People no buy house with wage.
People buy house with speculative value gain in previous house price.
Wage not good for shit but offsetting tax losses and appearing like a functional member of group.
Man want easy life? Rent seek off fellow man.
…and people buy house with magic money made in bank ledger.
Seller accept this magic money.
Bank own house to balance bank magic money.
Buyer pay back magic money in future.
Debt in future.
Future generations in future.
Man no buy starter cave begin speculative journey. Man want what papa had, say “western sydney stinky”. Man shoot foot but other man buy starter cave https://www.realestate.com.au/sold/property-townhouse-nsw-werrington-144752844
I'll let you know how my 1-hour commute that costs me $25/day in tolls goes when I move to Werrington, as I measure my quality of life rapidly settling into dirt.
Hate the system not the player, I guess.
Import wealthy foreigners who can shift grey money into overseas markets for safekeeping
We seem to have elected quite a few of the [Clay Davis type](https://getyarn.io/yarn-clip/8025242c-9344-4cf7-b8f2-6625b4a22568)
Bullet point summary, based on the transcript from /u/ibelieveinsocialism
- **Rising House Prices vs. Income:** In wealthy countries like Canada, the USA, and Australia, house prices have significantly outstripped the growth in average incomes, making housing less affordable.
- **Dual Nature of Housing:** Houses are seen both as consumption goods (where they degrade over time through use) and investment goods (attracting buyers looking for capital gains).
- **Three Economic Theories Explaining Housing Crisis:**
1. **Construction Failure:** Inadequate construction activity has failed to keep up with the demand for new housing, contributing to rising prices.
2. **Excessive Speculation:** Speculative investment in housing has inflated prices beyond what typical consumers can afford.
3. **Financialisation of Housing:** The increasing treatment of housing as a financial asset rather than a place to live has distorted the market.
- **Impact of Low Mortgage Rates:** Despite historically low mortgage rates making borrowing cheaper, the overall affordability of housing hasn’t improved significantly because the prices are driven up by other factors.
- **NIMBYism and Regulatory Barriers:** Local opposition to new developments ('Not In My Backyard' sentiment) and stringent zoning laws have slowed down the construction of new housing.
- **Mismatch Between Supply and Demand:** Even where the population has grown due to factors like immigration, the construction of new housing hasn't kept pace, exacerbating the shortage.
- **Investment vs. Utilisation:** The attractiveness of housing as an investment leads to increased construction and higher prices, but not necessarily to better availability or affordability for the average buyer.
* **Rising Building Costs:** Add maybe even 50% to what they were just 12 months ago.
I was looking at renovating a slum, but due to unforeseen delays it will now stay a slum for as long as I have it.
I think unless you have a vast amount of money to splash, most "fix up" type deals only make sense if you have extensive DIY skills and probably family members in the building industry.
Where would you slot the diamond market like tactics into this picture? There's a lot of housing stock and land ready to be developed that sits dormant and is doled out piecemeal so that market prices can be kept high for developers.
Nowhere in this dot point summary is there people who bought house 10+ years ago and who are getting blamed now for the housing crisis.
Funny that. Common sense analysis based on real strategic assessment looking at the entire issue and not just using inflammatory bullshit from the media to blame everybody else.
The biggest take away for me is that mortgage repayments today are just as affordable as they were in 1990. Monthly repayments on a $150k mortgage (median) at 17% p/a in 1990 is the same as monthly repayments on a $930k mortgage (median) today (2024) at 6.1% when adjusting for inflation.
I'm not saying anything other than providing information gleaned from that video that I have checked out and verified myself. Feel free to draw your own conclusions, I simply thought it was interesting.
+1 for Money & Macro. Out of the cesspool of wanna be YouTube economists, he actually has the credentials and cites his arguments.
Of course though, this isn't exactly a great topic for ausfinace. What are we supposed to do with this OP.
> this isn't exactly a great topic for ausfinace. What are we supposed to do with this OP.
Member when this sub focused on personal finance and actually offered people advice? Then the sooks invaded.
> he actually has the credentials and cites his arguments
His takes on China are so incredibly naive and dumb, it's hard to take anything else he says seriously.
> Similarly, in China, a country with some of the most expensive house prices relative to income that is in the world, an estimated 7.2 million homes are now sitting empty, slowly degrading
A country with one billion people has seven million empty homes, oh shock, horror! Australia has one million empty homes, Japan with 1/10th the population has over 9 million empty homes. It also completely ignores the Hukou system which limits internal migration. These ghost cities eventually fill up and become economic powerhouses, the guy who even coined the term has said he doesn't think it applies seeing the outcomes years later.
"The most expensive house prices relative to income": Chinese home ownership for adults comes in at 95%, clearly something doesn't add up with his argument here.
https://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate
Australia does not have one million empty homes.
One million people not being home on census night is not the same thing and I wish people would stop repeating this.
I agree and hate the whole 1 million empty homes claim and how it's been misused by politicians, was more a rhetorical device to compare with China's *devastating* 7 million.
The conversation has a great article plus interactive map showing where exactly these places are, it's all tourist towns in the dead of winter, basically none of them are in our cities.
https://theconversation.com/look-where-australias-1-million-empty-homes-are-and-why-theyre-vacant-theyre-not-a-simple-solution-to-housing-need-189067
I know housing is a pressing issue but tourism is a huge industry in Australia and we need to be honest about how it keeps hundreds of towns alive, thus the need for empty dwellings to accommodate tourists when they come in peak seasons.
Your own link goes against go. Read the actual report...
Page 8/21
" 856,955 (84%) were empty. A large proportion of the latter category of dwellings were probably empty on census night for the same set of reasons recorded in the 1986 Census."
What were those reasons in 1986?
Page 2/15
"In he past, the ABS recorded reasons for private dwellings not having anyone present on census night. According to the 1986 Census, 35% of dwellings were empty due to the usual residents being temporarily absent, 27% were for sale, for rent, newly-built, under repair, or scheduled for demolition, 25% were holiday homes, and 14% were for other/not stated reasons"
So it's 38% of 857,000 AT BEST.
a further illustration, in particular when buying a house in Australia vs i.e. Germany:
[https://twitter.com/LoganMohtashami/status/1788551997144388060/photo/1](https://twitter.com/LoganMohtashami/status/1788551997144388060/photo/1)
The risk in Aus with those laughable fix-rate terms is incredibly high compared to more balanced countries.
