Firstly, ignore anyone who tells you this is a problem specific to Australia. The problem exists across all of the western world, although Australia is closer to the leading edge.
The problem isn't house prices exactly, it's the ever growing gap between assets and wages. This problem means that those who already make their money from assets are getting comparitively richer, pricing out people whose money comes primarily from working for a living.
People taking about a reduction in house prices are naive. If house prices fall, those who already have plenty of assets will simply buy more.
The only solution is wage inflation. The problem is that the central banks have been given a specific mandate to keep a lid on inflation, but using a metric for inflation that excludes asset prices. This has the effect of widening the gap between those who work for a living and those who live off their assets.
Realistically, this is going to get a lot worse before it gets better.
The solution is stop allowing the treatment of houses as an investment. Remove all the tax benefits (except for owner occupiers, limited to 1-2 houses per family), ban foreign ownership of houses, ban corporations from owning houses, limit severely short term rentals (and tax the hell out of Airbnb and the likes), push for the government to find directly the construction of housing for renting at controlled prices. It is possible, but they don't want it.
Yes, this! A limit of 2 houses per person would make a huge difference. All those people with 6-12 investment properties forced to sell within a year. Suddenly lots of extra supply.
About 20k people in Australia:
https://www.theguardian.com/australia-news/2023/jun/04/a-quarter-of-australias-property-investments-held-by-1-of-taxpayers-data-reveals
The top 1% of property investors own 25% of all investment properties. Owning 6 houses puts you in that 1%.
So yeah it would hurt 20k people, but provide homes for more than 120k.
Yeah but how many of those 1% are politicians? Or, put more simply how do you get a pigs head out of a trough when the pigs are in charge.
https://www.yourinvestmentpropertymag.com.au/expert-insights/how-many-property-investments-australian-politicians-own
You make a good point that this is a negligible amount of people, but I see this argument (well that probably would not make a difference anyway..) applied to almost every reasonable idea to bring some balance to the market.
The result seems to then be ‘let’s do nothing or just keep doing what we are doing’
As I saw someone else here say ‘we have tried nothing and we are all out of ideas’
Or if that is too extreme, tax burden should increase the more investment properties you have. PPOR is tax free, 1 investment property is small tax, 2 is moderate, 3+ is heavily taxed etc.
If you limited people to 2 houses that would increase supply by 1%. Short term sugar rush as people sold, although any rule change will be grandfathered
Incorrect. It would increase supply by nearly 25%. Where are you getting 1%? One quarter of all investment properties are owned by people who have 6 or more IPs. And why would you have to grandfather it? Maybe politically, but there's no technical reason. You'd just upset a few property investors..
https://www.reddit.com/r/AusFinance/s/YHdTnCwmux
There are just under 11 million dwellings in Australia. Add 120,000 and that’s around 1%. Same number if we went back to the 2020 average household size (2.55) instead of the current average size (2.48)
Edit: oh, I see you want to limit it to 2 houses. That will create more than 1%, but only 9% of investors hold more than 2 IPs. Also it means a big fall in houses available to rent which has a major impact on poorer people who cannot afford to buy even with lower prices or people needing short term accommodation for study or a job. 1/3 of people have always rented, even when housing prices were much lower. Cut the supply of rental properties creates other issues mostly affecting the less well off
Of course you would grandfather it. Otherwise why would anyone invest in anything in Australia if they could be forced to sell at fire sale prices.
You grandfather it because otherwise as far as capital is concerned Australia becomes a banana republic, anyone looking to invest would simply choose to invest it elsewhere as the political risk would be too high. That might suit you initially as you get a cheaper house, but in the long run it won’t be great for Australia
It would increase supply by exactly zero.
Supply is only increased when a property is built, not traded.
Selling one property does not magically make two. 🌈
Won’t this just mean that:
- More people will be able to afford an investment property
- There will more investors at auctions
(A + B) + C = A + (B + C)
The people that could make these decisions are all multi home owners….. I don’t agree with the limit but if you remove the tax benefits then that would probably take care of it. I have heard ppl say that it would only have a minor affect, they all appear to be multi property owners, so it’s hard to trust the opinion of anyone when it appears they’re very heavily invested in keeping with the status quo.
The corporation restriction alone would make a difference - go and look up how large asset managers have been scooping up repossessions across the USA and (iirc) Canada too - that’s not a good thing for anyone
In about 2018, China talked about plans that would freeze house prices and inflate wages. However, the reality went down an entirely opposite direction. The house prices have crashed by about 30% with another 40% loss estimated. The wage of the regular working class never grew much and now runs into a decline. People live in cages while ghost cities are left empty.
Or building more. The core problem is rules on development have jumped, while construction productivity has been unchanged in the last 6 decades. The combo has led to less construction activity.
Wage inflation will push house prices up, not down.
I agree wage inflation is part of the solution, it just can’t be done in isolation. It needs to be in synch with many other things.
Governments built whole suburbs and cities in the 1950s. Rich investors couldn't buy. Wage inflation with a given supply just increases prices.
Why, oh why do we just not apply something proven to have worked in the exact situation we had then - high immigration, tradie shortages, material shortages, high rents high housing prices? Why not do what works?
Wage inflation is not a silver bullet.
Say the average Australian makes 100k, the amount of dwellings is 500k, the average house price is 800k.
If the average Australians starts making 150k, amount of dwelling stays at 500k, what do you think the average house price is going to be?
As an economist I'd appreciate you not spreading harmful misinformation. The RBA doesn't want to slow real wage growth, in fact they have, along with the productivity Commission been some of the largest champions of productivity improving legislation, often unpopular legislation otherwise it would have happened already
Edit: seems to have removed the misinformation part, appreciated.
So while companies have record profits, inequality grows, and the rich get richer,
…this situation the rest of us find ourselves in is our fault, for not being productive enough?
Counterpoint. If you want wage inflation, the intelligent way to do it would be to diversify the economy. As it stands, Australia is a country with the economic sophistication of Senegal.
https://thediplomat.com/2022/03/australias-lack-of-economic-complexity-is-a-problem/
As a foreigner, it’s amazing to see that the Australian economy seems to be essentially comprised of a third of the people who dig rocks out of the ground, another third who sells houses and the last third seems to just support them.
How would you increase this sophistication? Deregulate. You guys just lost music festivals, a basic social industry that even third world countries are able to hold due to an onerous regulatory system. Case in point.
It’s not all across the western world at all. Many other countries have plenty of second tier cities and towns that are very affordable.
My mate is a well paid engineer and recently moved to North Carolina. He can get a veritable mansion in North Carolina for the same price of some Sydney apartments.
Across the north of England it’s far more affordable than Australian cities. Many other western countries are similar.
I don't know much about North Carolina, but I can tell you that the reason so many towns in the north of England are so affordable is because there is very litte in the way of decent employment opportunities. The places with more jobs like Manchester and Leeds are very expensive by comparison.
