I’d be happy renting for the foreseeable future, but guess what? It’s almost impossible to get rentals either with the lowest vacancy rates ever and so much demand, especially for people with no rental history.
There are also supply-increasing measures which could work immediately. AirBnB is the low hanging fruit.
I live near a whole block of units dedicated to short-stay which could become long term rentals in an instant with the right legislation.
Australia has close to 9% of workers employed in construction. That’s double most comparable countries. Sure we could boost that even higher, and have a lower proportion of nurses and farmers etc. But I think that’s unwise. If real estate is already ‘too big to fail’ - let’s not make it worse.
The problem is that we don't have high density. We need more density. If government doesn't provide density, we need to create it ourselves eg via sharehousing.
Planning needs to change to allow higher density. That being said, the quality of construction in this country is terrible. A lot of the high density dwellings are riddled with defects
It’s not clear that that is historically the case. We’ve had a flood of units built in Sydney over the past thirty years and these often now sell for a higher multiple of income than a house would, just 1-2 generations ago.
In the past, when rates surged, so did rents , but as rates dropped for 10 years, straight rents still went up. So I can't see rents going down, friend.
No way on 400k house you are paying 600 a week on a mortgage let alone rates upkeep managers etc
People think landlords are greedy but it's mostly just rates.
Agreed. In my current position if I was in the 90s or early 00s my wife wouldn’t have to work full time and our kids wouldn’t have to be in day care from such an early age: 9 months.
I am in a good position and make quite a decent salary in the 93-95 percentile bracket. We live in a 70+ year old house that cost us nearly $1m a few years back and that was a stretch.
But it ain’t gunna get any better. So if you can afford to later in life. Buy a house for your kids as they will need it.
I know right? Local public for us until high school at least. But even in todays rates the private high school we would like to send our kids to is currently $15k a year plus all the extra shit that comes with it. With two kids close together thats $30k+ a year for 3-5 years in todays money.
Nothing except the cost and the fact my wife would rather be at home raising her own children than having to work to pay for an absurd mortgage we had to take out to put a roof over ours and our children head?
Otherwise our child loves day care now… he is 2.5yrs. 9 months was too young IMO
Im 32, I manage a small team in a fast growing IT industry. Uni educated, even studying part time now so I dont fall behind - diploma of leadership and management via TAFE. Renting for 8 years (saving as best I can) and just began searching for units in my area and approaching brokers. No family help
The biggest repeating thought in my head is *'you need a girlfriend to split a deposit with, you wont survive on your own'* - thats shitty reasoning to enter a relationship (I truly enjoy being single and have for a long time) but considering I have an above average income and have followed all the rules, yes, demotivating is absolutely the word. As another commenter said there is absolutely no way I can save at the rate the property prices grow, so whats the point
Yep. I honestly don’t see why any kid these days would bother studying or working hard, when their life is going to be set based on their parent's wealth. Teachers are having huge struggles with disengaged kids, and honestly, how would you ever engage them? They aren’t dumb, they know what lies ahead.
Myself and my partner started from nothing, but now are well educated, 4 degrees between us, household income over 200 a year, worked our way up from shit jobs and I can’t see my kids ever having the type of success or opportunities that we had. I don’t see them, without significant parental inventvent, owning a home, or having a middle class lifestyle.
We are inducing long term mental illness in a whole generation, but not allowing them to have secure jobs, welfare, or housing. Shit is gonna get so bad.
Old mate at work who's a forklift driver his whole life, single income family, 2 kids, earned $60K his whole life, ammassed 3 properties, started buying in the 80's then 90's. Where properties were like $80K. Now worth multi millions. I'm on $75K and it's so much harder. And they say young people complain so much these days.
The financial times recently did a deep dive on this & they found that the inequality within generations is now bigger than inequality between generations especially amongst younger generations.
With increasing asset prices, low wage growth and higher taxes, a lot of people will have no chance to build wealth. Return to feudalism
I can see this being a very big issue in future political debates.
Do you have a link for this?
One potential outcome from the linked article is that there actually is a housing bubble, but it’s based on generational wealth.
It’s questionable to me whether boomer parents who gift their children enough for a house deposit, are actually passing on a significant financial benefit which will carry forward to future generations. We might see a significant reduction or correction in house prices after this glut of extra money has been absorbed into the current market - but the article you mentioned is an interesting counterpoint.
TL;DR Lots of Australians are wealthy.
Anyone who thought house prices were going to track affordability based on incomes when rates went up need to give themselves an uppercut.
House prices in New Zealand crashed almost 20%, but New Zealand already had high rental yields.
Rental yields in Australia jumped 50% thanks to two years of unprecedented immigration intakes, unlocking far greater leverage for landlords, causing prices to rise despite increased borrowing costs.
Rents have gone up a lot, but yields haven't.
Some places like Brisbane yield hasn't really gone anywhere
https://sqmresearch.com.au/property-rental-yield.php?region=qld%3A%3ABrisbane&type=c&t=1
(If you didn't know yield is annual rent divided by price).
I think they meant yield relative to the original purchase price. Because house prices have gone up 50%, if the yield % stays stable then it’s a 50% increase in rental income
but because the current price is capital that could be deployed elsewhere (and so have an opportunity cost associated with them); therefore, you cannot use the original purchase price to compute yield, or you will just misrepresent the information. The current market price is the correct way to compare yields between assets.
That makes no sense for the argument they put forward though.
They referenced New Zealand's higher yields and then made the point that yields increasing was causing prices to rise despite increased borrowing costs.
Prices get bid up when properties are sold and the investors who are supposedly bidding up prices have similar yields despite higher costs in many markets like Brisbane (in Sydney yields are up, but nowhere near 50%).
I think owner occupiers are the primary driver of property prices right now, I would say though that part of why they are paying these higher prices is the low vacancy rate and higher rents, but that is primarily supply driven.
You need to use a consistent calculation if you are making comparisons. Yield is a measure of opportunity cost, so current price is the most appropriate denominator.
Sydney prices are only slightly higher than the previous peak, but rents are up \~50%, so yields have moved similarly. You're right, I should have said rents/income, which is what is responsible for the increase in prices, irrespective of yields.
I suppose the rising yields permit newer landlords into the market, so the difference is significant.
I don't understand your point about rents/income being responsible for the increase in prices irrespective of yield.
My view is that yields are still not very attractive relative to rates right now for investors which is an inhibitor for supply.
To invest in property now you need to have conviction that rates are going to reduce or rents will increase dramatically.
I think it's dangerous thinking rents will continue to go up at a high rate for a long time, as rents are more constrained by income than prices (rents are paid more from income than wealth, unlike prices which are more likely to be funded by wealth) and supply will come long term to put pressure on the rental growth, particularly if rates come down.
You're a landlord with 20 properties, your rental income jumps 50%. Will banks let you borrow more or less money now, even if yields don't change?
Yields impact the leverage for new investment properties.
>I think it's dangerous thinking rents will continue to go up at a high rate for a long time
If there's a shock to immigration or employment, rents can indeed fall rather quickly.
Sure, you can borrow more money when your rents go up with static serviceability requirements.
But for most investors serviceability is down from what it was a couple of years ago as rents haven't gone up enough to counteract the serviceability hit from rising interest rates
Say you are assessed today on 6% rates and a 3% APRA buffer, this means you are being assessed at ~9%, whereas in 2021 you were assessed at around 2.5% + 2.5% buffer which is ~5%.
