The 99% can't afford but those aren't the ones buying those properties. All these cities have a population that's significantly more affluent than lessay 40 years ago. In Vancouver and Tel-Aviv e.g. a lot of tech workers.

invalidname2• 3 years ago

So I lived for years in a private property in the center of Tel Aviv. 2 min walking distance from Disengof center. While there are a few high rises in the area there's still a lot of low rises and old buildings. There are still single story houses right in the center. (Edit: my point here is that there's a lot of space and people don't build enough).

The problems are multiple. You are correct, I over simplified and interest is a huge reason for this bubble.

1. The local government doesn't allow construction in the areas people want. They're afraid that the influx of people will reduce the quality of life since the school system, sewage, policing etc. needs to be updated. They also lose on residence financially. Businesses fund cities and municipalities go bankrupt if they allow too much construction.

2. Traffic to Tel Aviv is terrible which makes even the outskirts less attractive. There's no parking either and if you choose to use public transport then it's closed in the weekends. I hope the light rail will change this but I think it's too little, too late. I'd keep a close eye on the prices in Bat Yam and Jaffa. If they go up there it might be due to the rail.

3. The government is the biggest landowner in these parts, it sells lands using a process that values return rather than the price to the consumer.

4. The rent market isn't regulated at all. That means investors push up prices and then overcharge on rent. Rental properties have a lower tax bracket than stock market investments. My accountant has 10 apartments for rent and this isn't an exceptional scenario. People are hoarding properties.

barrysteve• 3 years ago

Australia has the largest average house block in the world (or close to it) at 400m2. A lot of the older-style houses are 700m2 blocks.

People have been subdivided and densifying older blocks, building two houses on one block.

Working off a criminal sentence for a decade then receiving emancipation and ownership of large land holdings was the original lifestyle of the convicts sent over to AUS. It's in the culture to value land.

One of our five major cities covers the distance of greater london measured north-to-south and has a population of 2.3mil, compared against 13mil for london.

We need to make the Bush/Desert liveable. People don't realize how much work goes into maintaining housing outside the 'butter zone' where everything works.

There's more thought put into terraforming Mars than there is, keeping salt out of the wind in the outback, or making it economical and affordable to keep wildlife out of your housing, or transporting water large distances for cheap. Basically we need rivers in the desert.

The economy is built around sexy projects and consumer bait, but the real expansionist policies that could secure Australian housing and Australian life for centuries to come, are basically an afterthought of silly politicians.

iamthemonster3• 3 years ago

As one bit of anecdata: there's a proposed development in my suburb of Perth just 3km from the city centre along one of the major bus routes. It's a 13-storey block of flats that got whittled down to 9 storeys by NIMBY backlash and the NIMBYs are pushing for six storeys, because that was the council's plan several years ago. This has been dragging on for over a year now.

There's not just endless land in Australia but there's also endless room to grow cities upwards. There's nothing technical about our lack of housing, it's 100% a decision.

fakedang3• 3 years ago

I like this anecdote because it's the exact opposite of what I've seen in Dubai, Doha, Riyadh and practically any city where they're building up massive infrastructure. The government has a vision for a certain skyline to take shape, so small scale residential don't really find much government support. On the other hand, the governments strongly encourage a 70-storey residential skyscraper with a wonky rad shape, because why not? The end result is a massive oversupply of homes - there was a such a large glut that prices remained depressed even now, except for Dubai after the Russo-Ukrainian war. My cousin lives in a cozy 3 bedroom rental in Dammam, just outside Aramco City (the part where all the Western oil engineers live and where there are American schools and bars and stuff), for a tenth of what I pay for my tiny apartment in Zurich (which is at the typical level for any non-sharing home for a major city worldwide).

If living in a liberalizing autocracy doesn't rock your boat, Saudi Arabia and Qatar are nice options. I've seen a lot of Israeli techies moving to the UAE too.

thriftwy4• 3 years ago

They should give a blanket licence to PIK and LSR and then plead for mercy watching rows after rows of 25 storey buildings.

Klaster_1• 3 years ago

For those who don't know: PIK (ПИК) is the largest property developer in Russia. Most of the newly built affordable housing in Russia tends to be very high rise, low quality and not conductive to decent living conditions.

thriftwy4• 3 years ago

The obvious upside is that it does have "affordable" and "housing" in a single sentence, especially if we are not talking about Moscow (but even then your chances of owning your own home now exist).

shortcake27• 3 years ago

Most new builds in Melbourne are already of low quality. I lived in an apartment built in 2013 with water leaking in from the roof three levels above, and the sound insulation was so bad I could hear my neighbours putting cutlery away. And the elevator broke down daily.