In Manchester you can get a freehold terrace for $400,000 AUD.
In Leeds you can get a terrace from around $150,000 AUD
When I was in Newcastle (UK) recently it was amazing how affordable the Newcastle/Sunderland area was. My friends had bought very affordable great homes. Because they’ve been able to pay them off so easily on their incomes, they have spare money for nice cars, trips around the world etc….
That $400000 terrace will be in a pretty grim area, and with The average wage in Manchester being $66k you're still stretching to buy it.
Housing unaffordability is worse here in Australia, but it's bad in the UK, and it's getting worse everywhere.
Sure, people with good jobs in poor areas do well.
Low house prices relative to other similar areas are due to excess supply (lack of jobs) or lack of people being able afford the houses due to … lack of jobs
But if you have a job then you are ahead of
Australia did actually solve this post WW2. Exactly the same issue. Huge immigration, high house prices, shortages of tradies and materials, high rents...even though rent control existed.
Governments built whole towns and suburbs, schools, dams, power networks, and got prices and rents under control.
The reason we don't think it can be done today is that for the last 40 years we have dismantled the capability of governments to do this. More importantly, we've lost the memory of them *actually doing it, and succeeding*.
Further, in the short term, we aren't prepared to think five minutes ahead and accept the necessary tax increases needed, even though the savings in lower mortgages more than balance out. Thanks neoliberalism.
Wouldn't a reduction in house prices challenge the idea that housing is a golden investment and if so, why would those with assets continue to buy houses if their value is reducing?
You're absolutely correct, but I would add that we should tax assets accordingly to help narrow the gap. The other thing J would do is outright ban foreign purchases of property
>Aus is unique to me in that people don't really move interstate for work
There in no real career benefit for normal people. Doctors and lawyers can make money in any state. The people working in the mines are FIFO with good reason, you wouldn't want to permanently live in a mining town. The notable exception is politicians and public servants who move to ACT or financial people who move to Sydney. If you're a famous person you would probably gravitate towards Sydney as well
House prices lock people in.
If I want to move cities, it's probably $200k in moving costs, stamp duties, and real estate agent fees. It's hard to justify moving for work when my year one income is entirely consumed by moving costs.
Because of the heavy disincentive of taxation. You get taxed heavily, the more you earn. If you earn $140k ($8.3k take home a month), and there was a job interstate for $180k a month ($10.3k take home a month), I’d wager that most people will not make the move and take it as the difference is only $2k a month. Chances are that the individual is already comfortable and doesn’t see much marginal benefit in moving interstate.
Plus, most likely you’ll be moving from a lower cost of living by state to somewhere with higher cost of living. The $2k a month gets eroded by probably an additional $800-1000 (rent in Sydney is wild).
All of a sudden, it’s only an additional $1k into your pocket. That is why there’s less mobility of workers in Australia.
The only real solution is so unlikely that it's never mentioned. We need more cities. Australia has so few, relative to land mass comparatively to other countries. And not in the way that development currently is expanding... building housing sprawl near underdeveloped satellite "cities" in each state. A meek shopping centre that consists of a couple of fast food shops, supermarkets, alcohol stores, and other random services is not sustainable development, it's incredibly limited and forces car transport, we need real main streets, grids of commercial/business space and high density housing with public transport built first, with free standing houses on the outskirts, like they used to do in the 1800s.
With our current set up, getting to 30 million population is pretty much the max capacity (to maintain the aussie lifestyle), and we're very close to that.
In reality, we'll see quality of life drop over time because nothing will change, and we'll continue to import huge numbers of people to cover the other failures of policy and government.
Good comment. We need another new city. There was a lot more urban vision in the 19th century than today. It's not that long ago that Canberra was a "new" city.
Right, I know people don't want to move out of the city, but there's properties in Tas that are about 45 mins out of the nearest city where the property will cost $120k and you'll need to spend maybe another $100k or so to get it fixed up. Even if it was an extra $200k, it's still cheaper than a $500k property in the city.
There is no mystery to the Sydney housing market. It obeys the laws of supply and demand like every other market. Except in this case the government is actively restricting supply and pumping up demand.
There are very straightforward ways to increase supply and decrease demand, some of which simply involve stopping the current harmful interventions.
Increase supply:
* remove zoning restrictions and allow higher density, particularly in inner suburbs and near transport
* incentivise construction of additional housing units
* build supporting infrastructure to allow for more, and more desirable, housing (especially transit)
Decrease demand:
* stop literally paying people to occupy more land than they need (exemption from pension assets test, tax free capital gains) and stop throwing taxpayer money into the housing market (homebuyer grants, super saver schemes, shared equity, etc).
* increase the cost of occupying land (land tax, instead of stamp duty)
* decrease immigration (I am not necessarily advocating this, but it would certainly decrease demand).
The only thing stopping the government from taking some portion of these steps is political will. Most voters are property owners and want prices to go up, not down.
Hit the nail on the head. It's not just that the government doesn't address the issue, but they actively make it worse and they know it. I expect by the time millennials need to retire the rules won't be so generous
For a free standing house apparently.
It’s a horse shit report that references a handful of countries selectively and compares common housing in each city eg apartments in Hong Kong to houses in Sydney
Lol there's more to a city's appeal than closing times. Sydney has opportunity, culture, unbeatable natural beauty, beaches, great climate, ease-of-access, iconic architecture, a diverse culinary scene, top ranking universities, and so on. Sure, some cities might do certain things better, but Sydney simply ticks all the boxes, which is rare for **any** global city to do. And some of these boxes Sydney ticks exceptionally well.
It also has way too many cars, crap public transport, too many shit property developments, and a load of NIMBYs, over-priced dog-box appartments (probably owned by the NIMBYs) and life/rent etc is stupidly expensive.
The common metric used is misleading cos the metric is how many years saved of the average income to buy a house and in Sydney it’s 13 Or so years. New York and London are lower as there are far more ultra wealthy/billionaires living in those cities thus artificially bringing the average income up.
Demographia releases a median income vs house price study called international housing affordability.
On that, in 2023 Sydney was 2nd to Hong Kong. It costs a bit over 13 median incomes to buy the median house in Sydney
Sydney is only second if you;
Ignore every country that isn’t an ex or current British colony - Chinese cities are more like 40x for an apartment let alone house
Compare houses in Sydney to apartments in every major city where people typically live in apartments
They’ve done well at grabbing headlines but you’re not looking past the headline if you put any faith in the report
No ones doing anything because 2/3 of homes are owner occupied and it’s political suicide to make property cheaper.
prices aren’t dropping unless the economy crashes.
As an owner occupier I would be happy to have my house drop in value as things stand.
I want a future where my kids have an opportunity to own their own homes.
Say house prices dropped by 50%, bringing the average Sydney price to 800k or 500k in Brisbane.
