Australia’s property boom making the nation poorer

Discussion in 'Economics' started by themickey, May 20, 2021.

  1. themickey

    themickey

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    Experts have warned that younger Australians delaying having children will affect the entire country. Photo: iStock

    Australia’s property boom leaves young Australians put off having children, making the nation poorer

    Australia’s property boom is making the nation poorer as more young people are forced to delay starting a family due to soaring house prices, experts say.

    Spiralling job insecurity and the meteoric rise of property prices this year has created the “perfect storm” that will see younger Australians delay key life stages even longer — and with migration at a standstill, there is no one to make up the shortfall.

    The impacts will leave the entire nation worse off, says Liz Allen, demographer at the Australian National University.

    “The fact that young people can’t afford to buy a home is making the nation poorer,” Dr Allen said. “The population will age more rapidly, the potential pool of money from individual income tax will shrink and we will have to do more and more with less and less,” Dr Allen said.

    She said the lack of investment in housing affordability by governments was short-sighted.

    “The reality we will be confronted with is that living standards will decline in Australia.

    “That finite money has to go more ways, it has to look after the young, it has to look after the old, to make sure the houses are built, the roads are built the hospital are staffed.”

    Birth rates in Australia have been steadily declining for some years but hit rock bottom at 1.66 per woman in 2019, according to Australian Bureau of Statistics figures.

    Since 1976, Australia’s total fertility rate has been below replacement level – that is the level at which the population is replaced from one generation to the next without migration – according to the Australian Government’s Institute of Family Studies.

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    The soaring cost of property is delaying young Australian’s decisions to start their families and this has grave implications for everyone, economists say. Photo: Greg Briggs

    Until the pandemic hit, Australia relied on migration to increase birth and fertility rates to boost its population. But this option is currently off the table, with borders closed until 2022 by the government’s own projections in the federal budget.

    Rising housing costs were a major factor in couples delaying when they start a family, according to Emma Dawson, Per Capita executive director, and governments were actively making the situation worse instead of helping address the situation.

    “[Current policies] are geared towards maximising the property values of existing stock. It’s not geared towards making housing affordable for first-home buyers or life-long renters,” she said, adding that policies were subsidising investment properties more than subsidising first-home buyers.

    “There is a huge risk if your retired population outgrows the younger population of income earners.

    “Our population will age rapidly and we won’t have a sufficient taxpayer base to pay for things.”

    Alison Pennington, senior economist at the Centre for Future Work with the Australia Institutes, said the current situation had created the “perfect storm”, leaving partnered women during prime working-age years to increasingly prioritise earning to meet mortgage costs, which further delayed child rearing.

    “Dual incomes are now a necessity for accessing and servicing a mortgage, forcing women to partner if they want to own a home,” Ms Pennington said. “This financial bind has worrying implications for family formation, fertility rates, and women’s choices,” she said.

    Better job and housing security would help families have better choices, according to Emma Power, an urban geographer at Western Sydney University.

    “For parents, secure housing can mean knowing that they’re going to have family and friendship networks around them,” Dr Power said. “It’s a critical part of that village of raising children.

    “We do know uncertainty about the future and crisis can affect the decision people make when they have children and how many children they have.”
     
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  2. Big AAPL

    Big AAPL

    Mick
    You are there. What is the consensus of the people you are in tune with?
    I can tell you that here in the states, it is pretty much the same situation...my son just bought his first home, and he and his wife must continue to work to meet his mortgage payments. The thought of having a child would put a crimp in their financial status. The tax breaks do not even compensate for the lack of income. I feel sorry for this generation because the mortgage crisis of the 2000's have made it virtually impossible for a single earner family to own a home and raise a family.
     
  3. I was thinking about how Americans and Canadian youth have no chance buying homes because of foreign and institutional money enjoying the .5%-1.5% borrowing cost. Screw old savers with $500k to $3 million with 0.5% money markets, let foreigners and institutions like BlackStone and Apollo buy up inventory and kill birth rates for average people.
     
  4. JSOP

    JSOP

    This is the same situation in every single country that has an open-door policy, imported inflation in real estate market due to the inflation in other countries' real estate market. This is due to the unbalanced economic growth between countries as a result of unbalanced trade agreements. Under the comparative advantage model, all trading partners are supposed to benefit roughly equally economically but unfortunately as a result of manmade barriers to trade such as tariffs to foreign imports, dumping of exports at the unsustainably below-market price as well as currency manipulations by certain countries.

    The only solution by the domestic countries is restricting the purchase of real estate by foreign buyers to ensure the domestic population would have a chance to participate in the domestic real estate market. I thought Australia has already implemented foreign-buyer tax? I think Australia should ban the purchase of real estate by foreign buyers altogether. China, the country that has caused this imported inflation in real estate market in countries around the world, ironically bans foreigners who do not have Chinese permanent residency or citizenship from purchasing real estate properties. I do not know why all of our governments are so reluctant to implement the same policy?
     
  5. VicBee

    VicBee

    There we go again... So now China is also responsible for the world's property boom and consequently, making the nations of the world poorer? o_O
     
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  6. Canada tried in Vancouver, they should have charged 3x instead of something stupid like 20 percent. Can Western citizens own land in China?
     
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  7. VicBee

    VicBee

    China is a communist dictatorship, you can't own land unless you're really powerful and buddy with the dictator
     
  8. JSOP

    JSOP

    No, if you do not have Chinese permanent residency or citizenship, you can't own property or land in China, period. Do not know why all the western countries do not just ban foreign buyers from purchasing properties like China does.

    For Chinese citizens or anybody who has permanent residency, apparently you can own land but only up to a maximum of 70 years. After 70 years, your ownership is revoked and everything goes back to the government.
     
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  9. themickey

    themickey

    RE is going crazy atm, was looking at an 3brm 2 bath house, rent was $295pw, landlord is raising it to $360pw (house was a shitbox and dog had dug up the whole backyard into a shit pocked sandpit). Now those prices may sound cheap, but this is the very outer fringes of the city (about 30 miles from centre) and are about half what you'd pay in Eastern States, NSW, VIC & QLD.
    Anyhow right now RE is going ballistic, I went to an open home couple days ago, again same area, about 100 people queuing up to view.
    Prices are going up by the week as I'm watching the RE market atm, it's just going insane.
    What's causing it? Gawd only knows....
    It's kind of weird because overseas borders closed, maybe its people relocating locally and interstate after covid scare because here in Perth there is very low rate of covid and people may be attracted to live here, good climate, plenty of work, outdoorsie lifestyle, no air pollution other than odd bush fire.
    Great place so long as yu don't mind carrying snake anti venom in yur back pocket everywhere.
    Just kidding, that last sentence was for @Overnight. :)
     
    Last edited: May 21, 2021
  10. JSOP

    JSOP

    no not property boom, imported inflation so people who are supposed to be able to afford to buy properties to live in them can't and instead properties all around the world sit empty and become play things and "investment vehicles" for the riches from not just China but other countries like Middle East, Russia and etc. but mainly China, disrupting communities and creating unnecessary housing shortage while at the same time destroying environment and greenspace while the government is forced to cut down trees to build more properties to combat the imported inflation.

    Property boom is healthy organic growth in property values that is in line with economic and population growth, not unsustainable growth in property values all due to excessive purchasing of properties by external forces which China is responsible for. If China is so proud of creating this "property boom" in cities around the world, WHY does it itself ban foreigners from buying properties in China? Why not let foreigners create the same "property boom" as well in China? o_O Hypocritical much?
     
    Last edited: May 21, 2021
    #10     May 21, 2021
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