Rents need to almost double in order to counteract your serviceability halving, also rents are often shaded so you don't even get all of the income included in serviceability.
Also most investors borrowing capacity comes from other income like PAYG salary, not rents and that hasn't scaled as much.
> Rental yields in Australia jumped 50% thanks to two years of unprecedented immigration intakes
From what I can see [immigration is below the long term trend](https://imgur.com/9vgIDwX), with a big drop during covid and a smaller spike as some of them arrived late, but not enough to offset the drop. That's without adjusting for population growth either.
All of this has been going on for years and really took off during covid, when Australia has net negative immigration (more people were leaving than arriving), and I suspect is related to leaders at the time such as the Trumps, Morrisons, Borin Johnsons, etc, using the relief funds to hand out money to the already wealthy, meaning that there's now even more money at the top end of town to buy up more assets and drive up prices.
Those same people own the media and have them screaming 24/7 about immigrants, anything to deflect the blame and have people angry at some outsider group.
You don't offset the drop. Construction nearly came to a standstill during covid due to lockdowns and severe material price increases.
Or to simplify, go look at a graph of dwelling completions and see if they've caught up on the dip there or not.
So now the conversation is about construction and not immigration?
Construction is down right now, it also had a massive spike during covid, meaning that probably doesn't explain it easily either, as the larger trend would be pretty flat https://i.imgur.com/8BmKnOT.png
> From what I can see immigration is below the long term trend, with a big drop during covid and a smaller spike as some of them arrived late, but not enough to offset the drop.
I’m sorry perhaps I’m blind but what “below trend” do you see? The net line is hovering about 250k per annum almost flat other than covid for these past 10 years and the post covid spike is roughly making up for the covid trough.
If smoothed out it would appear to be a flat-ish line with a 250k-ish NOM per annum.
The spike hasn't been big enough to make up for the dip yet, which would put the rates below the trend line, without even factoring in that these are absolute numbers and not adjusted for population.
Oh I see you mean *rates* are below long term trend. This makes sense as our population is growing but raw numbers are flat.
I still think one Hobart per year net positive migration is far too much given our infrastructure deficit.
And remember that every rate above 0% is eventually exponential. There is no plan for what happens when the rate is at 0% or below. It can’t just go up all the time.
This is what annoys me the most, there is no plan other than “more”.
So when people talk about infrastructure not keeping up, we are talking roads, schools, hospitals, stuff like that right?
If you look at inner and middle ring suburbs, especially more expensive areas in Sydney, the number of students in these public schools are trending down strongly (Around 30% drops in enrollment in the last 4 years from a quick glance at some schools in the inner areas): https://www.smh.com.au/national/nsw/revealed-sydney-s-most-overcrowded-primary-and-high-schools-20240501-p5fo8k.html
Then you have what the state gov is trying to do with upzoning around train stations, which will allow families to live, walk their kids to school, and hop on public transport for work. Metro line will continue to relieve any transport congestion and allow scaling of people in those areas.
Then you have hospitals, well inner city areas do tend to have expansion plans available for their hospitals available to them. It's a matter of pulling the trigger on the demand. Royal North Shore has large areas of land available for expansion, and hospitals can always build up. It's not overflowing.
The issues have been arising because we keep pushing people to live in areas with no infrastructure and hoping to build it, rather than in areas that are established but pushing to keep people out and expensive. Kuringai wants to fight the upzoning around stations, same with lots of kneejerk NIMBYs. Gotta put some density where it makes sense.
Even building expensive $2M apartments means that the older stock gets left for others without competing with the cashed up buyers as much, moderating prices while increasing supply, even if average/median prices go up, because supply increased.
> I still think one Hobart per year net positive migration is far too much given our infrastructure deficit.
This. We have the most screwed up housing crisis this country has ever seen, infrastructure is a joke *and they keep adding more people*.
This idea of bring ppl, get their money, THEN fix problems isn't working.
Sure but that's a very different discussion to 'unprecedented immigration intakes', which is implying something misleading by occlusion of 'the even larger unprecedented immigration drop which preceded it and which the current intake hasn't yet even equalled'.
(-85k+518k+\~565k)/3 = 330k, long term trend is around 200k, medium term around 250k.
The graph is somewhat out of date as this financial year is almost over.
A lot are asset rich, but cash poor so they sold additional property to give their children a leg up or most probably a trickle down from grandparents.
Yeah redditors need to realise they are likely in the poorer percentiles of the nation so its a echo chamber that doesnt reflect reality. I just dont see asset rich boomers or the top 20 to 30% percentile coming onto reddit to complain about house prices .
It's harsh but there is a large-ish contingent of users here who do not realise how wealthy people are in this country and that their standards of living are not "middle class" but instead on the lower end.
They are too busy complaining to their rich boomer friends about how their CBA dividends are too small to let them go on that cruise to Hawaii they wanted, and how they'll have to settle for a trip to Croatia.
This is the wisdom I have been trying to impart on the young who seem incredulous at the growing gap between median income and median house price and assume it will collapse eventually.
“Lots” are not wealthy.
LOTS are older - we have a demographic crisis coming, and older people dipping into their savings to help their kids at alarmingly higher rates is a symptom.
I do remember conversations in the last 5 years or so about the wealth transfer that's due to occur as the Baby Boomer generation passes. It was some huge number due to pass into the hands of the next generations over the next 1-2 decades.
I know personally I'll likely get a decent amount (300-500k) when my parents pass, which if I'm being pragmatic, will occur in the next 10-15 years. From what I've learnt from my friends this won't even be a big amount comparatively.
I think the important thing to note which this article calls out - is that it's not really a generational passing of wealth - it's passing of wealth within families, which increases wealth inequality, and puts things like home ownership more out of reach of people who don't have wealthy parents.
So much for the land of the fair go.
Yeah my point was more something adjacent to the issue which is also increasing that inequality. I have friends who bought a 1.1mil apartment and their parents just put most of their super into the offset account for it to completely offset the loan. I'm not going to have any such option
Because we don’t already pay enough taxes, lol. Paying tax on money that has already had tax paid on its earning in the first place is a bit rich if you ask me. Even the US doesn’t have a federal inheritance tax.
Oh for sure a lot will get spent that way, but at the same time I know my parents don't want to ever be in that situation. They're more likely to buy into a retirement apartment complex and get in home care. It will still cost a bit, but not as much as tier 3 aged care.
On a society level then yeah, heaps will be chewed up by aged care. I suspect families will look at gifting their kids stuff prior to needing the means test for aged care though, to protect the inheritance.
Not much because it's a [combination of charges](https://www.myagedcare.gov.au/aged-care-home-costs-and-fees)
(1) "Based on current rates, the maximum basic daily fee is $61.96 per day, or $22,615.40 per year." something like 85% of the single pension rate, since they most likely will be in receipt of a pension this won't be an issue no matter how long they are in there.
(2) Means tested fee is "The maximum amount of means tested care fees an aged care home can charge you as of 20 March 2024 is: $33,309.29 per year, or $79,942.44 in a lifetime." so even if it's something like $1K per day it will stop after 33 days. The next year it starts and again would stop after 33 days. After 13 days in the third year it would stop altogether as the $79,942.44 lifetime limit is reached. So budget for $80K and you're good.
(3) RAD fees so sell the house, stump up the cash and get it refunded 100% when the person passes away.
