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A tiny shack for $300 a week? The real crisis in housing

There’s a crisis in the housing market — and it’s not about mortgage rates and property prices. Renters are increasingly squeezed into tiny places with unaffordable rates, writes market analyst Catherine Cashmore.

Australia has a growing generation of residents who not only can’t afford to buy, they can’t afford to rent either.

They’re the oft-forgotten “rental sector” lost amid an abundance of market commentary devoted to the “good news” on falling interest rates for mortgage holders, endless “forecasts” of growth for potential property investors and renovation mania that is set to hit the country again as we enter the year’s annual ratings war full of obsessive real estate reality shows.

Despite reports assuring buyers that housing affordability has improved and the persistent and poorly assessed claim that it’s cheaper to buy than rent in an increasing number of suburbs (the methodology of which I argue against), the percentage of people requiring rental accommodation is fast gaining pace. For the past five years or so, yields have been rising at phenomenal rates — by and large outpacing both wage growth and inflation for the same period.

The insistence from various commentators that the steep rise in rental prices will push increasing numbers back into ownership fails to consider that inflated yields coupled with erosion of interest on long-term deposit accounts has all but cancelled out any perceived benefit for a large proportion of “would-be owners”. Consequently, they often have no choice but to lodge with family or friends as they transition through the various stages of job changes and property moves.

Currently, roughly 30% of Australia’s housing market is made up of renters. The 2011 census data indicated median rises in rental prices rose sharply over the five-year interim, with Western Australia tipping the scales with an increase of 76% over the corresponding period. The number of owner-occupiers has been slowly diminishing, and the proportion of renters priced out all together is increasing.

Australia’s owner-occupancy rate, which once sat at 71.4% in the mid to late 1990s, is now at 67%  and forms part of a slow decline in which families with children in particular seem to be suffering. The decrease of ownership for this demographic has fallen from 79.5% (2006) to 77.2% in 2011 — and considering the low activity in the market of late, it’s fair to suggest the downward trend is set to continue.

Other reports presented late last year suggest that had ownership percentages stayed at the same level as that recorded in the 2006 census, we’d have welcomed an additional 34,000 into the property market. As it is, despite the 6.1% “peak to trough” fall in the national median house price and flat prices in most capital city markets throughout 2012, sales turnover over the past two years has been woefully low — back at levels not seen since the late 1990s.

It’s easy to palm off the figures as a result of low consumer confidence. But as the latest Fitch ratings report  on residential mortgages pointed out, Australia is still the “least affordable housing” worldwide — and it’s nothing to be proud of.

The trend is not localised. In the UK the owner-occupancy rate is at its lowest level since 1988, with 64.7% of the population now classified as “owner-occupiers” and the proportion of people renting rising from 31 to 36% over the preceding 10 years. This is despite a recent British Social Studies Survey that indicates 86% of tenants (social included) still foster a strong desire to “own their own home”.

In light of its financial woes the US is of course no different — their owner-occupancy rate is at a 15-year low, with roughly 65% of the population now classified as owner-occupiers and a rental sector that is straining under the pressure of inflated yields and increased demand in capital city locations.

Is it any wonder reports of ‘crowded houses’ — with three or more families sharing accommodation — rose nationally by 64% to 48,499 in the last census?”

In fact, across all property markets that have historically boasted high owner-occupancy rates, the rise in the number of homeless people is strengthening as the vicious circle of trying to save for a deposit in a fiscal environment while servicing high rental prices keeps residents well and truly “stuck” — often in accommodation that  is not adequately suited to their family’s needs.

A comment (one of many) from a would-be home buyer on Australians for Affordable Housing’s Facebook site last week summed it up perfectly: “Well I can’t afford to rent let alone buy (and the) stress … is literally [a]ffecting my health.”

A closer look at exactly what it costs to rent a modest apartment within commutable proximity to our capital cities is truly eye-opening for anyone who may have been out of touch with the market of late. In the most recent quarterly bulletin wrapping up the year for 2012, RP Data noted that Perth in particular is feeling the strain, with an increase in yields of 12.8% for houses and 10.6% for units, and vacancy rates as low as 1.6%. According to APM, this is an increase of $70 per week over the 12-month period, leading Premier Colin Barnett to single out rental prices as the “biggest cost-of-living pressure facing Western Australians”.

Darwin currently has only two rental properties listed on realestate.com.au for under $300 per week  —  one of which is a rusty old corrugated iron shack that would look more at home in a “shantytown”. The median rent in Darwin is $600 per week.