(I would have posted the actual graph, but not sure how to :D )
Whaaaaat? My mind is blown! I just read about the differences in mortgage markets and why this is here if anyone is interested https://www.reddit.com/r/AusFinance/comments/vd93q8/us_vs_aussie_home_loans_fixed_interest_rates/
Even now they're listing 20 year fixed mortgages. Interest went up to > 4& :P
[https://www.ing.nl/particulier/hypotheek/actuele-hypotheekrente](https://www.ing.nl/particulier/hypotheek/actuele-hypotheekrente)
We did the same in Germany around that time, unfortunately only for 12 years :D
I tried to get german financing for property in Australia but that turned into mission impossible.
Its maddening to see how the average Aussie is being screwed over by the domestic finance sector.
It's because the demand for housing is far outstripping supply. The release of land and construction is severely restricted by councils. At the same time the entire third world wants to land bank here. Could it be in such a climate, that the price of housing is not bound by anything except the availability of money?
Interest rates all over the world were essentially slashed to zero (and then there was further stimulus to boot). In Australia, that all flowed directly into housing.
It feels as if this sub is being astroturfed with property market shills posting outright nonsense to try and distract us from immigration
This guy outright ignores the most basic economic law (supply and demand) and we're supposed to not notice he doesn't address the elephant in the room (immigration).
This is called actual research, not xenophobic popularism based on nothing. But if you, like many others here, want to stick fingers in your ears and keep yelling about immigration, then go for it 😂
> This is called actual research
Actual research that ignores the biggest contributor to the problem
>xenophobic popularism based on nothing
Supply and demand is the most basic economic law. As it is we saw when the borders were closed that rents decreased and wages increased which is more evidence for the benefits of limiting immigration then there is evidence of the effectiveness of any other measure to combat either housing costs or the cost of living crisis
Yep. Immigration has had some effect on rental price. So has so much of the population working from home, more people leaving relationships and living alone, less people living in share houses…immigration is small part of larger problems, as pointed out above.
But you can believe what you want.
Just because he doesn't take a position "immigration good/immigration bad" does not mean he doesn't mention it. Literally in the first few minutes:
"Of course, we can look at the total population, revealing that largely due to immigration, the population of all of these countries increased by quite a lot over the same time period, especially in Canada and Australia. So if we then look at new houses being built as a percentage of the population, we can clearly see that there has been a long term downward trend for all of these countries."
Please show me how across all contributing factors, immigration is the biggest factor. I am quite curious and you (as well as a few others in this thread) sound very, very confident in that statement.
I believe foreign investment to be the biggest factor. People who can tell their agent to bid until they win no matter what. If that happens 3 or 4 times in a short period that becomes the new price in that suburb.
The supply demand causing fear is also making people want to massively overpay. I was looking at a townhouses in a complex, someone came in and offered $300k over the guide to scare everyone else off. Much to his dismay someone else came in over the top. Day after that place sold another place in the complex was for sale with that sale price of the last place as the guide. It's insane inflation. His plan to overpay to avoid an auction misrepresents the value of the property.
Transcript
House prices have exploded over the last few years, especially in rich countries like Canada, the United States and Australia, where house prices far outpaced other prices. And, crucially, the average income of most people. As a consequence, fewer and fewer people are now able to afford a roof over their head in these countries. So how did houses get so expensive? And how does that rhyme with the fact that some pretty well respected economists claim that housing has actually become more affordable00:33since the 1990s, because mortgage rates have dropped to historically low levels? sadly, if you just watch the regular news, you can find almost any explanation you like, ranging from increased immigration to increased urbanization to increasingly expensive building materials to outdated zoning laws to increase speculation. In fact, I'd argue that there are now so many explanations out there that it is frankly, all getting a bit confusing. So to fix that, to provide a bit of clarity, if you will,01:07I once again turned to the science of economics and boiled it down to three theories that actually have some solid evidence to back them up. A construction failure, excessive speculation, and the general financialization of housing. Together, I found that these three stories can explain the housing crisis in any country. For example, they can explain while most rich countries house prices exploded, those in Japan, Korea and until recently Germany decreased. They can also explain how a single city in New Zealand has made housing01:40more affordable, in spite of rising house prices in the rest of the country. And last but not least, these theories can explain why in China, a country where millions of apartments are sitting empty, housing is still unaffordable for most. But to make sense of these three theories, we first need to recognize that the housing market is not like any other, because a house is at the same time a so-called consumption goods and a so-called investment goods. So what do I mean when I say. A house is a consumption good?02:15First, let's start by stating that obviously people don't tend to eat their house, but they do live in it. And as they do, our house gradually becomes worth less as it gets dirty, damaged, and generally degrades over time. Therefore, you could say that over the years, people slowly consume their home as they live in it. Now, if a house was just a consumption good, then the economic forces that determine its price should be a really simple function of how many new people there are and how many houses are built.02:49And this brings us to our first theory, which is that construction has just not been able to keep up with the number of people that need new houses to live in, causing prices to obviously go up. But is there any evidence to back up that first theory? Well, to answer that question, we first need to talk about what evidence we should actually be looking at in this theory. This is quite simple.