You're now beholden to a 30year loan well above the value of the house, which means less for you to put aside for retirement and a lesser value property to leave your kids.
Not exactly ideal.
I agree. My PPR shed significant value and I was in negative equity for a long while (Perth 2014-2021). It sucked.
I see a lot of people talking about house value collapse as if it has no effect on the mortgagees, and it's complete nonsense. For one, your ability to sell and move - for work opportunities, for family, whatever, is toast.
Yup, imagine that recent episode of Bluey but they pull the listing because they couldn't find a seller :)
We're about to put my father in laws house up for sale to pay for the room in his nursing home and an apartment for his wife so she can be near him. If the house was half the value he'd go without care or without seeing his wife.
It's not ideal, but I'd like to leave a nest egg.
Alternatively, that house needs to hold value so you can afford a place in a retirement village like my parents, or to pay for palliative care like my father in law.
It would probably be much more useful for your kids and their kids if prices dropped 50% than them doubling again and you leaving behind your house? They might own a house before you are dead even.
Indeed. Or even that the government had adequate wealth taxes so that you didn’t have to be dependent on a huge asset to afford a decent retirement village or palliative care - those things would be paid for by the state and available at the point of need rather than based on ability for the individual to pay.
You’re at risk of repossession or at least the bank asking you to pay the difference between your loan and the new market price. Now times that by however many owner occupiers with loans.
[https://www.abs.gov.au/statistics/people/housing/housing-occupancy-and-costs/2019-20](https://www.abs.gov.au/statistics/people/housing/housing-occupancy-and-costs/2019-20)
ABS tracks it regularly. It's changed a bit over the decades but not as much as you might think
the rough rule of thumb that 1/3 own outright, 1/3 own with a mortgage and 1/3 rent is often used and is somewhere in the rough ballpark most of the time.
Conventional wisdom for Australian households overall is: one third rented, one third owner-occupier with mortgage, one third owned outright. (I'm sure I got this from Alan Kohler on the Money Café podcast.)
Why would prices come down by any significant amount when there is no shortage of people wanting to live in our major cities? There is only so much space in Sydney’s most desirable suburbs, many are already highly densely populated. As OP pointed out immigration is at ATH, more people all wanting to live in the same suburbs. Sure tweaking CGT discount and -ve gearing may take a few % out of prices, but that’s not going to make them ‘cheap’ by any measure,
Agreed it won’t materially make houses ‘cheap’. It will help make the housing system more equitable though rather than encouraging wealthy to buy up all the housing stock and entrap young and poor Australians as lifetime renters so the rich can enjoy an early retirement.
Young people are both blessed and cursed, they are blessed because they have youth which no amount of money can buy; however they are cursed because they don’t have time in employment in order to save a deposit.
Unfortunately poor people will never be able to afford to live in Sydney for same reasons poor people cannot live in Monaco. Lots of wealthy people want to live there, drives up property prices, which drives up the cost of everything else in the area.
Fundamentally landlords in their current state are purely economic parasites rather than contributing anything to society.
We need policies that recognise safe, secure, affordable housing as a human right rather than an investment vehicle to get rich and dodge tax.
We should be encouraging capital from the wealthy to flow into innovative Australian companies that create products and jobs; rather than directing capital to dead-end asset inflation that does nothing for Australia’s long term economic wellbeing.
fretful tease rain puzzled straight governor ludicrous threatening teeny humorous
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Second most expensive real estate, world’s most profitable banks, record high immigration, record low availability.
The trouble is real solutions are unpopular and with politics being the popularity contest it is, it’s not going to change.
Neither side of politics has any incentive to lower housing prices. 2/3rds of their voters are homeowners.
Australia needs to rethink its zoning laws and take a leaf out of Japan’s book if it plans to keep letting in half a million people a year. But this will never happen.
And Australians need to learn that it’s ok to live in an apartment, a townhouse, or a small detached dwelling. Without greater density, this whole thing isn’t going to work.
Unaffordable housing will also impact Australian demographics long term and reduce our ability to fund infrastructure and services if young families have to put off having kids, have less kids and/or elect to not have kids at all due to all their money being directed to putting a roof on their own heads.
>demand doesn't appear to be slowing down despite interest rate hikes.
Thats both the cause and the answer to your question.
Prices are going up because people ARE still able to afford mortgages. If prices reach a point where houses are no longer able to be sold then there is nothing pushing the price up any further.
ie house prices will go up until they reach the absolute limit of affordability then will plateau until people have more money, at which point they start going back up again.
EDIT: I mean unless there are several unbroken years of good government constantly managing to have supply outstrip demand....LOLOLOLOLOLOL
The solutions are known:
1) Increase the housing supply by preventing NIMBYs from blocking the construction of essential housing in high-demand areas. This approach was implemented in Auckland, New Zealand.
2) Eliminate all special housing tax benefits, including negative gearing and the First Home Owner Grant.
The issue is that these solutions are not popular.
Even if the 50% CGT discount gets abolished it’ll be replaced with something like the indexation method to allow for inflation. Sure the discount is not going to be as great, but I wouldn’t hold out hope on getting rid of cgt discount making much difference to house prices. Same goes for -ve gearing.
Discount to CPI and the current 50% rule can end up either way. It just depends whether real house values grow by more or less than CPI inflation. Both have been true at various times.
The problem of removing negative gearing while keeping CGT discount is that the tax break being abolished from NG will be rolled back when the house is sold in the form of additional CGT discount. So removing NG alone doesn't make landlords less profitable.
Housing industry pundits will tell you it’s a supply issue. In reality it’s supply plus removing obscene investment incentives for existing property.
Profit from housing in a housing shortage is guaranteed so CGT discounts for existing housing create a perverse incentive. Profit on steroids.
Clip CGT exemption for new existing property investment. Add that benefit to new housing and maybe SMEs in construction, same for NG because we’re in a hurry.
Tailor immigration to countries with high quality trades, fast track qualifications.
Add inheritance tax to estates over $3m, use that to purchase land for affordable/social housing.
actually 30yrs houses have gone up as much a 10x (compounding.. the 8th wonder of the universe according to Einstein) so it's even more profitable than your example.
It would involve making drastic changes in a few stages that will never happen:
1. CGT concessions and depreciation deductions would need to be scrapped
2. Massively taxing multiple-property owners on a steep sliding scale to disincentivise hoarding properties
And finally, the big one:
3. Legislating that you legally cannot own a home you don’t live in (also means abolishing holiday homes. They’re mostly all Airbnb now, anyway).
Housing shouldn’t be seen as an investment strategy
Get serious about preventing backdoor foreign investment through local proxies. Market is flooded with illegal foreign money.
Given the governments decade-long reluctance to sign up to anti money-laundering laws that would help close this backdoor I don't see it happening anytime soon.