Students in Queensland have described the market under $300 “war like”, and as for Melbourne and Sydney it all comes down to the standard of accommodation you want to call home. In Melbourne, if you’re halfway fussy — perhaps requiring good proximity to transport, a modest balcony, or internal floor space over 40 square metres — you’ll be hard pushed to get a one-bedroom apartment in original un-renovated condition under a minimum of $350 per week. In Sydney, the equivalent will cost between $450 and $500 per week — which is hefty chunk for any average wage earner.To give some idea of the condition of apartments currently for rent at the above prices, this is an interior snapshot of the kitchen in one such apartment I inspected last week in an inner suburb of Melbourne. I think it paints the picture perfectly …

Students, singles and childless couples can often make do with less space to compensate for the luxury of being close to the city or walkable distance to both transport and shops. However single mothers, low-wage families, retirees or disabled tenants understandably require something a little more substantial than a one-bedroom flat to adequately fulfil their basic needs. They’d be hard pushed to find anything suitable for less than $500 per week unless they move to the outskirts of the capital city. And due to poor public transport facilities in many fringe locations, such a move simply isn’t feasible for a large majority of renters — though many are forced in that direction.

Is it any wonder reports of “crowded houses” — with three or more families sharing accommodation — rose nationally by 64% to 48,499 in the last census? Furthermore, other data from the ABS shows from 2009-10, 42% of renter households received some form of housing assistance, once again emphasising the growing crisis in this sector of our marketplace.

Pressure on the rental market is unlikely to ease in the near to far future. The ABS estimates almost two-thirds of “new residents from overseas” are long-term property renters — this is compared with half new residents from “within Australia” who now class themselves in the same bracket, which is a robust figure in itself.

Economic conditions such as wage growth, unemployment, consumer confidence and frequent changes of work placements all reduce the likelihood of a strong owner-occupier market over the next decade. Current policy is built around the general assumption that renting is a “step” on the road to ownership — but it’s fair to suggest unless the trend takes an about turn, tomorrow’s generation will hold a growing percentage of residents for which renting is “for life”. We need to consider their welfare.

No one should be fooled into thinking private rental accommodation is affordable accommodation; residential investors are looking for strong yields and solid returns. In a heated market, vendors will understandably go for as much rent as they can achieve (regardless of tax benefits and lower interest rates, which are rarely passed onto the tenant.)

The National Rental Affordability Scheme, which was designed to go some way in bridging the “affordability gap” for low income workers sitting on the rental ladder is also flawed in its design. When the scheme was first initiated in 2010, the AHURI analysed the project to assess the overall impact in easing affordability — only 40% of applicants using the accommodation had fallen below the 30% “housing stress” benchmark.

It’s vital we start to steer policy towards the creation of a fairer partnership between owner and renter: longer terms of tenancy, protection from exorbitant rent rises, enforcement of basic standards of accommodation (in both the private and public sector) and a greater partnership between tenant and owner — which could even envisage the tenant taking on more responsibility for the basic maintenance of their “home” in return for a secure rental plan ensuring a longer term of permanent tenancy (five to 10 years) for which rent does not outpace the growth of inflation. Other models of assistance, including housing co-operatives, should also be assessed.

The benefit an investor can gain from a happy tenant should not be underestimated. Property — even when maintained through an experienced property manager — is not a hands-off experience. Unlike a share certificate you can file away and forget about — the value of any residential property (whether letting or selling) derives from its lasting appeal as a “home”. Ensuring there’s enough money left over from the initial acquisition for ongoing maintenance is vital — and a long-term happy tenant should never be undervalued.

There is much that needs to be done to assist the ownership of affordable accommodation, but creating a stable market terrain for tenants is equally important and needs an overhaul of current policy if we’re to do so. Without it, the number of people seeking government-assisted accommodation will escalate to greater proportions, and the untapped potential of a growing number of residents struggling to make ends meet will hamper advancement of the overall economy.

*Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. This article was first published at Property Observer.

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  • 1
    Altakoi
    Posted Tuesday, 22 January 2013 at 1:05 pm | Permalink

    I’m a bit suspicious of these ‘poor renters’ analysis because it tends to come around to arguments to subsidise the building of new accomodation in the seemingly never realised hope that this will be affordable. At the moment there are over 2000 vacant rental properties in Canberra, which is as high as I have seen it in 15 years are a renter. While many of these are pricey, the flip side of high rentals is that owner-investors usually can’t afford to have a property vacant either. Since the consequence of unaffordable rent is vacany, rents tend to come down. Some restraint on negative gearing claims forcing people to sell unrealistic assets might help. More sprawl will just fuel mortgage stress, which is hardly better than rental stress.