The difference is that these apartments require the vast majority of your income (rent) or a 30 year mortgage.

So PIK doesn’t sound too bad to be honest.

smallstepforman2• 3 years ago

My father purchased a house in Melbourne in the late 70’s, and he paid the mortgage completely in 3.5 years as a physical labourer. Most of his generation did the same. Today as a senior engineer I would need 35 years to pay off that very same home.

Hence why I moved away from Australia to south east Europe, now the 1.46ha block of land and big house on an estate set me back 3 yearly salaries. Income tax is lower, and lifestyle cheaper. I know 4 other families (friends) that did the same. Expect an exodus from Australia.

Izikiel43• 3 years ago

Croatia?

zemvpferreira• 3 years ago

Out of curiosity, where did you move?

dathinab2• 3 years ago

many rual areas in the EU are quite affordable

through local rual infrastructure e.g. doctors, hospitals, Kindergarten is in many areas in decline

depending on where internet on the other hand can often be good enough

through material and personal cost for renovation can still be a problem

rafaelmn2• 3 years ago

Where in southeast Europe are we talking about here ?

I'm from Croatia and what you're describing only checks out if you live in rural/undesirable area IMO.

This has huge implications on QoL :

- social circles

- schools/kindergarten and socialisation for your children (if you have them of course)

- usually worse pollution than city ironically, unless you're really isolated (a lot of these villages have terrible wood burning chimneys, usually some dirty factories etc., smell from farming/primitive animal styes in the area and zero regard for ecology/enforcement of environmental standards)

- bad infrastructure (common electrical outages, terrible internet), transportation options (highways are decent), hospitals

For example a 100m2 newly built apartment in a middle class area will cost you ~400k€ (can be a bit less but expect significant tradeoffs).

A house of similar quality will probably be 5-600k+.

Realestate inflation changes the equation of living here substantially - it used to be you could remote for 30% less money and live way above the standard you could get in more expensive countries.

Now the lifestyle is not significantly more attainable and everything else is worse than in richer countries.

markky• 3 years ago

I agree with you on quality housing being costly and scarce.

But living in SE Europe/Croatia can pay off if you can survive with lower standards for a while.

For example, you could buy a flat in urban area for 150k€ of lower quality and, if you are working for a non local company, you can pay it off quickly. Then you can start climbing on the housing ladder.

You probably cannot do that in other more developed countries.

smallstepforman2• 3 years ago

Serbia, 9km from Belgrade, got fibre, gas, and the usuals. Vikendaško naselje. 15 min by car from 2 big private schools, 20min from nearest big shopping center, 25min from Galerija (elite shopping), 25 min to airport, 30 min to downtown belgrade. Also got public train (800m) and bus stop (200m). On a hill (320m), wind intersecction, also got an actual spring on the property.

Who wants to live in polluted Belgrade though?

I’ve also got Croatian passport, considered Istra (Pula), but no private schools, and much higher taxes. By car I’m in Pula in 6 hours.

ulfw4• 3 years ago

Exactly this. And 400K EUR = 660K AUD. There's apartments to be found in Australia for that, especially when you're not in crazy expensive Sydney (e.g. Perth, Adelaide, Brizzy or Melbourne to name just the bigger cities. Much cheaper when you go to smaller towns. No need to move half way across the world for that)

raincom• 3 years ago

If Australia can open doors for immigrants, so many qualified folks from the third world can immigrate to Australia to replace the exodus.