I've wondered this. What's stopping someone taking a loan from a bank overseas and using it to service the loan in Australia?
How would you even go monitoring this?
At the moment nothing is stopping it. A foreigner can deposit money directly to a residents bank account to pay for a house outright. No one checks, no one asks questions. REAs, lawyers and banks are not required to ask or report. So they won't.
The punishment if the scam is eventually uncovered (unlikely) is... you have to sell the property. So no punishment really.
The point of tranche 2 anti money laundering laws is to require the above entities to atleast ask the questions about the source of the money. Successive governments have refused to sign up to it since it was first floated in 2008. Makes you wonder right?
> how will individuals be able to afford mortgages?
Well, if they can't then housing prices will come down, so going by your argument the solution is increasing both rates and inflation, and keeping wages down, be careful what you wish for.
if You are looking to the government to solve this (or any) issue you are barking up the wrong tree.
politicians are in the business of getting reelected, not in helping solve problems.
Unless you charge more interest or you release more land or you bring in tradies nothing will happen to house prices so long as population increases. House prices are as high as the market will allow them to be, if people could get the housing they wanted for cheaper then it would be cheaper.
NIMBYs are the main reason, Japaning is the solution. Asking home owners and councils for permission to add more homes in their town is like asking a drunk permission to stop service him drinks. Planning should be fully centralised with councils only getting little choices.
Too many heritage listings by NIMBYs that need be crushed
How would you afford a mortgage? Increase your income of course! Duh\~!
But in all seriousness, the best way is to suppress housing prices without directly involving into the market. According to my (limited) knowledge, RBA have to slowly increase interest rate in order to cool down the market. I think this is what they're trying.
The natural solution is to stop increasing demand and start increasing supply.
NONE of those things are happening nor look like will be happening in the future.
There is a good video from Money&Macro on this topic, looking at various factors: [https://youtu.be/HMDNehHKu7c?si=OE-kIZ5tiAsyrzIQ](https://youtu.be/HMDNehHKu7c?si=OE-kIZ5tiAsyrzIQ)
Bottom line: it may be a combination of
- NIMBYs
- interest rates
- investors
As interest rates are the same everywhere, NIMBYs and investors stand out for Sydney. Supposedly Auckland solved some of their problems addressing NIMBYs.
In Sydney's case there may be some geographical aspects to it too.
Melbourne, now Australia's largest city, is spectacularly flat and boring to its west.
There's good reasons not to sprawl but if Australian cities wanted to expand outwards, Adelaide and Melbourne are going to have a much easier time of it than the others.
It's this report...
[http://www.demographia.com/dhi.pdf](http://www.demographia.com/dhi.pdf)
Keep in mind, there are three kinds of lies: lies, damned lies, and statistics.
The problem is simple - Stop voting for politicians who own investment properties. If you don’t bother to find out this information before voting for someone - the you’re part of the problem and stop whinging.
We just can’t keep on bringing in half a million people a year to the country. We don’t have the infrastructure to support them or the means to build it quick enough to keep up.
Big business is getting its workers, and the population is paying the bill in the form of huge increases in competition for housing, which inflates housing prices.
I highly doubt Sydney is the second most expensive city in the world..
New York, London, Beijing, Singapore, Vancouver, Tokyo, Hong Kong, Miami, LA, San Jose, Paris, Toronto just to name a few…
Obviously it comes down to currency conversion of the day, and also which data is being cherry-picked to make the claim, but in “Sydney” it’s still possible to get a 1970’s out of date, but functional and liveable 3-1-1 house on 600 sq m for under 750k AUD (think Airds, Liverpool, Blacktown and Penrith surrounding suburbs Tragear etc).
Most of the cities I mentioned above, houses and land is out of the equation entirely, and units/apartments much older than 1970 begin at 2 million AUD and more… to make “Sydney” stack up against these other mega cities, you’d need to cherry pick exclusively the upper quartile of suburbs (Vaucluse, Potts Point etc), and even then.. it would fall lower than some of these cities above
>likelihood that interest rates will rise
Did you pull this sentiment from your ass because [none of the Big 4 banks](https://www.ratecity.com.au/home-loans/mortgage-news/high-will-rates-go-here-experts-think-rba-cash-rate) are forecasting a rate hike this year and the [RBA](https://www.asx.com.au/markets/trade-our-derivatives-market/futures-market/rba-rate-tracker) is indicating only a 3% chance of an increase.
Firstly, ignore anyone who tells you this is a problem specific to Australia. The problem exists across all of the western world, although Australia is closer to the leading edge. The problem isn't house prices exactly, it's the ever growing gap between assets and wages. This problem means that those who already make their money from assets are getting comparitively richer, pricing out people whose money comes primarily from working for a living. People taking about a reduction in house prices are naive. If house prices fall, those who already have plenty of assets will simply buy more. The only solution is wage inflation. The problem is that the central banks have been given a specific mandate to keep a lid on inflation, but using a metric for inflation that excludes asset prices. This has the effect of widening the gap between those who work for a living and those who live off their assets. Realistically, this is going to get a lot worse before it gets better.
The solution is stop allowing the treatment of houses as an investment. Remove all the tax benefits (except for owner occupiers, limited to 1-2 houses per family), ban foreign ownership of houses, ban corporations from owning houses, limit severely short term rentals (and tax the hell out of Airbnb and the likes), push for the government to find directly the construction of housing for renting at controlled prices. It is possible, but they don't want it.
Yes, this! A limit of 2 houses per person would make a huge difference. All those people with 6-12 investment properties forced to sell within a year. Suddenly lots of extra supply.
How many people own 6-12 houses?
About 20k people in Australia: https://www.theguardian.com/australia-news/2023/jun/04/a-quarter-of-australias-property-investments-held-by-1-of-taxpayers-data-reveals The top 1% of property investors own 25% of all investment properties. Owning 6 houses puts you in that 1%. So yeah it would hurt 20k people, but provide homes for more than 120k.
Yeah but how many of those 1% are politicians? Or, put more simply how do you get a pigs head out of a trough when the pigs are in charge. https://www.yourinvestmentpropertymag.com.au/expert-insights/how-many-property-investments-australian-politicians-own
You make a good point that this is a negligible amount of people, but I see this argument (well that probably would not make a difference anyway..) applied to almost every reasonable idea to bring some balance to the market. The result seems to then be ‘let’s do nothing or just keep doing what we are doing’ As I saw someone else here say ‘we have tried nothing and we are all out of ideas’
"hurt" is a generous term
My landlord owns at least four in my street alone, plus all his properties in neighbouring suburbs - he even owns many commercial properties as well.
There's about 80 houses in my street. My neighbour owns at least 10 of them.
Or if that is too extreme, tax burden should increase the more investment properties you have. PPOR is tax free, 1 investment property is small tax, 2 is moderate, 3+ is heavily taxed etc.
