As we are wanting to have children and have a stable house, as well as the fact that we can get this property and improve it and work on it and hopefully add some value - or at least have land to utilise for our hobbies (gardening, veges, brewing). Renting is about 2/3 the cost of buying, you are right - but the other 1/3 is around the amount of capital you are repaying so if houses stay even stagnant then it is an even bet.

The rule of thumb my wife and I use for mortgage size is that repayments should be no more than 50% of the lowest income

I have roughly the same rule, as long as our costs (total) can be earned by one of us we are OK - and of course have $50K sitting in the bank to mean we could last 12 months with neither of us working. We have a view of 8 years to pay off the house in total.

Good god, no. The UK is about the worst place on the planet we could be emulating. Even after the GFC, their real estate prices remain absurdly high, because of their incredibly restrictive urban planning.

I believe London’s have remained high, but when I was in Newcastle, Sunderland, and Manchester in July our friends had just purchased a house for 145K pounds - they were double this pre-GFC so I believe they have been wound back to more suitable levels (household income is around 45K) - London will always struggle due to its size and layout and I don’t think it is unexpected for such a large city to become so unaffordable - We stayed with friends in Guildford which was only 25 minutes by train (quicker, and substantially nicer than, say, a trip to Cranbourne in Melbourne or Penrith in Sydney) and houses are much more reasonable there.
I have my doubts about Australian property because it doesn’t have the same density and boundaries - but I don’t think any vested interest (land owners, banks, governments) are about to consciously deflate the prices by unlocking land, nor are the sort of transport or alternate towns going to be created in the next 20 years to negate this. So it will either take a massive external shock (China) or a slow change such as potentially a different attitude/culture to working remotely - but even then this isn’t always possible and doesnt factor in the social factors in terms of desirable suburbs and wanting to be close to the city centres. I can see house prices at present flat lining for the next 5 years, which can only be a good thing as money is diverted away from a non-income producing area to something much more productive to improve Australia’s productivity overall.

I am not thrilled about it, but needs must and we need to get on with things […]

Why ? Why would you not continue to rent (at 1/2 to 2/3 the cost of buying) and save the difference ?

I don’t think that - I think in a perfect world it should be around 550K.

The rule of thumb my wife and I use for mortgage size is that repayments should be no more than 50% of the lowest income. This means one of us can lose our jobs and the ability to service the minimum mortgage payment isn’t endangered. When both of us are working we could sacrifice at least one entire income to the mortgage (and probably more), thus paying it off in a much shorter time.

To those talking about decentralisation - the only state that I believe works well in terms of decentalisation is Tasmania - all other states need to look to the UK and not the US for their development.

Good god, no. The UK is about the worst place on the planet we could be emulating. Even after the GFC, their real estate prices remain absurdly high, because of their incredibly restrictive urban planning.

We earn a large amount more than the average household, and I really don’t know how things have got to this - I understand banks have been loose in their lending (they offered us $1.2M) but I cant not understand that it has taken a majority of people that have decided that the risk is acceptable in order to bump housing to this level.

To those talking about decentralisation - the only state that I believe works well in terms of decentalisation is Tasmania - all other states need to look to the UK and not the US for their development. I feel we are getting there with a great train station at Southern Cross and WH smith - we just need a train system and satellite towns like you do outside of London in England… Having worked in Atlanta before I can just say it takes urban sprawl to a new level and Marta is laughed at by car driving locals. There is a difference between a sprawling city and a city and satellite towns.

The vested interests, people who already own homes, the banks and the real estate industry would take great umbrage to any government that made more land available or changed zoning to create more inner city housing.

It’s simply not going to happen. The only way the Australian market is going to become affordable is when the bubble bursts and the poor unfortunates caught start with the fire sales.

There is no timetable as to when a bubble bursts just a inevitability.

Points well made above regaridng quality of medium and high rise. The main amenity required for reasonable living and a social community is soundproofing between apartments. Shoddy construction and paper-thin walls are often the case in modern buildings. Buying off the plan is a huge gamble because of it.

Anyone been following some of the ‘World Square’ (Sydney) arguments of late. A classic example of a huge number of apartments, unwieldy management stuctures and legal nightmares.

High-density, high rise is just too risky these days. Perhaps for studios and one-bedders only.

Caveat emptor.

it should come as no surprise that when a first-home buyer does come across an attractive property seemingly priced within their allocated budget, when faced with competition from an investor, the first-home buyer won’t be the one leaving the property with a signed contract in hand.”

Exactly. The current negative gearing regime is both fiercely defended by the industry lobbyists, and also a textbook example of perverse outcomes.

Neg Gearing has almost no social benefit, and yet enjoys exceptional tax benefits. It’s a no-brainer, for a govt with political courage.

The failure to plan infrastructure at NSW State level and thereby relieve Sydney property prices is hardly the fault of the Howard Government. A major reason why infrastructure is so difficult to build is the over-regulation of the labour market and overly expensive award conditions - something for which your beloved Labor Party deserves the lion’s share of the blame!!

Building skyscrapers in North Sydney is hardly decentralizing, it is simply continuing the CBD on the other side of the water!!

For decentralization, try relocating the NSW Government to Dubbo, University of Sydney to Goulburn, UNSW to Grafton, and half of Sydney’s corporate HQs to places like Bateman’s Bay and Port Macquarie. Then you may see Sydney property prices starting to ease.

Also, another reason why Dallas and Atlanta are poor comparisons is that they are inland cities. Land is more plentiful, and therefore cheaper, when it is available from all points of the compass!!

I’m not a fan of the methodology — comparative “medians” are a poor way to analyse effective cost.

Why ?

Re Demographia - its their sort of deregulation that puts poor people on the river flats in SE.Qld, if there were any justice they’d hang.

Also, Texas has virtually no planning controls - you can build a 60-storey building almost anywhere you want - this is part of the reason why land is relatively cheap.

Moreover, Australian cities are so heavily centralized with government, transport, education, business etc. all focused around the CBDs of just a handful of big cities. That means the CBDs have huge concentrations of jobs - and so everyone is clamoring to be as close to the CBD as possible. This is the biggest reason why city real estate is so expensive. Compare, for instance, the San Francisco area. You have the state capitol an hour’s drive away in Sacramento, major universities in outer suburbs like Palo Alto and Berkeley and major employers (e.g. Google, Apple) headquartered on suburban fringes in Silicon Valley, with some banks still in SF downtown. Most other US cities and states are similar to this. If this were an Australian city or state, however, all of these things would be concentrated in the CBD.

Part of the reason why US cities are decentralized like this, is because downtown areas became very unsafe in the 1960s and 1970s - due to homelessness, drugs, gangs and violence. That meant major companies relocated to the suburbs (the so called “white flight” phenomenon.

So in some ways, Australia’s high property prices are an unintended consequence of how safe and pleasant our CBDs are - we never experienced the “white flight” phenomenon, and we’ve got the property prices to prove it!!