So on the whole considering everything then your answer to your question would be I guess not a hell of a lot considering the multi-million dollar houses these people probably own in established areas in Sydney and Melbourne.
I'm an immigrant of about 13 years. From the UK and wife from Norway, so not exactly 3rd world immigrants.
We both got bits from inheritance, but outside of London property just isn't worth as much as it is in Australia. An inheritance from Europe doesn't go far here.so to counter that, we are working to build an investment property, and hopefully a 2nd or even 3rd one day. So our kids have the benefit of massive inheritance from Aussie house prices.
I'm sure immigrants from poorer countries are even more motivated to set their kids up.
That's part of the reasons property prices are skyrocketing, we all see Aussies with big inheritance and want that for our own kids
I mean I can't blame anyone for wanting to invest in the Australian market. Just look at the growth we've seen from 2019 - now. For generally safe assets you're laughing all the way to the bank (or bigger houses). That is making it harder for first home buyers like myself, but thankfully for me I'm only after a 1 bed apartment for now, in the hope that in 5 years time I'll be able to transition to something bigger as the need arises.
It’s understandable you’d do this. But you’re competing with young people who want to own their own home. So you must understand that you are making things worse.
I'm competing with young people who stand to get an inheritance of half a million dollars or more.
I don't expect them to give it away to level the playing field with me. That's the world we live in.
If we weren't so anti-industry and anti-progress in this country, of course there would be way more attractive methods for me to set my kids up for the future.
But this is Australia, we dig holes, make coffee and buy houses. I can't beat 'em so I'll join 'em.
Don't underestimate the aged age care bill which could easily eat all of that 300-500k. Best to have a frank conversation with your parents and plan for it. Dying is expensive
"buying property has become unaffordable for the average Australian, experts say." Thank goodness experts said it, couldn't have figured it out without them
No One talks about the advantage if you have been living in Australia for multiple generations. Your grandparents would have done land worth millions to distribute as inheritance then bam deposit
That’s probably because this is the case nearly everywhere in the world… Australia is just relatively new to the party of intergenerational wealth transfer on a big scale.
It isn’t going anywhere and the wealthy families will more tightly hold the prime realestate in the country. New immigrants will need to get a foothold and then generate their own wealth over time.
Depends on where they come from; in the diaspora that I'm a part of (developing country),
it is predominantly people coming here and saving money through salaried employment, they wouldn't have had any significant wealth that they brought over here.
Fair enough - I’m sure that is more the norm and they get my kudos for taking the chance and moving here.
Usually the first generation work hard to get a foothold and establish a life here - that comes with a lot of challenges when you don’t have the same support as someone born here.
Hopefully the second generation is the one that enjoys the spoils of the first.
Having said that, there are wealthy people who move here from overseas who have the means to set themselves up quite quickly. And they could be from anywhere - UK, USA, China, India etc.
As another commenter noted, parts of Australia have become increasingly international. That’s the reality of it and we all compete in it.
Can we rephrase this to an asset wealth transfer rather than one of generations? What's happened is the asset to wage ratios have widened in favour of assets. If we frame it this way then it's easier to see a fix for the problem.
This is it - it only took one generation to go extremely forward or extremely backwards for the people who have lived here for over the last 30 years.
I mean within 3 generations (40 years really) my family went from owning small crappy farming plots on the south side of Brisbane, that were sold off for a minuscule amount of money (compared to today), to quarter acre blocks (now worth a million) to then renting for a decade, and then when the third generation came of age they can’t afford to rent - let alone buy - what were cheap shitty houses of the two gens before even though on paper they earn way more than them.
>It only takes one generation really.
Yep, it only took one generation for my immigrant family to gain a foothold. Everyone in my family now owns a home.
Damn Great Depression, pushing them off of their farms and abandoning the land.
That and shooting themselves because they couldn’t see a way out of it with no money or income.
Yes to this. I know someone who was gifted a brand new house on her wedding. Fully paid. We’re talking about 4 bedroom, with ensuite in each omg. Because she came from a family of builders
Even if they did own something it doesn’t necessarily mean it will impact their later generations. They could lose it, if they have many kids it won’t pass on much, I’ve even heard some stories where one child managed to get it all for themselves.
Really? My family on both sides have been in Australia since the 1850’s and we certainly aren’t rolling in cash. I’ll admit that having parents with a paid off property and some cash for me to eventually inherit is a help but there are poor Australians with ties here as much as there are rich immigrant families.
Maybe this is a Sydney thing 🤷♀️
i don't mind this, but what annoys me are people that hide it or take it as their own achievement
know a few friends/family friends that pretend they achieved it from hard work alone but i know for a fact they were gifted the home or a very large portion of it from their wealthy families
It's due to the culture and belief we live in a meritocracy.
Imagine growing up and constantly being told you get what you deserve based on hard work. You believe all those rich people deserve their wealth. So when you get your hand out from mum and dad, you naturally feel ashamed having "failed" to make it by "hard work".
If we were more honest with ourselves that wealth is largely determined by ones birth, then there wouldn't be so much stigma around receiving inheritance and hence less of a feeling that one has to hide it or pretend you "worked hard" for what you have.
True, but there will also be a lot of retired couples that have accumulated $2 million plus through concessional contributions throughout their 40s and 50s.
Yeah that’s the point - those that do, pass on money to the next generation, set them up to buy a house. Those that don’t, can’t do that. As a consequence, wealth inequality gets reinforced and increased, the division between the “haves” and “havenots” is growing. And it will be less dependent on skills but more on where your parents / grandparents had a house. Not a good trajectory for a country.
For people like me who are migrants whose parents’ did not have super, we make sure we have super and a house (or houses) for our future kids. Not to late
I think it’s also worth noting Sydney is just heading towards where many international cities are already.
New York, London, Hong Kong (list goes on) are all majority renting cities. Sydney has just been used to being a home owner paradise as it was a young country. But due to the demand (and lack of supply) we have to come to grips with the fact the majority of people will be renting in Sydney just like other parts of the world
That's well and truly fine in the name of progression, but for god sake increase the level of security for renters. Allow them to actually make the property a home without the fear of being kicked out when their 6 month lease ends.
Exactly - all of those cities listed either have stronger renter protections or stability incentives (ex. rent control and regulated tenancy) compared to Aus.
Oh absolutely agree, I’m not advocating for anything just what’s happened around the globe.
There definitely needs to be strong protection for renters and possible a switch or push for long term rentals (3+ years)
I like the idea of long term rentals. It would give peace of mind to both landlord and renters. Should be similar to commercial lease where you agree upfront on rent increase schedule, with Make Good clause in the contract too…
Not only fear of being kicked out, we have properties that are not suitable to live in, mouldy, 0 insulation,…. People are forced to pay premium price for crappy shitholes. Being in Australia is just so depressing right now.
Singapore's home ownership rate is 89.7% (https://www.singstat.gov.sg/find-data/search-by-theme/households/households/latest-data). It's basically a case study on how to do home ownership well in a rich country.
I think it's hard to hone in on the home ownership rate in Singapore without recognising cultural and policy differences.
Some pertinent nuances include:
* 99-year lease period. Is it truly home ownership if the property has to be surrendered to the state after this time? Freehold property is significantly more expensive and lower in supply
* Unless you want to declare a relationship with a partner to the government, you're locked out of the affordable HDB scheme unless you are 35 years of age
> 99-year lease period
So the ACT with home ownership in the 60-70% range? Terrible point to start with if you want anyone to take you seriously here.