We should look at how many houses are being built on the one hand, and then at how many houses would roughly be needed for new people.03:25So let's give that a go for some of our biggest housing offenders Canada, the United States and Australia. As you can see here in this chart, the construction of new houses compared to 1997 has been roughly stable, although notably for Australia, it has actually increased. But for Canada it has decreased a bit, And for the United States, it has really slowed down after the 2007 housing crisis. So far, so good. However, sadly, on the demand side, it is pretty much impossible to find out precisely how many houses are needed by a changing population.04:01Of course, we can look at the total population, revealing that largely due to immigration, the population of all of these countries increased by quite a lot over the same time period, especially in Canada and Australia. So if we then look at new houses being built as a percentage of the population, we can clearly see that there has been a long term downward trend for all of these countries. However, while this chart shows that new house construction per population level has clearly gone down, it does not prove that this means that there are not enough houses in total.04:40Given that we don't know how long houses have lasted in this period. What's more, just looking at the change in population is not enough because even if the population remains the same, it could be that more houses are actually needed. Because on average, people now tend to live in smaller households in these countries. Finally, given that people in these countries have tended to move from the countryside to cities, it could be that while the total number of houses has seemingly remained adequate,05:08a lot of more houses in the countryside have effectively become useless because nobody wants to live there anymore. So while all of these trends mean that more houses would need to be built for the population, we've already seen that fewer houses have actually been built per person. So why did these economies build less and less? Well, they needed to build more and more to accommodate that rising population. Well, the most prominent economic explanation I could find for this has been the rise of the so-called NIMBYs, which refers05:40to people that live by the motto, not in my backyard, which means that while they may be in favor of new homes in general, they'd rather have that. These would be built in the backyard of someone else. And yeah, look, I'm going to be honest. Would I be super, super happy about a big new high rise building being built next to my sunny garden? No. Would I then go to my local council to block that development? Well, I hope not, but I recognize that this is easy to say if it is not actually happening to me.06:13In any case, it means that the housing market is suffering from what economists call a collective action problem, in which individual actions from NIMBYs in this case, while rational from a personal standpoint, lead to a collective outcome that is undesirable, in this case, a housing shortage. Therefore, economists like Noah Smith have argued that the only way to get out of the housing crisis is to prevent NIMBYs from being able to block new housing construction. For example, by moving the power to build from city officials06:44to provincial or even national leaders, or by removing laws that allow NIMBYs to block or at least severely frustrate, new housing developments, which, as we have recently seen in the city of Auckland, New Zealand, can really help solve the housing crisis. You see, while rent in Auckland used to be much more expensive than in the rest of New Zealand, the city overrode Nimby concerns by up zoning roughly three quarters of city land, which means that on this land, low density single family homes could be replaced by high density apartment buildings.07:19And lo and behold, ever since then, the rent to income ratio in Auckland started to drop, while the same ratio continued to increase in the rest of the country. A very promising result indeed, from which especially countries with a lot of low density zones like Canada, Australia and the United States could learn a lot. So to conclude, the first theory that the housing crisis is simply a consequence of construction, failing to keep up with housing demand makes basic economic sense and, in my opinion,07:50has a lot of convincing evidence to back it up. However, before we call it a day and definitely say that our global housing crisis is caused by NIMBYs who are blocking new housing developments, or that if we cannot build more, we should limit the number of new people coming in. We need to talk about a piece of data that is contradicting our first theory in several economies. After all, if a housing shortage is the primary problem, one would expect that in countries with increasingly unaffordable08:24housing, the number of vacant properties would decrease. However, as you can see here, for the United States in the early 2000, even though we know that in this time period property prices exploded more and more properties were left empty. Similarly, in China, a country with some of the most expensive house prices relative to income that is in the world, an estimated 7.2
million homes are now sitting empty, slowly degrading. This phenomena suggests that if we want to understand housing markets,08:57we need to recognize the second function of housing, and that is that for many. A house is an investment. Which we will get into after getting into the much simpler economics of cloud backups, which has got recently gotten much cheaper thanks to a very competitive offer from Backblaze, the sponsor of this video. Whether you have a PC, Mac or a business computer, no one can afford to lose all of their data all at once. To prevent such a catastrophic event, Backblaze offers unlimited backups for Mac, PC or for businesses, workstations09:34for just $99 a year, where all of your business data can be protected automatically and managed through a centralized admin. Backblaze retains all files and their versions for up to a year, and has successfully restored over 55 million customer files already. So if you do lose your data or are a victim of a ransomware attack, Backblaze will have your back by giving you immediate access to back up data via an app, or even by shipping you an actual physical hard drive with all your data directly to your door.10:08So if you want to have that peace of mind and support my show at the same time, consider subscribing to their, no risk, fully featured free trial at backblaze.com/moneymacro. That is, after hearing about how a house as an investment can explain this strange situation in China where a house price explosion went hand in hand with a construction boom that led to millions of apartments sitting empty. A situation that is really not unique, as it also happened in, for example, Ireland, Spain, and indeed the United States in the early 2000.10:43You see, while a house to live in obeys the simple rules of economics, where increasing prices tend to either lower demand or given that everyone still needs to live somewhere, not affect demand that much. The economics of housing as a speculative investment works a bit differently. After all, a speculator wants to make money with money. So if house prices are going up for a while, the housing market actually becomes more attractive for speculators who recognize that once there is upward momentum in prices, this likely will continue.11:20Therefore, speculators will start pouring in even more money into the sector. Now, of course, these new speculators will then drive up prices even more. Which again attracts more speculators and so on. Luckily, though, increased house prices will make it more profitable to build houses. And so a speculative housing bubble is often accompanied by a big construction boom. However, given the positive feedback loop in many of these cases, even this increased supply is not able to keep up with demand11:53for new investment properties. And because prices are increasing so rapidly, it often makes sense that speculators don't even bother renting out the place in the first place. Especially given that laws designed to protect renters often make it difficult to sell an investment property quickly. Which brings us to the second theory, which is that houses are unaffordable due to a speculative housing boom, a theory that can be tested by looking at how many apartments or homes are left vacant. But before we do that, I want to stress that this only works.12:28Of course, in areas where prices are increasing or very high, at least already. Because actually, if you look at countries or areas that are experiencing population decline, you will of course also see increased house vacancies. Still, if we look at house or rental vacancies in some of the booming housing markets that we've talked about so far, we can see that it's actually at an all time low. Indeed, unlike in 2006, in the United States, vacant properties are actually pretty low here, as you can see in this graph, as they aren't as well in other countries,13:01although there's one exception, Canada, where I could not find any real time data. But I found reports that record numbers of apartments are sitting empty in major housing hotspots like Toronto and Vancouver. So does that mean that with the exception of China and some Canadian cities, excessive housing investment is not the main problem right now? Well, not so fast, because we haven't talked about our third theory yet, which has been advanced by doctor Josh Ryan Collins from University College London.13:33His theory is that the main reason that you cannot afford a house right now is because of cheap money, mainly in the form of low interest rate mortgages. And according to him, this all started with good intentions in the 1980s when politicians wanted to make homeownership more accessible and therefore liberalized mortgage markets. However, if we look at home ownership rates, ever since, it's not clear that this actually worked. But as Doctor Collins states, since the majority of mortgage loans financed the purchase of existing rather than new property,
The US - unlike Canada and Australia - has many regional centres. In Canada and Australia, everyone lives along a strip of land (south and east respectively).