RestlessMind• 3 years ago

per capita immigration is already higher in Australia than in the US: https://worldpopulationreview.com/country-rankings/immigrati...

ulfw4• 3 years ago

LOL. Yea sorry but no. I don't expect an exodus from Australia to Bulgaria or Romania. I just really ain't seeing it. And neither do statistics show anything like it.

dathinab2• 3 years ago

it's not a Australian specific problem

we have a nearly world wide city housing crises (if you ignore cities which are falling apart and consider affordability)

and as far as I can tell a major driving fair is how in recent years a lot of people with a lot of money increasingly did invest into residential land not for self use or for substainable renting but instead as speculative investment or land bank

giving his a crisis of affordable housing in the population centers can easily lead to civil unrest and even be a thread for democracy I would argue both should not be allowed (for residential land/apartments)

nine_zeros2• 3 years ago

Two laws will solve a lot of problems

1. No more non-human purchase of houses. No companies, corps, trusts, funds etc. should be allowed to buy houses.

2. Ban Airbnb and other short term rentals less than 30 days.

bryanlarsen2• 3 years ago

The vast majority of rentals are owned by companies. Your proposal would make it difficult/impossible for anybody to rent.

mdorazio• 3 years ago

Serious question: is there any desirable city right now that doesn't have a housing crisis? A few weeks ago the discussion on HN was about Canada, this week it's about Australia, take your pick of coastal US cities and it's the same. I've heard people moving to parts of Europe for lower-cost housing are doing well, but that presumes you have a mobile job (and visas to go with it) and banks on the fact that many parts of Europe are losing population rather quickly.

davidw• 3 years ago

Tokyo is pretty famous for building something like 'enough'.

Vienna has a pretty good housing story.

The interest rates in most of the world are bad for would-be homebuyers across the board, though.

The US has a lot of 'low hanging fruit' in terms of being able to get rid of a lot of onerous zoning that could really make a dent in the housing supply. And we've seen a fair amount of progress in the short time frame that YIMBY groups have been a thing.

linguae3• 3 years ago

Interest rates in Japan are still very low, though if you're thinking about moving to Japan, it is difficult for foreigners to get mortgages through Japanese banks unless they have permanent residency or have a Japanese spouse, though I've heard of some banks offering mortgages to those who lived in the country for at least two years. Who knows what interest rates in Japan will be in two years, though; the yen has weakened noticeably against the dollar since 2022 when the Federal Reserve started its interest rate hikes, yet the Bank of Japan has continued its low interest policy.

dzhiurgis• 3 years ago

Japanese property is famously cheap for being small, but other factor is land being a 30 year lease. Build same size + on land you buy and it will be more expensive despite efficiencies of large domestic market.

seanmcdirmid11• 3 years ago

Tokyo is pretty famous for building something like 'enough'.

Tokyo builds a lot because they tear down homes after 30-40 years to rebuild them. You can't judge Tokyo's property market by new housing starts, and the fact that housing depreciates (rather than appreciates) scares away all the speculators.

linguae3• 3 years ago

The Tokyo metro area is quite affordable compared to desirable metro areas in the United States and Canada, as well as other East Asian metro areas outside Japan. While I'd struggle to find a place for $500,000 in Silicon Valley, $500,000 in the Tokyo metro area could buy a nice place, especially if one commutes from the suburbs. The public transportation system in the Tokyo metro area is top notch, even in the suburbs.

alephnerd2• 3 years ago

A deflated housing bubble in the 90s and (relatively) lower salaries is also a reason in Tokyo.

The median household income in the Bay Area is $128,000 [0] versus around $50-60,000 in Japan [1], with median house priced at $1.3m and ~$300k respectively.

Both are pretty unaffordable for people earning normal salaries.

The median in NSW (where Sydney is located) is around AUD$62,000 [2] but the median house go for AUD$1.3m [2]

[0] https://www.census.gov/quickfacts/fact/table/sanfranciscocou...

[1] https://www.stat.go.jp/english/data/kakei/156.html

[2] https://www.abs.gov.au/statistics/labour/earnings-and-workin...

[3] https://www.ratecity.com.au/home-loans/mortgage-news/median-...

[4] https://www.forbes.com/advisor/mortgages/real-estate/bay-are...

[5] https://www.nippon.com/en/japan-data/h01311/

kurthr2• 3 years ago

CA is losing population too and building houses in those desirable locations. Why don't prices go down? These are financialized assets bought on credit. Some 8-10% of SF rental and 2% of owned housing is vacant (over 25% of commercial), but you don't see prices go down. Building 1% per year would involve a project on every single residential city block. That would have huge externalities. Why should current residents deal with the mess so more people can move in? So builders can get rich charging $1000/sqft?

The quick way to lower prices would be to annually tax vacancies (if you can't show a CA resident/corp paying rental income on a residential/commercial property) then pay the sales tax income the city would have received from those in an occupied location. This would encourage people to lower rents/prices to fill vacancies. Prop13 has made the property taxable rate so low that many people would rather have an empty rotting hulk than an occupied older property since it would lower their leverage on asset appreciation. A residence tax wouldn't be limited to the Prop13 assessment (5-10% of current value).

