If Sydney is too expensive, I don't see why people don't move elsewhere?
I wanted to live in Sydney, I moved, I haven't noticed any decrease in my quality of life except I'm 100% less stressed about money.
The thing that strikes me about Australia's property prices are, who will be the generation to pay prices like this again? I personally can't imagine the prices to eventually go anywhere but down.
Considering Work from Office is the norm, good jobs that have career growth are largely on the East Coast i.e. Melbs, Sydney. Both are "too expensive" ... so where else should people move where it's less expensive and they can easily find a job there?
I am genuinely curious where you moved.
> The thing that strikes me about Australia's property prices are, who will be the generation to pay prices like this again? I personally can't imagine the prices to eventually go anywhere but down.
I imagine the opposite. Price will keep going up and up. It's a ponzi scheme, it's literally "too big to fail". The government cannot allow a fall in prices so it will simply never come.
Regarding who will pay again? No-one, land will concentrate amongst the few who already own land and can use that equity as leverage, while the rest of us will live via rent. I am 80% sure that most people born after 2000 will never own a home.
The problem with property tax instead of land value tax is that a parking lot operator pays a lot less tax than the 30-storey apartment building next door. This is despite the fact that both plots of land have the same neighborhood amenities and same development potential. See https://www.youtube.com/watch?v=xqQhoZgFZgk
Or alternately see the 'homeless' problem in the US which IMO is a combination of lack of mental healthcare, broken or absent social integration and support policies generally, a lack of common space protection laws or enforcement of them, and a failure of civic planning to provide enough places people can afford to call home.
The homeless problem in the US is almost entirely the result of real estate speculation. Housing can’t be both something everyone needs to be able to afford and something that guarantees obscene returns in locations where the vast majority of jobs are located. The two are diametrically opposed. Wealthy liberals don’t want to see their selfishness as the cause of so much the poverty and suffering they see around them, so they invent all kinds of mystifications and exaggerate other factors to claim this isn’t true. But it is.
By far the worst homelessness problems in the US are all in very blue cities, not red voting areas. It's not even a close comparison, all the worst cities in the US for wealth inequality and homelessness are particularly blue. The dramatic intensity of poverty and murder that deeply blue cities have produced is terrifying, as is the fact that it has continued uninterrupted for so long. At some point someone should start asking some questions. San Francisco has been a microcosm of that severe dysfunction.
…those questions are all answered by wealthy liberals profiting off real estate speculation at the expense of everything else. You can’t have a functioning society where someone’s right to make obscene returns on a single family home is privileged over people shitting and dying on the streets. When you do, you end up with the severe inequality and dysfunction of California’s cities. Trust me, I know. I live in one. But this trend is playing out all across America, red or blue. California just did a speed-run of the consequences of “fuck you, I got mine” by passing a suite of especially terrible laws in the 70s while being one of the world’s largest economies. Most red-voting areas are nowhere near as economically productive as California, so they haven’t (until recently) been able to draw the same level of speculative investment.
Wealthy conservatives in the US largely subscribe to Social Darwinism or something like a Calvinist logic of god having ordained their success. Essentially, “the homeless are homeless because they deserve to be homeless.” It’s self-serving and tautological, but so are most ideologies based around on a defense of the status quo.
They'd bring up that poverty is the "necessity" in the phrase "Necessity is the mother of invention." though perhaps in lieu of invention, industry.
In neither case is either correct. Rather poverty exists in a strata of manmade architecture that defies scrutiny. Some elect it, others have it thrust upon them, and there is of course every space between and above those statements that make up a much larger space.
The US doesn't have a severe homeless problem as is so often portrayed. The US rate of homelessness is comparable to or better than Canada [0] and far better than France (which has about 3x the homelessness problem of the US, with ~330,000 homeless and 1/5 the population of the US).
People on HN think the US looks like San Francisco. California has one of the highest rates of homelessness in the US.
"About 582,000 Americans are experiencing homelessness, according to 2022 Department of Housing and Urban Development (HUD) data."
That figure is lower than it was before the great recession bubble burst for example. It's up slightly, a few tens of thousands, since the bottom in ~2015-2016.
The Housing First program dramatically reduced homelessness in the US. Many regions of the US have followed it to great success, California has largely refused to. The US rate of homelessness actually declined throughout the era of the great recession, when the severe economic hit would have been expected to produce a large surge in homelessness (especially given it was in part a housing collapse) - the reason for that was the Housing First program (which began under the Bush Administration and was successfully continued during the Obama Administration).
When you point out to people that the US homelessness problem is better than the dire situation in eg France, they lose their minds in my experience, but that's due solely to ignorance about the actual data and context. They can't fathom that a massive welfare state system like France has would still have immense homelessness.
[0] "Canada's national database estimates that there are approximately 235,000 homeless people across the country, but that number triples when emergency room health-care data is considered."
> People on HN think the US looks like San Francisco. California has one of the highest rates of homelessness in the US.
That’s just the general shtick here. You take your own SV bubble, extrapolate it to the whole country/world/etc., and when challenged, accuse the challenger of being in a bubble, with some self righteous flavor to land it.
Nothing stops the tide. The pressures of systems like this build up until not even the government can stop it. The biggest dam in the world cannot stop dead in it's tracks even the tiniest trickle of water. Something will give, could be the entire financial system collapses, could be guillotines, but the government is not omnipotent.
But Australia can't do that with their housing market. If they try, prices just go up. Real estate is monetized, people need to park their devaluing dollars somewhere. The more they try, the more they price their own people out of their own country.
Generally when the debtor goes into bankruptcy they give up the asset. Some other 'wealthy' person buys up the for pennies on the dollar. So while a particular rich person loses, in general the wealthy come out ahead.
Inflation enables debtors to default in real terms while still meeting their contractual obligations. They (er, we) end up paying debts back with money that's worth less, assuming we remain solvent in nominal terms (as the govt, currently a very large debtor, is guaranteed to do)
Sydney was always expensive, but there was a reason for it; now everyone has caught up thanks to the economic climate, and it's just because they think they can get away with it.
I've lived in Adelaide my entire life, and it's impossible to find reasonably priced accommodation currently, and I'm saying that as a working class software engineer. You might not feel the pain, but there's an entire corpus of people besides you who do.
TL;DR it's expensive in Sydney. Lot's of speculation and no real solutions...
I live in Tel Aviv and actually found that refreshing. We've been in a housing bubble since 2000. Here the main claim is that since the country is small, prices will always go up. This is BS since if you step out of Tel Aviv prices are still higher but fall drastically. This also shows it's BS, if there's one thing Australia has it's land.
This is due to government decisions in development. The problem is that these policies take a decade+ to show the full impact and the political incentive is problematic.
I live in Vancouver, I'm pretty familiar with Tel-Aviv, and I visited Sydney ;)
Tel-Aviv is expensive because it's the place people want to be. As you say, it's cheaper outside of Tel-Aviv and there's a reason for that. Vancouver is like that as well, there are more amenities, more jobs, a better "life style" so to speak, in Vancouver. And people are willing to pay for that. And part of why it's like that is because of the density and the people that live there. So sure, in theory you could build another city like Vancouver on the Sunshine Coast, or on Vancouver Island, but in practice you can not - it's the results of decades of evolution.
In Israel lessay Hadera or Netanya could be Tel-Aviv... But they're not. And so you pay less to live there.
There's plenty of "land" in Australia but most of it is a) desert you don't want to live in, b) too far from anything. The Sydney metropolitan area is very large. Not unlike Gush Dan or Greater Vancouver. And in that area there isn't "more land" so all the other land, like all the other land in Canada, doesn't matter. Israel being a speck compared to those does actually have a shortage of land since you aren't going to turn the entire country into a city (one would hope).