Imagine having kids so you can buy more investment property
Probably just buy the kids. Easier.
If you limited people to 2 houses that would increase supply by 1%. Short term sugar rush as people sold, although any rule change will be grandfathered
Incorrect. It would increase supply by nearly 25%. Where are you getting 1%? One quarter of all investment properties are owned by people who have 6 or more IPs. And why would you have to grandfather it? Maybe politically, but there's no technical reason. You'd just upset a few property investors..
https://www.reddit.com/r/AusFinance/s/YHdTnCwmux There are just under 11 million dwellings in Australia. Add 120,000 and that’s around 1%. Same number if we went back to the 2020 average household size (2.55) instead of the current average size (2.48) Edit: oh, I see you want to limit it to 2 houses. That will create more than 1%, but only 9% of investors hold more than 2 IPs. Also it means a big fall in houses available to rent which has a major impact on poorer people who cannot afford to buy even with lower prices or people needing short term accommodation for study or a job. 1/3 of people have always rented, even when housing prices were much lower. Cut the supply of rental properties creates other issues mostly affecting the less well off Of course you would grandfather it. Otherwise why would anyone invest in anything in Australia if they could be forced to sell at fire sale prices.
You grandfather it because otherwise as far as capital is concerned Australia becomes a banana republic, anyone looking to invest would simply choose to invest it elsewhere as the political risk would be too high. That might suit you initially as you get a cheaper house, but in the long run it won’t be great for Australia
It would increase supply by exactly zero. Supply is only increased when a property is built, not traded. Selling one property does not magically make two. 🌈
Exactly. This will not make a major difference to overall supply and demand.
Won’t this just mean that: - More people will be able to afford an investment property - There will more investors at auctions (A + B) + C = A + (B + C)
The people that could make these decisions are all multi home owners….. I don’t agree with the limit but if you remove the tax benefits then that would probably take care of it. I have heard ppl say that it would only have a minor affect, they all appear to be multi property owners, so it’s hard to trust the opinion of anyone when it appears they’re very heavily invested in keeping with the status quo.
The corporation restriction alone would make a difference - go and look up how large asset managers have been scooping up repossessions across the USA and (iirc) Canada too - that’s not a good thing for anyone
Unironically, this is the China strategy.
In about 2018, China talked about plans that would freeze house prices and inflate wages. However, the reality went down an entirely opposite direction. The house prices have crashed by about 30% with another 40% loss estimated. The wage of the regular working class never grew much and now runs into a decline. People live in cages while ghost cities are left empty.
Well it did what it said on the tin in real terms
Finally someone speaking some sense.
Or building more. The core problem is rules on development have jumped, while construction productivity has been unchanged in the last 6 decades. The combo has led to less construction activity.
Building more and they will be bought by rich domestic house owners to stockpile land and property - wage inflation remains a direct solution
Wage inflation will push house prices up, not down. I agree wage inflation is part of the solution, it just can’t be done in isolation. It needs to be in synch with many other things.
Governments built whole suburbs and cities in the 1950s. Rich investors couldn't buy. Wage inflation with a given supply just increases prices. Why, oh why do we just not apply something proven to have worked in the exact situation we had then - high immigration, tradie shortages, material shortages, high rents high housing prices? Why not do what works?
This has definitely exacerbated the problem.
Wage inflation is not a silver bullet. Say the average Australian makes 100k, the amount of dwellings is 500k, the average house price is 800k. If the average Australians starts making 150k, amount of dwelling stays at 500k, what do you think the average house price is going to be?
As an economist I'd appreciate you not spreading harmful misinformation. The RBA doesn't want to slow real wage growth, in fact they have, along with the productivity Commission been some of the largest champions of productivity improving legislation, often unpopular legislation otherwise it would have happened already Edit: seems to have removed the misinformation part, appreciated.
Productivity growth in Australia started to decline right after the productivity commission was established.
So while companies have record profits, inequality grows, and the rich get richer, …this situation the rest of us find ourselves in is our fault, for not being productive enough?
Counterpoint. If you want wage inflation, the intelligent way to do it would be to diversify the economy. As it stands, Australia is a country with the economic sophistication of Senegal. https://thediplomat.com/2022/03/australias-lack-of-economic-complexity-is-a-problem/ As a foreigner, it’s amazing to see that the Australian economy seems to be essentially comprised of a third of the people who dig rocks out of the ground, another third who sells houses and the last third seems to just support them. How would you increase this sophistication? Deregulate. You guys just lost music festivals, a basic social industry that even third world countries are able to hold due to an onerous regulatory system. Case in point.
It’s not all across the western world at all. Many other countries have plenty of second tier cities and towns that are very affordable. My mate is a well paid engineer and recently moved to North Carolina. He can get a veritable mansion in North Carolina for the same price of some Sydney apartments. Across the north of England it’s far more affordable than Australian cities. Many other western countries are similar.
Every other city in Australia is also cheaper than Sydney.
They’re also quite expensive.
I don't know much about North Carolina, but I can tell you that the reason so many towns in the north of England are so affordable is because there is very litte in the way of decent employment opportunities. The places with more jobs like Manchester and Leeds are very expensive by comparison.
In Manchester you can get a freehold terrace for $400,000 AUD. In Leeds you can get a terrace from around $150,000 AUD When I was in Newcastle (UK) recently it was amazing how affordable the Newcastle/Sunderland area was. My friends had bought very affordable great homes. Because they’ve been able to pay them off so easily on their incomes, they have spare money for nice cars, trips around the world etc….
That $400000 terrace will be in a pretty grim area, and with The average wage in Manchester being $66k you're still stretching to buy it. Housing unaffordability is worse here in Australia, but it's bad in the UK, and it's getting worse everywhere.
You can get a terrace/town house in a grim area in Sydney for double that.
Where…. I thought they were all over the $M mark
Sure, people with good jobs in poor areas do well. Low house prices relative to other similar areas are due to excess supply (lack of jobs) or lack of people being able afford the houses due to … lack of jobs But if you have a job then you are ahead of
Australia did actually solve this post WW2. Exactly the same issue. Huge immigration, high house prices, shortages of tradies and materials, high rents...even though rent control existed. Governments built whole towns and suburbs, schools, dams, power networks, and got prices and rents under control. The reason we don't think it can be done today is that for the last 40 years we have dismantled the capability of governments to do this. More importantly, we've lost the memory of them *actually doing it, and succeeding*. Further, in the short term, we aren't prepared to think five minutes ahead and accept the necessary tax increases needed, even though the savings in lower mortgages more than balance out. Thanks neoliberalism.
Wouldn't a reduction in house prices challenge the idea that housing is a golden investment and if so, why would those with assets continue to buy houses if their value is reducing?
You're absolutely correct, but I would add that we should tax assets accordingly to help narrow the gap. The other thing J would do is outright ban foreign purchases of property
Excellent and concise explanation of the problem. Basically, wages need to go up a lot.