If there is ever a bubble pop, prices would likely to stay low for a generation. Just like Japan. It's not that different from bitcoin/NFT (other than some people live in them).

cwalv4• 3 years ago

Prop13 has made the property taxable rate so low that many people would rather have an empty rotting hulk

Doesn't prop13 only apply to primary residence?

seanmcdirmid11• 3 years ago

California's property bubble did pop in the late 80s/early 90s (ironically, or maybe related to, Japan's bubble pop). It recovered since then. Most people leave California because "it's too crowded, no one goes there anymore" (leading to high housing costs) problems, not because of other reasons. Eventually an equilibrium will be reached, and prices shouldn't drastically pop unless something else happens (like a tech sector crash).

wwtdtgotiatl• 3 years ago

desirable city

Sydney has topped net internal migration for years now. It's desirable for everyone who doesn't live there, actual locals are getting out at a ridiculously high rate.

drt5b7j3• 3 years ago

Chicago? Prices don't seem to be going up.

PebblesHD3• 3 years ago

The experience of living in Sydney and working full-time as a senior engineer is truly mind bending. My parents were a teacher and a labourer and have always owned the houses we lived in, usually in a middle suburb on the western side of the city.

Adjusted for inflation, I earn multiple times their combined income and for me a detached house is almost entirely out of reach, and apartments with any more than 2 bedrooms are about the same.

The numbers really tell the story. My parents combined income was around $40,000 and the house they bought when I was born was around $120,000. Today, If my household is earning $160,000, an equivalent house in the same suburb is $1,500,000, and the numbers just don’t balance.

This wouldn’t be so bad if apartments were reasonably sized and built to be lived in. We have thousands of studios and 1 bedroom apartments that you could never raise a family in. What we need is 2 and 3 bedroom apartments in well located suburbs with access to transport, and a disincentive for developers to just build tiny studios to maximise profit.

I have put my money where my mouth is so-to-speak on saying Sydney is overpriced, and spend a few months a year living in Tokyo while I work out how moving there more permanently will work. It’s still expensive, but relatively speaking its decades of work more affordable to buy a house.

thriftwy4• 3 years ago

Normally, a studio apartment is not an endgame but a stepping stone: once you have it and paid out mortgage, you can sell it and buy a 2-3 bedroom unit. Are these actually not available?

PebblesHD3• 3 years ago

When a studio apartment costs $600,000 and a 2 bed apartment in the same building costs often double, there really isn’t a pathway to ‘step’ between them. The same is true of houses, where the gap in prices between apartments and houses has never been wider.

It also doesn’t take into consideration that the would be homeowner is usually renting while saving their deposit, and that currently requires a larger share of their income than basically ever before.

fatherzine• 3 years ago

"adjusted for inflation" -- what does that mean if it doesn't include basic life necessities, e.g. shelter.

PebblesHD3• 3 years ago

Inflation in Australia is measured using what’s known as CPI, but is weighted with other goods, and is widely but not universally thought to downplay the effects of property pricing in spending.

harambae• 3 years ago

Yeah he clearly means CPI-type inflation overall but the terminology does seem off

Adjusted for average housing inflation, average housing costs exactly what it used to

AussieWog93• 3 years ago

This problem has at least been recognised by Victorian State Government, and there are plans to increase the housing supply above what is required to maintain population growth.

Huge, genuine reforms designed with the explicit goal of reducing property values.

justinclift4• 3 years ago

Do they also have (serious) plans to build new matching hospitals and the like, to support those houses?

Hoping they do, as it's required. Just haven't heard any mention of them doing so (yet) is all. :/

pygar• 3 years ago

The middle classes in Australia have a lot of expendable income and not much to do with it. So "safe" investment properties have become very popular. This has resulted in a lot of peoples investments being tied up in real estate. This makes any serious reform politically impossible for the foreseeable future. and people who don't have investment investment properties don't want the value of their home to decrease.

The current Labor government lost a previous election in part due to proposed changes regarding the taxation of investment properties. It dumped[0] those policies and won the last election.

Property has become a cringy weird national obsession to the point where high-school children [1] and are thinking about it.