  • 2
    Rhys Bevilaqua
    Posted Tuesday, 22 January 2013 at 1:24 pm | Permalink

    Since rent effectively winds up as a percentage yield on the property price due to the fact that it generally ends up priced at the pain point just below a mortgage then the only way to adress this issue is to torpedo prices.

    Removing negative gearing and taxing the family home rather than charging stamp duty would go a long way to relieving the upward pressure on home prices, but both of these items would be political suicide.

  • 3
    Apollo
    Posted Tuesday, 22 January 2013 at 1:25 pm | Permalink

    I hope they will build more affordable housings in the next budget.

    For now they should raise the the rate for the unemployed from $246/W to $260 per week starting from March. And remove the fuel rebates for the large miners, they can leave it for the smaller miners so they can compete. The welfare should be directed at the poor not the rich miners.

  • 4
    joanjett
    Posted Tuesday, 22 January 2013 at 1:47 pm | Permalink

    I agree with Apollo regarding raising the dole, it is scandalously low. Reduce the bloody baby bonus and also the private health rebate to pay for it if necessary. I am very lucky as my mother helped me purchase a home, figuring that she would prefer to see her inheritance put to good measure before she shuffles off this mortal coil. If I fall under the spell of a Svengali type and sell the place, she gets her money back. She did the same for my sister. Funny thing is, I actually can’t live there as it is too small for my family, only really will be once most of the kids leave home. I have to rent it out, and rent a larger place for my family. I have a lovely landlady who doesn’t automatically lift the rental rate every year, like the last one did. This is the only toe in the home owing door for me and I wish I could have achieved it by myself, but that would have been impossible without a 150 year life span. Can we give incentives for newly arrived migrants to move to other places rather than the capital cities? In Italy you can just up and live in say, Rome. You need a job, accommodation before you can apply for your residency with the city. Can people access their super instead of seeing it eroded by financial planners and the next stock market crash? It does seem that we need to think outside the box on this one….

  • 5
    joanjett
    Posted Tuesday, 22 January 2013 at 2:07 pm | Permalink

    um re: Rome, you can’t just up and live there, sorry

  • 6
    Dogs breakfast
    Posted Tuesday, 22 January 2013 at 2:36 pm | Permalink

    A supremely complex problem, and a million touts and lobbyists muddying the water making good policy so hard to assess.

    Personally, tax incentives for investors would be the first thing I would look at, getting rid of negative gearing. Although there are those who suggest that ‘investors’ improve the lot of renters, there is ample argument to the contrary, and certainly house prices are falsely bid up by the tax incentives available for those wealthy enough to ‘invest’.

    And no, rent increases are not a corollary of the abolition of negative gearing, nor do investors add to the housing stock in any significant way, with over 95% of housing investment going to established homes.

    Hugely expensive real estate is a great burden on this society, not a great boon. It is at the heart of a substantial inter-generational inequality and will either burst precipitously, which will endanger many, or remain as a boulder tied around our necks.

    Hugely complex. I look forward to simplistic solutions, which will be elegant, clever, and wrong. :-)

  • 7
    mattsui
    Posted Tuesday, 22 January 2013 at 2:45 pm | Permalink

    My wife is Japanese and the major factor guiding our decision to live there, rather than home in Perth was rental cost. Apartment living is very much the status-quo for much of the Japanese population (though a large home is an aspiration still) and where we live there is an abundance of vacancy. In Perth, I would be paying at least half my weekly income for a modest house with a garden which I would be obliged to maintain (one of the greatest thorns in the tennants side is looking after someone elses garden). In Japan - albeit outside the major population centres of Honshyu - we are able to rent a very comfortable apartment for the equivalent of $600 per month.
    I know, apples v. oranges in many respects but the Australian obsession with large houses is causing irreparable damage to the property market (and the landscape). Inner suburb apartment developments are only for the rich. Meanwhile, the working poor who serve your coffee are forced to commute from the fringes.
    Matt

  • 8
    fractious
    Posted Tuesday, 22 January 2013 at 3:32 pm | Permalink

    @ DogsBreakfast
    “I look forward to simplistic solutions, which will be elegant, clever, and wrong.”

    They won’t be wrong so much as completely unpalatable to the real estate bandwagon. The simpler and more effective the solution, the less likely those with their snouts in the property trough will let it happen.