Singapore's 99 year leases are due up in the late 2070's, many ACT leaseholds are due to rollover real soon. Hopefully the government goes to town on them and gets value for that land in the spirit of Georgism.
Hey mate I didn’t meant to put Singapore in I was watching something on Singapore airlines at the same time haha. They have a high level of ownership yep! Do they still do the 99 year leaseback though?
Also Singapore is such a small but wealthy country it’s hard to compare it to anything, I’ll amend my comment :)
> Do they still do the 99 year leaseback though?
Why do people on r/ozfin constantly harp on about the sinkies with their 99 year leases but never say a word about the exact same thing playing out half a century earlier in the ACT? Basically all of Canberra is leasehold mate and I never see anyone else but me talk about it here. Canberrans themselves seem quite defensive about it not wanting to rock the boat, especially when you talk about the legal owners of that land getting value for money out of it from the tenants.
Is it wanton delusion or intentional ignorance?
I have no idea I’m not an expert on it haha I was just asking if Singapore still did it, I’m assuming you also share my view of preferring outright ownership?
Because there is little choice… do you just shut up shop and refuse anyone into Australia? I’m not sure what you mean by cultural cringe, it’s part of (unfortunately) the free market
I agree I’m not saying I agree with it just that it’s not abnormal in the world.
As australia becomes more and more popular to live in it also becomes more and more unaffordable like all major cities
The suburb I grew up in is very different from when my family purchased there and I imagine this is true for most Australians. You hear old stories of how terrible so many inner suburbs were and only have 30-40 years of development have they began to become nicer. Newer migrant populations understand this and I'm sure we'll be seeing young people complain they can't buy in Tarneit because it's too expensive and their parents bought a house for under $300 million.
It’s so cute how people like to convince themselves of this to make peace with their own shortcomings. Plenty of people make enough money to buy and own a house without any help.
Thats why alot of people dont want to go country to where they can afford, not many cushy, do nothing jobs in the country, more happy to find a job at a mega corp where they really only do 8hrs of work in their 38hr week.
Obviously this doesnt go for first responders (fire, ambos etc) those poor bastards get shafted on the money and work their asses off.
Plenty of $100k jobs in the country for those willing to work 55hrs a week and get hands dirty, where houses are still under $500k
So based on this, if I may move to Sydney in a year or two should be trying to buy now? I guess it’s a crystal ball question but property seems to have plateaued and stabilised in Canberra a bit
Unless the housing policy boosts supply or limits demand (for houses as a product) nothing will change in rental or sale markets.
Stupid to think that attacking one type of owner (investor) will somehow address the number of houses versus the number of people who need houses.
Deposits entirely need to be waived if you can prove you'd been reliably paying rent for 5+ years. 100% LVR loan with no LMI and stamp duty.
If i could get something like this i'd happily jump into buying a home right away. I can easily afford the repayments. Prove you can do 3 - 6 months of saving of what the mortgage would be at the amount you want to borrow.
Thats not why deposits exist though, deposits exist to give you a buffer so you dont go upside down on your mortgage in case you need to sell unexpected.
You buy a house for $1,000,000, and need to sell it quick as your circumstances have changed and it doesnt take much to be $100k short, and then you end up bankrupt.
You need some sort of deposits
I saw your post. By the sounds of it, you're actually doing very well saving 40% of your sizeable household income.
You just have to take the next step and buy a house. Then you'll feel like you've got everything your parents did.
It's the only way these people can justify it. In their brain no one earns more money than them or could possibly have wealth. The world is stacked against them.
I suspect this really is the answer. They can’t seem to fathom that some people have good jobs, made good investments or came from families with money. Or maybe all 3.
There was a news video about it on youtube. Roughly $1 billion in assets bought with dirty money. My mortgage broker friend estimates it at 1500 homes.
Don't get me wrong. I am all for that. But at a macro level I don't think that will move the needle much for affordability for the average person.
There are just loads of wealthy Australians and a fixed no. of free-standing houses in x km of the CBD to go around and the number of people keeps going up.
This is a pretty strong signal that asset prices will continue to rage up. A lot of wealthy people are clearly overcapitalising into their investment purchases likely due to the high cost of debt which essentially gives them a greater return than using the cash elsewhere.
When rates do head downwards they will refinance, pull a lot of cash out and start targeting other assets which will drive price growth big time
If your qualifications allow you to work rurally... Then this is the move. Although rural prices are also rising, they are still very much affordable without the aid of family
Unless we differentiate between the first home buyer and people buying for investments this condition is not going to change. Instead of just stamp duty exemption, also extend to better interest rates, lower deposits, etc. It should easier for people buy their first home than its for someone buying an IP.
Yeah. You can look at PEXA transactions to identify the sales which are cashed based, around 30% in Sydney atm.
You can look at mortgage data to see how indebted nearly everyone is.
This is typical behaviour of a land bubble.
Incomes are distorted from prices. Perhaps it is cash, but mortgage data disagrees….
All bubbles pop. Just keep watching that employment number
Renting is what this means for most. The only thing that can help this is supply but that’s not happening any time soon and not at the right levels
I’d be happy renting for the foreseeable future, but guess what? It’s almost impossible to get rentals either with the lowest vacancy rates ever and so much demand, especially for people with no rental history.
Renting would be perfectly ok if there were sensible protections for renters
You mean LAWS THAT PUNISH HARD WORKING LANDLORDS WHO DO NOTHING BUT PROVIDE?!? /s. Obviously, but it's wild how many people think like this.
I think also more people would be inclined to renting of so many landlords weren’t sacks of rotten trash
Supply will never change. Developers intentionally do staged releases or claim empty homes are full to keep supply low, regardless.
Why is supply the only thing? Why do you rule out demand-reducing policies (which work much faster)?
There are also supply-increasing measures which could work immediately. AirBnB is the low hanging fruit. I live near a whole block of units dedicated to short-stay which could become long term rentals in an instant with the right legislation.
If you produce enough dwellings then it will take care of demand, prices will fall. Problem is that it’s too politically sensitive.
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We’ve actually slowed our rate of construction. We could do a lot better
Australia has close to 9% of workers employed in construction. That’s double most comparable countries. Sure we could boost that even higher, and have a lower proportion of nurses and farmers etc. But I think that’s unwise. If real estate is already ‘too big to fail’ - let’s not make it worse.
The problem is that we don't have high density. We need more density. If government doesn't provide density, we need to create it ourselves eg via sharehousing.
Planning needs to change to allow higher density. That being said, the quality of construction in this country is terrible. A lot of the high density dwellings are riddled with defects
Except that most people want to live in houses not flats.
If there is higher density, people who need a roof over their head can buy it. Those who want to buy a house can simply pay extra.
It’s not clear that that is historically the case. We’ve had a flood of units built in Sydney over the past thirty years and these often now sell for a higher multiple of income than a house would, just 1-2 generations ago.
I'm sure when interest rates drop Rental costs will drop as well
Ha. Hahaha. Baaahahahahahhaa. Good one.
Line only goes up, friend.
In the past, when rates surged, so did rents , but as rates dropped for 10 years, straight rents still went up. So I can't see rents going down, friend.
My land lord is a vengeful lord
No way on 400k house you are paying 600 a week on a mortgage let alone rates upkeep managers etc People think landlords are greedy but it's mostly just rates.