That said it's true there's been a bubble, mostly related to interest rates. But as they say the market can remain irrational longer than you can remain solvent. Even if prices correct in Israel or in Canada or in Australia the highly desirable areas are likely to still remain relatively, and absolutely, expensive. Things that can change that are reduced demand, economic downturn, those areas becoming less desirable, etc.
People keep talking about lack of affordability, but the reality is there are (a lot of!) people that can afford to live in those places, the 1%. The 99% can't afford but those aren't the ones buying those properties. All these cities have a population that's significantly more affluent than lessay 40 years ago. In Vancouver and Tel-Aviv e.g. a lot of tech workers.
So I lived for years in a private property in the center of Tel Aviv. 2 min walking distance from Disengof center. While there are a few high rises in the area there's still a lot of low rises and old buildings. There are still single story houses right in the center. (Edit: my point here is that there's a lot of space and people don't build enough).
The problems are multiple. You are correct, I over simplified and interest is a huge reason for this bubble.
1. The local government doesn't allow construction in the areas people want. They're afraid that the influx of people will reduce the quality of life since the school system, sewage, policing etc. needs to be updated. They also lose on residence financially. Businesses fund cities and municipalities go bankrupt if they allow too much construction.
2. Traffic to Tel Aviv is terrible which makes even the outskirts less attractive. There's no parking either and if you choose to use public transport then it's closed in the weekends. I hope the light rail will change this but I think it's too little, too late. I'd keep a close eye on the prices in Bat Yam and Jaffa. If they go up there it might be due to the rail.
3. The government is the biggest landowner in these parts, it sells lands using a process that values return rather than the price to the consumer.
4. The rent market isn't regulated at all. That means investors push up prices and then overcharge on rent. Rental properties have a lower tax bracket than stock market investments. My accountant has 10 apartments for rent and this isn't an exceptional scenario. People are hoarding properties.
Rental properties and landlords is part of how the market works. That can be a good thing. In Vancouver (so they say) people own condos and don't rent them out, they just sit empty.
In North America people lose it when you talk about government interfering with market prices but Vancouver (or rather British Columbia) has limits on how much you can raise rent for existing tenants every year, but there's plenty of loopholes. All in all the rental returns are not great. A $2M house might rent for (guessing) $5-7K a month, that's a bit more than 3% return, before expenses.
Prices have been crazy for the last two decades. They're not showing any signs of a major reversal. I remember talking with some real estate guy about how expensive Vancouver is- 15 years ago. There is so much more demand now despite prices being x3-5.
Australia has the largest average house block in the world (or close to it) at 400m2. A lot of the older-style houses are 700m2 blocks.
People have been subdivided and densifying older blocks, building two houses on one block.
Working off a criminal sentence for a decade then receiving emancipation and ownership of large land holdings was the original lifestyle of the convicts sent over to AUS. It's in the culture to value land.
One of our five major cities covers the distance of greater london measured north-to-south and has a population of 2.3mil, compared against 13mil for london.
We need to make the Bush/Desert liveable. People don't realize how much work goes into maintaining housing outside the 'butter zone' where everything works.
There's more thought put into terraforming Mars than there is, keeping salt out of the wind in the outback, or making it economical and affordable to keep wildlife out of your housing, or transporting water large distances for cheap. Basically we need rivers in the desert.
The economy is built around sexy projects and consumer bait, but the real expansionist policies that could secure Australian housing and Australian life for centuries to come, are basically an afterthought of silly politicians.
As one bit of anecdata: there's a proposed development in my suburb of Perth just 3km from the city centre along one of the major bus routes. It's a 13-storey block of flats that got whittled down to 9 storeys by NIMBY backlash and the NIMBYs are pushing for six storeys, because that was the council's plan several years ago. This has been dragging on for over a year now.
There's not just endless land in Australia but there's also endless room to grow cities upwards. There's nothing technical about our lack of housing, it's 100% a decision.
I like this anecdote because it's the exact opposite of what I've seen in Dubai, Doha, Riyadh and practically any city where they're building up massive infrastructure. The government has a vision for a certain skyline to take shape, so small scale residential don't really find much government support. On the other hand, the governments strongly encourage a 70-storey residential skyscraper with a wonky rad shape, because why not? The end result is a massive oversupply of homes - there was a such a large glut that prices remained depressed even now, except for Dubai after the Russo-Ukrainian war. My cousin lives in a cozy 3 bedroom rental in Dammam, just outside Aramco City (the part where all the Western oil engineers live and where there are American schools and bars and stuff), for a tenth of what I pay for my tiny apartment in Zurich (which is at the typical level for any non-sharing home for a major city worldwide).
If living in a liberalizing autocracy doesn't rock your boat, Saudi Arabia and Qatar are nice options. I've seen a lot of Israeli techies moving to the UAE too.
For those who don't know: PIK (ПИК) is the largest property developer in Russia. Most of the newly built affordable housing in Russia tends to be very high rise, low quality and not conductive to decent living conditions.
The obvious upside is that it does have "affordable" and "housing" in a single sentence, especially if we are not talking about Moscow (but even then your chances of owning your own home now exist).
Most new builds in Melbourne are already of low quality. I lived in an apartment built in 2013 with water leaking in from the roof three levels above, and the sound insulation was so bad I could hear my neighbours putting cutlery away. And the elevator broke down daily.
The difference is that these apartments require the vast majority of your income (rent) or a 30 year mortgage.
My father purchased a house in Melbourne in the late 70’s, and he paid the mortgage completely in 3.5 years as a physical labourer. Most of his generation did the same. Today as a senior engineer I would need 35 years to pay off that very same home.
Hence why I moved away from Australia to south east Europe, now the 1.46ha block of land and big house on an estate set me back 3 yearly salaries. Income tax is lower, and lifestyle cheaper. I know 4 other families (friends) that did the same. Expect an exodus from Australia.
Where in southeast Europe are we talking about here ?
I'm from Croatia and what you're describing only checks out if you live in rural/undesirable area IMO.
This has huge implications on QoL :
- social circles
- schools/kindergarten and socialisation for your children (if you have them of course)
- usually worse pollution than city ironically, unless you're really isolated (a lot of these villages have terrible wood burning chimneys, usually some dirty factories etc., smell from farming/primitive animal styes in the area and zero regard for ecology/enforcement of environmental standards)
- bad infrastructure (common electrical outages, terrible internet), transportation options (highways are decent), hospitals
For example a 100m2 newly built apartment in a middle class area will cost you ~400k€ (can be a bit less but expect significant tradeoffs).
A house of similar quality will probably be 5-600k+.
Realestate inflation changes the equation of living here substantially - it used to be you could remote for 30% less money and live way above the standard you could get in more expensive countries.
Now the lifestyle is not significantly more attainable and everything else is worse than in richer countries.
I agree with you on quality housing being costly and scarce.
But living in SE Europe/Croatia can pay off if you can survive with lower standards for a while.
For example, you could buy a flat in urban area for 150k€ of lower quality and, if you are working for a non local company, you can pay it off quickly. Then you can start climbing on the housing ladder.
You probably cannot do that in other more developed countries.
This is true but you're also living in a significantly less developed environment/society. And the widespread corruption/crime in society is depressing - you're competing for high quality realestate with these people and they will be your neighbours/social circle.
Also a lot of work capable population is moving to higher standard countries (brain drain). 1/3 of my childhood friends already left.
Like you said a lot of stuff is still cheaper, income tax is insanely low if you're contracting (~22% tax total).
