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Why Australia’s Housing Crisis Is a Warning for the World [video]

55 points by thelastgallon 3y ago

phibbs 3y ago
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thriftwy 3y ago
They should give a blanket licence to PIK and LSR and then plead for mercy watching rows after rows of 25 storey buildings.
- Klaster_1 3y ago
  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.
  - thriftwy 3y ago
    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).
  - shortcake27 3y ago
    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. So PIK doesn’t sound too bad to be honest.
ChatGTP 3y ago
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.
- erklik 3y ago
  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.
  - api 3y ago
    This is why remote work is so important. It’s not about not going to the office. It’s about breaking real estate.
  - nayuki 3y ago
    This is why we must implement a land value tax as Henry George proposed. People should not be able to profit from squatting on / hoarding land.
    - applied_heat 3y ago
      Where I live we already have property taxes indexed to the value of the property, and a tax on secondary dwellings that are not rented out.
      - nayuki 3y ago
        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 https://www.youtube.com/watch?v=xqQhoZgFZgk
Proven 3y ago
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invalidname 3y ago
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.
- YZF 3y ago
  I don't think it's that simple. 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.
smallstepforman 3y ago
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.
- Izikiel43 3y ago
  Croatia?
- zemvpferreira 3y ago
  Out of curiosity, where did you move?
  - dathinab 3y ago
    many rual areas in the EU are quite affordable 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
- rafaelmn 3y ago
  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.
dathinab 3y ago
it's not a Australian specific problem 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)
- nine_zeros 3y ago
  Two laws will solve a lot of problems 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.
  - bryanlarsen 3y ago
    The vast majority of rentals are owned by companies. Your proposal would make it difficult/impossible for anybody to rent.
    - nine_zeros 3y ago
      Yes, and my proposal will transform all the renters into owners, thereby not requiring so many rental companies in the first place.
      - freefaler 3y ago
        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.
        3y ago
mdorazio 3y ago
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.
- davidw 3y ago
  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.
  - linguae 3y ago
    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.
  - dzhiurgis 3y ago
    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.
  - seanmcdirmid 3y ago
    > 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.
fdhfdjkfhdkj 3y ago
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PebblesHD 3y ago
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.
- thriftwy 3y ago
  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?
  - PebblesHD 3y ago
    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.
    - rainonmoon 3y ago
AussieWog93 3y ago
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.
- justinclift 3y ago
  Do they also have (serious) plans to build new matching hospitals and the like, to support those houses? Hoping they do, as it's required. Just haven't heard any mention of them doing so (yet) is all. :/
pygar 3y ago
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. [0] https://www.afr.com/politics/federal/labor-axes-neg-gearing-cgt-curbs-waves-though-income-tax-cuts-20210726-p58cv5 https://www.afr.com/politics/federal/labor-axes-neg-gearing-... [1] https://www.youtube.com/watch?v=kMdA_fRzySk https://www.youtube.com/watch?v=kMdA_fRzySk
- 000ooo000 3y ago
  >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).
- drt5b7j 3y ago
  > 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.
- rstuart4133 3y ago
  Another explanation. Copy & pastes from: https://www.macrobusiness.com.au/2023/07/australias-housing-crisis-was-never-about-supply/ https://www.macrobusiness.com.au/2023/07/australias-housing-... 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. [0] https://blog.id.com.au/2023/population/population-trends/australias-population-booms-again-with-post-covid-migration-surge/ https://blog.id.com.au/2023/population/population-trends/aus... [1] https://theconversation.com/ambulance-ramping-is-a-signal-the-health-system-is-floundering-solutions-need-to-extend-beyond-eds-187270 https://theconversation.com/ambulance-ramping-is-a-signal-th... [2] https://www.abc.net.au/news/2019-08-20/queensland-traffic-congestion-crisis/11338212 https://www.abc.net.au/news/2019-08-20/queensland-traffic-co... [3] https://www.9news.com.au/national/teacher-shortage-mental-health-claims-rise-australia/c0f1b3c0-04a1-4fcf-a565-4d3d1e17cb90 https://www.9news.com.au/national/teacher-shortage-mental-he...
iamthemonster 3y ago
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)
- ethbr1 3y ago
  It's a 5 hour flight from Perth to Sydney? (just looked it up) That's not nothing, especially if you're occasionally needed in-person on the east coast.
  - iamthemonster 3y ago
    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.
  - ulfw 3y ago
    Well it's a 25 hour flight to South East Europe where OP went for some odd reason, so...
naruhodo 3y ago
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. [1] https://www.abc.net.au/news/2023-04-29/australian-migrant-population-growth-hits-all-time-record-high/102281798 https://www.abc.net.au/news/2023-04-29/australian-migrant-po... [2] https://www.worldometers.info/world-population/australia-population/ https://www.worldometers.info/world-population/australia-pop... [3] https://www.9news.com.au/national/labor-to-abandon-negative-gearing-policy/0c52c0e6-5de5-4504-a478-291c434983a4 https://www.9news.com.au/national/labor-to-abandon-negative-... [4] https://www.news.com.au/finance/real-estate/renting/shifting-housing-trends-mean-australias-lagging-tenancy-laws-undermine-renters/news-story/b5239528b7e5550f3b1728a18e62074b https://www.news.com.au/finance/real-estate/renting/shifting... [5] https://www.abc.net.au/news/2015-06-11/bagwell-australian-a-nation-of-reluctant-renters/6539266 https://www.abc.net.au/news/2015-06-11/bagwell-australian-a-... [6] https://theconversation.com/renting-for-life-housing-shift-requires-rethink-of-renters-rights-20538 https://theconversation.com/renting-for-life-housing-shift-r... [7] https://www.theguardian.com/australia-news/2023/sep/20/short-stay-levy-and-800000-homes-how-victoria-plans-to-ease-the-housing-crisis https://www.theguardian.com/australia-news/2023/sep/20/short... [8] https://www.abc.net.au/news/2021-12-21/rental-market-housing-crisis-australia-germany-singapore/100686340 https://www.abc.net.au/news/2021-12-21/rental-market-housing... [9] https://en.wikipedia.org/wiki/Public_housing_in_Australia https://en.wikipedia.org/wiki/Public_housing_in_Australia [10] https://www.abc.net.au/news/2019-08-12/fact-check-social-housing-lowest-level/11403298 https://www.abc.net.au/news/2019-08-12/fact-check-social-hou... [11] https://www.abc.net.au/news/2021-02-27/policy-ideas-to-solve-national-housing-crisis-australia/13185064 https://www.abc.net.au/news/2021-02-27/policy-ideas-to-solve...

