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I'm from Perth but now live in NYC and I've lived in London, Zurich and Germany. I can tell you that the erosion in the real standard of living in Australia, p
by cletus 15y ago
I'm from Perth but now live in NYC and I've lived in London, Zurich and Germany.
I can tell you that the erosion in the real standard of living in Australia, particularly Perth, in the last decade is mind-blowing.
The way I see it the resources boom has driven up the cost of construction both directly (through infrastructure projects) and indirectly (increased demand for residential housing from net migration). It now costs anywhere from $1500-2000/m2 to build a house.
That's insane.
That cost is then passed on through wage demands, the cost of running any business and so on. Rent is at or above New York levels (my old apartment in West Perth is now more expensive than my apartment in Manhattan).
Apart from roughly comparable rent in NYC, everything else is significantly cheaper.
Increased population pressure, property prices and construction costs are also reflected in the skyrocketing price increases in food, water and power.
London is (or at least was the last time I visited) reasonably expensive.
Zurich has a reputation for being expensive but honestly it's not anymore. Fact is, you can still get a studio in the city for maybe under CHF1000/month (something you can't in Perth). Yes food is more expensive but you pay lower taxes and everything else is, at worst, comparable in cost. I look at property prices in nice towns like Zug or Luzern and (IMHO) it's way more affordable than Perth.
So ignore whatever the CPI tells you about Australia. IMHO it's not a place you want to live now unless you have owned property for at least 10 years (and thus rode the property boom and are reasonably cashed up) or are rich. Either way it's one of the most expensive countries on the planet now.
- tjmc 15y agoI think the real estate prices here are more a side effect of the mining boom rather than the drivers of the cost of living here. We recently got a quote of $5000 for paving ~30m^2 out the back of our house. It's a joke. Trades people are in such high demand here that they can charge more than surgeons. I worry about the effect that this is going to have on the education level of the local populace. What's the incentive to stay in school to Yr 12 when you can drop out at 15, get an apprenticeship and be earning a motza by the time you're 18?
- brc 15y agoAgreed on all points. Question is : what can be done? I would say a property price drop would be a good thing because it would feed into lower rents for everything. But that, of course, would have damaging wealth effects for people who lose everything when their mortgage went underwater, and the banks would take massive losses on their oversized residential mortgage portfolios. More economic growth might reignite property and job markets. I was talking to a friend of mine in Sydney who earns 200k plus. He was struggling with the idea of buying an average townhouse in an average Sydney suburb because his mortgage + expenses would run over $3k per month. It's madness. Are we to just stagnate our way out of it? Hold property prices and rents level for 10 years while incomes eke upwards? Or is Australia destined to be in the Norway/Switzerland/Sweden club forever more, and the cheap-as-chips country of my youth is gone forever? I just can't get away from the uncomfortable feeling that whatever adjustment comes along will be painful.
- jacques_chester 15y agoPerth's main disadvantage is that it is wedged between the hills and the sea, which is why it is steadily growing into one of the longest conurbations in the world. On the other hand, public transport on the north-south axis is reasonably good thanks to an uncharacteristic degree of planning foresight starting in the 60s. If you don't have to live in the CBD or adjacent, Perth can be very affordable. You just have to shop around or put up with a 30 minute commute on a train (oh noes!).