Australia Rental Prices a Joke

[Flake]

Yes property prices are hideous that's for sure, however the wages are very high too. It's much of a muchness really.

There are people in London who never afford a £250k property, much the same as there are people in Sydney who could never afford a $600K property either.

Generally the cost of housing is all relative to the demand, and people only want to live in desirable areas.

For example, You can buy a property in Blacktown in Sydney for $330k, very commutable distance to the city for work and central access to various other business districts, but who wants to live there?... The repayments would be less than renting, even on a 100% mortgage, but somehow it still doesn't make it desirable.

There are options for those that live in Sydney to get onto the property ladder much like there is in London too, You just have to be willing to start somewhere and work your way up to what you really want, hence the term 'Property Ladder'.

​

[Incata]

Yes - but surely that large deposit would have been invested and earning interest, even if it's taxed? Surely you could have rented a house where you bought and been better off financially? I know there are other advantages to owning, (possible capital gains not included), but on a pure financial level, I think you would be hard to beat renting at this present time.

 

I also agree Duncraig is a better area. You do get a much older house without the street appeal, but the block value will hold, and you can always knock down rebuild (maybe even sub divide) at a later date. Depends on how many kids you have too, as you can always go private in Ocean Reef.

 

I think it depends on your financial situation. We wanted a quality of life (part of which is the house that you live in) that was at least the equivalent to what we had in the UK and we could have got something awful for $450 per week, but why put the money into someone else's mortgage when we could put it into our own? By getting a mortgage and paying significantly less every month than if we were renting, we got a house we by and large like and will be happy to live in for the rest of our days (should we decide in 4 years time that this is where we want to stay). In 3 years, based on our current calculations we will have paid off the mortgage and then we will have no repayments (other than bills and insurance) whereas if we were renting, in 3 years we would still be renting and someone else will have profited. In 3 years we will start saving a deposit for our own investment property and in 5 years we will be in a much better position than now.

 

Incidentally we could not have afforded to rent in the area we now live in. A typical 4 bed, 2 bath where we are would be between $800 - $1300 per week, depending on the condition of the property. Way out of our price range!

 

In the end, you have to do the finances and work out what is best for you. Interest rates at the moment (certainly in the UK) are lower than the rate of inflation, so we were losing money there. Here I am not sure what the rate of inflation is as we have not been here long enough so I can't say.

 

However, if you are not committed to staying in Australia and are not sure whether it is where you want to be, I certainly would not recommend buying as a mortgage is a millstone and not easy to get rid of if you suddenly decide you want to go back to the UK (or wherever you came from).

Edited May 6, 2013 by Incata

[Guest chris955]

You are making the assumption that everyone is on high wages which they arent which is why property has become so unaffordable.

 

Yes property prices are hideous that's for sure, however the wages are very high too. It's much of a muchness really.

There are people in London who never afford a £250k property, much the same as there are people in Sydney who could never afford a $600K property either.

Generally the cost of housing is all relative to the demand, and people only want to live in desirable areas.

For example, You can buy a property in Blacktown in Sydney for $330k, very commutable distance to the city for work and central access to various other business districts, but who wants to live there?... The repayments would be less than renting, even on a 100% mortgage, but somehow it still doesn't make it desirable.

There are options for those that live in Sydney to get onto the property ladder much like there is in London too, You just have to be willing to start somewhere and work your way up to what you really want, hence the term 'Property Ladder'.

​

[Flake]

You are making the assumption that everyone is on high wages which they arent which is why property has become so unaffordable.

 

I'm basing it on minimum wage. And if you compare that to the UK minimum wage against the cost of property, you will suddenly see that Australia is no more less affordable than the UK.

 

The mistake everyone makes is converting the currency based on today's exchange rate, lets not forget that once, there were nearly $3 to the pound. Meaning that our so called affordable housing in the UK of; for example £250k as mentioned above, would be the equivalent of nearly $750k in Australian Dollar.

 

And let's not forget to mention that it has been literally years since the UK national minimum wage has matched the rise of inflation. Meaning people everyday are living in deficit.

 

Australia is a very affluent country with more opportunity than the UK can currently speak of.

