Good News – essential item gets far more expensive

In the midst of our nation’s worst housing affordability crisis on record, the front page story on Saturday’s Courier-Mail newspaper manages to make rocketing house prices into a good news story.

The story contains a range of phrases portraying price hikes as positives – such as “solid gains”, “healthy price growth”, Brisbane “leading the way .. with consistent price growth” and “suburbs within 10km of the city performing especially well” and the suburbs with the biggest price rises (of around 40 % in one year) described as the “top performers.”

There’s nothing unusual about such a story of course, but this sort of mindset is one reason why it is so hard for political parties or the mainstream media to focus on effective solutions to the housing affordability problem.

If it was any other essential item like food or petrol or cars going up in price so constantly, it would be seen as unrelentingly bad thing, but this approach is rarely applied to housing. Of course, housing can usually be resold for more than you bought it, unlike most other items. Housing becoming more expensive might be a good thing if you’re an investor or if you already own a home, but it certainly isn’t a good thing if you’re trying to buy a home or if you’re a renter whose rents go up as a consequence.

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31 Comments

  1. Housing affordability is a furphy – it’s scaremongering by politicians to try and make themselves relevant. People can’t afford everything they want. How is this news?

  2. My brother saw a weatherboard in our twin settlements,or place names for $218,000,and I spent a couple of weeks getting prickles out of small paddocks that is a working cattle property worth $616,000.For the first time in my life,I felt a new fear,a pyschological matter I rarely acknowledge.I couldnt believe that asking price,more so because I know its history as a house,and the [Secretly I hope my brother was seeing things..forlorn hope]owner.I now feel threatened by house prices…and before the election the ALP had this matter about rentals in Grafton N.S.W.,where an average full time employed would be only be able to afford a one bedroom unit.Capital has won Andrew,and all we have is promises that have no meaning as ownership is taken away from us,whilst some brag their work ethic has made them and their home ownership.Wrong on both counts.They own their houses on the back of a lot of exploitation that wasnt in their building.Rudd s son-in-law and his toady drinks with Gore means the bastards will be demanding even more of us,as Labor flogs off more that was publicly owned.No hope in being hopeful about Labor, they have set their collective backsides like sails to the highest bidders…the sooner people wake up the better.The resources boom is only a government revenue boom,and nowhere else does it exist…Christmas this year maybe the final outrage that,Labor wont be able to stop the criticism of them,as people look at the State revenue raising methods and justifications, knowing a new year is a long time where government can dream up revenue raising and matters that end up inflicting more costs or uncertainty.Iemma is certain about his future,everyone has a quite right to not make that confidence continue.I suspect Iemma would love to think the Police function will stall the unplanned inenvitable.It may,but not by riot squad,but wondering if they can live with the uncertainties that others have both being law a-biding or not.And to me Iemma is too conservative

  3. I don’t think it is a “furphy” for those people who want to buy a house but can’t afford to, despite earning a decent wage, Nick.

  4. While demand from migrants and the 1500 people who move to Queensland from interstate every week remain high, there will continue to be upward pressure on housing prices, due to excessive competition.

    There will also continue to be excessive strain on infrastructure such as hospitals, schools and roads.

    Added to this, most young people expect to marry late, after blowing all of their money on overseas trips, expensive clothing, alcohol, outings etc.

    Then when they marry, they start crying poor. They can’t afford a house. They can’t afford to have children.

    Even those on high incomes require many thousands of dollars from the government to pay for the Baby Bonus and/or Child Care.

    No wonder the elderly are living in poverty. Most of the money is being thrown at those who don’t need or deserve it.

    On TV recently, I saw a mother being interviewed in her loungeroom. She and her husband could not possibly afford another interest rate hike. Their baby was sitting on the floor amongst thousands of dollars worth of toys!

    One could be forgiven for thinking that mothers are primarily working to pay for someone else to look after their children, disposable nappies so they don’t have to wash them, the family’s fleet of vehicles and material self-and-child spoiling.

    They might as well stay home for a few years and wash nappies, with only one family vehicle to run. It would be better for their kids’ health and wellbeing – and for the environment.

    I also think Andrew’s recent suggestion of a savings scheme for young people was excellent.