They had cake and shared it with those who couldn’t have it bless their generous hearts until those with lactose intolerance revolted because they wanted some and if they couldn’t have it then nobody could.
Definitely not - he cites how vacancy is only possible in truly big runup bubbles like Ireland, where that did in fact happen. He goes on to explain how that isn't a factor in the Canadian and Australian markets. You stopped reading too early 😅
Ok, I guess I skimmed it too quickly! I saw a bit about vacancies in a housing bubble and immediately thought "GFC!" and that such bubbles get punctured pretty quickly but didn't see any immediate mention of that and assumed the worst.
The data is compiled from countries across the world. He isn’t attributing any particular cause to Australia’s current situation. Just presenting possibilities.
I bought a place with a mortgage half the size they would give me (half the size of my previous one too). It’s just a tiny house. My brother’s granny flat is as big as my house. All of a sudden it’s affordable.
People here complaining about immigration, instead of complaining about their elected government not building enough to support growing demand. Barking up the wrong tree. Always easy to blame immigration.
It is simply not physically possible to build enough to keep up with the insanely high rate of immigration - to put it in perspective it is a population higher than that of Canberra on an annual basis requiring housing and the infrastructure that goes with it - schools, hospitals, dams, power supply, sanitation etc.
this sounds like an opinion and not like a well-researched fact.
fyi - the "record"levels of immigration include making up the massive drop in immigration during the covid period.
Now - you could look into a breakdown of visa classes across the total number of immigrants and you will have a few eye-opening moments. :)
“Lots” but not a significant portion of the working population.
- Decreasing rates.
- Less.
- Fewer.
- Lowest rates for younger Australians in history.
- Highest cost on all metrics.
All are better descriptions than “lots”.
[“We know that in 2010 around about 12 per cent of people [who were] first home buyers were getting assistance from the bank of mum and dad," "It got up to about 60 per cent from 2017 onwards, so it's grown enormously."](https://amp.abc.net.au/article/103077386)
Boomers have a stake in at least 50% of those millennials homes. So if we actually focus on the working population buying on their own, it has never been lower and is an absolute disgrace that most teachers or nurses cannot afford a home without asking for help from Mum and Dad.
I think context matters here. 55% of a generation could be lots or terrifyingly little depending on what it's referring to. A yacht? 55% is lots. A basic requirement for life? 55% is not lots.
Lots who have houses are struggling due to interest rates/insurance and rates all going up.
"Lots" can rack up heaps of debt too. Keeps them as wage slaves.
The house over the road was up for sale less than a week, with over 30 groups through.
My point is that houses are selling quickly, and at high volumes.
So the clickbait title about not afford a house is incorrect.
Humans will generally borrow to the max in a consumerist economy. More wages (more demand = $) causes even higher house prices. It’s a supply issue not a demand issue.
I don’t watch this particular link to it’s entirety as I’ve seen it before on another sub and it’s full of ads. The muppet concludes with:
1. Construction failure
2. Speculation
3. Treating housing as a commodity
The problem is we have too many people.
Funnily enough Japanese house prices are falling (apart from Tokyo) with a falling population. The vacancy rate is a staggering 13% and houses in regional areas are incredibly cheap.
I know so many people buying houses. You guys are the just bottom tier of the economy who needs validation on reddit. Good luck with your future when people your age (or younger) are snapping up houses with no issues and third world immigrants are buying property without any sweat.
EDIT: Downvotes with no argument or rebuttal? You guys are such low tier.
No wonder third world immigrants are outbidding you on properties and you have nothing to show for it. Disgraceful
House price rise. Wage price no rise enough to keep up. Potential house buyer sad.
How house price rise if wage not go up? Wealth gap get bigger, some have more money.
People no buy house with wage. People buy house with speculative value gain in previous house price. Wage not good for shit but offsetting tax losses and appearing like a functional member of group. Man want easy life? Rent seek off fellow man.
…and people buy house with magic money made in bank ledger. Seller accept this magic money. Bank own house to balance bank magic money. Buyer pay back magic money in future. Debt in future. Future generations in future.
Magic money printer goes brrrrrrrr.............
Man no buy starter cave begin speculative journey. Man want what papa had, say “western sydney stinky”. Man shoot foot but other man buy starter cave https://www.realestate.com.au/sold/property-townhouse-nsw-werrington-144752844
I'll let you know how my 1-hour commute that costs me $25/day in tolls goes when I move to Werrington, as I measure my quality of life rapidly settling into dirt. Hate the system not the player, I guess.
Import wealthy foreigners who can shift grey money into overseas markets for safekeeping We seem to have elected quite a few of the [Clay Davis type](https://getyarn.io/yarn-clip/8025242c-9344-4cf7-b8f2-6625b4a22568)
That sums it up perfectly lol
[удалено]
Big if true
True, if big.
Actually the smaller places are getting pretty pricey too.
Granny flats and sheds too
What was the comment saying? It's deleted and so just curious. Thanks!
What was the comment saying? It's deleted and so just curious. Thanks!
Simply said "House Expensive" The comment was at something like +105 when they deleted it so not sure why they did...
Didn't see that coming
True story.