It's definitely a trade-off.
TBH if I didn't already have a child I'd be moving west - and even now I'm seriously considering it instead of doing an "upgrade" here like you say.
Serbia, 9km from Belgrade, got fibre, gas, and the usuals. Vikendaško naselje. 15 min by car from 2 big private schools, 20min from nearest big shopping center, 25min from Galerija (elite shopping), 25 min to airport, 30 min to downtown belgrade. Also got public train (800m) and bus stop (200m). On a hill (320m), wind intersecction, also got an actual spring on the property.
Who wants to live in polluted Belgrade though?
I’ve also got Croatian passport, considered Istra (Pula), but no private schools, and much higher taxes. By car I’m in Pula in 6 hours.
Exactly this. And 400K EUR = 660K AUD. There's apartments to be found in Australia for that, especially when you're not in crazy expensive Sydney (e.g. Perth, Adelaide, Brizzy or Melbourne to name just the bigger cities. Much cheaper when you go to smaller towns. No need to move half way across the world for that)
LOL. Yea sorry but no. I don't expect an exodus from Australia to Bulgaria or Romania. I just really ain't seeing it. And neither do statistics show anything like it.
we have a nearly world wide city housing crises (if you ignore cities which are falling apart and consider affordability)
and as far as I can tell a major driving fair is how in recent years a lot of people with a lot of money increasingly did invest into residential land not for self use or for substainable renting but instead as speculative investment or land bank
giving his a crisis of affordable housing in the population centers can easily lead to civil unrest and even be a thread for democracy I would argue both should not be allowed (for residential land/apartments)
This wouldn't work because not every renter wants to be an owner and have 20+ years mortgage that ties him down to a particular place after he has put all his cash into the deposit.
The problem is with the supply. Fix the supply and the market will balance itself.
Land supply in desirable locations cannot be increased; you can zone for increased density in those locations, but developers are not incentivised to release new supply as quickly as possible (as that would reduce prices). See for example https://www.fresheconomicthinking.com/p/a-housing-supply-abs... and other articles on that blog which explain this phenomenon.
The property market has too many inherent and imposed monopoly conditions that prevent it from acting as a hypothetical free market where supply and demand are the only factors that influence price.
Actors not motivated by profit can increase supply faster than the private sector's preferred absorption rate (e.g. mass state housing projects like in Singapore and Vienna), in which case sure, if the government massively increases supply consistently above demand and only rents or sells in a manner preventing monopoly acquisition then prices (rents or purchases prices) can be pushed down. There are other alternatives (e.g. Georgist style land taxes combined with liberal zoning laws, so efficient use of desirable locations is encouraged and enabled).
It's not easy, but without building more the situation would get even worse.
Low-density houses are nice, but in Australia it's not the most efficient way to absorb the large number of new arrivals clustering in the 3-5 major cities.
Cities with higher densities exist and they're not as nice as suburbia, but it's much better than no housing at all.
BTW, after thinking about that more I'm sure that there isn't anything fundamentally challenging with building more supply.
The highly parts of existing cities are limited, but as history shows - you build new cities. Population has moved from one place to another for centuries and new cities sprang all over the world. If this was done before it should be done now. Overregulation may be the culprit.
You can build lots of housing in remote locations, sure, but people have to want to live there. Even existing cities can have massive surplus of housing if people don't want to live there anymore (see Detroit for an example). Most people want to live in existing cities, and particularly the biggest cities (hence them being the biggest). Tokyo is huge because people want to be there; there are cheap houses available outside of Tokyo but people don't want to be there as much. Most of the time, each state or country has a single large city that grows much faster than all the other cities, because people want to be there and not somewhere else.
The main "successful" new cities these days are when governments create one for their headquarters (or move their headquarters to an existing smaller city), like Sejong in South Korea. This is because it induces demand quite successfully for government employees to move there. You need a strong inducing of demand to create a new city; existing cities already have strong demand via jobs, other people, and services, so new cities need to outcompete them.
During the longest stretch of time that I rented a house, I was one of between four and two young men, most of us broke. The owners of the house were a married couple who lived about a mile away. Were the state to have expropriated them, we could not have paid anything like fair compensation.
I don't say that we represented the most common case, but I do think that such rentals reduce friction in the housing market. Towns with decent economies will have such transients who need a roof but aren't ready to commit to staying.
Many renters couldn't afford to spend $5000 for a house. So should we sell houses that contain >$100,000 of raw materials for <$5000? Who would ever build a house again?
With falling prices of houses, rental prices will also fall, making the entire real estate business unappealing. That would have the effect of reducing building material cost significantly, if there's no demand. Builders and developers get paid for their other contributions to the process though, so while their revenue will decline, so will their costs, which will keep things stable enough. The ones fucked will be corporate investors who buy from developers to rent them out to individuals (and to some extent those developers who rely on inflated house prices).
If lumberjacks aren’t paid enough for their trees, they will stop cutting them down. Supply and demand will always come to an equilibrium eventually, if demand plummets, supply will follow in plummeting sometime after.
At least in Australia where I live, the problem isn't really the number of houses (despite the Murdochian headlines harping otherwise.) We have ungodly numbers of vacant dwellings. New houses aren't the solution, new incentives are. This is where the pushing down of prices is important. If companies don't want to build new places, fine, let them rot. In the mean time the multinationals and leveraged-to-the-teeth speculators will be forced to make those empty homes available to the market.
People used to build their own houses, you could order a kit from Sears. You aren’t going to get away without an appropriate amount of resources to buy land, buy the kit, and labor (your own or purchased) to do all the work.
I'm not sure how you would go about selling a 200 unit apartment building to humans? I guess you would demand that all apartment buildings go condo? This is often used as a way to get out of rent control, so the companies are already doing it in some markets.
"Oh no, but what about the companies and their shareholders...."
It's funny because I used to work for one of the largest corporate owners of real estate globally.
Companies should be allowed to own properties, sure. What doesn't work is bringing corporates into the residential rental market. Housing cooperatives should be allowed though.
Serious question: is there any desirable city right now that doesn't have a housing crisis? A few weeks ago the discussion on HN was about Canada, this week it's about Australia, take your pick of coastal US cities and it's the same. I've heard people moving to parts of Europe for lower-cost housing are doing well, but that presumes you have a mobile job (and visas to go with it) and banks on the fact that many parts of Europe are losing population rather quickly.
Tokyo is pretty famous for building something like 'enough'.
Vienna has a pretty good housing story.
The interest rates in most of the world are bad for would-be homebuyers across the board, though.
The US has a lot of 'low hanging fruit' in terms of being able to get rid of a lot of onerous zoning that could really make a dent in the housing supply. And we've seen a fair amount of progress in the short time frame that YIMBY groups have been a thing.
Interest rates in Japan are still very low, though if you're thinking about moving to Japan, it is difficult for foreigners to get mortgages through Japanese banks unless they have permanent residency or have a Japanese spouse, though I've heard of some banks offering mortgages to those who lived in the country for at least two years. Who knows what interest rates in Japan will be in two years, though; the yen has weakened noticeably against the dollar since 2022 when the Federal Reserve started its interest rate hikes, yet the Bank of Japan has continued its low interest policy.
Japanese property is famously cheap for being small, but other factor is land being a 30 year lease. Build same size + on land you buy and it will be more expensive despite efficiencies of large domestic market.
> Tokyo is pretty famous for building something like 'enough'.
Tokyo builds a lot because they tear down homes after 30-40 years to rebuild them. You can't judge Tokyo's property market by new housing starts, and the fact that housing depreciates (rather than appreciates) scares away all the speculators.