  5. I believe the problem lies with the lack of decentralisation because the infrastructure to spread out and make use of the vast tracts of land.

    I have a business in the building industry and let me tell you that in the not so distant future, there will be a lack of timber due to no vision and the true grasp of what sustainability really entails!

    It is time that we look at the nation we want our children to inherit.

    I’m not talking about three year term vision, I’m talking about fifty years down the track.

    Have any of you considered this, or is that too much to ask???

    Is Australia going to have any sustainability?

    I mean will we be able to feed ourselves and still have an export capability?

    Will our environment be in a better condition?

    What about the economy?

    Andrew, I’m still waiting for a response…tell me I’m dreaming or tell me that the project would be more viable if there was certain shifts in the strategy.

    Better still…tell me that you have a better vision…..I’m all eyes.

    scaper…

  6. It doesn’t really matter what kind of vision individual politicians have; when most of the political, humanitarian, capitalistic, warmongering, environmental, agricultural, fossil fuel and mineral clout has already gone global.

    Our government has traditionally been at least 20 years behind the eight ball, but now in Queensland, I think it may have climbed to 40.

  7. CORAL [on 4]:
    Housing affordability has more than one aspect and it certainly does have a considerable impact on the decisions to marry/partner late, to delay having children or even to not enter a permanent relationship at all.

    For decades before the SubPrime Depression put banks and building societies into a fugue state, you had Buckley’s Chance of being able to get a loan for a very modest little cottage just like Grandma and Grandfather had when they got married. There were exceptions, of course, but few and far between.

    If however, you wanted a badly-designed, horribly-inefficient huge monstrosity with an anti-family room the size of a cow paddock then the money was right there – along with the loan agreement and the mortgage documents; no worries!

    Great for short-term profitability; pity about all the social and long-term economic disasters.

    I can’t imagine the Rudd government doing anything to compel banks and building societies to behave responsibly [and in their own long-term interests too].

  8. Graham:

    I don’t think the decision to marry/partner late has much to do with housing affordability. I started my married life in a tiny flat with two babies.

    I think it has more to do with the permissive society in which we live. We also cannot rule out the fact that a lot of the parents are divorced, which may put a lot of young people off marriage.

    My parents started out with a war service home with a large mortgage (despite Mum saving a deposit), a couple of packing cases to sit on, an ice box, a grandfather clock and a bit of bedroom furniture. In those days, women earned less for doing the same jobs as men. Children arrived fairly quickly – not much choice in those days.

    Today’s young people have exceedingly high expectations as to what they should have and when they should have it. They may study for longer, but at the end of it, the recompense generally makes up for the years spent not earning much income.

    From personal experience, I would say that you’re better off starting out with second hand or minimal furniture that allows children room to play without fear of damaging expensive items – also no carpets.

    Before the election, I observed Joe Hockey to say that we all want more for our children than what we had. But should we?

    Today’s children are largely a bunch of overindulged spoilt brats, with little respect for their NUMEROUS belongings – or for adults, for that matter.

    These days, we have a social competition to see who can grab the most for themselves, while doing the least for others.

    Last night on TV, a spokesperson said that parents are spending more on children than they ever have before – mostly due to sending them to private schools and providing indulgence.

    So-called children in the 18-24 age group were costing parents the most – paying upfront university fees.

    As for the banks, well yes, absolutely! They even admit in their documents that no social consideration is taken into account.

  9. What flabbergasts me is the home-owning mugs who think that rising house prices is somehow a major benefit to them.

    If you own an investment property that you don’t live in, sure, rising property values do benefit you financially. But as far as owner-occupiers go, if it goes up in value, it means that all the other houses you might consider living in will also go up in value. Unless you’re planning to move to somewhere where property prices haven’t risen as much, you’re pretty much treading water.

    If you’re prepared to use the increased value of your home to borrow against to buy some income-producing asset, great, but how many people actually do that?

    So in summary, rising property prices are great for landlords (in general, amongst the richest section of the population), neutral for owner-occupiers, and terrible for those that don’t own properties.

  10. Robert:

    I can think of one benefit for owner-occupiers, especially if the size of their household decreases.

