Australian house prices could rise 10 times as fast as wages in 2021 Tawar RazaghitwitterJournalist May 26, 2021 https://www.domain.com.au/news/aust...smh&utm_medium=link&utm_content=pos5&ref=pos1 House prices could rise more than 10 times faster than wages this year, with a top economist warning that the improving jobs market will make little difference to modest income earners trying to save a house deposit. And experts warn that government grants to home buyers and tax incentives for investors will only make it harder for some to buy a home. The odds are stacked against lawmakers’ attempts to improve the cost of housing, with the millions of home-owning households – who do not wish to see the value of their asset fall – dwarfing the roughly 100,000 first-home buyers every year. Australia’s job market has improved since the depths of the pandemic recession, with the unemployment rate dropping 0.2 percentage points to 5.5 per cent in April, on ABS figures released last week. Wages edged up 0.6 per cent in the March quarter, tracking at an annual growth rate of 1.5 per cent. But with house prices growing more than eight times that pace in the same period alone, Shane Oliver, chief economist of AMP Capital, said it does not come close to helping aspirational home owners into the market. “It hardly makes any difference. House prices are up 8 per cent already this year based on CoreLogic numbers. There’s another 2 per cent coming in May alone,” Dr Oliver said. “As this year settles down, we’re going to see house price growth at 15 or 20 per cent in some cities.” Buyers are much more prepared at auctions and are sticking to their budgets, experts say. Photo: Peter Rae By year’s end, forecast house price growth could outstrip wages growth by more than 10 times, leaving low- and moderate-income earners worse off. “If you’re in hospitality, food services and accommodation, you might have got an increase, but you’re still on the minimum wage on which most people can’t get in [to property ownership]. It doesn’t really help,’ Dr Oliver said. “Affordability is getting worse.” This gap between average household income and house price growth has been growing for years. The average cost of housing in Australia was about 2.5 times the average household disposable income in 1990, the Reserve Bank of Australia found. Now, housing across Australia costs five times that the Reserve Bank found, with capital cities such as Sydney and Melbourne much higher. Sydney ranked an unenviable third on the latest Demographia list of cities worldwide with the least affordable housing. A shift in supply and demand House prices ran away when governments began to increase demand for housing at the same time as construction slowed down, said Saul Eslake, an independent Tasmania-based economist. “From the late 1940s until the mid-1970s, government policies generally focused on increasing the supply of housing – either by building a lot of it themselves or encouraging and facilitating the private sector to build a lot of it – and avoided artificially inflating the demand for it,” Mr Eslake said. “But beginning in a small way with the introduction of the first First Home Buyers’ grant scheme in 1964, and especially from the late 1970s onwards, government policies have moved away from boosting supply (towards constraining it) and towards inflating the demand for housing.” Many aspirational home owners are being priced out as house price growth outstrips wages growth. Photo: Peter Rae Since then, incentives that drive demand have only grown thanks to a variety of grants for home owners and favourable tax settings, such as negative gearing and capital gains tax, that encourage taxpayers to invest their money into bricks and mortar, which encouraged the rise of mum and dad investors, economists agreed. CoreLogic estimates the overall value of residential housing across Australia reached $8.1 trillion at the end of April this year with 53 per cent of household wealth held in this asset class, said Tim Lawless, CoreLogic research director. “It’s understandable that policymakers would be reluctant to implement policies that could place housing values under downward pressure,” Mr Lawless said. “A reversal in home values could see households spending less as the wealth effect moved into reverse, weighing on economic growth.” The political imbalance between home owners and would-be home owners Beyond the financial implications, the odds are stacked against any politician who wants to make housing more affordable, Mr Eslake noted. “There are a lot more votes to be had from the 11 million or so people who already own at least one property (to say nothing of the 2 million or more who own at least two) than there are from the people who in any given year have a realistic chance of becoming property owners for the first time,” Mr Eslake said. There are roughly 100,000 first-home buyers a year. The reality is that there is little political support for such a change, with two out of three Australians living in a home they own or are paying off, Dr Oliver said. Housing costs have soared this year despite the pandemic. Photo: Peter Rae “[As] more people get into the market, the political support [for housing affordability and lower house prices] diminishes. That’s how we find ourselves in this treadmill situation; we’re in a bind. “When they do get in, their attitudes change. They join the bandwagon and don’t want prices to go down and have a paper loss.” Last year’s pandemic-induced downturn showed what was at stake when housing prices were in peril, Dr Oliver said “We had one incentive after another to push the property market back up,” he said. What next? Subdued house price growth is needed while wages growth catches up – a difficult scenario to engineer but not out of the question if demand-driven policies were stripped back, economists said. Unwinding such policies would also provide financial incentives for the private sector, including super funds and large scale investors, to build more affordable homes efficiently, said Ellen Witte, SGS Economics and Planning principal and partner. “At the moment, it’s driven by investors and speculation, and that balance needs to shift. There is an ongoing incentive for house prices to keep growing a lot,” Ms Witte said. While Labor’s $10 billion fund dedicated to building more housing in Australia was a “good start”, Ms Witte said even that was outdated as it was based on a model from more than a decade ago.