In Japan, the real estate system is designed to ensure affordability of homes.
In Australia, the real estate system is designed to encourage and maximise real estate investment as a no-effort wealth multiplier for (literal) rent-seekers. See for example the policy of "negative gearing" where the tax system subsidises those buying investment properties. Those that took advantage are such a powerful block that no politician of any stripe has the gumption to sunset this policy.
The Tokyo metro area is quite affordable compared to desirable metro areas in the United States and Canada, as well as other East Asian metro areas outside Japan. While I'd struggle to find a place for $500,000 in Silicon Valley, $500,000 in the Tokyo metro area could buy a nice place, especially if one commutes from the suburbs. The public transportation system in the Tokyo metro area is top notch, even in the suburbs.
A deflated housing bubble in the 90s and (relatively) lower salaries is also a reason in Tokyo.
The median household income in the Bay Area is $128,000 [0] versus around $50-60,000 in Japan [1], with median house priced at $1.3m and ~$300k respectively.
Both are pretty unaffordable for people earning normal salaries.
The median in NSW (where Sydney is located) is around AUD$62,000 [2] but the median house go for AUD$1.3m [2]
That is definitely true. I currently live in a one-bedroom apartment near Silicon Valley; I can't afford to buy a house anywhere near the Bay Area unless I wanted to commute from Stockton, which has a very high crime rate. Conversely, I could afford a really nice place in Tokyo with my Silicon Valley income, but if I transferred to my company's Tokyo branch and took a local salary, my salary would go down substantially. Even so, I'd still be able to afford a home in a suburb of Tokyo (even $250,000 can get you a place out there).
As someone who travels to Japan frequently, my dream is to own a vacation home there. Outside of Tokyo homes can be even cheaper; I've seen listings in rural parts of Japan for places as low as $40,000!
> I currently live in a one-bedroom apartment near Silicon Valley; I can't afford to buy a house anywhere near the Bay Area unless I wanted to commute from Stockton
I mean, you are going to have to get a mortgage to buy a house no matter which country you live in. A mortgage of $4-5k/month can still be doable assuming you saved enough for a down payment, though the lack of houses being sold makes it much more difficult to buy. That said, it's a similar story in every city I've been to - London, Boston, Saigon, HK, Delhi, Shanghai, Tel Aviv, etc.
> As someone who travels to Japan frequently, my dream is to own a vacation home there. Outside of Tokyo homes can be even cheaper; I've seen listings in rural parts of Japan for places as low as $40,000!
Prices are lower, but managing, buying, and owning property is difficult if you aren't a Japanese national.
A lot of those cheap rural houses are in their versions of WV or Idaho, where you can still find houses for a similar price.
> Even so, I'd still be able to afford a home in a suburb of Tokyo
To be fair, anything that isn't Central Tokyo is the Japanese equivalent of Stockton socially.
> As someone who travels to Japan frequently, my dream is to own a vacation home there. Outside of Tokyo homes can be even cheaper; I've seen listings in rural parts of Japan for places as low as $40,000!
There are lots of conditions to that, including high property tax, requirements to farm, strict permanent residency requirements. I don't think many rural communities want to become desolate vacation home places, and they've surely thought of that when regulating their property markets.
You can’t compare Tokyo and Bay Area mortgages this way as interests rates in Japan are still remarkably low and citizens of Japan are able to obtain favorable term, zero money down mortgages fairly easily (assuming they’re salaried workers). Nothing like this is available in the US. Likewise, rental costs in Tokyo are far cheaper than the Bay Area and Tokyo has stronger renter protections. From the perspective of housing (and myriad other things, like public transit), it’s much better to be a median income worker in Tokyo than the Bay.
Australia, however, is it’s own special variety of fucked.
CA is losing population too and building houses in those desirable locations. Why don't prices go down? These are financialized assets bought on credit. Some 8-10% of SF rental and 2% of owned housing is vacant (over 25% of commercial), but you don't see prices go down. Building 1% per year would involve a project on every single residential city block. That would have huge externalities. Why should current residents deal with the mess so more people can move in? So builders can get rich charging $1000/sqft?
The quick way to lower prices would be to annually tax vacancies (if you can't show a CA resident/corp paying rental income on a residential/commercial property) then pay the sales tax income the city would have received from those in an occupied location. This would encourage people to lower rents/prices to fill vacancies. Prop13 has made the property taxable rate so low that many people would rather have an empty rotting hulk than an occupied older property since it would lower their leverage on asset appreciation. A residence tax wouldn't be limited to the Prop13 assessment (5-10% of current value).
If there is ever a bubble pop, prices would likely to stay low for a generation. Just like Japan. It's not that different from bitcoin/NFT (other than some people live in them).
California's property bubble did pop in the late 80s/early 90s (ironically, or maybe related to, Japan's bubble pop). It recovered since then. Most people leave California because "it's too crowded, no one goes there anymore" (leading to high housing costs) problems, not because of other reasons. Eventually an equilibrium will be reached, and prices shouldn't drastically pop unless something else happens (like a tech sector crash).
Isn’t that how too much demand for limited supply works? Taxes aren’t that high in California, they are higher than average but that’s it. In fact, given that taxation is extremely progressive, you can wind up paying less in taxes in CA then states like Alabama (where taxation is very regressive) if you don’t make a lot of money.
Sydney has topped net internal migration for years now. It's desirable for everyone who doesn't live there, actual locals are getting out at a ridiculously high rate.
The experience of living in Sydney and working full-time as a senior engineer is truly mind bending. My parents were a teacher and a labourer and have always owned the houses we lived in, usually in a middle suburb on the western side of the city.
Adjusted for inflation, I earn multiple times their combined income and for me a detached house is almost entirely out of reach, and apartments with any more than 2 bedrooms are about the same.
The numbers really tell the story. My parents combined income was around $40,000 and the house they bought when I was born was around $120,000. Today, If my household is earning $160,000, an equivalent house in the same suburb is $1,500,000, and the numbers just don’t balance.
This wouldn’t be so bad if apartments were reasonably sized and built to be lived in. We have thousands of studios and 1 bedroom apartments that you could never raise a family in. What we need is 2 and 3 bedroom apartments in well located suburbs with access to transport, and a disincentive for developers to just build tiny studios to maximise profit.
I have put my money where my mouth is so-to-speak on saying Sydney is overpriced, and spend a few months a year living in Tokyo while I work out how moving there more permanently will work. It’s still expensive, but relatively speaking its decades of work more affordable to buy a house.
Normally, a studio apartment is not an endgame but a stepping stone: once you have it and paid out mortgage, you can sell it and buy a 2-3 bedroom unit. Are these actually not available?
When a studio apartment costs $600,000 and a 2 bed apartment in the same building costs often double, there really isn’t a pathway to ‘step’ between them. The same is true of houses, where the gap in prices between apartments and houses has never been wider.
It also doesn’t take into consideration that the would be homeowner is usually renting while saving their deposit, and that currently requires a larger share of their income than basically ever before.
It also doesn't take into account that apartment dwellings are increasingly touted as the solution to supply. Speaking as someone who's trying to buy an apartment just because it'd be nice to have the security, I think it's delusional for anyone to expect to make money off these things when the supply of comparable housing is only increasing. Plenty of houses around me (Melbourne) have doubled in price in the last 10-20 years; anyone trying to use an apartment as a stepping stone to those is in for a rude shock.
Inflation in Australia is measured using what’s known as CPI, but is weighted with other goods, and is widely but not universally thought to downplay the effects of property pricing in spending.
This problem has at least been recognised by Victorian State Government, and there are plans to increase the housing supply above what is required to maintain population growth.