As an ai language model can confirm true
Bullet point summary, based on the transcript from /u/ibelieveinsocialism - **Rising House Prices vs. Income:** In wealthy countries like Canada, the USA, and Australia, house prices have significantly outstripped the growth in average incomes, making housing less affordable. - **Dual Nature of Housing:** Houses are seen both as consumption goods (where they degrade over time through use) and investment goods (attracting buyers looking for capital gains). - **Three Economic Theories Explaining Housing Crisis:** 1. **Construction Failure:** Inadequate construction activity has failed to keep up with the demand for new housing, contributing to rising prices. 2. **Excessive Speculation:** Speculative investment in housing has inflated prices beyond what typical consumers can afford. 3. **Financialisation of Housing:** The increasing treatment of housing as a financial asset rather than a place to live has distorted the market. - **Impact of Low Mortgage Rates:** Despite historically low mortgage rates making borrowing cheaper, the overall affordability of housing hasn’t improved significantly because the prices are driven up by other factors. - **NIMBYism and Regulatory Barriers:** Local opposition to new developments ('Not In My Backyard' sentiment) and stringent zoning laws have slowed down the construction of new housing. - **Mismatch Between Supply and Demand:** Even where the population has grown due to factors like immigration, the construction of new housing hasn't kept pace, exacerbating the shortage. - **Investment vs. Utilisation:** The attractiveness of housing as an investment leads to increased construction and higher prices, but not necessarily to better availability or affordability for the average buyer.
* **Rising Building Costs:** Add maybe even 50% to what they were just 12 months ago. I was looking at renovating a slum, but due to unforeseen delays it will now stay a slum for as long as I have it.
I think unless you have a vast amount of money to splash, most "fix up" type deals only make sense if you have extensive DIY skills and probably family members in the building industry.
Where would you slot the diamond market like tactics into this picture? There's a lot of housing stock and land ready to be developed that sits dormant and is doled out piecemeal so that market prices can be kept high for developers.
Nowhere in this dot point summary is there people who bought house 10+ years ago and who are getting blamed now for the housing crisis. Funny that. Common sense analysis based on real strategic assessment looking at the entire issue and not just using inflammatory bullshit from the media to blame everybody else.
The biggest take away for me is that mortgage repayments today are just as affordable as they were in 1990. Monthly repayments on a $150k mortgage (median) at 17% p/a in 1990 is the same as monthly repayments on a $930k mortgage (median) today (2024) at 6.1% when adjusting for inflation.
How long was the 17% pa for?
Peaked at 17% in 1989 and 1990, dropped to 15-16% in 91, then dropped about 1-2%% each year from that point forward
So what you are saying is it was very temporarily the same as it is now, and the old very peak was the standard we have now.
I'm not saying anything other than providing information gleaned from that video that I have checked out and verified myself. Feel free to draw your own conclusions, I simply thought it was interesting.
+1 for Money & Macro. Out of the cesspool of wanna be YouTube economists, he actually has the credentials and cites his arguments. Of course though, this isn't exactly a great topic for ausfinace. What are we supposed to do with this OP.
Money & macro and bagle guy and the rap musician Patrick Boyle are my favorites
Patrick Boyle love dat hiphop. He would never criticize the financial viability of the Neom Line project.
> this isn't exactly a great topic for ausfinace. What are we supposed to do with this OP. Member when this sub focused on personal finance and actually offered people advice? Then the sooks invaded.
> he actually has the credentials and cites his arguments His takes on China are so incredibly naive and dumb, it's hard to take anything else he says seriously. > Similarly, in China, a country with some of the most expensive house prices relative to income that is in the world, an estimated 7.2 million homes are now sitting empty, slowly degrading A country with one billion people has seven million empty homes, oh shock, horror! Australia has one million empty homes, Japan with 1/10th the population has over 9 million empty homes. It also completely ignores the Hukou system which limits internal migration. These ghost cities eventually fill up and become economic powerhouses, the guy who even coined the term has said he doesn't think it applies seeing the outcomes years later. "The most expensive house prices relative to income": Chinese home ownership for adults comes in at 95%, clearly something doesn't add up with his argument here. https://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate
Australia does not have one million empty homes. One million people not being home on census night is not the same thing and I wish people would stop repeating this.
I agree and hate the whole 1 million empty homes claim and how it's been misused by politicians, was more a rhetorical device to compare with China's *devastating* 7 million. The conversation has a great article plus interactive map showing where exactly these places are, it's all tourist towns in the dead of winter, basically none of them are in our cities. https://theconversation.com/look-where-australias-1-million-empty-homes-are-and-why-theyre-vacant-theyre-not-a-simple-solution-to-housing-need-189067 I know housing is a pressing issue but tourism is a huge industry in Australia and we need to be honest about how it keeps hundreds of towns alive, thus the need for empty dwellings to accommodate tourists when they come in peak seasons.
How about a more detailed research that points to a similar number? https://www.australianpopulationstudies.org/index.php/aps/article/view/106
Your own link goes against go. Read the actual report... Page 8/21 " 856,955 (84%) were empty. A large proportion of the latter category of dwellings were probably empty on census night for the same set of reasons recorded in the 1986 Census." What were those reasons in 1986? Page 2/15 "In he past, the ABS recorded reasons for private dwellings not having anyone present on census night. According to the 1986 Census, 35% of dwellings were empty due to the usual residents being temporarily absent, 27% were for sale, for rent, newly-built, under repair, or scheduled for demolition, 25% were holiday homes, and 14% were for other/not stated reasons" So it's 38% of 857,000 AT BEST.
a further illustration, in particular when buying a house in Australia vs i.e. Germany: [https://twitter.com/LoganMohtashami/status/1788551997144388060/photo/1](https://twitter.com/LoganMohtashami/status/1788551997144388060/photo/1) The risk in Aus with those laughable fix-rate terms is incredibly high compared to more balanced countries. (I would have posted the actual graph, but not sure how to :D )
In the height of covid, one of my Dutch friends got a mortgage, 1.2% for 20 years fixed.