[0] https://www.afr.com/politics/federal/labor-axes-neg-gearing-... [1] https://www.youtube.com/watch?v=kMdA_fRzySk

000ooo0002• 3 years ago

Property has become a cringy weird national obsession

I don't think this can be understated. Being a landlord is so normalised here that people seemingly can't connect the dots between every able person collecting 'investment properties' and the impact it has on the housing market (among other things).

drt5b7j3• 3 years ago

Property has become a cringy weird national obsession

Same in London. Furthermore I have the suspicion that this contributes to the low productivity in the UK. Freshly minted MBAs whose business plans are... buy property, collect rent.

rstuart4133• 3 years ago

Another explanation. Copy & pastes from: https://www.macrobusiness.com.au/2023/07/australias-housing-...

    Australia has had one of the highest rates of housing construction in the developed world

    We also have one of the highest numbers of construction workers per capita in the OECD

    Australia also ramped-up housing construction to record levels last decade

    However, this surge in construction was swamped by the unprecedented jump in net overseas migration from 2005, which is projected to run even higher over the next five years

So, it's simple demand and supply. Demand has been driven by a "Big Australia" policy driven by the federal government that started with Howard in 1996 and has been enthusiastically continued by every government from both sides of the isle for the next 25 years. Demand outstripped supply, despite the fact we've turned up the dials on supply about as far as they can be turned. Rising prices should not be a surprise.

In view of the fact we are world leaders in building housing the other explanations we are given like "land availability" or "state government bureaucracy" or lack of public housing are IMO just furphies. Government subsidies for house builds only make sense if we have spare capacity. But we've already maxed out our building capacity, so the builders pocket the money. As a consequence these federal attempts to subsidise their way of the problem doesn't get more houses built - they just pour fuel on the housing price fire.

Perversely, it's been a factor in bankruptcies in the building sector. With so much demand builders took on more work than they could complete in a reasonable time frame. Yes, it was pure greed, but it was also only possible because demand is so high. And usually locking in sales like that would be harmless and even prudent (apart from pissing off the customer because it took 18 months rather than 7 to deliver the built house). But that work was for a fixed cost and we got hit with COVID inflation so the self inflicted long leads times lead to builders making a loss - and going under.

But it's not just the building sector. When your growing your population at about 2% per annum [0] all sorts of things start going wrong. You can't build hospitals fast enough, and we get ramping [1]. Roads clog faster than you can build them. [2] Public schools can't be built fast enough, and you can't find teachers. [3]

The icing on the cake is it's the State's that cope the blame for all of this because they are the ones responsible for delivering roads, hospital, schools and releasing housing land, and they aren't delivering fast enough. But the root cause isn't them - it's federal population policy. And so far, feds have got with their the "Big Australia" policy scot-free, with none of the blame for the down sides attributed to them.

I'm not against population growth, but it has to be done at a reasonable pace and clearly the current pace is not reasonable.

[0] https://blog.id.com.au/2023/population/population-trends/aus...

[1] https://theconversation.com/ambulance-ramping-is-a-signal-th...

[2] https://www.abc.net.au/news/2019-08-20/queensland-traffic-co...

[3] https://www.9news.com.au/national/teacher-shortage-mental-he...

firecall• 3 years ago

Fellow Australian here.

Agree with all of that.

If you buy into the rhetoric on AU Reddit subs you’d believe it was all the fault of Boomers, Negative Gearing and AirBNB.

People just don’t seem to understand Negative Gearing. They seem to think it means free profit. It’s not understood that you need to make a loss to claim the offset on your tax, and you have fund that from your own pocket.

Then somehow Boomers are both responsible for Housing Prices, lack of housing to buy, and lack of rentals.

It can’t be both.

Anyway - the whole thing is hard to understand for anybody.

How can house prices be rising when it’s seemingly impossible to get mortgages on normal dual income salaries?

The bank of mum and dad doesn’t explain it.

Immigration explains part of it. Overseas money being parked in property is a large component.

Then there’s AirBNb and other short term rentals…

And if Airbnb is taking properties off the rental market, why is there suddenly such huge demand? Who’s staying in those holiday homes and where do they get the money!

There’s a real lack of in depth reporting and analysis on this.

Even the ABC is very superficial in its reporting.

iamthemonster3• 3 years ago

I feel like Perth exists in a little alternate universe of its own. It's a city of approx 1.6 million, bigger than Phoenix or Philadelphia, with Western Australia having a state GDP-per-capita 10% higher than the US. Property is also 15% cheaper than the South-East England (excluding London) region.