Huge, genuine reforms designed with the explicit goal of reducing property values.
The middle classes in Australia have a lot of expendable income and not much to do with it. So "safe" investment properties have become very popular. This has resulted in a lot of peoples investments being tied up in real estate. This makes any serious reform politically impossible for the foreseeable future. and people who don't have investment investment properties don't want the value of their home to decrease.
The current Labor government lost a previous election in part due to proposed changes regarding the taxation of investment properties. It dumped[0] those policies and won the last election.
Property has become a cringy weird national obsession to the point where high-school children [1] and are thinking about it.
>Property has become a cringy weird national obsession
I don't think this can be understated. Being a landlord is so normalised here that people seemingly can't connect the dots between every able person collecting 'investment properties' and the impact it has on the housing market (among other things).
> Property has become a cringy weird national obsession
Same in London. Furthermore I have the suspicion that this contributes to the low productivity in the UK. Freshly minted MBAs whose business plans are... buy property, collect rent.
Australia has had one of the highest rates of housing construction in the developed world
We also have one of the highest numbers of construction workers per capita in the OECD
Australia also ramped-up housing construction to record levels last decade
However, this surge in construction was swamped by the unprecedented jump in net overseas migration from 2005, which is projected to run even higher over the next five years
So, it's simple demand and supply. Demand has been driven by a "Big Australia" policy driven by the federal government that started with Howard in 1996 and has been enthusiastically continued by every government from both sides of the isle for the next 25 years. Demand outstripped supply, despite the fact we've turned up the dials on supply about as far as they can be turned. Rising prices should not be a surprise.
In view of the fact we are world leaders in building housing the other explanations we are given like "land availability" or "state government bureaucracy" or lack of public housing are IMO just furphies. Government subsidies for house builds only make sense if we have spare capacity. But we've already maxed out our building capacity, so the builders pocket the money. As a consequence these federal attempts to subsidise their way of the problem doesn't get more houses built - they just pour fuel on the housing price fire.
Perversely, it's been a factor in bankruptcies in the building sector. With so much demand builders took on more work than they could complete in a reasonable time frame. Yes, it was pure greed, but it was also only possible because demand is so high. And usually locking in sales like that would be harmless and even prudent (apart from pissing off the customer because it took 18 months rather than 7 to deliver the built house). But that work was for a fixed cost and we got hit with COVID inflation so the self inflicted long leads times lead to builders making a loss - and going under.
But it's not just the building sector. When your growing your population at about 2% per annum [0] all sorts of things start going wrong. You can't build hospitals fast enough, and we get ramping [1]. Roads clog faster than you can build them. [2] Public schools can't be built fast enough, and you can't find teachers. [3]
The icing on the cake is it's the State's that cope the blame for all of this because they are the ones responsible for delivering roads, hospital, schools and releasing housing land, and they aren't delivering fast enough. But the root cause isn't them - it's federal population policy. And so far, feds have got with their the "Big Australia" policy scot-free, with none of the blame for the down sides attributed to them.
I'm not against population growth, but it has to be done at a reasonable pace and clearly the current pace is not reasonable.
If you buy into the rhetoric on AU Reddit subs you’d believe it was all the fault of Boomers, Negative Gearing and AirBNB.
People just don’t seem to understand Negative Gearing. They seem to think it means free profit. It’s not understood that you need to make a loss to claim the offset on your tax, and you have fund that from your own pocket.
Then somehow Boomers are both responsible for Housing Prices, lack of housing to buy, and lack of rentals.
It can’t be both.
Anyway - the whole thing is hard to understand for anybody.
How can house prices be rising when it’s seemingly impossible to get mortgages on normal dual income salaries?
The bank of mum and dad doesn’t explain it.
Immigration explains part of it. Overseas money being parked in property is a large component.
Then there’s AirBNb and other short term rentals…
And if Airbnb is taking properties off the rental market, why is there suddenly such huge demand? Who’s staying in those holiday homes and where do they get the money!
There’s a real lack of in depth reporting and analysis on this.
Even the ABC is very superficial in its reporting.
I feel like Perth exists in a little alternate universe of its own. It's a city of approx 1.6 million, bigger than Phoenix or Philadelphia, with Western Australia having a state GDP-per-capita 10% higher than the US. Property is also 15% cheaper than the South-East England (excluding London) region.
Median house price is US$396000 / AUD$615000 and there is a very long list of skills shortages for immigration to fill. The property boom in Sydney just passed Perth by, and it's now significantly cheaper.
Vacancy rates are at their lowest in years, and rents have risen recently, but that's off the back of eleven years of zero nominal house price growth 2011-2021. We are only now getting 10-15% above 2011 levels in nominal terms.
I'm not saying people can uproot their established lives in Melbourne/Sydney, especially when the main industries are quite different in Perth, but I really don't understand why Perth is not a more popular destination for immigration from around the world.
As a British economic migrant to Australia myself I'm just surprised there isn't more of a stampede. My 2023 Perth salary is 3.5 times higher than my UK 2010 salary, and the quality of life in Perth is far higher than the UK.
My house is 4 bed 2 bath on a 4300 ft2 block 2.5 miles (9 minutes on the bus) from the city centre and it is 3.8 times my salary as an engineer (my wife is unable to work so we are single income)
Oh god yeah, I didn't mean to imply you could live in Perth while working an eastern states job; moving to Perth will always be a big move, I'm just surprised there aren't more immigrants or eastern states folk relocating. Moving from Melbourne to Perth is not that functionally different from emigrating.
My parents spent quite a bit of time in Perth, and I went over for a holiday a little while ago for the first time (I live in the ACT). I hadn't expected how far it feels from the rest of Aus. Of course, I knew it, but it's different when you're over there.
The video is useless, except to spark discussion. Fucking well done Bloomberg. Top quality journalism. Yep, it really is a fucking mystery. Vast rivers of ink have been spilt on this topic and Bloomberg has not read any of it.
Topics the video studiously avoids:
1. Record immigration: 400,000 migrants in 2022-2023 [1] in a population of 26.5 million [2]. Where are all those people going to live? Well, they'll continue to prop up the housing and rental ponzi schemes.
2. Shitty tax policies (negative gearing and capital gains tax deduction) that make housing more attractive as an investment vehicle. The centre-right Labor party (think: Labor = US Democrats, except Australian politics are not as extreme right as the US') tried to take modest reforms to the 2019 federal elections and got shot down hard. [3]
3. AirBnB siphoning accommodation away from the long-term rental market. It is more profitable to run your AirBnB for 3 months a year than to provide long-term accommodation, contributing to the tight rental market.
4. The power imbalance in the rental equation: renters in Australia have some of the weakest rights protections in the world [4] [5] [6] although at least one progressive state is making modest reforms that don't go nearly far enough [7]. Australian renters have no guaranteed right to put up a picture frame, have pets, or get a decades-long lease like their European counterparts. [8]
5. The demise of public (read: government owned and built) housing in Australia [9] [10] [11]. It used to provide affordable housing to essential workers. It has been gradually sold off by state governments to private real-estate developers under neoliberal economic policies.
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[ 3.3 ms ] story [ 388 ms ] threadI wanted to live in Sydney, I moved, I haven't noticed any decrease in my quality of life except I'm 100% less stressed about money.
The thing that strikes me about Australia's property prices are, who will be the generation to pay prices like this again? I personally can't imagine the prices to eventually go anywhere but down.
I am genuinely curious where you moved.
> The thing that strikes me about Australia's property prices are, who will be the generation to pay prices like this again? I personally can't imagine the prices to eventually go anywhere but down.