    They can “trade down” at the peak of the market and come up smiling – or, conversely for others, “trade up” during a recession.

    We traded up during a recession – more by accident than any specific plan.

    The type of house was pretty much the same, but the area was better. We moved from lower socio-economic to working/middle class in 1986, but the interest rates were a real killer.

    On the plus side, it was closer to the city and workplaces (savings on fuel and fares), and the local schools were better.

  11. I read an article the other day, that pointed out how poorly Australia does in relation to public housing. Apparently, in comparison to many countries in Europe, we fare very far down. There’s 100,000 people living on the streets as we speak; many due to loss of job, house been repossessed; even when you rent you can end up on the street. I’ve heard on numerous occasions this year, that those in real estate (20-30 years) have never known as many people losing their homes. Some is greed, bad luck or bad advice, and banks etc should also take responsibility – allowing loans to those who have to pay a 3rd or more to repay.

    Only 30 years ago a person(male ususally) may borrow $30,000 for a home, and his annual income was the same amount?How many people earn at least $300,000 a year-that’s the cost in NSW for a modest 3-4 B/R. I’ve also heard, that in 20 years to come, there’ll be too many huge homes as families grow up etc. Majority of those over 60-65 live alone now!That’s certainly the case in public housing here.

    Young people also have horrific HECS to pay off too. The politicians who introduced this (Labor) and who increased the fees enormously((Howard) got their uni courses free – all the present Chancellors did!(4corners program)Too many are over the $100,000 mark. When you factor in unemployment, under-employment, a lot of part time and casual workers (2 or 3 jobs sometimes)those on disability support pens. the real employment figures are more than the govt said, perhaps 10-12%. Youth unemployment here is 40%! Horrific situation. More young people are staying at home longer too, as they can’t afford to buy or rent – not enough properties or money. I feel sorry for young people. Of course there are those who want it all now, but a lot have their heads screwed on and are working hard – at home, work, uni and/or TAFE.
    The average age of women having first babies is about 36-37. Not rushing in are they? Marriage is on the decline and divorce stats still up.

  12. Naomi:

    “Only 30 years ago a person (male usually) may borrow $30,000 for a home, and his annual income was the same amount?”

    I would agree that a couple could borrow $25,000 to $30,000 (based only on the man’s income), but his annual income was CERTAINLY NOT the same amount i.e. $30,000. That would approximate the minimum wage NOW.

    Students only have to pay off their HECS debts when they are earning a reasonable figure, and then it is only a set percentage of their income. They can pay it off quicker if they wish.

    The highest fees for university courses are generally attached to the highest paid jobs, such as Medicine, Science and Engineering.

    You’re right about most women not rushing in to have babies. Then why must the government pay their child care fees and huge baby bonuses, when most of them ought to be financially well off?

  13. You’re right about most women not rushing in to have babies. Then why must the government pay their child care fees and huge baby bonuses, when most of them ought to be financially well off?
    Could have something to do with the fact, that the population is ageing, and the government was worried how many mugs would be around to go to the wars they create, pay tax, and help contribute to their pensions later on, or their descendants pensions later on. It could also be because, after taking so much tax they thought that they should look like they were giving some back; also, as far as Howard’s conservative view of women (1950’s)it was his compromise to not agreeing to paid maternity leave! A cheaper option!
    Coral, if you’re so concerned about mothers staying at home to look after the kids, I suppose you’re outraged at the ‘welfare to work’ policy – where women receiving sole parent benefit are forced out to work when the youngest reaches 6 years – regardless of the hours, child care or transport. Failure to take up a ‘suitable’ job meant the loss of income for 8 weeks – no matter how many kids, alternate support or whatever – one strike and that’s it!
    There’s a good article in the Sydney Morning Herald today,of how Centrelink went after these type of people, while they left the tax dodgers, who owed billions alone! No doubt about Howard, he certainly knew how to look after his rich mates! No wonder not many/any of them are criticising him after their election loss!