 

Supply and demand = increase of prices.

 

​

[Guest guest76088]

1. Supply and Demand = relationship of quantity demanded to a particular price.

Supply goes up prices come down. The changes in Income relate to change in demand for Normal Goods.

 

2. Minimum wage is an artificial construct that causes unemployment (surplus quantity) through unconsumated employment agreements. So for the minimum wage to lag inflation means that the minimum wage means less in real terms but the resulting employment attributable to this measure is reduced.

 

BigD

 

 

I'm basing it on minimum wage. And if you compare that to the UK minimum wage against the cost of property, you will suddenly see that Australia is no more less affordable than the UK.

 

The mistake everyone makes is converting the currency based on today's exchange rate, lets not forget that once, there were nearly $3 to the pound. Meaning that our so called affordable housing in the UK of; for example £250k as mentioned above, would be the equivalent of nearly $750k in Australian Dollar.

 

And let's not forget to mention that it has been literally years since the UK national minimum wage has matched the rise of inflation. Meaning people everyday are living in deficit.

 

Australia is a very affluent country with more opportunity than the UK can currently speak of.

 

Supply and demand = increase of prices.

 

​

[newjez]

How did you pick up the house so cheap then, if rentals in your area are so expensive?

 

​

I think it depends on your financial situation. We wanted a quality of life (part of which is the house that you live in) that was at least the equivalent to what we had in the UK and we could have got something awful for $450 per week, but why put the money into someone else's mortgage when we could put it into our own? By getting a mortgage and paying significantly less every month than if we were renting, we got a house we by and large like and will be happy to live in for the rest of our days (should we decide in 4 years time that this is where we want to stay). In 3 years, based on our current calculations we will have paid off the mortgage and then we will have no repayments (other than bills and insurance) whereas if we were renting, in 3 years we would still be renting and someone else will have profited. In 3 years we will start saving a deposit for our own investment property and in 5 years we will be in a much better position than now. Incidentally we could not have afforded to rent in the area we now live in. A typical 4 bed, 2 bath where we are would be between $800 - $1300 per week, depending on the condition of the property. Way out of our price range! In the end, you have to do the finances and work out what is best for you. Interest rates at the moment (certainly in the UK) are lower than the rate of inflation, so we were losing money there. Here I am not sure what the rate of inflation is as we have not been here long enough so I can't say. However, if you are not committed to staying in Australia and are not sure whether it is where you want to be, I certainly would not recommend buying as a mortgage is a millstone and not easy to get rid of if you suddenly decide you want to go back to the UK (or wherever you came from).

[Guest chris955]

Both countries are very affluent, Im not entirely sure what you mean by 'with more opportunities' ? What does that have to do with the cost of housing ? We sold our house to a professional couple in Brisbane and they still had to borrow money from the parents to afford just an average house. As I said this is why Australia has some of the least affordable housing in the world.

 

I'm basing it on minimum wage. And if you compare that to the UK minimum wage against the cost of property, you will suddenly see that Australia is no more less affordable than the UK.

 

The mistake everyone makes is converting the currency based on today's exchange rate, lets not forget that once, there were nearly $3 to the pound. Meaning that our so called affordable housing in the UK of; for example £250k as mentioned above, would be the equivalent of nearly $750k in Australian Dollar.

 

And let's not forget to mention that it has been literally years since the UK national minimum wage has matched the rise of inflation. Meaning people everyday are living in deficit.

 

Australia is a very affluent country with more opportunity than the UK can currently speak of.

 

Supply and demand = increase of prices.

 

​

[Flake]

1. Supply and Demand = relationship of quantity demanded to a particular price.

Supply goes up prices come down. The changes in Income relate to change in demand for Normal Goods.

 

2. Minimum wage is an artificial construct that causes unemployment (surplus quantity) through unconsumated employment agreements. So for the minimum wage to lag inflation means that the minimum wage means less in real terms but the resulting employment attributable to this measure is reduced.

 

BigD

 

 

you need to brush up on your economics BigD

[Flake]

Both countries are very affluent, Im not entirely sure what you mean by 'with more opportunities' ? What does that have to do with the cost of housing ? We sold our house to a professional couple in Brisbane and they still had to borrow money from the parents to afford just an average house. As I said this is why Australia has some of the least affordable housing in the world.

