caliburn

In this report, house prices have been compared in relation to average income levels in different cities. Lets take a hypothetical example.... say a house price is $500k and average income level is $200k in London, whereas, a house price is $400k in Adelaide but average income level is $100k. In the above example, affordability index for London is 2.5 and for Adelaide its 4 (just divide house prices by income level). I agree with you, absolute house prices in Adelaide is less than London. However, given the even lower income level in Adelaide, houses in Adelaide are less affordable than London. This is precisely the point this report is trying to make. Does the report make any sense to you now?

DCS

this highlights something my wife and i have been banging on about since deciding to make the move.

we come on here and read people saying house prices in oz are much higher than in the uk. but i think they should state where in the uk they are rather than generalising.

we have a 2 bed house with a garden that is little bigger than a garage. our lounge is the size of an average bedroom. and I can stand in the middle of the bathroom and touch all four walls. but its valued at £199,500!

the comparison in perth were we dream of living is a totally diffrent story from what i see on net/tv.

Petals

There are unaffordable now for lots of people and this will get worse as the Banks will now want people to have a larger deposit. Due to contract work here in Australia thank you to to the new world this also puts a dent in a lot of people being able to get a loan.

Hopefully house prices will recede again.

I remember the 1992 downturn and at that time I worked in legal I saw that houses were selling for less than the CIV (Capital Improved Value) on the rate notice in some suburbs.

All will be revealed in the fullness of time.

As far as the land goes the State gov in Victoria has curbed the release of land for housing to try to force more people into high density housing closer to the city. This has not worked as it has forced the price of houses up closer to the city and the developers of the town houses and units have been the people who have benefited most as they put their prices up.

They are now going to release more land to the North of the city and also the Pakenham corridor so hopefully things may ease but I will not hold my breath on that one as affordability does not seem to follow as too many fingers in the pie.

Anne2Oz

yeah that's how I understood the report myself (I am a scientist)...
BUT that is if you compare a little box 3 bed house with 2 square metre garden in London to a 3 bed house of average Oz size in Adelaide. A large decent house on large plot is still more affordable in Adelaide.
The type of houses in Oz and UK aren't really comparable in my opinion.

CaptainMerton

One thing I never understood when i was in Sydney was you have this growing city which is really starting to sprawl but its also filled with so many young single people who want to live in the central suburbs but there was very little building up the way. Why is that? Some residential towers in Bondi Junction or something would do the trick. Throw up some more beside the ones already there in North Sydney.

julie and chad

interesting so where is the cheapest place to live in oz ? every story you read or listen to tells a different story and its weird we are in a semi rural really nice quiet village in north wales and we have 4 beds all double big bathroom with shower and bath and huge kitchen only 1 year old as we put it in smallish garden normal garage quiet cul de sac and we have been valued ay £180.000

jad n rich

Its why coastal areas etc look expensive.

In australia the pension is means tested so ....

Retired people in OZ often buy a million dollar property on the coast/inner city/river, leaving themself with very little income, so they can get the state pension which is means tested.

Nothing unusual to have a couple in a $3 million dollar house with a $15,000 income.

hereshoping

This is surely affected by the number of people in London with very high incomes. Unfortunately the report took the Mean income which is affected by unusually high/ low incomes rather than the Median.

It may make headlines but I don't believe this is an accurate reflection of the affordability of houses in these areas. I know I couldn't afford the house I have in Melbourne in London if I was on the same salary.

Petals

A person with a three million dollar house living on the pension would be hard pushed to pay the rates even if they were reduced they are only reduced by a small amount. I think most wealthy people want to live as well as they can.

What does affect the pension though is if you have investment properties or a holiday house. This is included in your assets I think a couple can have about $800,000 not including the family home pension is cut off. Of course depending on assets its a part pension but allows medical and reduced rates etc and small amount of money as we receive one.

Land tax is exempt on homes in Vic another incentive for people to have a larger one. If you own investment properties then land tax is payable.