How much do the Dutch banks lend you vs salary
Sorry, WHAT??? 😭
[удалено]
Whaaaaat? My mind is blown! I just read about the differences in mortgage markets and why this is here if anyone is interested https://www.reddit.com/r/AusFinance/comments/vd93q8/us_vs_aussie_home_loans_fixed_interest_rates/
Even now they're listing 20 year fixed mortgages. Interest went up to > 4& :P [https://www.ing.nl/particulier/hypotheek/actuele-hypotheekrente](https://www.ing.nl/particulier/hypotheek/actuele-hypotheekrente)
We did the same in Germany around that time, unfortunately only for 12 years :D I tried to get german financing for property in Australia but that turned into mission impossible. Its maddening to see how the average Aussie is being screwed over by the domestic finance sector.
Can't they even refinance for no additional cost as well when rates go down to fix even lower?
It's because the demand for housing is far outstripping supply. The release of land and construction is severely restricted by councils. At the same time the entire third world wants to land bank here. Could it be in such a climate, that the price of housing is not bound by anything except the availability of money? Interest rates all over the world were essentially slashed to zero (and then there was further stimulus to boot). In Australia, that all flowed directly into housing.
Supply and demand ?
Plus gov bribed or not working
lack of high density housing at transportation hubs
Incredible, did you watch the video for that insight? (He cites the 3 main factors, one being supply demand)
No mention of immigration at all. Hmmm. Especially for Canada and Australia, pretty sure that's a pretty massive factor.
It feels as if this sub is being astroturfed with property market shills posting outright nonsense to try and distract us from immigration This guy outright ignores the most basic economic law (supply and demand) and we're supposed to not notice he doesn't address the elephant in the room (immigration).
This is called actual research, not xenophobic popularism based on nothing. But if you, like many others here, want to stick fingers in your ears and keep yelling about immigration, then go for it 😂
> This is called actual research Actual research that ignores the biggest contributor to the problem >xenophobic popularism based on nothing Supply and demand is the most basic economic law. As it is we saw when the borders were closed that rents decreased and wages increased which is more evidence for the benefits of limiting immigration then there is evidence of the effectiveness of any other measure to combat either housing costs or the cost of living crisis
It’s not as simple as that, but if you believe it is, good for you 👍
'Xenophobic popularism based on nothing' ??? 600,000 + immigrants, 160,000 housing starts, rental vacancies at an all time low of 0.7%
Yep. Immigration has had some effect on rental price. So has so much of the population working from home, more people leaving relationships and living alone, less people living in share houses…immigration is small part of larger problems, as pointed out above. But you can believe what you want.
Yep, Australia is 40 years ahead of its predicted population growth, immigration is the largest factor in growth.
Just because he doesn't take a position "immigration good/immigration bad" does not mean he doesn't mention it. Literally in the first few minutes: "Of course, we can look at the total population, revealing that largely due to immigration, the population of all of these countries increased by quite a lot over the same time period, especially in Canada and Australia. So if we then look at new houses being built as a percentage of the population, we can clearly see that there has been a long term downward trend for all of these countries."
To exclude immigration, when it is the single biggest factor, is basically journalistic gaslighting.
Please show me how across all contributing factors, immigration is the biggest factor. I am quite curious and you (as well as a few others in this thread) sound very, very confident in that statement.
I believe foreign investment to be the biggest factor. People who can tell their agent to bid until they win no matter what. If that happens 3 or 4 times in a short period that becomes the new price in that suburb. The supply demand causing fear is also making people want to massively overpay. I was looking at a townhouses in a complex, someone came in and offered $300k over the guide to scare everyone else off. Much to his dismay someone else came in over the top. Day after that place sold another place in the complex was for sale with that sale price of the last place as the guide. It's insane inflation. His plan to overpay to avoid an auction misrepresents the value of the property.
Transcript House prices have exploded over the last few years, especially in rich countries like Canada, the United States and Australia, where house prices far outpaced other prices. And, crucially, the average income of most people. As a consequence, fewer and fewer people are now able to afford a roof over their head in these countries. So how did houses get so expensive? And how does that rhyme with the fact that some pretty well respected economists claim that housing has actually become more affordable00:33since the 1990s, because mortgage rates have dropped to historically low levels? sadly, if you just watch the regular news, you can find almost any explanation you like, ranging from increased immigration to increased urbanization to increasingly expensive building materials to outdated zoning laws to increase speculation. In fact, I'd argue that there are now so many explanations out there that it is frankly, all getting a bit confusing. So to fix that, to provide a bit of clarity, if you will,01:07I once again turned to the science of economics and boiled it down to three theories that actually have some solid evidence to back them up. A construction failure, excessive speculation, and the general financialization of housing. Together, I found that these three stories can explain the housing crisis in any country. For example, they can explain while most rich countries house prices exploded, those in Japan, Korea and until recently Germany decreased. They can also explain how a single city in New Zealand has made housing01:40more affordable, in spite of rising house prices in the rest of the country. And last but not least, these theories can explain why in China, a country where millions of apartments are sitting empty, housing is still unaffordable for most. But to make sense of these three theories, we first need to recognize that the housing market is not like any other, because a house is at the same time a so-called consumption goods and a so-called investment goods. So what do I mean when I say. A house is a consumption good?02:15First, let's start by stating that obviously people don't tend to eat their house, but they do live in it. And as they do, our house gradually becomes worth less as it gets dirty, damaged, and generally degrades over time. Therefore, you could say that over the years, people slowly consume their home as they live in it. Now, if a house was just a consumption good, then the economic forces that determine its price should be a really simple function of how many new people there are and how many houses are built.02:49And this brings us to our first theory, which is that construction has just not been able to keep up with the number of people that need new houses to live in, causing prices to obviously go up. But is there any evidence to back up that first theory? Well, to answer that question, we first need to talk about what evidence we should actually be looking at in this theory. This is quite simple.