    “Only 30 years ago a person (male usually) may borrow $30,000 for a home, and his annual income was the same amount?”
    This was what a caller to talkback said was his personal experience of 30 years ago. The point being, that these days the cost of homes in relation to yearly income is a lot more. Don’t take my word for it, listen to Tanya Plebersak, who spoke about this a lot during the federal election campaign

  14. My Goodness – the erudite Naomi reduced to passing on talkback gossip!!

    30 years ago if you earned $10k you were doing well, a quantas pilot made $20k and that was / is a top job – someone on $30k was doing extremely well. I borrowed $85,000 in 1985 when earning $26,000 as a graduate psychologoist – but had $35k in cash. That is the big differnece today – the only equity many have is capital gain – and that can be very risky as so dependent on external facotrs.

    “The point being, that these days the cost of homes in relation to yearly income is a lot more.” – accuracy is never a strong point for Naomi, However in this case this statement is basically corect – but not as bad as the 1:1 ratio originally offered.

  15. Naomi:

    Yes, you’re right about most of what you said at post 14#, except in relation to housing costs.

    The cost of housing rose at an average of about 10% per annum between 1975 and 1998, including a period of stagnation in the mid 1980s due to recession and high interest rates of 17%+.

    Here is the approximate value of my current home at various stages:

    1986 $ 60,000
    1998 $130,000
    2007 $420,000

    I’d give that about 25% per annum average increase between 1998 and 2007.

    In the 1970s, most people used to pay off houses and raise 2 or 3 children on one income (while they were YOUNG and having had very little opportunity to save), which is another thing that needs to be taken into account.

    Now the birthrate is only about 1.5 children per couple, and most parents are older, having both worked for a significant length of time.

    Does my heart bleed for these self-indulged people? No, it doesn’t.

    Yes, John Howard was an A word. That’s the main reason he lost his seat.

    Until 3 months ago, I was a sole parent myself.

    I’ve worked for the Department of Social Security, and am well aware of recent gross discrimination against women, children and the disabled at the hands of Centrelink, Child Support Agency and the Taxation Department – having been a victim of all 3 myself.

  16. Coral may complain about the greed of children today, but the increase in housing costs is in no little part due to the Baby Boomers, who after the 1989 recession, had the option of paying off their mortgages quicker or buy other items rather than spend it on housing, instead decided to buy much bigger and more expensive houses.

    Of course, this reflects a trend that has been going on for a while – much larger houses with fewer people living in them. Little wonder demand (and prices) is growing.

  17. muzz:

    Not all Baby Boomers have had that sort of opportunity. For one thing, about 40% have been divorced at least once.

    Younger people expect to start out with everything that opens and shuts, including fences, lawns, multiple bathrooms, backyard pools, dishwashers, clothes dryers, carpets, at least 2 cars, etc.

    They expect to get the equivalent of their parents’ second more upmarket home the first time around. Then they consider it a starter home.

    Most modern mothers are too lazy to wash nappies, and most of them need a “rest break” from looking after only 1 or 2 children. Many have been too spoilt when they were children themselves.

    My first home (not mentioned above) didn’t even have kitchen or laundry cupboards, a vanity unit, toilet (only an outhouse) or any floor coverings or tiles – no built-in cupboards in the bedrooms either – and no garage, carport, concrete driveway, OR PHONE!

    We had to save up to buy a large can of sealant/lacquer to use on the floorboards (2 babies in nappies) and, eventually, try to pay for all of the shortfalls listed above.

    Let’s face it – most of the modern society suffers from Affluenza. That’s why most of the government policies favour double income households. They’re in the majority.

    In general, the younger the people, the more financially irresponsible and greedy they are, and the higher their expectations – encouraged by banks and advertisers to “have it now – pay later” – and often, also encouraged by their own parents.

    Demand and prices are growing in Brisbane, mainly due to 1500 people arriving from interstate every week, and probably about 1000 immigrants. It’s more about competition than anything else.

    In summary, young people cannot blame their parents or those who are much older. They have generally done it much tougher – with less income, more children and fewer expectations – no huge baby bonus or child care fees being paid.

  18. Twas ever thus Coral – your grnadma said the same things about you – your sounding like a JOF. Jealous Old FART.

  19. That’s not very nice, Ken. I am well aware of the difficult lives of my forebears.

    It isn’t me who’s looking to blame the Baby Boomers for everything.

    It’s the younger people who are jealous of us, largely because they have been much too spoilt, and only want more.