 

 

the UK is no longer affluent. Opportunities as in Jobs, which in turn has direct correlation to affordability of housing.

[Guest guest76088]

Clearly your username is appropriate. Check out some microeconomics theory and repeal some of the crap you are posting.

 

​BigD

 

you need to brush up on your economics BigD

[Bobj]

Both countries are very affluent, Im not entirely sure what you mean by 'with more opportunities' ? What does that have to do with the cost of housing ? We sold our house to a professional couple in Brisbane and they still had to borrow money from the parents to afford just an average house. As I said this is why Australia has some of the least affordable housing in the world.

 

Really good to know that selling your house causes Australia to have the least affordable housing in the world...:laugh:

 

Cheers, Bobj.

[Guest chris955]

the UK is no longer affluent. Opportunities as in Jobs, which in turn has direct correlation to affordability of housing.

 

Of course the UK is still affluent. So because unemployment in Australia is less than 2% lower than here you consider that a major difference ?

[Flake]

Clearly your username is appropriate. Check out some microeconomics theory and repeal some of the crap you are posting.

 

​BigD

 

touched a nerve did we? I like how you cut and paste something from the web and think you are an expert. Big tip, make sure you understand the theory before you cut and paste next time. Fool

[Flake]

Of course the UK is still affluent. So because unemployment in Australia is less than 2% lower than here you consider that a major difference ?

 

 

You need to consider the difference in population on top of that. So yes I do consider it a major difference

[Guest guest76088]

What cut and paste might that be then? Notes I took during my MBA or the six Microeconomics books I have in front of me? Anyone that has read a few of my posts will realise that it is not necessary.

 

Continue posting shite if you wish, I think most people can see it for what it is.

 

BigD

 

touched a nerve did we? I like how you cut and paste something from the web and think you are an expert. Big tip, make sure you understand the theory before you cut and paste next time. Fool

[Flake]

What cut and paste might that be then? Notes I took during my MBA or the six Microeconomics books I have in front of me? Anyone that has read a few of my posts will realise that it is not necessary.

 

Continue posting shite if you wish, I think most people can see it for what it is.

 

BigD

 

Of course it must be, Of course it's not inferiority complex, of course everything you say must be true and correct.... anyone who is truly worthy of their apparent capabilities, does not feel the need to say it.

 

*Continue posting shite if you wish, I think most people can see it for what it is.*

[northshorepom]

You can't make posts like this:

 

the UK is no longer affluent.

 

and expect to be taken seriously on questions of economics

 

 

I wouldn't have worded the description of supply and demand in the way BigD did, but I think he's established he knows what he's talking about on economics.....to me, anyway. And I think I know what I'm talking about on economics as well

 

Anyway, the whole issue of minimum wage is irrelevant to house prices, isn't it? People on minimum wage are not, on the whole, buying houses.

 

​Obviously supply and demand is at work in the housing market, it is in any free market where a price mechanism is involved. I would caution that it's not at work in the way many people often think it is though. It's not simply a question of gross supply and gross demand, ie number of housing units vs number of households. Supply and demand are time based - Quantity Supplied at any point is a measure of how many people are willing and able to sell AT THIS TIME. Likewise for demand. People who may be involved in the market but are passive (ie the vast majority of households at any one time, people who are just living in their house with no intention to buy or sell) do not influence the price.

 

People often quote "supply and demand" as a reason that house prices will not fall. But if their logic was correct (ie if it were a matter of gross supply vs gross demand), they would never rise sharply in excess of inflation either. Can't have it both ways - there is plenty of speculative demand at play in the market.

 

Having said all that, demand in most Aus metro areas is continually fuelled by the influx of (mostly relatively well off, well paid) immigrants and by the tax advantages available to speculators. And supply in some areas (especially Sydney) is constrained due to lack of space and the slowness of the planning process. So I can't see prices here falling sharply. Shame really, as affordability is a real issue for a lot of people and the high prices seriously distort the economy, putting upward pressure on wages (with knock on effects on competitiveness, especially given productivity problems) and tying the government's hands in economic policy terms because a wholesale fall in prices would have such a serious impact (another reason prices are unlikely to fall - governments can't allow it)

[Incata]

How did you pick up the house so cheap then, if rentals in your area are so expensive?