I imagine the opposite. Price will keep going up and up. It's a ponzi scheme, it's literally "too big to fail". The government cannot allow a fall in prices so it will simply never come.
Regarding who will pay again? No-one, land will concentrate amongst the few who already own land and can use that equity as leverage, while the rest of us will live via rent. I am 80% sure that most people born after 2000 will never own a home.
Or alternately see the 'homeless' problem in the US which IMO is a combination of lack of mental healthcare, broken or absent social integration and support policies generally, a lack of common space protection laws or enforcement of them, and a failure of civic planning to provide enough places people can afford to call home.
In neither case is either correct. Rather poverty exists in a strata of manmade architecture that defies scrutiny. Some elect it, others have it thrust upon them, and there is of course every space between and above those statements that make up a much larger space.
People on HN think the US looks like San Francisco. California has one of the highest rates of homelessness in the US.
"About 582,000 Americans are experiencing homelessness, according to 2022 Department of Housing and Urban Development (HUD) data."
That figure is lower than it was before the great recession bubble burst for example. It's up slightly, a few tens of thousands, since the bottom in ~2015-2016.
The Housing First program dramatically reduced homelessness in the US. Many regions of the US have followed it to great success, California has largely refused to. The US rate of homelessness actually declined throughout the era of the great recession, when the severe economic hit would have been expected to produce a large surge in homelessness (especially given it was in part a housing collapse) - the reason for that was the Housing First program (which began under the Bush Administration and was successfully continued during the Obama Administration).
When you point out to people that the US homelessness problem is better than the dire situation in eg France, they lose their minds in my experience, but that's due solely to ignorance about the actual data and context. They can't fathom that a massive welfare state system like France has would still have immense homelessness.
[0] "Canada's national database estimates that there are approximately 235,000 homeless people across the country, but that number triples when emergency room health-care data is considered."
https://www.cbc.ca/news/canada/nova-scotia/canada-homeless-p...
That’s just the general shtick here. You take your own SV bubble, extrapolate it to the whole country/world/etc., and when challenged, accuse the challenger of being in a bubble, with some self righteous flavor to land it.
Usually, the government soft-fails through inflation and deflates the bubble.
It depends on the unit prices are measured in. They may go up, or tread sideways in AUD, but that doesn't mean they're actually appreciating
People have been saying that for years. It's gotten a lot worse rather than improving though.
I've lived in Adelaide my entire life, and it's impossible to find reasonably priced accommodation currently, and I'm saying that as a working class software engineer. You might not feel the pain, but there's an entire corpus of people besides you who do.
Did you even try? Jobs, careers, social networks, familial support networks.
I live in Tel Aviv and actually found that refreshing. We've been in a housing bubble since 2000. Here the main claim is that since the country is small, prices will always go up. This is BS since if you step out of Tel Aviv prices are still higher but fall drastically. This also shows it's BS, if there's one thing Australia has it's land.
This is due to government decisions in development. The problem is that these policies take a decade+ to show the full impact and the political incentive is problematic.
I live in Vancouver, I'm pretty familiar with Tel-Aviv, and I visited Sydney ;)
Tel-Aviv is expensive because it's the place people want to be. As you say, it's cheaper outside of Tel-Aviv and there's a reason for that. Vancouver is like that as well, there are more amenities, more jobs, a better "life style" so to speak, in Vancouver. And people are willing to pay for that. And part of why it's like that is because of the density and the people that live there. So sure, in theory you could build another city like Vancouver on the Sunshine Coast, or on Vancouver Island, but in practice you can not - it's the results of decades of evolution.
In Israel lessay Hadera or Netanya could be Tel-Aviv... But they're not. And so you pay less to live there.
There's plenty of "land" in Australia but most of it is a) desert you don't want to live in, b) too far from anything. The Sydney metropolitan area is very large. Not unlike Gush Dan or Greater Vancouver. And in that area there isn't "more land" so all the other land, like all the other land in Canada, doesn't matter. Israel being a speck compared to those does actually have a shortage of land since you aren't going to turn the entire country into a city (one would hope).
That said it's true there's been a bubble, mostly related to interest rates. But as they say the market can remain irrational longer than you can remain solvent. Even if prices correct in Israel or in Canada or in Australia the highly desirable areas are likely to still remain relatively, and absolutely, expensive. Things that can change that are reduced demand, economic downturn, those areas becoming less desirable, etc.
People keep talking about lack of affordability, but the reality is there are (a lot of!) people that can afford to live in those places, the 1%. The 99% can't afford but those aren't the ones buying those properties. All these cities have a population that's significantly more affluent than lessay 40 years ago. In Vancouver and Tel-Aviv e.g. a lot of tech workers.
The problems are multiple. You are correct, I over simplified and interest is a huge reason for this bubble.
1. The local government doesn't allow construction in the areas people want. They're afraid that the influx of people will reduce the quality of life since the school system, sewage, policing etc. needs to be updated. They also lose on residence financially. Businesses fund cities and municipalities go bankrupt if they allow too much construction.
2. Traffic to Tel Aviv is terrible which makes even the outskirts less attractive. There's no parking either and if you choose to use public transport then it's closed in the weekends. I hope the light rail will change this but I think it's too little, too late. I'd keep a close eye on the prices in Bat Yam and Jaffa. If they go up there it might be due to the rail.
3. The government is the biggest landowner in these parts, it sells lands using a process that values return rather than the price to the consumer.
4. The rent market isn't regulated at all. That means investors push up prices and then overcharge on rent. Rental properties have a lower tax bracket than stock market investments. My accountant has 10 apartments for rent and this isn't an exceptional scenario. People are hoarding properties.
In North America people lose it when you talk about government interfering with market prices but Vancouver (or rather British Columbia) has limits on how much you can raise rent for existing tenants every year, but there's plenty of loopholes. All in all the rental returns are not great. A $2M house might rent for (guessing) $5-7K a month, that's a bit more than 3% return, before expenses.
Prices have been crazy for the last two decades. They're not showing any signs of a major reversal. I remember talking with some real estate guy about how expensive Vancouver is- 15 years ago. There is so much more demand now despite prices being x3-5.
People have been subdivided and densifying older blocks, building two houses on one block.
Working off a criminal sentence for a decade then receiving emancipation and ownership of large land holdings was the original lifestyle of the convicts sent over to AUS. It's in the culture to value land.
One of our five major cities covers the distance of greater london measured north-to-south and has a population of 2.3mil, compared against 13mil for london.
We need to make the Bush/Desert liveable. People don't realize how much work goes into maintaining housing outside the 'butter zone' where everything works.
There's more thought put into terraforming Mars than there is, keeping salt out of the wind in the outback, or making it economical and affordable to keep wildlife out of your housing, or transporting water large distances for cheap. Basically we need rivers in the desert.
The economy is built around sexy projects and consumer bait, but the real expansionist policies that could secure Australian housing and Australian life for centuries to come, are basically an afterthought of silly politicians.
There's not just endless land in Australia but there's also endless room to grow cities upwards. There's nothing technical about our lack of housing, it's 100% a decision.
If living in a liberalizing autocracy doesn't rock your boat, Saudi Arabia and Qatar are nice options. I've seen a lot of Israeli techies moving to the UAE too.
The difference is that these apartments require the vast majority of your income (rent) or a 30 year mortgage.
So PIK doesn’t sound too bad to be honest.
Hence why I moved away from Australia to south east Europe, now the 1.46ha block of land and big house on an estate set me back 3 yearly salaries. Income tax is lower, and lifestyle cheaper. I know 4 other families (friends) that did the same. Expect an exodus from Australia.
through local rual infrastructure e.g. doctors, hospitals, Kindergarten is in many areas in decline
depending on where internet on the other hand can often be good enough
through material and personal cost for renovation can still be a problem
I'm from Croatia and what you're describing only checks out if you live in rural/undesirable area IMO.