    @ Altakoi - the high vacant rentals in CBR may be partly because uni hasn’t started yet (or has it?) and partly because of the significant number of jobs gone or going as the Fed budget cuts kick in.

  • 9
    michael r james
    Posted Tuesday, 22 January 2013 at 3:44 pm | Permalink

    @joanjett

    ” In Italy you can’t just up and live in say, Rome. You need a job, accommodation before you can apply for your residency with the city.”

    Do you mean for Italian citizens, or is this just the usual visa requirements for foreigners?

    France has gone to great lengths to encourage people to live elsewhere other than Paris — as I have written in Crikey, including the TGV network, and overall devolution (of government jobs, universities etc). This was because growth rates in the 50s and 60s truly spooked them that Paris would become 20 million — it didn’t though it still became the biggest conurbation in Europe (about 12m).

    But there is no actual legal prescription against choosing to live in Paris. As usual the rental and housing market etc. act to encourage many to choose elsewhere.

  • 10
    fractious
    Posted Tuesday, 22 January 2013 at 3:46 pm | Permalink

    Thanks for the article Catherine. Renters are almost third-class citizens these days and - except for when 7, 9 or 10 decide to run (yet another) ‘bad tenants boo!’ “exclusive” - barely rate a mention in the MSM.

    I’ve wanted to be able to buy a place to live for some years but it’s always been just out of reach, and I simply will not go into debt way way over my head just to do so. Unfortunately that puts me at the mercy of ever-increasing rent, greedy landowners and estate agents who can quite readily find you when you’re a day late with a bill but who miraculously vanish when urgent repairs are needed.

    Yes I know not all landowners and estate agents are like that, but neither are all tenants lazy, filthy, defaulting wreckers. Most of us pay our bills and look after the place where we live - all we ask for in return is to be heard when we have a legitimate problem, and be treated by landowners and real estate agents with the same degree of respect that is afforded to property owners.

  • 11
    Arty
    Posted Tuesday, 22 January 2013 at 4:08 pm | Permalink

    All the comments so far seem to be focused on living in or very near the big cities.

    Maybe it would be wonderful if we moved the jobs and the workers to the country where land is so much cheaper.

    People who want to live within walking distance of the beach, the clubs, the pubs and the 24/7 parties ought to expect to pay a premium rental, and never be able to afford to own.

    Unfortunately the people who don’t want those facilities never-the-less also pay the rental premium.

    Please Sir, can we decentralize?

  • 12
    shepmyster
    Posted Tuesday, 22 January 2013 at 5:27 pm | Permalink

    Action needs to be taken against newspapers and other media who constantly represent the views of their advertisers instead of their readers not only are they guilty of false advertising, it’s often hard to tell where the news stops and the advertising starts. Hence people believing that real estate is still a good investment.
    I noticed that councils have a fine of up to $8500 for candidates who do not properly disclose where all their political donations come from. If they applied something like this to journalists, then the Herald Sun would be out of business within days.

  • 13
    David Hand
    Posted Tuesday, 22 January 2013 at 5:45 pm | Permalink

    I’m quite keen to understand what the term “commutable proximity to our capital cities” actually means.

    Dandenong? Blacktown?

    Or maybe Fitzroy and Newtown?

  • 14
    drsmithy
    Posted Tuesday, 22 January 2013 at 6:34 pm | Permalink

    No one should be fooled into thinking private rental accommodation is affordable accommodation; residential investors are looking for strong yields and solid returns.

    The scary thing is: they’re not.

    Yields on rental properties are a few percent at best. Something like 2/3 of property “investors” are negatively geared, which means they are in affect subsidising their tenants in the (vain, these days) hope of sufficient capital growth to make up the shortfall.

    In most of the country it costs around 1/2 to 2/3 as much to rent a given property as just the interest component on the mortgage to buy the same property would be. Rents have a long, long way to go up before they make current house prices attractive from either a home ownership or property investment perspective.

  • 15
    drsmithy
    Posted Tuesday, 22 January 2013 at 6:37 pm | Permalink

    Hugely complex. I look forward to simplistic solutions, which will be elegant, clever, and wrong.

    Axe urban growth restrictions, institute a broad-based land tax, eliminate CGT discounts on investment properties and eliminate negative gearing.

    It’d be a painful couple of years, but the end result would be worth it.

  • 16
    drsmithy
    Posted Tuesday, 22 January 2013 at 6:45 pm | Permalink

    Maybe it would be wonderful if we moved the jobs and the workers to the country where land is so much cheaper.