 

​

 

It was cheap for the area, but not cheap for Perth. It needs a lot of work doing to it to bring it up to standard and we think it will take us 3 - 4 years to get it into the state where we feel we can say that there is no more for us to do to it. We had a very large deposit and my husband has a good job so we were able to get a mortgage for the difference.

[Flake]

You can't make posts like this:

 

 

 

and expect to be taken seriously on questions of economics

 

 

I wouldn't have worded the description of supply and demand in the way BigD did, but I think he's established he knows what he's talking about on economics.....to me, anyway. And I think I know what I'm talking about on economics as well

 

Anyway, the whole issue of minimum wage is irrelevant to house prices, isn't it? People on minimum wage are not, on the whole, buying houses.

 

​Obviously supply and demand is at work in the housing market, it is in any free market where a price mechanism is involved. I would caution that it's not at work in the way many people often think it is though. It's not simply a question of gross supply and gross demand, ie number of housing units vs number of households. Supply and demand are time based - Quantity Supplied at any point is a measure of how many people are willing and able to sell AT THIS TIME. Likewise for demand. People who may be involved in the market but are passive (ie the vast majority of households at any one time, people who are just living in their house with no intention to buy or sell) do not influence the price.

 

People often quote "supply and demand" as a reason that house prices will not fall. But if their logic was correct (ie if it were a matter of gross supply vs gross demand), they would never rise sharply in excess of inflation either. Can't have it both ways - there is plenty of speculative demand at play in the market.

 

Having said all that, demand in most Aus metro areas is continually fuelled by the influx of (mostly relatively well off, well paid) immigrants and by the tax advantages available to speculators. And supply in some areas (especially Sydney) is constrained due to lack of space and the slowness of the planning process. So I can't see prices here falling sharply. Shame really, as affordability is a real issue for a lot of people and the high prices seriously distort the economy, putting upward pressure on wages (with knock on effects on competitiveness, especially given productivity problems) and tying the government's hands in economic policy terms because a wholesale fall in prices would have such a serious impact (another reason prices are unlikely to fall - governments can't allow it)

 

 

 

 

You need to research this statement before making a judgment.

 

It is a matter of fact, not opinion.

 

Maybe you should do some reading on the status of global affluence, and perhaps you will gather an understanding of my previous statement.

 

As for your comment on minimum wage people being irrelevent as on the whole they do not buy houses, that's probably the most ridiculous thing I have ever heard! Not only completely bigoted but also out of touch!

 

The original point was about making comparisons of affordability based on minimum wage between the UK and Australia.

 

Again, Australia is no less affordable than the UK based on people earning the minimum wage of each country. It's simple Mathematics.

[Guest chris955]

What exactly is a matter of fact, you didnt refer to anything ?

 

Noone with a grasp of basic economics could deny the UK is an affluent country, it is quite misleading to state otherwise.

 

​It is also clear to see that the majority on minimum wage in either country would not be home owners unless they live in a very cheap area. That isnt bigotted as you put it, again it is just basic economics in todays world.

 

You need to research this statement before making a judgment.

 

It is a matter of fact, not opinion.

 

Maybe you should do some reading on the status of global affluence, and perhaps you will gather an understanding of my previous statement.

 

As for your comment on minimum wage people being irrelevent as on the whole they do not buy houses, that's probably the most ridiculous thing I have ever heard! Not only completely bigoted but also out of touch!

 

The original point was about making comparisons of affordability based on minimum wage between the UK and Australia.

 

Again, Australia is no less affordable than the UK based on people earning the minimum wage of each country. It's simple Mathematics.

[Flake]

What exactly is a matter of fact, you didnt refer to anything ?

 

Noone with a grasp of basic economics could deny the UK is an affluent country, it is quite misleading to state otherwise.

 

​It is also clear to see that the majority on minimum wage in either country would not be home owners unless they live in a very cheap area. That isnt bigotted as you put it, again it is just basic economics in todays world.