    Tomorrow I leave for Canberra. Despite your disgusting attitude, I will still wish you and everyone reading or contributing here a Merry Christmas and a Happy New Year.

    Perhaps you might consider “being more respectful of others” as your New Year’s resolution – instead of your usual one-or-two-liner shots at other people.

  20. Someone has recently observed that democracy is somehow linked to petrol prices. When petrol price is low people enjoy better standards of living.
    Housing affordability is definitely linked to democracy.
    It is high time Australians realised that we live at the mercy of banks’ usury; we can no longer claim equality in our society and vast majority of Aussies are NOT represented in the Parliament. Lobby groups are.
    I have just returned from Surfers Paradise and cannot recover from shocking prices of highrises’ DENS. One can hardly call them units let alone ‘appartments’. Shocking!
    For many young people of Australia there is no chance to buy a house. There are no jobs for uni graduates, who are already in HECS debt. Everybody wants an ‘experienced’ uni graduate, which does not apply to the graduates who come from the establishment.
    Many idiots occupy positions they are not qualified to do but they are well connected and related to some politicians or other ‘prominents’. In the Soviet Russia they called it ‘nomenclature’- a special list of people entitled to get cushy jobs.
    In Singapore, on the other hand, a small child has his/her own bank account,(tax free) so the parents put some money regularly; by the time EACH child is 16 he/she can already buy a unit or go into business without begging the merciless and totally corrupted banks for loans.

    Our governments seem to hate young people; our system penalises young Aussies for ‘fertility and infertility’.
    The result?
    Singapore owes half of Australia already.

    There are not bad kids; there are only bad politicians.
    After recent revelations about young Aboriginal girl being raped by 9 males I cannot help asking myself:
    Why do Australian governments HATE children (other than their own)???????

  21. Zen

    You seem to know a lot about Singapore.

    I was of the understanding that they had Government organised housing.

    Children tend to live at home until they get married. They apply for a flat once they get engaged, and they pay a 50 year lease or something along those lines.

    Is that correct?

    I am aware that Singaporeans are savvy with their money and live frugally, but they spend a lot on education.

  22. Donna is certainly right in noting that banks and other institutions have until recently been over-eager to lend too much money to people who quite possibly cannot afford repayments. This is also what we saw in the late 1980s which led to recession.

    Similarly, we’re seeing the finacial problems caused by over-eager lenders (and borrowers) in the USA. It’s greed all round.

  23. Ah Coral – you’re probably right and I’m duly admonished. However you provide such a rich vein of material in your uniquely Fabian conservative insular views of the world, that someone such as me brought up on Swift and other satirists find so appealing.
    Nonetheless at this time of year you deserve an apology. Bet you don’t get one from Naomi, Marilyn, Paul, Donna and others that have been incensed by your views – me its all rather amusing, but some are much more serious souls than me.

    However the validity of the comment stands, rather than the expression, most of us work to see our children have a better life than we did, certainly that has been the history of human kind rather than to besmirch and be scornful of those following us – and that’s the point I was clumsily making.

    Muzz – the reason people lend is because they get a return. Would you consider it more appropriate for them to not get a return? While it may be greed is also quite normal for people to wish to get a return,. However as noted earlier the return was most recently only capital growth, not equity, and this always will eventually self defeat – this is what is happening now.

    Howveer the validity of the comment astands, ratehr than the experssion, most of us work tyo see our children have a better life than we did, certainloy tyhat has been the hisotry of human kind

  24. Ken:

    I bet you’ll be much less amused, and more appreciative of my current and past input, several years down the track.

    You may consider my views conservative and insular, but I think you are mistaken in some instances.

    Most people who know me well think I am progressive and broad thinking.

    zen:

    You’re right about our children being undervalued. They are put at risk by the current overindulgence and overempowerment, so that when they get a bit older they think they are more knowledgeable and experienced than adults.

    Then they seem to be able to do whatever they like and get away with it.

    The government and those driving their current policies need to put an end to laissez faire attitudes throughout the society – affecting both children and adults.

  25. My point Ken was that some lenders have lent large sums of money at great (and clearly) unsustainble leverage – 95% or 100% loans). And it often seems to be to people who have comprehension or estimation of the implications of a potential rate rises.