    Here’s the problem: land _isn’t_ particularly cheaper out in the sticks. For example in Springfield, a 30-45 minute drive from Brisbane, a mere 600m^2 block of land will set you back $200k+. Houses on 300m^2 postage stamps of land are $300k+. It’s ridiculous.

  • 17
    fractious
    Posted Tuesday, 22 January 2013 at 7:18 pm | Permalink

    @ drsmithy
    “Yields on rental properties are a few percent at best. Something like 2/3 of property “investors” are negatively geared, which means they are in affect subsidising their tenants”

    Logically then, 1/3 of them aren’t. The two properties I rented at prior to where I am now were owned outright, but that didn’t stop the rent increasing at least annually, if not twice or more a year. Whether the landowner has no debt, a minimal mortgage or is up to their neck in interest, tenants are human beings trying to live a reasonable life, not cash cows. Is it better to keep rents reasonable and get some return while retaining tenants that help look after the place, or keep on upping the rent, pi$$ing decent tenants off and getting sfa return?

  • 18
    fractious
    Posted Tuesday, 22 January 2013 at 7:24 pm | Permalink

    @ drsmithy at 6.45pm:
    “and _isn’t_ particularly cheaper out in the sticks. For example in Springfield, a 30-45 minute drive from Brisbane, a mere 600m^2 block of land will set you back $200k+”

    Nothing within 1.5 hours of the CBD of any major east coast city is “the sticks”. I think what Arty is referring to are places like Dubbo, Tamworth, Coffs, Albury-Wodonga and (insert your state’s equivalents here).

  • 19
    Rosie Torr
    Posted Tuesday, 22 January 2013 at 7:49 pm | Permalink

    So right Drsmithy, it would be a painful couple of years but it would all work. Renters are already having painful years and living in dread as the rent increases each year and pay does not. Also commutable distance is now more like Kyneton, Castlemaine or even Bendigo to Melbourne. When did this all become so acceptable? Why can’t investors accept a loss anymore? Why are people so greedy?

  • 20
    hpouwels4@bigpond.com
    Posted Tuesday, 22 January 2013 at 7:57 pm | Permalink

    We constantlt are compared to only the Anglosphere, other then Mattsui and Joanjett. there are many other places in Europe , North and South America and Asia where for a comparable apartment to any in one of the Oz mainland capitals the rental is well below those charged here. One reason for such high rentals is the lack of good public housing schemes. . The ones that were established in the early 1950’s i.e the South Australian Housing Trust , have been corporitised , maintenance deprived , and many sold off , and now only used as “crises” and welfare housing.

  • 21
    Posted Tuesday, 22 January 2013 at 9:42 pm | Permalink

    Arty

    Please Sir, can we decentralize?

    Yes we can. When the NBN becomes ubiquitous.

  • 22
    Buddy
    Posted Tuesday, 22 January 2013 at 9:52 pm | Permalink

    Renting is even harder if your unemployed, a single parent working part time, a pensioner or part of the growing working poor. I work with people in all of these categories and its heartbreaking to watch people’s lives fall apart because they cannot afford rent. I would love an answer to this problem because I can assure you we have large recurringly homeless population who are being pushed into more and more squalid properties because of high rental prices. Shoddy boarding houses charge $250.. Per week for a single room in less than desirable conditions and with people who often have complex and serious problems..

  • 23
    Apollo
    Posted Tuesday, 22 January 2013 at 10:04 pm | Permalink

    When I look at rental ads on the internet, they look very expensive. But some people I know get cheap private rental, for example someone sharing house in around North or West Melbourne can get $100 per week for the room. Someone out in Epping close to the shops and public transport could get $200 per week for a nice 3 bedroom house with backyard.

    I don’t really know why, maybe some of the landlords have already paid off their debts so they don’t have to charge high price.

  • 24
    Apollo
    Posted Tuesday, 22 January 2013 at 10:27 pm | Permalink

    Agreed Dan, but, I’m afraid the LNP will sell it when they get into power to get their ‘surplus’ and the private company will not expand the network. They will only expand it to where they can make lots of money.

    My tip to Swan, sell 45% of Medibank now if it’s not sold already, they can float the shares on the exchange for Aussie family investors. It’s better to help his surplus objective rather than leave it for a Hockey surplus.