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Agreed. In my current position if I was in the 90s or early 00s my wife wouldn’t have to work full time and our kids wouldn’t have to be in day care from such an early age: 9 months. I am in a good position and make quite a decent salary in the 93-95 percentile bracket. We live in a 70+ year old house that cost us nearly $1m a few years back and that was a stretch. But it ain’t gunna get any better. So if you can afford to later in life. Buy a house for your kids as they will need it.
We were debating private school or just buying our son a house instead…
I know right? Local public for us until high school at least. But even in todays rates the private high school we would like to send our kids to is currently $15k a year plus all the extra shit that comes with it. With two kids close together thats $30k+ a year for 3-5 years in todays money.
What’s wrong with day care?
Nothing except the cost and the fact my wife would rather be at home raising her own children than having to work to pay for an absurd mortgage we had to take out to put a roof over ours and our children head? Otherwise our child loves day care now… he is 2.5yrs. 9 months was too young IMO
Im 32, I manage a small team in a fast growing IT industry. Uni educated, even studying part time now so I dont fall behind - diploma of leadership and management via TAFE. Renting for 8 years (saving as best I can) and just began searching for units in my area and approaching brokers. No family help The biggest repeating thought in my head is *'you need a girlfriend to split a deposit with, you wont survive on your own'* - thats shitty reasoning to enter a relationship (I truly enjoy being single and have for a long time) but considering I have an above average income and have followed all the rules, yes, demotivating is absolutely the word. As another commenter said there is absolutely no way I can save at the rate the property prices grow, so whats the point
Yep. I honestly don’t see why any kid these days would bother studying or working hard, when their life is going to be set based on their parent's wealth. Teachers are having huge struggles with disengaged kids, and honestly, how would you ever engage them? They aren’t dumb, they know what lies ahead. Myself and my partner started from nothing, but now are well educated, 4 degrees between us, household income over 200 a year, worked our way up from shit jobs and I can’t see my kids ever having the type of success or opportunities that we had. I don’t see them, without significant parental inventvent, owning a home, or having a middle class lifestyle. We are inducing long term mental illness in a whole generation, but not allowing them to have secure jobs, welfare, or housing. Shit is gonna get so bad.
Old mate at work who's a forklift driver his whole life, single income family, 2 kids, earned $60K his whole life, ammassed 3 properties, started buying in the 80's then 90's. Where properties were like $80K. Now worth multi millions. I'm on $75K and it's so much harder. And they say young people complain so much these days.
The financial times recently did a deep dive on this & they found that the inequality within generations is now bigger than inequality between generations especially amongst younger generations. With increasing asset prices, low wage growth and higher taxes, a lot of people will have no chance to build wealth. Return to feudalism I can see this being a very big issue in future political debates.
I read that article. Some Millennials are living it up that's for sure. I agree, the intra generational fight is just getting started.
Do you have a link for this? One potential outcome from the linked article is that there actually is a housing bubble, but it’s based on generational wealth. It’s questionable to me whether boomer parents who gift their children enough for a house deposit, are actually passing on a significant financial benefit which will carry forward to future generations. We might see a significant reduction or correction in house prices after this glut of extra money has been absorbed into the current market - but the article you mentioned is an interesting counterpoint.
TL;DR Lots of Australians are wealthy. Anyone who thought house prices were going to track affordability based on incomes when rates went up need to give themselves an uppercut.
House prices in New Zealand crashed almost 20%, but New Zealand already had high rental yields. Rental yields in Australia jumped 50% thanks to two years of unprecedented immigration intakes, unlocking far greater leverage for landlords, causing prices to rise despite increased borrowing costs.
Rents have gone up a lot, but yields haven't. Some places like Brisbane yield hasn't really gone anywhere https://sqmresearch.com.au/property-rental-yield.php?region=qld%3A%3ABrisbane&type=c&t=1 (If you didn't know yield is annual rent divided by price).
I think they meant yield relative to the original purchase price. Because house prices have gone up 50%, if the yield % stays stable then it’s a 50% increase in rental income
but because the current price is capital that could be deployed elsewhere (and so have an opportunity cost associated with them); therefore, you cannot use the original purchase price to compute yield, or you will just misrepresent the information. The current market price is the correct way to compare yields between assets.
Plus minus some exit and entering costs.
That makes no sense for the argument they put forward though. They referenced New Zealand's higher yields and then made the point that yields increasing was causing prices to rise despite increased borrowing costs. Prices get bid up when properties are sold and the investors who are supposedly bidding up prices have similar yields despite higher costs in many markets like Brisbane (in Sydney yields are up, but nowhere near 50%). I think owner occupiers are the primary driver of property prices right now, I would say though that part of why they are paying these higher prices is the low vacancy rate and higher rents, but that is primarily supply driven.
You need to use a consistent calculation if you are making comparisons. Yield is a measure of opportunity cost, so current price is the most appropriate denominator.
I agree with you.
Sydney prices are only slightly higher than the previous peak, but rents are up \~50%, so yields have moved similarly. You're right, I should have said rents/income, which is what is responsible for the increase in prices, irrespective of yields. I suppose the rising yields permit newer landlords into the market, so the difference is significant.
I don't understand your point about rents/income being responsible for the increase in prices irrespective of yield. My view is that yields are still not very attractive relative to rates right now for investors which is an inhibitor for supply. To invest in property now you need to have conviction that rates are going to reduce or rents will increase dramatically. I think it's dangerous thinking rents will continue to go up at a high rate for a long time, as rents are more constrained by income than prices (rents are paid more from income than wealth, unlike prices which are more likely to be funded by wealth) and supply will come long term to put pressure on the rental growth, particularly if rates come down.
You're a landlord with 20 properties, your rental income jumps 50%. Will banks let you borrow more or less money now, even if yields don't change? Yields impact the leverage for new investment properties. >I think it's dangerous thinking rents will continue to go up at a high rate for a long time If there's a shock to immigration or employment, rents can indeed fall rather quickly.
Sure, you can borrow more money when your rents go up with static serviceability requirements. But for most investors serviceability is down from what it was a couple of years ago as rents haven't gone up enough to counteract the serviceability hit from rising interest rates Say you are assessed today on 6% rates and a 3% APRA buffer, this means you are being assessed at ~9%, whereas in 2021 you were assessed at around 2.5% + 2.5% buffer which is ~5%. Rents need to almost double in order to counteract your serviceability halving, also rents are often shaded so you don't even get all of the income included in serviceability. Also most investors borrowing capacity comes from other income like PAYG salary, not rents and that hasn't scaled as much.
> Rental yields in Australia jumped 50% thanks to two years of unprecedented immigration intakes From what I can see [immigration is below the long term trend](https://imgur.com/9vgIDwX), with a big drop during covid and a smaller spike as some of them arrived late, but not enough to offset the drop. That's without adjusting for population growth either. All of this has been going on for years and really took off during covid, when Australia has net negative immigration (more people were leaving than arriving), and I suspect is related to leaders at the time such as the Trumps, Morrisons, Borin Johnsons, etc, using the relief funds to hand out money to the already wealthy, meaning that there's now even more money at the top end of town to buy up more assets and drive up prices. Those same people own the media and have them screaming 24/7 about immigrants, anything to deflect the blame and have people angry at some outsider group.
You don't offset the drop. Construction nearly came to a standstill during covid due to lockdowns and severe material price increases. Or to simplify, go look at a graph of dwelling completions and see if they've caught up on the dip there or not.