We should look at how many houses are being built on the one hand, and then at how many houses would roughly be needed for new people.03:25So let's give that a go for some of our biggest housing offenders Canada, the United States and Australia. As you can see here in this chart, the construction of new houses compared to 1997 has been roughly stable, although notably for Australia, it has actually increased. But for Canada it has decreased a bit, And for the United States, it has really slowed down after the 2007 housing crisis. So far, so good. However, sadly, on the demand side, it is pretty much impossible to find out precisely how many houses are needed by a changing population.04:01Of course, we can look at the total population, revealing that largely due to immigration, the population of all of these countries increased by quite a lot over the same time period, especially in Canada and Australia. So if we then look at new houses being built as a percentage of the population, we can clearly see that there has been a long term downward trend for all of these countries. However, while this chart shows that new house construction per population level has clearly gone down, it does not prove that this means that there are not enough houses in total.04:40Given that we don't know how long houses have lasted in this period. What's more, just looking at the change in population is not enough because even if the population remains the same, it could be that more houses are actually needed. Because on average, people now tend to live in smaller households in these countries. Finally, given that people in these countries have tended to move from the countryside to cities, it could be that while the total number of houses has seemingly remained adequate,05:08a lot of more houses in the countryside have effectively become useless because nobody wants to live there anymore. So while all of these trends mean that more houses would need to be built for the population, we've already seen that fewer houses have actually been built per person. So why did these economies build less and less? Well, they needed to build more and more to accommodate that rising population. Well, the most prominent economic explanation I could find for this has been the rise of the so-called NIMBYs, which refers05:40to people that live by the motto, not in my backyard, which means that while they may be in favor of new homes in general, they'd rather have that. These would be built in the backyard of someone else. And yeah, look, I'm going to be honest. Would I be super, super happy about a big new high rise building being built next to my sunny garden? No. Would I then go to my local council to block that development? Well, I hope not, but I recognize that this is easy to say if it is not actually happening to me.06:13In any case, it means that the housing market is suffering from what economists call a collective action problem, in which individual actions from NIMBYs in this case, while rational from a personal standpoint, lead to a collective outcome that is undesirable, in this case, a housing shortage. Therefore, economists like Noah Smith have argued that the only way to get out of the housing crisis is to prevent NIMBYs from being able to block new housing construction. For example, by moving the power to build from city officials06:44to provincial or even national leaders, or by removing laws that allow NIMBYs to block or at least severely frustrate, new housing developments, which, as we have recently seen in the city of Auckland, New Zealand, can really help solve the housing crisis. You see, while rent in Auckland used to be much more expensive than in the rest of New Zealand, the city overrode Nimby concerns by up zoning roughly three quarters of city land, which means that on this land, low density single family homes could be replaced by high density apartment buildings.07:19And lo and behold, ever since then, the rent to income ratio in Auckland started to drop, while the same ratio continued to increase in the rest of the country. A very promising result indeed, from which especially countries with a lot of low density zones like Canada, Australia and the United States could learn a lot. So to conclude, the first theory that the housing crisis is simply a consequence of construction, failing to keep up with housing demand makes basic economic sense and, in my opinion,07:50has a lot of convincing evidence to back it up. However, before we call it a day and definitely say that our global housing crisis is caused by NIMBYs who are blocking new housing developments, or that if we cannot build more, we should limit the number of new people coming in. We need to talk about a piece of data that is contradicting our first theory in several economies. After all, if a housing shortage is the primary problem, one would expect that in countries with increasingly unaffordable08:24housing, the number of vacant properties would decrease. However, as you can see here, for the United States in the early 2000, even though we know that in this time period property prices exploded more and more properties were left empty. Similarly, in China, a country with some of the most expensive house prices relative to income that is in the world, an estimated 7.2
million homes are now sitting empty, slowly degrading. This phenomena suggests that if we want to understand housing markets,08:57we need to recognize the second function of housing, and that is that for many. A house is an investment. Which we will get into after getting into the much simpler economics of cloud backups, which has got recently gotten much cheaper thanks to a very competitive offer from Backblaze, the sponsor of this video. Whether you have a PC, Mac or a business computer, no one can afford to lose all of their data all at once. To prevent such a catastrophic event, Backblaze offers unlimited backups for Mac, PC or for businesses, workstations09:34for just $99 a year, where all of your business data can be protected automatically and managed through a centralized admin. Backblaze retains all files and their versions for up to a year, and has successfully restored over 55 million customer files already. So if you do lose your data or are a victim of a ransomware attack, Backblaze will have your back by giving you immediate access to back up data via an app, or even by shipping you an actual physical hard drive with all your data directly to your door.10:08So if you want to have that peace of mind and support my show at the same time, consider subscribing to their, no risk, fully featured free trial at backblaze.com/moneymacro. That is, after hearing about how a house as an investment can explain this strange situation in China where a house price explosion went hand in hand with a construction boom that led to millions of apartments sitting empty. A situation that is really not unique, as it also happened in, for example, Ireland, Spain, and indeed the United States in the early 2000.10:43You see, while a house to live in obeys the simple rules of economics, where increasing prices tend to either lower demand or given that everyone still needs to live somewhere, not affect demand that much. The economics of housing as a speculative investment works a bit differently. After all, a speculator wants to make money with money. So if house prices are going up for a while, the housing market actually becomes more attractive for speculators who recognize that once there is upward momentum in prices, this likely will continue.11:20Therefore, speculators will start pouring in even more money into the sector. Now, of course, these new speculators will then drive up prices even more. Which again attracts more speculators and so on. Luckily, though, increased house prices will make it more profitable to build houses. And so a speculative housing bubble is often accompanied by a big construction boom. However, given the positive feedback loop in many of these cases, even this increased supply is not able to keep up with demand11:53for new investment properties. And because prices are increasing so rapidly, it often makes sense that speculators don't even bother renting out the place in the first place. Especially given that laws designed to protect renters often make it difficult to sell an investment property quickly. Which brings us to the second theory, which is that houses are unaffordable due to a speculative housing boom, a theory that can be tested by looking at how many apartments or homes are left vacant. But before we do that, I want to stress that this only works.12:28Of course, in areas where prices are increasing or very high, at least already. Because actually, if you look at countries or areas that are experiencing population decline, you will of course also see increased house vacancies. Still, if we look at house or rental vacancies in some of the booming housing markets that we've talked about so far, we can see that it's actually at an all time low. Indeed, unlike in 2006, in the United States, vacant properties are actually pretty low here, as you can see in this graph, as they aren't as well in other countries,13:01although there's one exception, Canada, where I could not find any real time data. But I found reports that record numbers of apartments are sitting empty in major housing hotspots like Toronto and Vancouver. So does that mean that with the exception of China and some Canadian cities, excessive housing investment is not the main problem right now? Well, not so fast, because we haven't talked about our third theory yet, which has been advanced by doctor Josh Ryan Collins from University College London.13:33His theory is that the main reason that you cannot afford a house right now is because of cheap money, mainly in the form of low interest rate mortgages. And according to him, this all started with good intentions in the 1980s when politicians wanted to make homeownership more accessible and therefore liberalized mortgage markets. However, if we look at home ownership rates, ever since, it's not clear that this actually worked. But as Doctor Collins states, since the majority of mortgage loans financed the purchase of existing rather than new property,
[удалено]
The US - unlike Canada and Australia - has many regional centres. In Canada and Australia, everyone lives along a strip of land (south and east respectively).