If Australia is anything like the UK, many politicians have property portfolios and/or are in the pay of real estate builders/ land owners etc. Same with journalists who love ramping up the property market for the same reason. So many of those with power are into property and have a vested interest in high property prices, they don't care if the young and poor are priced out, actually thats even better for them as they get renters for their property. No point blaming the Chinese or the Russians (who bid up London property prices).
No point blaming foreign investors when in the same post you agree that they bid up London property prices? Spelling error or are you an idiot? Nobody claimed that the property problem for young generations is only caused by foreign investors but in certain cities it is a big problem. 1/20th of all Toronto condos are owned by foreign investors who have never set foot into Canada. That is only those who have invested without ever having seen the condo. And only condos, and only Toronto. I do not know how many people the UK immigrates per year but Canada nowadays lets almost anyone in with a high school diploma or more (I exaggerate).
Yes, if you have the means, you buy where you want and aren't confined by the limits of your country. It's called supply and demand. Owners sell because someone makes an offer they can't refuse. France and Spain have sold out to Brits, Dutch and Germans, London sold out to Middle Eastern and Russians, Vancouver sold out to Chinese... it's been going on for many decades but seems to be a problem only when the buyers aren't white. Should government intervene to prevent flaming property prices? Perhaps, especially if the owners aren't living in or renting out their property. But isn't it funny how right wing rabid racists want government to intervene when they're negatively affected by markets but scream bloody communism when they're the subjected to government intervention?
Yeah because Western buyers are on average not assholes who shit in others' gardens, piss in alleys, price everyone out of the market? Perhaps it's certain cultures who just don't want to assimilate. Ever heard of a German enclave in Spain or Portugal? And please don't come up with a stupid joke and say Majorca. Or some Brits who regularly buy up entire city districts in Italy or Greece? Or Belgians who run opium dens in France and start organized crime groups and smuggle illegal goods into the country? Or Swedes who open massage parlors (=whore houses) everywhere they fucking move to? Or Norwegians girls who are advertised as escorts (=whores) on plenty Internet websites? Or any western tourists who seem to have a passion for fucking up oriental monuments in other countries and behave like some fucking cavemen? I can name you a culture who fits all the above: Chinese. Here is your reason why we make a difference. Some groups behave and everyone likes them around and they assimilate and they are respected. Another group is hated by everyone and why? Because they run around with some retarded hair cuts, smell, drive certain cars for no other reason than to show off. They buy up entire districts and push everyone else out. They still can't speak the proper local language even after 30 years in the country because they can't give a damn. Cause they want to recreate their little China wherever they go. I say, buy those guys some fucking mints and bath wash. They smell and are a displeasure to everyone around them Nobody screams for any government help. We scream for politicians to start taking their job seriously as civil SERVANTS. They currently serve their own pockets not the ones of their voters. That's why they let fucking Chinese in to buy up thousands of condos in each city without ever letting anyone live in them. Canada and Australia and all other countries are for Canadians and Australians and those who live and work in those countries. Not for some Chinese fucks, who obtained their wealth illegally, moved out their money illegally, and have zero respect for laws, moral and ethical values. And don't come and argue that the average Chinese won't do such things. Well it's their fucking job to police their communities. Same as fucking Muslims can't get away with saying that only a minority of them are terrorists. Well yeah, then help local law enforcement to catch them, instead of grading safe harbor. Otherwise your allegiances are questioned, and for good reason. If caring for our own rights and doing the right thing and fighting against wrongdoing makes one a racist then so be it. I speak the truth from my heart.
Guess who can't keep their dirty fingers off the shells and respect laws and regulations. Those names and people on the photos seem familiar? https://www.cbc.ca/amp/1.6038459
? Not sure what this is supposed to be other than pure character assassination. I failed a certain times in life like every other human being. But I worked hard and made something out of myself, saved up and retired early in the place of my dreams. I really care about honesty and truthfulness and character. I blame Chinese culture for a lot of wrongs in their country and in certain areas outside. I have some very good Chinese friends, believe it or not (well HK Chinese) and they look at Chinese culture in the exact same way. There are drawbacks in every culture, but it's just that other cultures generally don't go out and make life miserable for everyone else around them. So, if you consider failure the disability to accept Chinese pissing and shitting into your backyard then yes I failed to deal with that. To me thats unacceptable among the many other things Chinese culture represents.
Great points by @DiceAreCast here. Maybe we should deal with the Chinese like the Jews in Germany where @DiceAreCast is from. In fact, we can extend that to blacks, browns, muslims, illegal immigrants, queers of any gender, non christians, anybody to the left of the political spectrum, the mentally disabled, native americans, and middle aged Karens. Because fuck Karens. I'm sure @DiceAreCast would love to operate the camp, I heard she has experience running such a concentration camp before in Germany.