- Published: Friday, 03 February 2017 15:26
- Written by Sean Summerville
From the Desk of Sean Summerville,
Australian Property Market UNAFFORDABLE : HERE’S PROOF!
Sean Summerville here,
I hope you’re sitting down…
I have just finished trying to digest the 13th Annual Demographic International Housing Affordability Survey 2017. It covers 406 metropolitan housing markets in 9 countries and to compare “affordability”, they divide the median house prices by the median household income.
It was hard to digest because the news was not exactly palatable.
I’ll cut to the chase … this survey confirms what Australians have been saying all along. That, when it comes to the Australian property market, we are in for a world of pain!
Let’s take a closer look … Did you know that there’s only one city that’s more unaffordable than Sydney? – It’s Hong Kong. You read that right … Sydney came in second as the most unaffordable. When weighing up this titbit of information, let’s not forget Hong Kong has a population of 7.5 million to house. So, in real terms, what does “unaffordable” look like? Well, in Sydney, the average property price sits at around 12.2 times the average household income. If you’re on $100,000 per annum salary, you can expect to pay around $1,220,000 for a house in the median price range.
That’s a lot of money in anyone’s language!
Let me give you a moment to catch your breath…
Sadly, the news isn’t much better for Melbourne where the average price of property is 9.7 times the average household income.
Of course, I hear you saying, everyone knows Melbourne and Sydney property prices are through the roof – it’s all over the news.
Mmmm … then,
How do you feel about knowing that the Gold Coast, Tweed Heads, Wollongong, Wingcaribbee NSW, Sunshine Coast, Port Macquarie (just to name a few), cost at least 9 times the average household income to buy an average property.
The bad news stretches from the East Coast to the West Coast of this fair land of ours. The prize is ours! We are among the least affordable housing markets.
To quote the report, “… countries like Australia … house prices have gone through the (now unaffordable) roof”.
How does it make you feel? Depressed? Disillusioned? Angry?
All major housing markets in Australia were deemed severely unaffordable. Senator Bob Day commented that “… new home owners pay a much higher percentage of their income on house payments than they should”.
Of the 26 severely unaffordable major housing markets, Hong Kong is the least affordable with Sydney coming in second.
Not exactly anything to be proud of…
Dr. Donald Brash, Former Governor of the Reserve Bank of New Zealand had this to say …
“Australia is perhaps the least densely populated major country in the world, but state governments there have contrived to drive land prices in major urban areas to very high levels, with the result that in that country housing in major state capitals has become severely unaffordable... “
Whilst our politicians grapple with the housing affordability issue, it seems the problem is not going to go away any time soon. We can ponder how such a young country, blessed with so much land could get itself into such a mess. The solution, it would seem, is a long way off.
My question to you is, What Are You Going to Do? Take it lying down? Go down with a sinking ship?
This is the time to be Enterprising! Time to Rethink the game plan. Time to Consider other strategies for making wealth in property.
… On the one hand, you could be a slave to a hefty mortgage which will only take you 20 or 25 years to pay off, depending on what unexpected` life emergencies come your way …
…Or, you could be SMART and discover the benefits of investing in the distressed property market… Small Investments with Good Returns
I am inspired by these challenging times to give back – to share with you what I know – what I’ve been doing day in, day out for over 10 years.