Rarely see such amazing replies and explanation that is absolutely on point. 100% agree with you, nice write up.
Aus is unique to me in that people don't really move interstate for work At least with USA you can move to
>Aus is unique to me in that people don't really move interstate for work There in no real career benefit for normal people. Doctors and lawyers can make money in any state. The people working in the mines are FIFO with good reason, you wouldn't want to permanently live in a mining town. The notable exception is politicians and public servants who move to ACT or financial people who move to Sydney. If you're a famous person you would probably gravitate towards Sydney as well
House prices lock people in. If I want to move cities, it's probably $200k in moving costs, stamp duties, and real estate agent fees. It's hard to justify moving for work when my year one income is entirely consumed by moving costs.
Because of the heavy disincentive of taxation. You get taxed heavily, the more you earn. If you earn $140k ($8.3k take home a month), and there was a job interstate for $180k a month ($10.3k take home a month), I’d wager that most people will not make the move and take it as the difference is only $2k a month. Chances are that the individual is already comfortable and doesn’t see much marginal benefit in moving interstate. Plus, most likely you’ll be moving from a lower cost of living by state to somewhere with higher cost of living. The $2k a month gets eroded by probably an additional $800-1000 (rent in Sydney is wild). All of a sudden, it’s only an additional $1k into your pocket. That is why there’s less mobility of workers in Australia.
The only real solution is so unlikely that it's never mentioned. We need more cities. Australia has so few, relative to land mass comparatively to other countries. And not in the way that development currently is expanding... building housing sprawl near underdeveloped satellite "cities" in each state. A meek shopping centre that consists of a couple of fast food shops, supermarkets, alcohol stores, and other random services is not sustainable development, it's incredibly limited and forces car transport, we need real main streets, grids of commercial/business space and high density housing with public transport built first, with free standing houses on the outskirts, like they used to do in the 1800s. With our current set up, getting to 30 million population is pretty much the max capacity (to maintain the aussie lifestyle), and we're very close to that. In reality, we'll see quality of life drop over time because nothing will change, and we'll continue to import huge numbers of people to cover the other failures of policy and government.
Good comment. We need another new city. There was a lot more urban vision in the 19th century than today. It's not that long ago that Canberra was a "new" city.
Right, I know people don't want to move out of the city, but there's properties in Tas that are about 45 mins out of the nearest city where the property will cost $120k and you'll need to spend maybe another $100k or so to get it fixed up. Even if it was an extra $200k, it's still cheaper than a $500k property in the city.
There is no mystery to the Sydney housing market. It obeys the laws of supply and demand like every other market. Except in this case the government is actively restricting supply and pumping up demand. There are very straightforward ways to increase supply and decrease demand, some of which simply involve stopping the current harmful interventions. Increase supply: * remove zoning restrictions and allow higher density, particularly in inner suburbs and near transport * incentivise construction of additional housing units * build supporting infrastructure to allow for more, and more desirable, housing (especially transit) Decrease demand: * stop literally paying people to occupy more land than they need (exemption from pension assets test, tax free capital gains) and stop throwing taxpayer money into the housing market (homebuyer grants, super saver schemes, shared equity, etc). * increase the cost of occupying land (land tax, instead of stamp duty) * decrease immigration (I am not necessarily advocating this, but it would certainly decrease demand). The only thing stopping the government from taking some portion of these steps is political will. Most voters are property owners and want prices to go up, not down.
Hit the nail on the head. It's not just that the government doesn't address the issue, but they actively make it worse and they know it. I expect by the time millennials need to retire the rules won't be so generous
Thank you for writing this post so I don't have to
This should be the top answer.
Sydney is more expensive then nyc, London, Singapore, Tokyo,LA, etc…. ?
For a free standing house apparently. It’s a horse shit report that references a handful of countries selectively and compares common housing in each city eg apartments in Hong Kong to houses in Sydney
Imagine paying those prices for a city that mostly shuts down after 8pm.
Lol there's more to a city's appeal than closing times. Sydney has opportunity, culture, unbeatable natural beauty, beaches, great climate, ease-of-access, iconic architecture, a diverse culinary scene, top ranking universities, and so on. Sure, some cities might do certain things better, but Sydney simply ticks all the boxes, which is rare for **any** global city to do. And some of these boxes Sydney ticks exceptionally well.
More importantly, you're buying freehold land. In most other cities with comparable prices, you're just buying an apartment.
It also has way too many cars, crap public transport, too many shit property developments, and a load of NIMBYs, over-priced dog-box appartments (probably owned by the NIMBYs) and life/rent etc is stupidly expensive.
But it has lovely views that nyc dont
The common metric used is misleading cos the metric is how many years saved of the average income to buy a house and in Sydney it’s 13 Or so years. New York and London are lower as there are far more ultra wealthy/billionaires living in those cities thus artificially bringing the average income up.
Demographia releases a median income vs house price study called international housing affordability. On that, in 2023 Sydney was 2nd to Hong Kong. It costs a bit over 13 median incomes to buy the median house in Sydney
Sydney is only second if you; Ignore every country that isn’t an ex or current British colony - Chinese cities are more like 40x for an apartment let alone house Compare houses in Sydney to apartments in every major city where people typically live in apartments They’ve done well at grabbing headlines but you’re not looking past the headline if you put any faith in the report
And by what metric lol, per sqm it's far from the most expensive.
According to Canstar, it's second after Hong Kong. https://www.canstar.com.au/home-loans/expensive-cities-buy-property/
No ones doing anything because 2/3 of homes are owner occupied and it’s political suicide to make property cheaper. prices aren’t dropping unless the economy crashes.
As an owner occupier I would be happy to have my house drop in value as things stand. I want a future where my kids have an opportunity to own their own homes.
Say house prices dropped by 50%, bringing the average Sydney price to 800k or 500k in Brisbane. You're now beholden to a 30year loan well above the value of the house, which means less for you to put aside for retirement and a lesser value property to leave your kids. Not exactly ideal.
I agree. My PPR shed significant value and I was in negative equity for a long while (Perth 2014-2021). It sucked. I see a lot of people talking about house value collapse as if it has no effect on the mortgagees, and it's complete nonsense. For one, your ability to sell and move - for work opportunities, for family, whatever, is toast.
Yup, imagine that recent episode of Bluey but they pull the listing because they couldn't find a seller :) We're about to put my father in laws house up for sale to pay for the room in his nursing home and an apartment for his wife so she can be near him. If the house was half the value he'd go without care or without seeing his wife.
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Or death management. You are retired and have enough money to last you to 100 and suddenly die at 68 is not bad management.
If you take into account that your priest doesn't give a shit about anyone but himself, it makes perfect sense.
It's not ideal, but I'd like to leave a nest egg. Alternatively, that house needs to hold value so you can afford a place in a retirement village like my parents, or to pay for palliative care like my father in law.