Median house price is US$396000 / AUD$615000 and there is a very long list of skills shortages for immigration to fill. The property boom in Sydney just passed Perth by, and it's now significantly cheaper.

Vacancy rates are at their lowest in years, and rents have risen recently, but that's off the back of eleven years of zero nominal house price growth 2011-2021. We are only now getting 10-15% above 2011 levels in nominal terms.

I'm not saying people can uproot their established lives in Melbourne/Sydney, especially when the main industries are quite different in Perth, but I really don't understand why Perth is not a more popular destination for immigration from around the world.

As a British economic migrant to Australia myself I'm just surprised there isn't more of a stampede. My 2023 Perth salary is 3.5 times higher than my UK 2010 salary, and the quality of life in Perth is far higher than the UK.

My house is 4 bed 2 bath on a 4300 ft2 block 2.5 miles (9 minutes on the bus) from the city centre and it is 3.8 times my salary as an engineer (my wife is unable to work so we are single income)

ethbr1• 3 years ago

It's a 5 hour flight from Perth to Sydney? (just looked it up)

That's not nothing, especially if you're occasionally needed in-person on the east coast.

iamthemonster3• 3 years ago

Oh god yeah, I didn't mean to imply you could live in Perth while working an eastern states job; moving to Perth will always be a big move, I'm just surprised there aren't more immigrants or eastern states folk relocating. Moving from Melbourne to Perth is not that functionally different from emigrating.

ulfw4• 3 years ago

Well it's a 25 hour flight to South East Europe where OP went for some odd reason, so...

flopsamjetsam• 3 years ago

My parents spent quite a bit of time in Perth, and I went over for a holiday a little while ago for the first time (I live in the ACT). I hadn't expected how far it feels from the rest of Aus. Of course, I knew it, but it's different when you're over there.

naruhodo• 3 years ago

The video is useless, except to spark discussion. Fucking well done Bloomberg. Top quality journalism. Yep, it really is a fucking mystery. Vast rivers of ink have been spilt on this topic and Bloomberg has not read any of it.

Topics the video studiously avoids:

1. Record immigration: 400,000 migrants in 2022-2023 [1] in a population of 26.5 million [2]. Where are all those people going to live? Well, they'll continue to prop up the housing and rental ponzi schemes.

2. Shitty tax policies (negative gearing and capital gains tax deduction) that make housing more attractive as an investment vehicle. The centre-right Labor party (think: Labor = US Democrats, except Australian politics are not as extreme right as the US') tried to take modest reforms to the 2019 federal elections and got shot down hard. [3]

3. AirBnB siphoning accommodation away from the long-term rental market. It is more profitable to run your AirBnB for 3 months a year than to provide long-term accommodation, contributing to the tight rental market.

4. The power imbalance in the rental equation: renters in Australia have some of the weakest rights protections in the world [4] [5] [6] although at least one progressive state is making modest reforms that don't go nearly far enough [7]. Australian renters have no guaranteed right to put up a picture frame, have pets, or get a decades-long lease like their European counterparts. [8]

5. The demise of public (read: government owned and built) housing in Australia [9] [10] [11]. It used to provide affordable housing to essential workers. It has been gradually sold off by state governments to private real-estate developers under neoliberal economic policies.

[1] https://www.abc.net.au/news/2023-04-29/australian-migrant-po...

[2] https://www.worldometers.info/world-population/australia-pop...

[3] https://www.9news.com.au/national/labor-to-abandon-negative-...

[4] https://www.news.com.au/finance/real-estate/renting/shifting...

[5] https://www.abc.net.au/news/2015-06-11/bagwell-australian-a-...

[6] https://theconversation.com/renting-for-life-housing-shift-r...

[7] https://www.theguardian.com/australia-news/2023/sep/20/short...

[8] https://www.abc.net.au/news/2021-12-21/rental-market-housing...

[9] https://en.wikipedia.org/wiki/Public_housing_in_Australia

[10] https://www.abc.net.au/news/2019-08-12/fact-check-social-hou...

[11] https://www.abc.net.au/news/2021-02-27/policy-ideas-to-solve...

Why Australia’s Housing Crisis Is a Warning for the World [video]

Related Stories