55 points by thelastgallon 3y ago

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They should give a blanket licence to PIK and LSR and then plead for mercy watching rows after rows of 25 storey buildings.

Klaster_1 3y ago
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.
- thriftwy 3y ago
  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).
- shortcake27 3y ago
  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. So PIK doesn’t sound too bad to be honest.

ChatGTP 3y ago

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.

erklik 3y ago
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.
- api 3y ago
  This is why remote work is so important. It’s not about not going to the office. It’s about breaking real estate.
- nayuki 3y ago
  This is why we must implement a land value tax as Henry George proposed. People should not be able to profit from squatting on / hoarding land.
  - applied_heat 3y ago
    Where I live we already have property taxes indexed to the value of the property, and a tax on secondary dwellings that are not rented out.
    - nayuki 3y ago
      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 https://www.youtube.com/watch?v=xqQhoZgFZgk

Proven 3y ago

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invalidname 3y ago

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.

YZF 3y ago
I don't think it's that simple. 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.

smallstepforman 3y ago

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.

Izikiel43 3y ago
Croatia?
zemvpferreira 3y ago
Out of curiosity, where did you move?
- dathinab 3y ago
  many rual areas in the EU are quite affordable 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
rafaelmn 3y ago
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.

dathinab 3y ago

it's not a Australian specific problem 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)

nine_zeros 3y ago
Two laws will solve a lot of problems 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.
- bryanlarsen 3y ago
  The vast majority of rentals are owned by companies. Your proposal would make it difficult/impossible for anybody to rent.
  - nine_zeros 3y ago
    Yes, and my proposal will transform all the renters into owners, thereby not requiring so many rental companies in the first place.
    - freefaler 3y ago
      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.
      - 3y ago

mdorazio 3y ago

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.

davidw 3y ago
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.
- linguae 3y ago
  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.
- dzhiurgis 3y ago
  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.
- seanmcdirmid 3y ago
  > 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.

fdhfdjkfhdkj 3y ago

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PebblesHD 3y ago

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.

thriftwy 3y ago
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?
- PebblesHD 3y ago
  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.
  - rainonmoon 3y ago

