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What are some exciting explanations for this and what the distribution of this among different regions and cities have been. From the second article, Hobart seems to be relatively untouched by this.
I think the main reason is lack of supply. My daughter has been trying to upsize and looking for about three years as they are fussy on location. Although the interest rate rises have cut the amount they can borrow, they have been able to save a lot while they have been looking. Properties sell before they go onto the market.
The ramp up of immigration is partly causing the lack of supply. People have to live somewhere and we are importing a lot of relatively wealthy Asian immigrants who can be in a position to buy.
Keep in mind that the general measurements of housing stress do not really apply for high income workers, who can often afford to comfortably pay a higher proportion of their incomes to their mortgage.
Many older retired people are opting to remain in the capital cities rather than moving to the regions, often for family and medical reasons. Often take their time downsizing, so the supply shortage is not being helped, despite some government policies meant to encourage downsizing.
What are some exciting explanations for this and what the distribution of this among different regions and cities have been. From the second article, Hobart seems to be relatively untouched by this.
The government has a fairly perverse set of incentives that encourage property speculation. Interest is not deductible on the home you live in but is on any investment properties; most property "investors" have negative carry (this is actually encouraged LOL) on the property and are only in it for the capital gains – you can compare rent price indexes to price indexes and see how detached they have become. There is no capital gains tax or land tax on the house you live in, but there are very high stamp duties (~5% of the home value) when buying. Because of that a lot of people would rather over-capitalise where they live than move.
Layer on to that the population of Sydney and Melbourne increasing by 6%-7%/year and some pretty politically savvy anti-development lobbies and you have a cocktail for high house prices. At some point it will end, but this has been happening now for the better part of 30 years.
Yes, we are retirees in a five bed-room house in Sydney. The five houses closest to us, of a similar size, have either one or two people living in them. Six houses, about twenty-four bedrooms accommodating eleven people, one only occasionally as he generally lives in his other house down the coast. This is typical of our part of the city and causes all sorts of problems.
The way our tax system works makes us consider downsizing but upgrading. If we do that we can not only put more money into super but have more of our assets in a capital gains tax free environment. But if we were looking to buy, we would not have a mortgage and would probably be in a position to offer over market value if we really saw what we wanted. So all the buyers in a similar position push up the prices. And we certainly would not be leaving our general area as this is where our life is.
Lack of supply driven by covid lock-downs and border closures which created the labor and material shortages. Also given that around 9% of Australian's own at least one investment property I think it's safe to say where alot of the supply has been gobbled up. Thankfully with the government first home buyer incentives during the Covid outbreak creating the highest number of new build approvals on record. When these houses finally come through in bigger numbers it should help with supply. There is still a significant backlog of new housing that are taking 2-3 years.
The way I also look at it is that the government does not want to tackle this. No Premier wants housing to go down in their own cities. Australians voted for Labor who are clear that the private industry will look after itself so obviously most Australians are happy with the status quo when they voted Labor into power
Lack of supply driven by covid lock-downs and border closures which created the labor and material shortages. Also given that around 9% of Australian's own at least one investment property I think it's safe to say where alot of the supply has been gobbled up. Thankfully with the government first home buyer incentives during the Covid outbreak creating the highest number of new build approvals on record. When these houses finally come through in bigger numbers it should help with supply. There is still a significant backlog of new housing that are taking 2-3 years.
The way I also look at it is that the government does not want to tackle this. No Premier wants housing to go down in their own cities. Australians voted for Labor who are clear that the private industry will look after itself so obviously most Australians are happy with the status quo when they voted Labor into power
In the process of 'protecting' housing inflated prices, they are willing to further decline living standards. The record turbo immigration (un needed) partly the blame but other things to be factored in as well. Increasingly 'ordinary' folk are being left behind. Near impossible to purchase and a very 'difficult' rental market.
First Home Buyers was a mistake and goes way back to 2000. Not a result of the Covid outbreak. I doubt if the number of new builds will come anywhere close to solving the numerous issues impacting the market.
Yes, we are retirees in a five bed-room house in Sydney. The five houses closest to us, of a similar size, have either one or two people living in them. Six houses, about twenty-four bedrooms accommodating eleven people, one only occasionally as he generally lives in his other house down the coast. This is typical of our part of the city and causes all sorts of problems.
The way our tax system works makes us consider downsizing but upgrading. If we do that we can not only put more money into super but have more of our assets in a capital gains tax free environment. But if we were looking to buy, we would not have a mortgage and would probably be in a position to offer over market value if we really saw what we wanted. So all the buyers in a similar position push up the prices. And we certainly would not be leaving our general area as this is where our life is.
In Perth, people similar to yourselves are being encouraged to rent out spare bedrooms to renters.
^^ In Darwin, the local University ( CDU, Charles Darwin University ) is going around putting flyers in letterboxes looking for rooms to rent for the huge post Covid influx of foriegn students. All the Uni accommodation is full.
The going price for a room with AC is $200 a week.
In Perth, people similar to yourselves are being encouraged to rent out spare bedrooms to renters.
Good grief, had enough of “renters” when my adult kids were boomeranging around.
I wonder what the uptake will be? Obviously a good idea if one is short of money or lonely, neither of which applies to us.
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