    I have no problem with market economy and profits per se, but unfettered? No thanks.

  26. ken says:
    December 18th, 2007 at 8:52 am
    My Goodness – the erudite Naomi reduced to passing on talkback gossip!

    Sarcasm is the lowest form of wit!

    My goodness Ken, you really are an offensive person aren’t you? I wasn’t “passing on talkback gossip” I was relating some real facts. The person who spoke on that Talkback program was only talking about the facts of the time, that was confirmed by many people, not only during that program, but before and after.(perhaps you were listening to a commercial radio station, in another state even?) Maybe you weren’t around then, were you? At what age, and what was your experience and/or knowledge?

    Who do I owe an apology to and why?
    At the age of 62, perhaps my reality goes back further than yours. The next time you make a judgmental comment aimed at me, you should state your age – honestly!

    Please note, that I don’t try to hide my identity, unlike many on this site. I have the guts to put my name to my thoughts, opinions, ideals etc. If you insist on hiding behind a christian name that may or may not be genuine, then I think you should rethink your standards/motives etc before you pass judgement on me, or make assumptions in relation to me.

    Confronting views via being ‘anonymous’ is no real or genuine view to be taken seriously, let alone deserving respect. The same applies to Coral, muzzmonster,Zen etc. Why are so many on this, I’d have thought ‘protected site’ coy about showing their real identity, or am I displaying a naivity? Not quite the genuine article perhaps?

    Happy Christmas and a great New Year to you too, Ken! perhaps your new years resolution might include, attacking others genuine and totally honest principles loses credibility when the attacker lacks intestinal fortitude – otherwise known as guts! You were saying, Ken?

    Perhaps you’re just a misogynist, trying to act like an intelligent, articulate and caring person? Don’t try and be cute Ken!

  27. ‘You’re right about our children being undervalued. They are put at risk by the current overindulgence and overempowerment, so that when they get a bit older they think they are more knowledgeable and experienced than adults.’

    … Depends on how they’ve been raised Coral. Some kids have better social skill than some adults. Some kids are mini versions of their obnoxious parents.

  28. Naomi – I never asked you to apologise – read the words

    The average wage in 1977 (that’s thirty years ago by the way) was $9,365, the average home price was $38,198 – (source ABS and REI) your factual ABC caller was far from average – this is the point I was making (read again before firing off). At 62 I’m mildy surprised you wouldn’t have had some recollection of that.

    I’m 50 – whast age got to do wiht it. In fact even the most basic analysis of post 15 could have drawn you to not ask that redundant question.

    Sarcasm may be the lowest form of wit but its very effective – ergo your response.

    Mysoginist – hummm dont think so – perhasp an extremisoginist would be more accurate.

  29. Donna:

    It also depends on how children are socialised outside of the home. Our kids are overempowered in the primary schools. Some teachers even refer to them as adults.

    From Year 1, they are told that all of the choices are theirs. Then 5 year old children come home and tell their parents that they won’t be accepting any input from them.

    Yes, there are plenty of dreadful parents around, but the schools teach children the wrong things as well – either directly or by default.

    Overempowered children are more likely to end up in trouble, and be preyed upon by unscrupulous adults.

    The whole society has input into the attitudes and behaviour of children.
    Young children spend almost half of their waking lives at school.

    Naomi:

    The reason Ken, Muzz, Zen, myself and others use our first names or pseudonyms is to protect our identities so we do not receive unwanted personal contact, which is quite a wise thing to do.

    Even doing that, I’ve received political email from like-minded persons and groups. That’s okay – but using my last name would be far more likely to invoke something much worse ending up in the Inbox or even at my front door.

    Yes, you are displaying naivete. If we don’t hear from you in the future, we will be left wondering what might have happened.

    There are people who can hack right into the bowels of anyone’s computer to find out anything they want to know. One of my relatives has been trained by the government to do exactly that, for the protection of us all.

    Ken is right. Despite your continuing abuse of other posters, I think very few people would believe that a home costing $30,000 could be paid for using only one year’s salary.

    Even the Prime Minister could not have done that. That’s very naive indeed.

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