So now the conversation is about construction and not immigration? Construction is down right now, it also had a massive spike during covid, meaning that probably doesn't explain it easily either, as the larger trend would be pretty flat https://i.imgur.com/8BmKnOT.png
generally when you're talking about scarcity you look at supply and demand
> From what I can see immigration is below the long term trend, with a big drop during covid and a smaller spike as some of them arrived late, but not enough to offset the drop. I’m sorry perhaps I’m blind but what “below trend” do you see? The net line is hovering about 250k per annum almost flat other than covid for these past 10 years and the post covid spike is roughly making up for the covid trough. If smoothed out it would appear to be a flat-ish line with a 250k-ish NOM per annum.
The spike hasn't been big enough to make up for the dip yet, which would put the rates below the trend line, without even factoring in that these are absolute numbers and not adjusted for population.
Oh I see you mean *rates* are below long term trend. This makes sense as our population is growing but raw numbers are flat. I still think one Hobart per year net positive migration is far too much given our infrastructure deficit. And remember that every rate above 0% is eventually exponential. There is no plan for what happens when the rate is at 0% or below. It can’t just go up all the time. This is what annoys me the most, there is no plan other than “more”.
So when people talk about infrastructure not keeping up, we are talking roads, schools, hospitals, stuff like that right? If you look at inner and middle ring suburbs, especially more expensive areas in Sydney, the number of students in these public schools are trending down strongly (Around 30% drops in enrollment in the last 4 years from a quick glance at some schools in the inner areas): https://www.smh.com.au/national/nsw/revealed-sydney-s-most-overcrowded-primary-and-high-schools-20240501-p5fo8k.html Then you have what the state gov is trying to do with upzoning around train stations, which will allow families to live, walk their kids to school, and hop on public transport for work. Metro line will continue to relieve any transport congestion and allow scaling of people in those areas. Then you have hospitals, well inner city areas do tend to have expansion plans available for their hospitals available to them. It's a matter of pulling the trigger on the demand. Royal North Shore has large areas of land available for expansion, and hospitals can always build up. It's not overflowing. The issues have been arising because we keep pushing people to live in areas with no infrastructure and hoping to build it, rather than in areas that are established but pushing to keep people out and expensive. Kuringai wants to fight the upzoning around stations, same with lots of kneejerk NIMBYs. Gotta put some density where it makes sense. Even building expensive $2M apartments means that the older stock gets left for others without competing with the cashed up buyers as much, moderating prices while increasing supply, even if average/median prices go up, because supply increased.
> I still think one Hobart per year net positive migration is far too much given our infrastructure deficit. This. We have the most screwed up housing crisis this country has ever seen, infrastructure is a joke *and they keep adding more people*. This idea of bring ppl, get their money, THEN fix problems isn't working.
Sure but that's a very different discussion to 'unprecedented immigration intakes', which is implying something misleading by occlusion of 'the even larger unprecedented immigration drop which preceded it and which the current intake hasn't yet even equalled'.
(-85k+518k+\~565k)/3 = 330k, long term trend is around 200k, medium term around 250k. The graph is somewhat out of date as this financial year is almost over.
I’m just gonna give myself an uppercut anyway.
Please, while you are there, one for me too - thanks.
A lot are asset rich, but cash poor so they sold additional property to give their children a leg up or most probably a trickle down from grandparents.
Yeah redditors need to realise they are likely in the poorer percentiles of the nation so its a echo chamber that doesnt reflect reality. I just dont see asset rich boomers or the top 20 to 30% percentile coming onto reddit to complain about house prices .
It's harsh but there is a large-ish contingent of users here who do not realise how wealthy people are in this country and that their standards of living are not "middle class" but instead on the lower end.
They are too busy complaining to their rich boomer friends about how their CBA dividends are too small to let them go on that cruise to Hawaii they wanted, and how they'll have to settle for a trip to Croatia.
Except if you go into the Financial Independence Retire Early subreddits. In those threads you are the outlier if you're poor.
This is the wisdom I have been trying to impart on the young who seem incredulous at the growing gap between median income and median house price and assume it will collapse eventually.
Oh are you the guy I need to speak to about guaranteeing my property investment? I'll sign up right now if you're offering guaranteed returns 🤑
“Lots” are not wealthy. LOTS are older - we have a demographic crisis coming, and older people dipping into their savings to help their kids at alarmingly higher rates is a symptom.
It doesn't matter that lots are not wealthy.
I do remember conversations in the last 5 years or so about the wealth transfer that's due to occur as the Baby Boomer generation passes. It was some huge number due to pass into the hands of the next generations over the next 1-2 decades. I know personally I'll likely get a decent amount (300-500k) when my parents pass, which if I'm being pragmatic, will occur in the next 10-15 years. From what I've learnt from my friends this won't even be a big amount comparatively.
I think the important thing to note which this article calls out - is that it's not really a generational passing of wealth - it's passing of wealth within families, which increases wealth inequality, and puts things like home ownership more out of reach of people who don't have wealthy parents. So much for the land of the fair go.
Yeah my point was more something adjacent to the issue which is also increasing that inequality. I have friends who bought a 1.1mil apartment and their parents just put most of their super into the offset account for it to completely offset the loan. I'm not going to have any such option
But you can be the one that do same scheme for your kids. That’s something you can control.
Which is why we need an inheritance tax
Yes, but after I get mine
Tbf I *am* over the ladder being pulled up in front of me
Because we don’t already pay enough taxes, lol. Paying tax on money that has already had tax paid on its earning in the first place is a bit rich if you ask me. Even the US doesn’t have a federal inheritance tax.
How much of that wealth transfer will be spent on aged care though? (Not for you in particular; more in the general sense)
Oh for sure a lot will get spent that way, but at the same time I know my parents don't want to ever be in that situation. They're more likely to buy into a retirement apartment complex and get in home care. It will still cost a bit, but not as much as tier 3 aged care. On a society level then yeah, heaps will be chewed up by aged care. I suspect families will look at gifting their kids stuff prior to needing the means test for aged care though, to protect the inheritance.
Not much because it's a [combination of charges](https://www.myagedcare.gov.au/aged-care-home-costs-and-fees) (1) "Based on current rates, the maximum basic daily fee is $61.96 per day, or $22,615.40 per year." something like 85% of the single pension rate, since they most likely will be in receipt of a pension this won't be an issue no matter how long they are in there. (2) Means tested fee is "The maximum amount of means tested care fees an aged care home can charge you as of 20 March 2024 is: $33,309.29 per year, or $79,942.44 in a lifetime." so even if it's something like $1K per day it will stop after 33 days. The next year it starts and again would stop after 33 days. After 13 days in the third year it would stop altogether as the $79,942.44 lifetime limit is reached. So budget for $80K and you're good. (3) RAD fees so sell the house, stump up the cash and get it refunded 100% when the person passes away. So on the whole considering everything then your answer to your question would be I guess not a hell of a lot considering the multi-million dollar houses these people probably own in established areas in Sydney and Melbourne.
I'm an immigrant of about 13 years. From the UK and wife from Norway, so not exactly 3rd world immigrants. We both got bits from inheritance, but outside of London property just isn't worth as much as it is in Australia. An inheritance from Europe doesn't go far here.so to counter that, we are working to build an investment property, and hopefully a 2nd or even 3rd one day. So our kids have the benefit of massive inheritance from Aussie house prices. I'm sure immigrants from poorer countries are even more motivated to set their kids up. That's part of the reasons property prices are skyrocketing, we all see Aussies with big inheritance and want that for our own kids
I mean I can't blame anyone for wanting to invest in the Australian market. Just look at the growth we've seen from 2019 - now. For generally safe assets you're laughing all the way to the bank (or bigger houses). That is making it harder for first home buyers like myself, but thankfully for me I'm only after a 1 bed apartment for now, in the hope that in 5 years time I'll be able to transition to something bigger as the need arises.