  • 25
    Hamis Hill
    Posted Wednesday, 23 January 2013 at 9:39 am | Permalink

    Clearly, taxpayers, who indirectly pay this exorbitant rent for all their welfare clients have an interest, via their elected representatives, to inquire as to how these economy destroying disortions of the housing market place have become entrenched.
    Similarly, enployers, from the time of Robert Owen’s New Lanark and including, again, taxpayers, through the employment of public servants, have an interest in the costs of rents since they are the ones indirectly but absolutely paying for them.
    This strikes so close to the heart of a viable economy that a Royal Commission into the failure of the market to provide, through competition, the least expense to all involved for that roof over their head.
    No-one, surely, can be so mindless as to claim that there is an actual demand for unaffordable housing.
    No-one, surely, can claim that people demand that only the most expensive housing be available to rent or purchase.
    If there were a free-market for the supply of housing then the sales would go, as they do in every other market, to the supplier with the best price, and no-one would be concerned with the distortions of monopoly control or cartel control and price -fixing or asset price maintenance of any of the components of housing supply; land, services, materials even housing styles.
    Labour is already under the maximum pressure from its opponents in certain industries and the political representatives of those industries, so will not get any more political disadvantage than they are already withstanding by bringing on a Royal Commission into Housing.
    Labor’s opponents will be like rats in the corner, but it is hard to see how they will be any more vicious in their opposition than they already are.
    And there are industries, not the natural allies of Labor, who are also victims, economically, of the rental crisis. and the conservative forces will be denied their support as the sides divide along the boundaries of their opposing interests.
    It would be very difficult, for instance for the German industrial model of housing to be denigrated as comminist when it is based upon Adam Smith’s rational view of housing and the economy via the post -war Marshall Plan.

  • 26
    Hamis Hill
    Posted Wednesday, 23 January 2013 at 9:42 am | Permalink

    Why, Crikey, is Adam Smith always moderated.
    What sort of benighted cretins made up your moderation criteria? Really?
    No reasonable cause for complaint on this constantly recurring issue?
    NO? then do something about it!

  • 27
    Hamis Hill
    Posted Wednesday, 23 January 2013 at 9:51 am | Permalink

    And if Crikey’s cesorious constraint on commentaty is arbitrarilly set off by the length of a post, why?
    No-one is writing War and Peace here, thereby taking up all of your valuable real-estate!
    Beyond any reason.

  • 28
    Hamis Hill
    Posted Wednesday, 23 January 2013 at 10:55 am | Permalink

    A dwelling house, as such, adds nothing to the income of its inhabitants”.
    Is this at all factored in for its effect upon the economy?

  • 29
    Hamis Hill
    Posted Wednesday, 23 January 2013 at 12:04 pm | Permalink

    Economic reform in Australia must look beyond the mindless, middle class snobbery of the mining boom-enabled Howard Profligacy era to the point, where in order to remain competitive, the nation must more closely embrace the industry sustaining policies of say, Singapore and Germany, where housing speculation is effectively banished.
    But, in the home of the world’s worst middle-class snobs, that will be a big political battle.

  • 30
    joanjett
    Posted Wednesday, 23 January 2013 at 12:42 pm | Permalink

    @michael r james I was referring to Italian citizens who don’t seem to be able to freely go and live in another provincia without some sort of support system. My ex husband tried years ago without success but perhaps things have changed. I have back been here for over 10 years now so not sure.

  • 31
    Paul Elliott
    Posted Wednesday, 23 January 2013 at 1:06 pm | Permalink

    part of the issue is that for about 40 years, people have bought houses (which takes minimal upkeep), because they go up in value much faster then they’re own wages (which they work long hours for). accept if the whole housing market has been rising so fast for so long, its only logical that the prices. (and rents) on housing is going to be unaffordable one day, and eventually unable to continue rising. (Afterall prices can only go up as long as people can pay them).

    I think the big issue is that the average person is told to invest in property because it will go up in value. they do this because they don’t acually know how to make wealth and prosperity on their own. they don’t wish to do the extra work nessasary. saying things like “its Risky” or “rich people are bad”. they want at least a comfortable or prosperous retirement, but they want it given to them.

    The best thing is to learn how to increase your wealth. using things like business and R/E. for cashflow, not capital growth.

  • 32
    justsaying
    Posted Wednesday, 23 January 2013 at 4:26 pm | Permalink

    Just moved to Darwin. Paying a crazy $1500 p.wk. for a decent house close to the city. Locals are being squeezed out and are moving. Once the boom (associated with a massive LNP project) is over this city is likely to suffer a massive crash back down to earth.

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