 

Clearly your grasp of economics does not relate to today's global position. Note that I have not described the UK as a third world country, I have merely stated what is so obvious to most people! The UK is no longer in the position is used to be. That's the fact, up to you to look up the reference.

 

As for the comment on minimum wage earners, It is bigoted to suggest that minimum wage earners are 'irrelevant' when that was the very point of discussion in the first place! As if the people who find Property expensive don't count because they are on minimum wage. Absolutely ridiculous that they should be taken out of the equation due to a sweeping generalization that ' they as whole don't buy property' .

 

Also note, that from my previous posts, I have also referenced the fact that these properties are likely to be bought in less desirable areas but people still have the option to get onto the property ladder.

 

the reality is you CAN buy property in both countries, based on the very minimum you can earn, so when people carry on moaning about the prices, it goes back to the same old thing, you only get in life you you are prepared to work for.

 

Start somewhere and work your way up, quit moaning about what you can't have and do some graft! Simple.

[bluewaterz]

Buying a house, yes thats crazy prices but renting is reasonable, at least in Melbourne i think. We currently pay 15% our joint income in rent in Birmingham UK. I am expecting rent to take up 17% of our income in Melbourne, so not that much different really.

 

 

Exactly the same case with us in Newcastle UK, we pay 17% of our income for a one bed apartment. I think a lot of people do the mistake of comparing their city/town with Sydney rather than comparing London to Syd.

Having extensively seen prices on domain.com.au and having spoken to family members in aus and friends in London I can't really see a big difference in rental prices when comparing Sydney to London. London usually turns out to be a tad bit more expensive.

[bluewaterz]

Yes property prices are hideous that's for sure, however the wages are very high too. It's much of a muchness really.

There are people in London who never afford a £250k property, much the same as there are people in Sydney who could never afford a $600K property either.

Generally the cost of housing is all relative to the demand, and people only want to live in desirable areas.

For example, You can buy a property in Blacktown in Sydney for $330k, very commutable distance to the city for work and central access to various other business districts, but who wants to live there?... The repayments would be less than renting, even on a 100% mortgage, but somehow it still doesn't make it desirable.

There are options for those that live in Sydney to get onto the property ladder much like there is in London too, You just have to be willing to start somewhere and work your way up to what you really want, hence the term 'Property Ladder'.

​

 

 

Very well said! Cannot agree more!

 

People nowadays expect to move in to a perfect house for a small amount. In reality first time buyers should be looking for affordable areas and oldish houses that they can DIY over the years cheaply to bring its value up....

[Slean Wolfhead]

Exactly the same case with us in Newcastle UK, we pay 17% of our income for a one bed apartment. I think a lot of people do the mistake of comparing their city/town with Sydney rather than comparing London to Syd.

Having extensively seen prices on domain.com.au and having spoken to family members in aus and friends in London I can't really see a big difference in rental prices when comparing Sydney to London. London usually turns out to be a tad bit more expensive.

 

That's a good point, many people compare a fairly cheap UK place to Sydney, Canberra or Melbourne, then complain about the expense as if they were getting the same quality in the UK.

 

I asked a guy here who lived in central London and was posted to Canberra on a very good package (more than 2.2 wage ratio). He reckons the rent (and now mortgage) is near enough the same, but even with the extra pay he says that he cannot save as much money in Canberra as he did in London because of the higher cost of living.

OK, that's not a big deal, you just adjust the frills....a coffee and a danish from a local bakery for $10 is something you can cut out of your daily routine pretty easily if you need to, more home cooking and entertaining instead of an Indian takeaway for $100 a time, less hotels and more camping. It's about the big picture.

[Sustain]

1. Supply and Demand = relationship of quantity demanded to a particular price.

Supply goes up prices come down. The changes in Income relate to change in demand for Normal Goods.

 

BigD

That assumes a rational market.

 

Australia is highly emotional, and the variant of quality stock provides another obstacle in supply/price continuum

 

What does this mean? Higher stock supply may still mean higher prices if the stock coming on the market is of low quality (most of Australian property) and therefore pushes prices higher when emotionally sapped buyers find something decent and find others also chasing.