Back to the original question about housing prices they are cheaper in some country areas but not along the Murray River the houses up there are on a par with housing prices in Melbourne.

highersights

I can only speak for Sydney, but house prices here are ludicrously high. I am in a reasonably paid job in academia and as a family we only have one income, but we could never afford to buy in Australia at current prices, as a reasonable area would be around 7-8 times my salary. Add to that higher interest rates and the need for a large deposit. The areas we could afford (if we could save for a deposit, which we can't due to very high rents), it would be in an area out West which would offer a quality of life far below what we had in the UK and could have elsewhere, e.g. USA, Europe. The situation is hopeless because the NSW Government is entirely incompetent and there has now been years of poor/no planning, and a housing shortage. Prices are now at a peak and won't increase, because people are severely leveraged, but a crash will only be precipitated by a massive change in mood and outflow of people from Sydney. Regrettably, we may be among them. While we do not want to return tot he UK, we are considering Europe. The major reason is housing affordability. It is Australia's loss too as my post is very hard to fill and has been advertised 2-3 times with no applicants. I think there will be many more who see that, while Australia offers some good things, 30 years of unaffordable debt or very high rents in a market of 1% vacancy rate is too high a price to pay.

razbolch

Have to agree we currently rent a 3 room shed in inner melbourne for $400 per week and to buy, it would cost around $550000 +, Now we have PR we are looking to relocate. We are doing rekkies to adelaide and brisbane to help decide, any insight into areas would be appreciated as to what $600000 could get (dont want to max out as that's not why we came here). Hoping for a correction in house prices as seriously overvalued here as they were previously in the UK, unscrupulous agents don't help either. Ideally we are looking to be nearish to the beach and not too far from major amenities. We feel Melbourne is very cultural with a great scene and ok for a visit but not to settle, also just found out nurse pay rates here are the lowest in all australia, add to that chilly winters, unpredictable weather, lack of decent beaches and an ongoing drought - time to move on!

highersights

We're similar. We pay $550 p/w (!) for a run down 2 bed house in Sydney, butit would cost around $700,000 to buy. The rent, which is still very high, is about 1/2 of the interest alone. I have thought of Adelaide too, but as a long term option I am reticent as I really don't think Adelaide will ride out climate change well at all. Country or regional coastal areas may be better options if you can find work there, and want to live there.

NigelWaring

We live one hour, by train, north of Sydney, in the last few weeks three older houses with reasonable land have sold from $410 to $440, they'd been reasonably well maintained but probably a bit more work would have helped. We have a railway station, a shop, a school and lots of bush, we are surrounded by parks and reserves. It is possible to buy a reasonable home in a nice area if you look around.

I agree that things are expensive, prices may never drop because most vendors are greedy, it will be a few years before things take off again. My Mother-in-law recently sold her home and asked what she considered a reasonable price taking into account the market and the economy. She was almost lynched by the neighbours for bringing down prices in the neighbourhood, people that she had known and been very friendly with for about 40 years suddenly turned really nasty.

dpande

Yes, most vendors are greedy, but it only takes one such as your mother-in-law to provide the rest of them with a reality check. Prices are determined by what a buyer is willing to pay, after all.

Roll on the crash!!

highersights

Aside from housing unaffordability, this is a grotesque symptom of Australian affluenza that becomes more apparent the longer you live here. I find these kinds of attitudes and values very selfish and grasping. It is a far more capitalistic country than the UK and sadly houses are seen as factories of capital-growth. But they are non-productive assets and the whole thing may just cave in if people decide they've had enough. In our example, we've drastically cut back consumption (thus adding to unemployment), refused to buy into the bubble (thus reducing demand), and now considering moving to mainland Europe (thus combining both, and losing Australia skills that are in real shortage in one of its only growth sectors - higher education). If there are others like us, it's really not a good result.

Maybe the Gen Xers should move back in with the baby-boomers who caused this mess in the first place!