dooper

Apologies..im not a regular on here. I've just started reading a Travel book about Australia so was just doing some reading on the internet. I then looked at Australain realty prices in the major cities from Perth thruogh Canberra,Adelaide etc and couldnt help thinking how expensive houses are to buy. How can this be in such a massive country with such a small population density? Logic says that good sized houses should be modestly priced. So why so expensive? Ta

Bermudashorts

Well they just are really. I guess like most things governed ultimately by supply and demand economics.

h2oskineil

One of the things that used to really confuse me when we first moved here is why do we build another house in the back yard when we have sooooooo much land?

There is a new suburb being built next to where we live and a plot of land is around $500K (with an ocean view, I'm sure will cost more). The plots are crammed so close, that your alfresco area is right next to the neighbours home, meaning if you want to sit outside and have some friends over, some music etc, you will impact on your neighbours without doubt. Yes, they are lovely architect designed houses, but so close to one another.

Then there are the other suburbs where you can sub-divide your property and they cram another house in the back garden with no regard to the neighbours and the affect a new house may have on them. I was recently with friends who have a $2 million home in Hillarys (Perth) who have lost their ocean view due to someone building another home, it's just wrong!

Another couple I know, inherited from their parents a small house on a big block in North Beach (Perth) and built their dream home on the rear of the block. The zoning rules changed which meant the could sub divide the block straight down the middle 50/50, so wait for it.......... they knocked down their new home, sub-divided the block and sold the land for more money than it would have been worth with the two houses on. Even taking into account the cost of building the new house, they still made more money.
They have now bought the house next door and I waiting to see if they live in it or knock it down!

Beoz

Well in my humble opinion these are the reasons and I'm more than happy to be disputed on any of them.

1. Don't do a straight exchange rate comparision. You really need to look at salaries and what proportion of that it costs to buy a house. You will find that while it is still a bit more expensive than say the UK and the US the differences are smaller when you look at it that way.

2. Public transport, city roads and just general commuting in Australia is terrible. Therefore it forces people to live in smaller convienient areas in order to get to work, despite the huge land mass. For example you can live a 100km away from London and have a reasonable commute. Try that in Sydney - forget it.

3. There is a need of people in Australia to own a house. It's a fixation they have.

4. Agents - Agents artificially bump up the asking price or manipulate the auction clearance rates. Whilst supply and demand with undo this eventually it does suck the average, emotional Aussie house buyer into believing houses are worth more than they really are.

5. Negative Gearing. People still buy investment properties in Australia in the belief NG will be a tax advantage. All it does is offset the tax you've already paid providing very little positives.

6. The Chinese. Wealthy and not so wealthy Chinese are buying property like it's going out of fashion. They will even buy apartments for their children to live in while they study even though it makes no finincial sense. To the Chinese money is power even if that money is demonstrated through property ownership.

Amazulu

here we go again

'expert' central

eddie007

Is.... Because they are.... Adequate?

Why do houses cost whatever they do, wherever they are? Same principles apply....


Anyway.. I have a baby to cuddle...

spottydog

Are you comparing like with like?

I live in Balmain which is about a mile as the crow flies from Sydney's CBD (I say as the crow because there is water in between us and the CBD), I'd compare the area to around angel tube in Islington. 2 bed houses in my area start at around $850k on 100m+ blocks, a quick look on rightmove shows Islington 2 bed houses on smaller blocks starting at the same sort of amount just with a pound symbol in front rather than a $.

A quick look puts Norwich about 100 miles from London with 2 bed houses starting at GBP100k, Lithgow is about 150kms from Sydney in the blue mountains and on a direct train line to Sydney and 2 bed houses are around AUD150k.

One of the things that has stuck me is Aussie houses are usually on bigger blocks, I was very worried about Mum moving over and only being able to afford a small place then saw the floorplan for her Mum's home which was smaller than what banks will lend mortgages on here.

Grayling

Comparing Lithgow and Norwich is hardly comparing like for like.

Beoz

To be fair, the poster asked "why so high". That's a fair question and its not been done before .... it's usually the "great aussie bubble" and the like.

ozzieeagle

You'd expect Norwich to have some meritorious value in at least some aspects when comparing with Lithgow surely ? It's not the worst place in the UK

Amazulu

Fair enough

They are what they are

spottydog

Dunno, never been to Norwich and only to Lithgow once, it was the first place I thought of in NSW that was about 100 miles from Sydney as Norwich is from London.

chris955

Nobody knows why house prices are so high, 12 years ago when we bought in Brisbane they were cheap as chips, it was possible to buy a 3 bed on a good sized block with a pool for under 100k in a not quite so good area. A comparison, a house that sold for $115k 12 years ago sold for $385k this year, that is a huge increase. The problem is the huge country argument isnt relevant as only a very small part of it is liveable and this is why the normal 1000 square block has become 500 or even 400 nowadays. House affordability has never been lower in Australia and I have no idea whether that will or can change.

dooper

Thanks peeps..note that im not being critical,its just a neutral observation. I am struggling to understand why,in such a vast place with such a low population,houses and land are so costly. As someone noted,people are building new developments which are of course detached but too close to eachother.

I mean, in the UK we know why house prices are artificially high. Its becuase the UK is a feudal society in which The Crown has ultimate ownership of all land and below that,vast areas are claimed to be owned by the aristocracy ,usually gifted to them post Norman conquest/disollution of the monasterys and similar. Then the National trust kindly looks after some more of it,some of it is green belt and before you know it,only 10% or so if available for a population to live on. The pop density in the uk is about 256 people per sq km whereas in Aus its about 3. OK so most of the reasonably habitable space is on the coast.

Another question though,whereas the Crown and Aristocracy have stolen the land from the people in the UK...who owns land in Aus? Who owns the vast tracts that are used for new developments and who did they buy it from historically?

chris955

Well I took your first post seriously at least