AussieWog93 3y ago

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.

justinclift 3y ago
Do they also have (serious) plans to build new matching hospitals and the like, to support those houses? Hoping they do, as it's required. Just haven't heard any mention of them doing so (yet) is all. :/

pygar 3y ago

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. [0] https://www.afr.com/politics/federal/labor-axes-neg-gearing-cgt-curbs-waves-though-income-tax-cuts-20210726-p58cv5 https://www.afr.com/politics/federal/labor-axes-neg-gearing-... [1] https://www.youtube.com/watch?v=kMdA_fRzySk https://www.youtube.com/watch?v=kMdA_fRzySk

000ooo000 3y ago
>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).
drt5b7j 3y ago
> 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.
rstuart4133 3y ago
Another explanation. Copy & pastes from: https://www.macrobusiness.com.au/2023/07/australias-housing-crisis-was-never-about-supply/ https://www.macrobusiness.com.au/2023/07/australias-housing-... 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. [0] https://blog.id.com.au/2023/population/population-trends/australias-population-booms-again-with-post-covid-migration-surge/ https://blog.id.com.au/2023/population/population-trends/aus... [1] https://theconversation.com/ambulance-ramping-is-a-signal-the-health-system-is-floundering-solutions-need-to-extend-beyond-eds-187270 https://theconversation.com/ambulance-ramping-is-a-signal-th... [2] https://www.abc.net.au/news/2019-08-20/queensland-traffic-congestion-crisis/11338212 https://www.abc.net.au/news/2019-08-20/queensland-traffic-co... [3] https://www.9news.com.au/national/teacher-shortage-mental-health-claims-rise-australia/c0f1b3c0-04a1-4fcf-a565-4d3d1e17cb90 https://www.9news.com.au/national/teacher-shortage-mental-he...

iamthemonster 3y ago

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)

ethbr1 3y ago
It's a 5 hour flight from Perth to Sydney? (just looked it up) That's not nothing, especially if you're occasionally needed in-person on the east coast.
- iamthemonster 3y ago
  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.
- ulfw 3y ago
  Well it's a 25 hour flight to South East Europe where OP went for some odd reason, so...

naruhodo 3y ago

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. [1] https://www.abc.net.au/news/2023-04-29/australian-migrant-population-growth-hits-all-time-record-high/102281798 https://www.abc.net.au/news/2023-04-29/australian-migrant-po... [2] https://www.worldometers.info/world-population/australia-population/ https://www.worldometers.info/world-population/australia-pop... [3] https://www.9news.com.au/national/labor-to-abandon-negative-gearing-policy/0c52c0e6-5de5-4504-a478-291c434983a4 https://www.9news.com.au/national/labor-to-abandon-negative-... [4] https://www.news.com.au/finance/real-estate/renting/shifting-housing-trends-mean-australias-lagging-tenancy-laws-undermine-renters/news-story/b5239528b7e5550f3b1728a18e62074b https://www.news.com.au/finance/real-estate/renting/shifting... [5] https://www.abc.net.au/news/2015-06-11/bagwell-australian-a-nation-of-reluctant-renters/6539266 https://www.abc.net.au/news/2015-06-11/bagwell-australian-a-... [6] https://theconversation.com/renting-for-life-housing-shift-requires-rethink-of-renters-rights-20538 https://theconversation.com/renting-for-life-housing-shift-r... [7] https://www.theguardian.com/australia-news/2023/sep/20/short-stay-levy-and-800000-homes-how-victoria-plans-to-ease-the-housing-crisis https://www.theguardian.com/australia-news/2023/sep/20/short... [8] https://www.abc.net.au/news/2021-12-21/rental-market-housing-crisis-australia-germany-singapore/100686340 https://www.abc.net.au/news/2021-12-21/rental-market-housing... [9] https://en.wikipedia.org/wiki/Public_housing_in_Australia https://en.wikipedia.org/wiki/Public_housing_in_Australia [10] https://www.abc.net.au/news/2019-08-12/fact-check-social-housing-lowest-level/11403298 https://www.abc.net.au/news/2019-08-12/fact-check-social-hou... [11] https://www.abc.net.au/news/2021-02-27/policy-ideas-to-solve-national-housing-crisis-australia/13185064 https://www.abc.net.au/news/2021-02-27/policy-ideas-to-solve...