This has huge implications on QoL :
- social circles
- schools/kindergarten and socialisation for your children (if you have them of course)
- usually worse pollution than city ironically, unless you're really isolated (a lot of these villages have terrible wood burning chimneys, usually some dirty factories etc., smell from farming/primitive animal styes in the area and zero regard for ecology/enforcement of environmental standards)
- bad infrastructure (common electrical outages, terrible internet), transportation options (highways are decent), hospitals
For example a 100m2 newly built apartment in a middle class area will cost you ~400k€ (can be a bit less but expect significant tradeoffs).
A house of similar quality will probably be 5-600k+.
Realestate inflation changes the equation of living here substantially - it used to be you could remote for 30% less money and live way above the standard you could get in more expensive countries.
Now the lifestyle is not significantly more attainable and everything else is worse than in richer countries.
But living in SE Europe/Croatia can pay off if you can survive with lower standards for a while.
For example, you could buy a flat in urban area for 150k€ of lower quality and, if you are working for a non local company, you can pay it off quickly. Then you can start climbing on the housing ladder.
You probably cannot do that in other more developed countries.
Also a lot of work capable population is moving to higher standard countries (brain drain). 1/3 of my childhood friends already left.
Like you said a lot of stuff is still cheaper, income tax is insanely low if you're contracting (~22% tax total).
It's definitely a trade-off.
TBH if I didn't already have a child I'd be moving west - and even now I'm seriously considering it instead of doing an "upgrade" here like you say.
Who wants to live in polluted Belgrade though?
I’ve also got Croatian passport, considered Istra (Pula), but no private schools, and much higher taxes. By car I’m in Pula in 6 hours.
we have a nearly world wide city housing crises (if you ignore cities which are falling apart and consider affordability)
and as far as I can tell a major driving fair is how in recent years a lot of people with a lot of money increasingly did invest into residential land not for self use or for substainable renting but instead as speculative investment or land bank
giving his a crisis of affordable housing in the population centers can easily lead to civil unrest and even be a thread for democracy I would argue both should not be allowed (for residential land/apartments)
1. No more non-human purchase of houses. No companies, corps, trusts, funds etc. should be allowed to buy houses.
2. Ban Airbnb and other short term rentals less than 30 days.
The problem is with the supply. Fix the supply and the market will balance itself.
The property market has too many inherent and imposed monopoly conditions that prevent it from acting as a hypothetical free market where supply and demand are the only factors that influence price.
Actors not motivated by profit can increase supply faster than the private sector's preferred absorption rate (e.g. mass state housing projects like in Singapore and Vienna), in which case sure, if the government massively increases supply consistently above demand and only rents or sells in a manner preventing monopoly acquisition then prices (rents or purchases prices) can be pushed down. There are other alternatives (e.g. Georgist style land taxes combined with liberal zoning laws, so efficient use of desirable locations is encouraged and enabled).
Cities with higher densities exist and they're not as nice as suburbia, but it's much better than no housing at all.
The highly parts of existing cities are limited, but as history shows - you build new cities. Population has moved from one place to another for centuries and new cities sprang all over the world. If this was done before it should be done now. Overregulation may be the culprit.
The main "successful" new cities these days are when governments create one for their headquarters (or move their headquarters to an existing smaller city), like Sejong in South Korea. This is because it induces demand quite successfully for government employees to move there. You need a strong inducing of demand to create a new city; existing cities already have strong demand via jobs, other people, and services, so new cities need to outcompete them.
I don't say that we represented the most common case, but I do think that such rentals reduce friction in the housing market. Towns with decent economies will have such transients who need a roof but aren't ready to commit to staying.
Of course, that's assumed. No-one seems to be saying otherwise.
It's funny because I used to work for one of the largest corporate owners of real estate globally.
Companies should be allowed to own properties, sure. What doesn't work is bringing corporates into the residential rental market. Housing cooperatives should be allowed though.
Vienna has a pretty good housing story.
The interest rates in most of the world are bad for would-be homebuyers across the board, though.
The US has a lot of 'low hanging fruit' in terms of being able to get rid of a lot of onerous zoning that could really make a dent in the housing supply. And we've seen a fair amount of progress in the short time frame that YIMBY groups have been a thing.
Tokyo builds a lot because they tear down homes after 30-40 years to rebuild them. You can't judge Tokyo's property market by new housing starts, and the fact that housing depreciates (rather than appreciates) scares away all the speculators.
In Japan, the real estate system is designed to ensure affordability of homes.
In Australia, the real estate system is designed to encourage and maximise real estate investment as a no-effort wealth multiplier for (literal) rent-seekers. See for example the policy of "negative gearing" where the tax system subsidises those buying investment properties. Those that took advantage are such a powerful block that no politician of any stripe has the gumption to sunset this policy.
The median household income in the Bay Area is $128,000 [0] versus around $50-60,000 in Japan [1], with median house priced at $1.3m and ~$300k respectively.
Both are pretty unaffordable for people earning normal salaries.
The median in NSW (where Sydney is located) is around AUD$62,000 [2] but the median house go for AUD$1.3m [2]
[0] - https://www.census.gov/quickfacts/fact/table/sanfranciscocou...
[1] - https://www.stat.go.jp/english/data/kakei/156.html
[2] - https://www.abs.gov.au/statistics/labour/earnings-and-workin...
[3] - https://www.ratecity.com.au/home-loans/mortgage-news/median-...
[4] - https://www.forbes.com/advisor/mortgages/real-estate/bay-are...
[5] - https://www.nippon.com/en/japan-data/h01311/
As someone who travels to Japan frequently, my dream is to own a vacation home there. Outside of Tokyo homes can be even cheaper; I've seen listings in rural parts of Japan for places as low as $40,000!
I mean, you are going to have to get a mortgage to buy a house no matter which country you live in. A mortgage of $4-5k/month can still be doable assuming you saved enough for a down payment, though the lack of houses being sold makes it much more difficult to buy. That said, it's a similar story in every city I've been to - London, Boston, Saigon, HK, Delhi, Shanghai, Tel Aviv, etc.
> As someone who travels to Japan frequently, my dream is to own a vacation home there. Outside of Tokyo homes can be even cheaper; I've seen listings in rural parts of Japan for places as low as $40,000!
Prices are lower, but managing, buying, and owning property is difficult if you aren't a Japanese national.
A lot of those cheap rural houses are in their versions of WV or Idaho, where you can still find houses for a similar price.
> Even so, I'd still be able to afford a home in a suburb of Tokyo
To be fair, anything that isn't Central Tokyo is the Japanese equivalent of Stockton socially.
There are lots of conditions to that, including high property tax, requirements to farm, strict permanent residency requirements. I don't think many rural communities want to become desolate vacation home places, and they've surely thought of that when regulating their property markets.
Australia, however, is it’s own special variety of fucked.
The quick way to lower prices would be to annually tax vacancies (if you can't show a CA resident/corp paying rental income on a residential/commercial property) then pay the sales tax income the city would have received from those in an occupied location. This would encourage people to lower rents/prices to fill vacancies. Prop13 has made the property taxable rate so low that many people would rather have an empty rotting hulk than an occupied older property since it would lower their leverage on asset appreciation. A residence tax wouldn't be limited to the Prop13 assessment (5-10% of current value).
If there is ever a bubble pop, prices would likely to stay low for a generation. Just like Japan. It's not that different from bitcoin/NFT (other than some people live in them).