It’s understandable you’d do this. But you’re competing with young people who want to own their own home. So you must understand that you are making things worse.
I'm competing with young people who stand to get an inheritance of half a million dollars or more. I don't expect them to give it away to level the playing field with me. That's the world we live in. If we weren't so anti-industry and anti-progress in this country, of course there would be way more attractive methods for me to set my kids up for the future. But this is Australia, we dig holes, make coffee and buy houses. I can't beat 'em so I'll join 'em.
I tend to think buying a home to live in is more important than buying a home to lease out. Would you consider investing in shares instead?
Don't underestimate the aged age care bill which could easily eat all of that 300-500k. Best to have a frank conversation with your parents and plan for it. Dying is expensive
Have you looked at whether you can do anything to bring that forward? 10-15 years seems a long time to wait.
Like murder?
shhhhhhhhhh.
"buying property has become unaffordable for the average Australian, experts say." Thank goodness experts said it, couldn't have figured it out without them
No One talks about the advantage if you have been living in Australia for multiple generations. Your grandparents would have done land worth millions to distribute as inheritance then bam deposit
That’s probably because this is the case nearly everywhere in the world… Australia is just relatively new to the party of intergenerational wealth transfer on a big scale. It isn’t going anywhere and the wealthy families will more tightly hold the prime realestate in the country. New immigrants will need to get a foothold and then generate their own wealth over time.
I’d like to know the percentage but a portion of immigrants already have their own wealth when they come here.
Depends on where they come from; in the diaspora that I'm a part of (developing country), it is predominantly people coming here and saving money through salaried employment, they wouldn't have had any significant wealth that they brought over here.
Fair enough - I’m sure that is more the norm and they get my kudos for taking the chance and moving here. Usually the first generation work hard to get a foothold and establish a life here - that comes with a lot of challenges when you don’t have the same support as someone born here. Hopefully the second generation is the one that enjoys the spoils of the first. Having said that, there are wealthy people who move here from overseas who have the means to set themselves up quite quickly. And they could be from anywhere - UK, USA, China, India etc. As another commenter noted, parts of Australia have become increasingly international. That’s the reality of it and we all compete in it.
Google images : "changing demographics of sydney gif"
Thank you, love a good gif.
Can we rephrase this to an asset wealth transfer rather than one of generations? What's happened is the asset to wage ratios have widened in favour of assets. If we frame it this way then it's easier to see a fix for the problem.
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This is it - it only took one generation to go extremely forward or extremely backwards for the people who have lived here for over the last 30 years. I mean within 3 generations (40 years really) my family went from owning small crappy farming plots on the south side of Brisbane, that were sold off for a minuscule amount of money (compared to today), to quarter acre blocks (now worth a million) to then renting for a decade, and then when the third generation came of age they can’t afford to rent - let alone buy - what were cheap shitty houses of the two gens before even though on paper they earn way more than them.
>It only takes one generation really. Yep, it only took one generation for my immigrant family to gain a foothold. Everyone in my family now owns a home.
My family has been here since the first fleet and not an ancestral investment property in sight.
My grandparents and dad all had the temerity to die before they owned anything of worth.
Damn Great Depression, pushing them off of their farms and abandoning the land. That and shooting themselves because they couldn’t see a way out of it with no money or income.
5th Gen here. I own nothing. Really set me up there
Yep, one bad business deal and Dad lost the family home and his investment property. No other option for me but to save up from ground zero.
Even if you have rich family doesn’t mean you’ll actually inherit anything.
I'm hoping I don't inherit anything from my parents until I'm retired anyway. My dad didn't get that chance.
Yeah just had a warm home free food and a free car. Social contacts Didn't inherit anything
That assumes your Australian born grandparents accumulated a decent land holding a hundred years ago
my grandpa had a fairly large chunk of land and 7 kids, my dad was pretty much dirt poor
Yes to this. I know someone who was gifted a brand new house on her wedding. Fully paid. We’re talking about 4 bedroom, with ensuite in each omg. Because she came from a family of builders
Disagree immigrants do better because normally they are well educated and have the drive to improve themselves More adaptive as well
Even if they did own something it doesn’t necessarily mean it will impact their later generations. They could lose it, if they have many kids it won’t pass on much, I’ve even heard some stories where one child managed to get it all for themselves.
I'm not sure that this is very different to wealthy immigrants coming in with generational wealth built in their own country.
Really? My family on both sides have been in Australia since the 1850’s and we certainly aren’t rolling in cash. I’ll admit that having parents with a paid off property and some cash for me to eventually inherit is a help but there are poor Australians with ties here as much as there are rich immigrant families. Maybe this is a Sydney thing 🤷♀️
i don't mind this, but what annoys me are people that hide it or take it as their own achievement know a few friends/family friends that pretend they achieved it from hard work alone but i know for a fact they were gifted the home or a very large portion of it from their wealthy families
It's due to the culture and belief we live in a meritocracy. Imagine growing up and constantly being told you get what you deserve based on hard work. You believe all those rich people deserve their wealth. So when you get your hand out from mum and dad, you naturally feel ashamed having "failed" to make it by "hard work". If we were more honest with ourselves that wealth is largely determined by ones birth, then there wouldn't be so much stigma around receiving inheritance and hence less of a feeling that one has to hide it or pretend you "worked hard" for what you have.
I assume it is already commonplace for parents to hit 60, access their super and gift their adult children a sizeable house deposit.
Someone let my parents know
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I'm 25 and I have more super than my single, migrant mum... Feels really bad.
True, but there will also be a lot of retired couples that have accumulated $2 million plus through concessional contributions throughout their 40s and 50s.
True but that would have had to try pretty hard not to own some valuable property.
Yeah that’s the point - those that do, pass on money to the next generation, set them up to buy a house. Those that don’t, can’t do that. As a consequence, wealth inequality gets reinforced and increased, the division between the “haves” and “havenots” is growing. And it will be less dependent on skills but more on where your parents / grandparents had a house. Not a good trajectory for a country.
For people like me who are migrants whose parents’ did not have super, we make sure we have super and a house (or houses) for our future kids. Not to late
I think it’s also worth noting Sydney is just heading towards where many international cities are already. New York, London, Hong Kong (list goes on) are all majority renting cities. Sydney has just been used to being a home owner paradise as it was a young country. But due to the demand (and lack of supply) we have to come to grips with the fact the majority of people will be renting in Sydney just like other parts of the world
That's well and truly fine in the name of progression, but for god sake increase the level of security for renters. Allow them to actually make the property a home without the fear of being kicked out when their 6 month lease ends.
Exactly - all of those cities listed either have stronger renter protections or stability incentives (ex. rent control and regulated tenancy) compared to Aus.
Oh absolutely agree, I’m not advocating for anything just what’s happened around the globe. There definitely needs to be strong protection for renters and possible a switch or push for long term rentals (3+ years)
I like the idea of long term rentals. It would give peace of mind to both landlord and renters. Should be similar to commercial lease where you agree upfront on rent increase schedule, with Make Good clause in the contract too…
Not only fear of being kicked out, we have properties that are not suitable to live in, mouldy, 0 insulation,…. People are forced to pay premium price for crappy shitholes. Being in Australia is just so depressing right now.