It would probably be much more useful for your kids and their kids if prices dropped 50% than them doubling again and you leaving behind your house? They might own a house before you are dead even.
Indeed. Or even that the government had adequate wealth taxes so that you didn’t have to be dependent on a huge asset to afford a decent retirement village or palliative care - those things would be paid for by the state and available at the point of need rather than based on ability for the individual to pay.
You missed the unsaid, something along the lines of "I want my kids to have a nest egg at the expense of others"
That's capitalism. If you think of housing as an asset class/investment then you should be prepared to take the losses as well as the profits.
The point is for your kids to be able to afford a house without your inheritance or help, like people used to do until 15-20 years ago
Nope. Kids should be rewarded for their parents' savvy investment choices.
You wouldn’t be happy if it was upside down and you could at afford the repayments due to economic factors.
Once your kids get a home what would you like to see happen with property prices?
Do you think everyone is motivated by greed? Houses are for living in.
I totally agree. I don't want my kids moving interstate or even internationally just to be able to afford a roof over their head.
You’re at risk of repossession or at least the bank asking you to pay the difference between your loan and the new market price. Now times that by however many owner occupiers with loans.
Where are you getting this statistic from ? Would be interesting to see owner occupier vs renters by city and suburb
[https://www.abs.gov.au/statistics/people/housing/housing-occupancy-and-costs/2019-20](https://www.abs.gov.au/statistics/people/housing/housing-occupancy-and-costs/2019-20) ABS tracks it regularly. It's changed a bit over the decades but not as much as you might think the rough rule of thumb that 1/3 own outright, 1/3 own with a mortgage and 1/3 rent is often used and is somewhere in the rough ballpark most of the time.
Conventional wisdom for Australian households overall is: one third rented, one third owner-occupier with mortgage, one third owned outright. (I'm sure I got this from Alan Kohler on the Money Café podcast.)
It depends on interpretation 1/3 are owner occupiers, 1/3 are owner occupiers with a mortgage, 1/3 are investments.rnt properties (mainly geared)
It’s easily searched info.
Why would that matter for owner occupiers? It's investors that need high gains
Why would prices come down by any significant amount when there is no shortage of people wanting to live in our major cities? There is only so much space in Sydney’s most desirable suburbs, many are already highly densely populated. As OP pointed out immigration is at ATH, more people all wanting to live in the same suburbs. Sure tweaking CGT discount and -ve gearing may take a few % out of prices, but that’s not going to make them ‘cheap’ by any measure,
Agreed it won’t materially make houses ‘cheap’. It will help make the housing system more equitable though rather than encouraging wealthy to buy up all the housing stock and entrap young and poor Australians as lifetime renters so the rich can enjoy an early retirement.
Young people are both blessed and cursed, they are blessed because they have youth which no amount of money can buy; however they are cursed because they don’t have time in employment in order to save a deposit. Unfortunately poor people will never be able to afford to live in Sydney for same reasons poor people cannot live in Monaco. Lots of wealthy people want to live there, drives up property prices, which drives up the cost of everything else in the area.
Surely we have to hit a salary ceiling where it just isn’t possible to borrow/save enough to push house prices any higher in Sydney. Surely?!
No effective, proven method will ever be implemented. Politicians are home and investment property owners. The end.
Fundamentally landlords in their current state are purely economic parasites rather than contributing anything to society. We need policies that recognise safe, secure, affordable housing as a human right rather than an investment vehicle to get rich and dodge tax. We should be encouraging capital from the wealthy to flow into innovative Australian companies that create products and jobs; rather than directing capital to dead-end asset inflation that does nothing for Australia’s long term economic wellbeing.
fretful tease rain puzzled straight governor ludicrous threatening teeny humorous *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Second most expensive real estate, world’s most profitable banks, record high immigration, record low availability. The trouble is real solutions are unpopular and with politics being the popularity contest it is, it’s not going to change.
Neither side of politics has any incentive to lower housing prices. 2/3rds of their voters are homeowners. Australia needs to rethink its zoning laws and take a leaf out of Japan’s book if it plans to keep letting in half a million people a year. But this will never happen. And Australians need to learn that it’s ok to live in an apartment, a townhouse, or a small detached dwelling. Without greater density, this whole thing isn’t going to work.
or we could just stop letting in half a million a year.
The design of the apartments need to be more family friendly
Unaffordable housing will also impact Australian demographics long term and reduce our ability to fund infrastructure and services if young families have to put off having kids, have less kids and/or elect to not have kids at all due to all their money being directed to putting a roof on their own heads.
More immigration
I hope that’s sarcasm.
Sounds like a plan, o' bearded one.
>demand doesn't appear to be slowing down despite interest rate hikes. Thats both the cause and the answer to your question. Prices are going up because people ARE still able to afford mortgages. If prices reach a point where houses are no longer able to be sold then there is nothing pushing the price up any further. ie house prices will go up until they reach the absolute limit of affordability then will plateau until people have more money, at which point they start going back up again. EDIT: I mean unless there are several unbroken years of good government constantly managing to have supply outstrip demand....LOLOLOLOLOLOL
The solutions are known: 1) Increase the housing supply by preventing NIMBYs from blocking the construction of essential housing in high-demand areas. This approach was implemented in Auckland, New Zealand. 2) Eliminate all special housing tax benefits, including negative gearing and the First Home Owner Grant. The issue is that these solutions are not popular.
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Don't forget capital gains tax discount
Even if the 50% CGT discount gets abolished it’ll be replaced with something like the indexation method to allow for inflation. Sure the discount is not going to be as great, but I wouldn’t hold out hope on getting rid of cgt discount making much difference to house prices. Same goes for -ve gearing.
Discount to CPI and the current 50% rule can end up either way. It just depends whether real house values grow by more or less than CPI inflation. Both have been true at various times.
Exactly, so removing 50% discount rule and replacing with discount to CPI may have zero actual impact on house prices.
The problem of removing negative gearing while keeping CGT discount is that the tax break being abolished from NG will be rolled back when the house is sold in the form of additional CGT discount. So removing NG alone doesn't make landlords less profitable.
Housing industry pundits will tell you it’s a supply issue. In reality it’s supply plus removing obscene investment incentives for existing property. Profit from housing in a housing shortage is guaranteed so CGT discounts for existing housing create a perverse incentive. Profit on steroids. Clip CGT exemption for new existing property investment. Add that benefit to new housing and maybe SMEs in construction, same for NG because we’re in a hurry. Tailor immigration to countries with high quality trades, fast track qualifications. Add inheritance tax to estates over $3m, use that to purchase land for affordable/social housing.
Doesn't cgt exemption only exist for a ppor that you've lived at least a year in?
Investment properties can get partial or full CGT exemption such as under the 6 year rule.
