House Prices

Ah well, it had to happen. Here's that topic.

But first this:
www.google.com/publicdata/explore?ds=wb-wdi&met=ny_gdp_mktp_cd&idim=country:AUS&dl=en&hl=en&q=gdp+australia

Regarding the change in ratio between house prices and average wages over the last 15 years my new, radical theory (I'd like to thank this Pinot Noir) is that it is not high house prices, but low wages that are the problem. Why haven't they kept up with GDP like house prices have?

Fee free to shred my theory to pieces, I'm not attached to it. I'm no economist. I'd like to know where my theory is wrong however.

chief gillard over at wranger immigration will ensure housing prices will increase for ever!
if you have a successful job and marriage your children will benafit as wealth is accumulated. Just stay out of unmanageable debit.

I think it is high house prices, not lower wages. In WA house prices doubled in less than 10 yrs but nothing else has doubled in price..... even if you account for the real CPI not the Goverments seasonally adjusted BS one

I blame the tax office, and govt policy that has allowed housing to become an investment for the rich. Really I think the encouragement for people to negative gear and the boasting amongst some middle class people that they have 3 houses etc is terrible, as shelter is a necessity of life. Would anyone be allowed to do it with food or water? No, there would be an outcry.

That was the common cry back about 30 years or so, around the time when Bob Hawke was Prime Minstral.
One of the first things he did when he got in was to kick all these so called "rich bastards" in the bum and cut out many of the tax deductions these so called rich pricks used when buying an investment property. In particular, they made them subject to capital gains tax at the full marginal tax rate applicable in the year it was sold. They were also looking at cutting out negative gearing on investment properties.
It worked really well. (NOT)
The so called "rich bastards" stopped buying investment houses, which meant most of the houses for rent disappeared within a year.
The price to rent a house went up about 50% in a year or so because there were very few to rent and thus only those who could afford to pay heaps got to rent them.
The price to buy a house didn't drop at all.
Fewer new houses were built because none were built for the rental market, so all up, there were less houses available to buy or rent.

Within two years the govenrment was being sledged for not providing rental accomodation for all the people who needed housing and couldn't find a house to rent because there weren't any.

They soon realised the consequences of what they had done and put things mostly back to how they were on the grounds that it was far cheaper to allow the so called "rich bastards" to invest their own private money in housing and claim any losses on their tax bill rather than the government having to pay the whole cost of providing rental housing to all who wanted it.
The difference in what that costs the government is huge. The tax deductions claimed are a mere pittance compared to what it costs to front up with the full purchase price to supply rental properties to the market.
From what I've seen over the years it works pretty well.
Most of the so called "rich bastards" are your everyday mums & dads who buy another property as a retirement benefit so they wont be dependent on the government when they retire. That's a huge saving for the government in not having to pay their pensions.
It seems to be a good solution all round.

It's so easy to look at what someone else has got and say everthing is their fault becausae they have got more than you.
If they have got more than you it's most likely because thay worked harder than you and didn't waste what they earnt.
And after all, even if they have 3 houses, they can only live in one of them. The rest will be on up for rental.
About one third of Australians rent for all sorts of reasons. If you stop providing houses for this market you have a real problem.


Having said all that, I do think Australian houses are waaay overpriced at the moment and will probably remain so while we have this so called boom economy going on and are bringing in thousands of people every year to work here.
It's a simple matter of supply and demand.
While people keep paying ridiculous prices for a house then other people will continue to ask ridiculuos prices for them.

How many people do you know of who when they get 2 million dollars for theri property at auction, turn around and say "Noooo,.. that's far too much. You can have it for $450,000" ??
You can count them on the fingers of a double handed amputee.

Yes the price of houses have gone up BUT so has the size of what is regarded as now the "Standard Home", house sizes have increased but family sizes are smaller.
Is it like comparing oranges with apples?

But on the other hand the price of cars have dropped dramatically, instead of comparing it in actual $ value, work it out compared to the annual income as a percentage.

www.abs.gov.au/ausstats/[email protected]/Previousproducts/1301.0Feature%20Article262005?opendocument&tabname=Summary&prodno=1301.0&issue=2005&num=&view=

How so? I hear all this **** about the uk being F*ck*ed.. SOmetimes I just think it is (Australian/expat wishful thinking) Uk is still the fourth/fifth/sixth biggext economy in the world. And it is not based on digging stuff out the ground for china.

Yeah I did.. But the other economies you are looking at - Germany 10% fall. - Japan Irrelavant as they had that whole lost decade thing but are still strong as, because they chose not to talk them self into more of a recession. And the US the biggest trade defficit ever. Maybe I am just paranoid but it seems that the aussie media love bashing the brits.. My own media are hapy bashing ourselves. Where as yours likes to blow smoke up there own arses..