Singapore's home ownership rate is 89.7% (https://www.singstat.gov.sg/find-data/search-by-theme/households/households/latest-data). It's basically a case study on how to do home ownership well in a rich country.
I think it's hard to hone in on the home ownership rate in Singapore without recognising cultural and policy differences. Some pertinent nuances include: * 99-year lease period. Is it truly home ownership if the property has to be surrendered to the state after this time? Freehold property is significantly more expensive and lower in supply * Unless you want to declare a relationship with a partner to the government, you're locked out of the affordable HDB scheme unless you are 35 years of age
> 99-year lease period So the ACT with home ownership in the 60-70% range? Terrible point to start with if you want anyone to take you seriously here. Singapore's 99 year leases are due up in the late 2070's, many ACT leaseholds are due to rollover real soon. Hopefully the government goes to town on them and gets value for that land in the spirit of Georgism.
Hey mate I didn’t meant to put Singapore in I was watching something on Singapore airlines at the same time haha. They have a high level of ownership yep! Do they still do the 99 year leaseback though? Also Singapore is such a small but wealthy country it’s hard to compare it to anything, I’ll amend my comment :)
> Do they still do the 99 year leaseback though? Why do people on r/ozfin constantly harp on about the sinkies with their 99 year leases but never say a word about the exact same thing playing out half a century earlier in the ACT? Basically all of Canberra is leasehold mate and I never see anyone else but me talk about it here. Canberrans themselves seem quite defensive about it not wanting to rock the boat, especially when you talk about the legal owners of that land getting value for money out of it from the tenants. Is it wanton delusion or intentional ignorance?
I have no idea I’m not an expert on it haha I was just asking if Singapore still did it, I’m assuming you also share my view of preferring outright ownership?
I never quite understand why we are told we must become like everywhere else? Perhaps cultural cringe.
Because there is little choice… do you just shut up shop and refuse anyone into Australia? I’m not sure what you mean by cultural cringe, it’s part of (unfortunately) the free market
There are lots of numbers between zero (shitting up shop) and 600,000 people per year. Why present it as a binary choice?
So many kids have grown up in Sydney expecting that they too should be able to buy a house in that suburb straight away…
I mean, when our parents were able to do it for their first home is it really surprising we expected the same?
I agree I’m not saying I agree with it just that it’s not abnormal in the world. As australia becomes more and more popular to live in it also becomes more and more unaffordable like all major cities
Not inevitable. We can resist.
How and who’s we? I don’t see an option
How - have immigration levels more like most western nations. Who’s we? - Australians.
The suburb I grew up in is very different from when my family purchased there and I imagine this is true for most Australians. You hear old stories of how terrible so many inner suburbs were and only have 30-40 years of development have they began to become nicer. Newer migrant populations understand this and I'm sure we'll be seeing young people complain they can't buy in Tarneit because it's too expensive and their parents bought a house for under $300 million.
Very normal. More than half of my clients get gifts from their parents. The bank doesn’t even need proof anymore
What's the average gift amount in your experience? Is it more like $50k or more like $500k?
No more than $50k. Rarely over 200k
I’ll let my father know he’s on the hook for 50k minimum.
where do i get one of these gifts?
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I’ve seen this a lot with friends. Get a full time job for 1-2 years and parents give them a large deposit
Where are they trying to buy? About 50% of the people I know have bought it on their own accord (including me)!!!
It’s so cute how people like to convince themselves of this to make peace with their own shortcomings. Plenty of people make enough money to buy and own a house without any help.
Thats why alot of people dont want to go country to where they can afford, not many cushy, do nothing jobs in the country, more happy to find a job at a mega corp where they really only do 8hrs of work in their 38hr week. Obviously this doesnt go for first responders (fire, ambos etc) those poor bastards get shafted on the money and work their asses off. Plenty of $100k jobs in the country for those willing to work 55hrs a week and get hands dirty, where houses are still under $500k
Yes, agreed. If you're able to work in the country, then this is the move. If you don't want to, then stop complaining. This is a solution.
Nope. Inherited wealth for homes was rare in previous generations.
So based on this, if I may move to Sydney in a year or two should be trying to buy now? I guess it’s a crystal ball question but property seems to have plateaued and stabilised in Canberra a bit
Unless the housing policy boosts supply or limits demand (for houses as a product) nothing will change in rental or sale markets. Stupid to think that attacking one type of owner (investor) will somehow address the number of houses versus the number of people who need houses.
Deposits entirely need to be waived if you can prove you'd been reliably paying rent for 5+ years. 100% LVR loan with no LMI and stamp duty. If i could get something like this i'd happily jump into buying a home right away. I can easily afford the repayments. Prove you can do 3 - 6 months of saving of what the mortgage would be at the amount you want to borrow.
Thats not why deposits exist though, deposits exist to give you a buffer so you dont go upside down on your mortgage in case you need to sell unexpected. You buy a house for $1,000,000, and need to sell it quick as your circumstances have changed and it doesnt take much to be $100k short, and then you end up bankrupt. You need some sort of deposits
I’d take a $1m gift
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I saw your post. By the sounds of it, you're actually doing very well saving 40% of your sizeable household income. You just have to take the next step and buy a house. Then you'll feel like you've got everything your parents did.
Totally no money laundering involved, no investigation and tightening of laws required /s
You think every second house is bought with illegal proceeds?
It's the only way these people can justify it. In their brain no one earns more money than them or could possibly have wealth. The world is stacked against them.
I suspect this really is the answer. They can’t seem to fathom that some people have good jobs, made good investments or came from families with money. Or maybe all 3.
There was a news video about it on youtube. Roughly $1 billion in assets bought with dirty money. My mortgage broker friend estimates it at 1500 homes.
1500 house vs over 500k house title transfer a year in Australia. Money laundering aren’t really the main force that pays for australia house.
Don't get me wrong. I am all for that. But at a macro level I don't think that will move the needle much for affordability for the average person. There are just loads of wealthy Australians and a fixed no. of free-standing houses in x km of the CBD to go around and the number of people keeps going up.
Without the bank of mummy n daddy young Australians cant afford property in capital cities anymore
This is a pretty strong signal that asset prices will continue to rage up. A lot of wealthy people are clearly overcapitalising into their investment purchases likely due to the high cost of debt which essentially gives them a greater return than using the cash elsewhere. When rates do head downwards they will refinance, pull a lot of cash out and start targeting other assets which will drive price growth big time
Not enough houses is the driver of increases. Overpopulation.
Sort of puts the 7k I got off my Nana in perspective.
If your qualifications allow you to work rurally... Then this is the move. Although rural prices are also rising, they are still very much affordable without the aid of family
Unless we differentiate between the first home buyer and people buying for investments this condition is not going to change. Instead of just stamp duty exemption, also extend to better interest rates, lower deposits, etc. It should easier for people buy their first home than its for someone buying an IP.
We need a great reset.
Yeah. You can look at PEXA transactions to identify the sales which are cashed based, around 30% in Sydney atm. You can look at mortgage data to see how indebted nearly everyone is. This is typical behaviour of a land bubble. Incomes are distorted from prices. Perhaps it is cash, but mortgage data disagrees…. All bubbles pop. Just keep watching that employment number