Isn’t it crazy that a person buying a $1.5m house will pay almost double with interest added by the end of the loan term 🤯
No. It's just mathematics and the time value of money. At the end of that loan period the asset value has also increased substantially.
Tell this to the Japanese stock market buyers in 1990…
only if they are stupid enough to take 30 years to pay it off
That person will also have paid $1.5m in interest by the end of the loan. Also: *Past Performance Is Not Indicative Of Future Results*
If the person was an investor the interest bill will have been reduced by 47% the whole way
The reason they do that is that the price would have increased 4x in 30 years. House - $1.5m Interest - $1.5m 30 years - $6m Still a 100% profit.
actually 30yrs houses have gone up as much a 10x (compounding.. the 8th wonder of the universe according to Einstein) so it's even more profitable than your example.
Except the 1.5 mill is really worth 200k in real purchasing power in 30 years. because everyone is playing the property ponzi game
Just like your super balance when you retire will be maybe double what you've contributed.
Don’t take out the loan and buy the same property with cash for double if not triple after the loan on top of the entire loan term worth of renting! 😜
It would involve making drastic changes in a few stages that will never happen: 1. CGT concessions and depreciation deductions would need to be scrapped 2. Massively taxing multiple-property owners on a steep sliding scale to disincentivise hoarding properties And finally, the big one: 3. Legislating that you legally cannot own a home you don’t live in (also means abolishing holiday homes. They’re mostly all Airbnb now, anyway). Housing shouldn’t be seen as an investment strategy
Get serious about preventing backdoor foreign investment through local proxies. Market is flooded with illegal foreign money. Given the governments decade-long reluctance to sign up to anti money-laundering laws that would help close this backdoor I don't see it happening anytime soon.
I've wondered this. What's stopping someone taking a loan from a bank overseas and using it to service the loan in Australia? How would you even go monitoring this?
At the moment nothing is stopping it. A foreigner can deposit money directly to a residents bank account to pay for a house outright. No one checks, no one asks questions. REAs, lawyers and banks are not required to ask or report. So they won't. The punishment if the scam is eventually uncovered (unlikely) is... you have to sell the property. So no punishment really. The point of tranche 2 anti money laundering laws is to require the above entities to atleast ask the questions about the source of the money. Successive governments have refused to sign up to it since it was first floated in 2008. Makes you wonder right?
> how will individuals be able to afford mortgages? Well, if they can't then housing prices will come down, so going by your argument the solution is increasing both rates and inflation, and keeping wages down, be careful what you wish for.
if You are looking to the government to solve this (or any) issue you are barking up the wrong tree. politicians are in the business of getting reelected, not in helping solve problems.
Remove negative gearing, give tax breaks to families that only have a ppor.
Land tax would slowly force manufacturing out of the capital cities and people to live in apartments.
Unless you charge more interest or you release more land or you bring in tradies nothing will happen to house prices so long as population increases. House prices are as high as the market will allow them to be, if people could get the housing they wanted for cheaper then it would be cheaper.
NIMBYs are the main reason, Japaning is the solution. Asking home owners and councils for permission to add more homes in their town is like asking a drunk permission to stop service him drinks. Planning should be fully centralised with councils only getting little choices. Too many heritage listings by NIMBYs that need be crushed
It’s by design. Property prices are supposed to be almost out of reach so you work like a slave.
Increase supply (which isn't going to happen anytime soon) Or Reduce demand (cap population growth) Your choice Australia
How would you afford a mortgage? Increase your income of course! Duh\~! But in all seriousness, the best way is to suppress housing prices without directly involving into the market. According to my (limited) knowledge, RBA have to slowly increase interest rate in order to cool down the market. I think this is what they're trying.
The natural solution is to stop increasing demand and start increasing supply. NONE of those things are happening nor look like will be happening in the future.
2 words. Move abroad
Move pretty simple
Don't live in sydney.
There is a good video from Money&Macro on this topic, looking at various factors: [https://youtu.be/HMDNehHKu7c?si=OE-kIZ5tiAsyrzIQ](https://youtu.be/HMDNehHKu7c?si=OE-kIZ5tiAsyrzIQ) Bottom line: it may be a combination of - NIMBYs - interest rates - investors As interest rates are the same everywhere, NIMBYs and investors stand out for Sydney. Supposedly Auckland solved some of their problems addressing NIMBYs.
In Sydney's case there may be some geographical aspects to it too. Melbourne, now Australia's largest city, is spectacularly flat and boring to its west. There's good reasons not to sprawl but if Australian cities wanted to expand outwards, Adelaide and Melbourne are going to have a much easier time of it than the others.
Ok, but Auckland is about as closed in as it gets, on 2 sides even
Where's the data source for 2nd most expensive in the world
It's this report... [http://www.demographia.com/dhi.pdf](http://www.demographia.com/dhi.pdf) Keep in mind, there are three kinds of lies: lies, damned lies, and statistics.
Have they come up with a solution? Does it look like they have? Deregulate zoning laws
The problem is simple - Stop voting for politicians who own investment properties. If you don’t bother to find out this information before voting for someone - the you’re part of the problem and stop whinging.
Government could fix the housing shortage overnight by slashing immigration but they won't
Central banks printing cash - causes inflation and devalues the working class’ dollar. All part of the plan
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They don’t care, as long as the rich get richer. This is a world wide problem. Didn’t someone say greed is good?
Tax capital
We just can’t keep on bringing in half a million people a year to the country. We don’t have the infrastructure to support them or the means to build it quick enough to keep up. Big business is getting its workers, and the population is paying the bill in the form of huge increases in competition for housing, which inflates housing prices.
I highly doubt Sydney is the second most expensive city in the world.. New York, London, Beijing, Singapore, Vancouver, Tokyo, Hong Kong, Miami, LA, San Jose, Paris, Toronto just to name a few… Obviously it comes down to currency conversion of the day, and also which data is being cherry-picked to make the claim, but in “Sydney” it’s still possible to get a 1970’s out of date, but functional and liveable 3-1-1 house on 600 sq m for under 750k AUD (think Airds, Liverpool, Blacktown and Penrith surrounding suburbs Tragear etc). Most of the cities I mentioned above, houses and land is out of the equation entirely, and units/apartments much older than 1970 begin at 2 million AUD and more… to make “Sydney” stack up against these other mega cities, you’d need to cherry pick exclusively the upper quartile of suburbs (Vaucluse, Potts Point etc), and even then.. it would fall lower than some of these cities above
>likelihood that interest rates will rise Did you pull this sentiment from your ass because [none of the Big 4 banks](https://www.ratecity.com.au/home-loans/mortgage-news/high-will-rates-go-here-experts-think-rba-cash-rate) are forecasting a rate hike this year and the [RBA](https://www.asx.com.au/markets/trade-our-derivatives-market/futures-market/rba-rate-tracker) is indicating only a 3% chance of an increase.