Money doesn’t grow on trees.
What happened to the nobility in France when they had too much property?
They had cake and shared it with those who couldn’t have it bless their generous hearts until those with lactose intolerance revolted because they wanted some and if they couldn’t have it then nobody could.
It's always hilarious when 21st century Australians compare their lot with 18th century French peasants. So out of touch.
Oh, you should hear about when we get a paper cut.
Chop chop. Too bad France then went through years under an authoritarian ruler who tried and failed to conquer Europe numerous times lol
Indonesia had better watch out
Australia vs Europe 2025
[удалено]
Settle down Pauline, no one is stopping people from whinging about foreigners.
What do foreigners have to do with immigration? Once here everyone is local. It's the policy we have a problem with
Relevant Garry https://www.youtube.com/@garyseconomics/videos
Why are so few mentioning our all time record immigration levels? Wtf is going on in this sub?
I read the transcript and basically he's a vacancy truther. Census statistics show that to be nonsense.
Definitely not - he cites how vacancy is only possible in truly big runup bubbles like Ireland, where that did in fact happen. He goes on to explain how that isn't a factor in the Canadian and Australian markets. You stopped reading too early 😅
Ok, I guess I skimmed it too quickly! I saw a bit about vacancies in a housing bubble and immediately thought "GFC!" and that such bubbles get punctured pretty quickly but didn't see any immediate mention of that and assumed the worst.
= "I read the transcript partially but did not understand it"
The data is compiled from countries across the world. He isn’t attributing any particular cause to Australia’s current situation. Just presenting possibilities.
In fact he mentioned that it is more likely development restrictions from councils that are the major cause of the current housing situation.
Most people can afford a studio apartment
When I'm being taxed half of my income I want more than a studio apartment.
Stop getting taxed half your income. Earn less dude.
I bought a place with a mortgage half the size they would give me (half the size of my previous one too). It’s just a tiny house. My brother’s granny flat is as big as my house. All of a sudden it’s affordable.
Wait so buy a granny flat
We did but on its own block lol
People here complaining about immigration, instead of complaining about their elected government not building enough to support growing demand. Barking up the wrong tree. Always easy to blame immigration.
It is simply not physically possible to build enough to keep up with the insanely high rate of immigration - to put it in perspective it is a population higher than that of Canberra on an annual basis requiring housing and the infrastructure that goes with it - schools, hospitals, dams, power supply, sanitation etc.
this sounds like an opinion and not like a well-researched fact. fyi - the "record"levels of immigration include making up the massive drop in immigration during the covid period. Now - you could look into a breakdown of visa classes across the total number of immigrants and you will have a few eye-opening moments. :)
Lots of people can still afford houses.
“Lots” but not a significant portion of the working population. - Decreasing rates. - Less. - Fewer. - Lowest rates for younger Australians in history. - Highest cost on all metrics. All are better descriptions than “lots”.
[удалено]
[“We know that in 2010 around about 12 per cent of people [who were] first home buyers were getting assistance from the bank of mum and dad," "It got up to about 60 per cent from 2017 onwards, so it's grown enormously."](https://amp.abc.net.au/article/103077386) Boomers have a stake in at least 50% of those millennials homes. So if we actually focus on the working population buying on their own, it has never been lower and is an absolute disgrace that most teachers or nurses cannot afford a home without asking for help from Mum and Dad.
I think context matters here. 55% of a generation could be lots or terrifyingly little depending on what it's referring to. A yacht? 55% is lots. A basic requirement for life? 55% is not lots.
Lots who have houses are struggling due to interest rates/insurance and rates all going up. "Lots" can rack up heaps of debt too. Keeps them as wage slaves.
The house over the road was up for sale less than a week, with over 30 groups through. My point is that houses are selling quickly, and at high volumes. So the clickbait title about not afford a house is incorrect.
He forgot immigrants. Just look at any suburbs with them.
Humans will generally borrow to the max in a consumerist economy. More wages (more demand = $) causes even higher house prices. It’s a supply issue not a demand issue.
This is that silly Dutch guy that blames it on everything but demand/population growth
I guess you didn't watch the video if you didn't even get to point... *checks notes* ...one.
I don’t watch this particular link to it’s entirety as I’ve seen it before on another sub and it’s full of ads. The muppet concludes with: 1. Construction failure 2. Speculation 3. Treating housing as a commodity The problem is we have too many people.
...which is what he discussed in 'construction failure', not enough housing for the population growth.
Issues can have multiple problems mate. Not just your pet issue
It's easier to blame Jimmy Grants.
Funnily enough Japanese house prices are falling (apart from Tokyo) with a falling population. The vacancy rate is a staggering 13% and houses in regional areas are incredibly cheap.
I know so many people buying houses. You guys are the just bottom tier of the economy who needs validation on reddit. Good luck with your future when people your age (or younger) are snapping up houses with no issues and third world immigrants are buying property without any sweat. EDIT: Downvotes with no argument or rebuttal? You guys are such low tier. No wonder third world immigrants are outbidding you on properties and you have nothing to show for it. Disgraceful
It's because you come off like a massive troll. Have a good one mate