Doesn't prop13 only apply to primary residence?
Sydney has topped net internal migration for years now. It's desirable for everyone who doesn't live there, actual locals are getting out at a ridiculously high rate.
Adjusted for inflation, I earn multiple times their combined income and for me a detached house is almost entirely out of reach, and apartments with any more than 2 bedrooms are about the same.
The numbers really tell the story. My parents combined income was around $40,000 and the house they bought when I was born was around $120,000. Today, If my household is earning $160,000, an equivalent house in the same suburb is $1,500,000, and the numbers just don’t balance.
This wouldn’t be so bad if apartments were reasonably sized and built to be lived in. We have thousands of studios and 1 bedroom apartments that you could never raise a family in. What we need is 2 and 3 bedroom apartments in well located suburbs with access to transport, and a disincentive for developers to just build tiny studios to maximise profit.
I have put my money where my mouth is so-to-speak on saying Sydney is overpriced, and spend a few months a year living in Tokyo while I work out how moving there more permanently will work. It’s still expensive, but relatively speaking its decades of work more affordable to buy a house.
It also doesn’t take into consideration that the would be homeowner is usually renting while saving their deposit, and that currently requires a larger share of their income than basically ever before.
Adjusted for average housing inflation, average housing costs exactly what it used to
Huge, genuine reforms designed with the explicit goal of reducing property values.
Hoping they do, as it's required. Just haven't heard any mention of them doing so (yet) is all. :/
The current Labor government lost a previous election in part due to proposed changes regarding the taxation of investment properties. It dumped[0] those policies and won the last election.
Property has become a cringy weird national obsession to the point where high-school children [1] and are thinking about it.
[0] https://www.afr.com/politics/federal/labor-axes-neg-gearing-... [1] https://www.youtube.com/watch?v=kMdA_fRzySk
I don't think this can be understated. Being a landlord is so normalised here that people seemingly can't connect the dots between every able person collecting 'investment properties' and the impact it has on the housing market (among other things).
Same in London. Furthermore I have the suspicion that this contributes to the low productivity in the UK. Freshly minted MBAs whose business plans are... buy property, collect rent.
In view of the fact we are world leaders in building housing the other explanations we are given like "land availability" or "state government bureaucracy" or lack of public housing are IMO just furphies. Government subsidies for house builds only make sense if we have spare capacity. But we've already maxed out our building capacity, so the builders pocket the money. As a consequence these federal attempts to subsidise their way of the problem doesn't get more houses built - they just pour fuel on the housing price fire.
Perversely, it's been a factor in bankruptcies in the building sector. With so much demand builders took on more work than they could complete in a reasonable time frame. Yes, it was pure greed, but it was also only possible because demand is so high. And usually locking in sales like that would be harmless and even prudent (apart from pissing off the customer because it took 18 months rather than 7 to deliver the built house). But that work was for a fixed cost and we got hit with COVID inflation so the self inflicted long leads times lead to builders making a loss - and going under.
But it's not just the building sector. When your growing your population at about 2% per annum [0] all sorts of things start going wrong. You can't build hospitals fast enough, and we get ramping [1]. Roads clog faster than you can build them. [2] Public schools can't be built fast enough, and you can't find teachers. [3]
The icing on the cake is it's the State's that cope the blame for all of this because they are the ones responsible for delivering roads, hospital, schools and releasing housing land, and they aren't delivering fast enough. But the root cause isn't them - it's federal population policy. And so far, feds have got with their the "Big Australia" policy scot-free, with none of the blame for the down sides attributed to them.
I'm not against population growth, but it has to be done at a reasonable pace and clearly the current pace is not reasonable.
[0] https://blog.id.com.au/2023/population/population-trends/aus...
[1] https://theconversation.com/ambulance-ramping-is-a-signal-th...
[2] https://www.abc.net.au/ne...
Agree with all of that.
If you buy into the rhetoric on AU Reddit subs you’d believe it was all the fault of Boomers, Negative Gearing and AirBNB.
People just don’t seem to understand Negative Gearing. They seem to think it means free profit. It’s not understood that you need to make a loss to claim the offset on your tax, and you have fund that from your own pocket.
Then somehow Boomers are both responsible for Housing Prices, lack of housing to buy, and lack of rentals.
It can’t be both.
Anyway - the whole thing is hard to understand for anybody.
How can house prices be rising when it’s seemingly impossible to get mortgages on normal dual income salaries?
The bank of mum and dad doesn’t explain it.
Immigration explains part of it. Overseas money being parked in property is a large component.
Then there’s AirBNb and other short term rentals…
And if Airbnb is taking properties off the rental market, why is there suddenly such huge demand? Who’s staying in those holiday homes and where do they get the money!
There’s a real lack of in depth reporting and analysis on this.
Even the ABC is very superficial in its reporting.
Median house price is US$396000 / AUD$615000 and there is a very long list of skills shortages for immigration to fill. The property boom in Sydney just passed Perth by, and it's now significantly cheaper.
Vacancy rates are at their lowest in years, and rents have risen recently, but that's off the back of eleven years of zero nominal house price growth 2011-2021. We are only now getting 10-15% above 2011 levels in nominal terms.
I'm not saying people can uproot their established lives in Melbourne/Sydney, especially when the main industries are quite different in Perth, but I really don't understand why Perth is not a more popular destination for immigration from around the world.
As a British economic migrant to Australia myself I'm just surprised there isn't more of a stampede. My 2023 Perth salary is 3.5 times higher than my UK 2010 salary, and the quality of life in Perth is far higher than the UK.
My house is 4 bed 2 bath on a 4300 ft2 block 2.5 miles (9 minutes on the bus) from the city centre and it is 3.8 times my salary as an engineer (my wife is unable to work so we are single income)
That's not nothing, especially if you're occasionally needed in-person on the east coast.
Topics the video studiously avoids:
1. Record immigration: 400,000 migrants in 2022-2023 [1] in a population of 26.5 million [2]. Where are all those people going to live? Well, they'll continue to prop up the housing and rental ponzi schemes.
2. Shitty tax policies (negative gearing and capital gains tax deduction) that make housing more attractive as an investment vehicle. The centre-right Labor party (think: Labor = US Democrats, except Australian politics are not as extreme right as the US') tried to take modest reforms to the 2019 federal elections and got shot down hard. [3]
3. AirBnB siphoning accommodation away from the long-term rental market. It is more profitable to run your AirBnB for 3 months a year than to provide long-term accommodation, contributing to the tight rental market.
4. The power imbalance in the rental equation: renters in Australia have some of the weakest rights protections in the world [4] [5] [6] although at least one progressive state is making modest reforms that don't go nearly far enough [7]. Australian renters have no guaranteed right to put up a picture frame, have pets, or get a decades-long lease like their European counterparts. [8]
5. The demise of public (read: government owned and built) housing in Australia [9] [10] [11]. It used to provide affordable housing to essential workers. It has been gradually sold off by state governments to private real-estate developers under neoliberal economic policies.
[1] https://www.abc.net.au/news/2023-04-29/australian-migrant-po...
[2] https://www.worldometers.info/world-population/australia-pop...
[3] https://www.9news.com.au/national/labor-to-abandon-negative-...
[4] https://www.news.com.au/finance/real-estate/renting/shifting...
[5] https://www.abc.net.au/news/2015-06-11/bagwell-australian-a-...
[6] https://theconversation.com/renting-for-life-housing-shift-r...
[7] https://www.theguardian.com/australia-news/2023/sep/20/short...
[8] https://www.abc.net.au/news/2021-12-21/rental-market-housing...
[9] https://en.wikipedia.org/wi...