There have been many bizarre moments in the two-decades long inflation of the housing bubble in Australia, and many competing to outdo each other in patronising and denigrating either the generation above or below, for simply being in whatever situation they were in, but surely a new premium has been set by the ANZ Bank with their “home loan coach” ad.
You know the one. It starts with a young couple at an auction watching the bidding on a shabby house shoot past their limit place, as the old song “It’s Impossible” plays. Cue montage as they inspect one awful house after another, there’s a few tears at the kitchen table, and then they’re in a schmick office with a young Anzbot, who says “let’s get you started”.
She’s a first home coach! See you were doing it wrong! Who knows, maybe you were reading Domain upside down and thought everything was 000,000,1$! Did you feed the mortgage papers to ducks? There are many ways to go wrong. Yr first home is like yr first kiss in braces. Yr what, 28? You are little children. Let me show you how.
Of course the one thing the first home coach can’t do is get you an inheritance you don’t have, or a ring of relatives to contribute to a deposit. No matter. After seeing “coach”, the couple bid on a house that would hit about $1.5m, or $738 in northern Tasmania. The sun comes out. Thanks coach.
Thanks ANZ! With a limited housing supply, and an inflating market, it doesn’t matter to you where the money comes from. So why not add to the lie that lack of access to home ownership is about some attitudinal failure by the young — rather than about levels of familial capital. Home ownership isn’t about generation, it’s about class. Of which ANZ shows very little.
I was in my old hunting ground (Perth) over CNY or the Spring Festival. I couldn’t believe the (1) reduction in vehicle traffic or (2) the number of people who attempted to sell me anything. West Perth is almost a commercial-property ghetto and East Perth (significant property (intensive-living) development from the late 80s) seems to have seen better times. We can’t go forwards for backwards and there is “no one left to lend to”.
However, I do not concur with the last paragraph. There are any number of structural reasons for the “apparent” shortage of land/housing such as (1) excessive centralisation of the capital cities, (2) negative gearing and the tax code (3) HECS debt etc., (4) a huge incidence of taxation on PAYE compared (i.e. a 1:1 reversal over 60 years) to company tax, and (5) a failure to consider any other functioning economic system that does not have the systemic problems that afflict Australia.
A good deal of this content has been discussed at length on Crikey. The more the ALP sits on its hands the more I love the Libs although I never have (and never will) vote(ed) for them. We get the politics we deserve!
… or the younger generation should just get out there and get a job! Steve Price was once sharing his expertise on The Project tonight – Why when we were young…, The Vietnam War! Hard work!
Yeah, we had it so tough. In the late 70s my wife and I slaved for 3 years, living in Neutral Bay, running 2 cars, catching the ferry to work every morning and up to the Oaks at night, yes, we slaved for 3 whole years to save up for a deposit for our first home in Manly. Boy did we have it tough, eh Pricey.
In other words, (and not for the first time) the ratio of MedianHousePrice / MedianWage now is nothing like the ratio that it was in the 50s through to the 80s. Of course the median house price varies from suburb to suburb as does the wage/salary from occupation to occupation but the general point is there. As to the change of ratio : well consider points 1, 2, 4 and, somewhat to the rear, 5 of my initial post.
Do provide some numbers Bref (the exercise does require your data) on the median price (or quartile one or three) of where you live and for a married couple in their late 20s (Guy’s example) in related circumstances to yours of the late 70s and let’s ascertain if a mortgage can be retired in 15-25 years.
Kyle asked for some figures – in 1984 we bought a crappy corner 3 b/r house on a noisy bus route two streets from the cliffs between Bondi & Glamorama for $55K and thought it a rip-off.
Sold it during the Recession We Had to Have and 20% interest rates for over half a mill.
Still a rip-off but the buyers were chuffed.
It recently changed hands for $1.95M, STB a disappointment.
Yeah, I was a bit hot under the collar when I wrote that. I can’t stand people my age group sprouting the rubbish they do about the younger generation.
I’m sure there are people around who know the figures in great detail and no doubt I could do some research to find them as well, but it doesn’t take a genius to know that it was much easier to buy a home 30 or more years ago compared to today.
Even then Manly in Sydney was a coveted area to buy a home and we were living a comfortable lifestyle (my wife a young accountant, myself starting a computer business) and still we were able to save for a deposit in only 3 years (without family help). For the vast majority of young people thats just not possible today.
There is some first class data here! Assuming AR sold the corner block circa 1991 the average compound rate would have been circa 39% if sold for $550,000 seven years hence. Considering the 34 years since 1984 and the raw gain (1.95M/55k) the return is 11%; still better than shares. https://en.wikipedia.org/wiki/All_Ordinaries Funny (ha ha) that Oz has no venture capital (unlike Northern Europe/USA) to speak of. Oz could have had a ZTE-like company but, na; property is just too easy.
Have a go at plotting the equation since 1872! Gearing. Great for the boomers but disastrous for their kids and grand-kids! The short term verses the long term eh? Play with it now and one could knacker the super funds!
Referring to the early 90s Singapore’s President Lee Kuan Yew remarked (about a decade prior to dips in GDP etc. of the early 90s) that Australia was to be “the poor white trash nation of Asia”. Interesting to reflect as to how matters turned out.
All (I think) first world countries have adopted the neo-lib ideals of removing rights to automatic wage indexation and tariffs and have implemented priviatisation and decentralisation for the purpose of improving (as Lee put it) the “slothful business culture and industry featherbedding in Australia”
There is a project on the ‘back-burner’ for Keane or Rundel or anyone there guys. Given the space I’d undertake it myself.