Dr Andrew Wilson responds to Demographia

Find below APM’s Dr Andrew Wilson and his response to today’s demographia housing survey. If you can find an argument there, let me know. Keep it civil peeps!


  1. So if you read between the lines you get –

    OH crap we have been sprung, best I get my spin on and try to cover this up!

    • Yes – i was thinking the same thing.

      But I am perplexed as to why anyone would bother trying to argue that housing is actually affordable.

      That gets you laughed at.

      Better off running the line that yes it is unaffordable due to market dysfunction but there are few signs that the dysfunction is going to go away anytime soon with the RBA, the govt, local councils, NIMBYs, banks, land bankers all working their buns off to keep things that way.

      If past is any predictor of future behaviour there is force in that argument.

      Depressingly, so.

      But that can change if enough people understand the issue and demand action.

      Otherwise we will be still talking about this until the weight of the dysfunction eventually brings us to our economic knees.

  2. I wouldn’t have said that there is strong buyer enthusiasm in the market place right now, although it seems to be improving.

    As a rebuttal of Demographia, it kind of falls short, it was little more than a few words.

    Perhaps we will see a better argument put over the next few days.

    • dumb_non_economist


      If it was little more than a few words you must have been embarrassed for the poor doc to just say it kinda falls short?

  3. Fairfax has ben knocking back comments on the “Australian houses vastly unaffordable” story today, Dr Wilson may have his finger on the button there. Very frustrating.

  4. Alexandra ChapmanMEMBER

    This is just flat out funny.

    Reminds me of the Danny Kaye movie “Court Jester”.

    You know the bit where…

    Hawkins: I’ve got it! I’ve got it! The pellet with the poison’s in the vessel with the pestle; the chalice from the palace has the brew that is true! Right?
    Griselda: Right. But there’s been a change: they broke the chalice from the palace!
    Hawkins: They *broke* the chalice from the palace?
    Griselda: And replaced it with a flagon.
    Hawkins: A flagon…?
    Griselda: With the figure of a dragon.
    Hawkins: Flagon with a dragon.
    Griselda: Right.
    Hawkins: But did you put the pellet with the poison in the vessel with the pestle?
    Griselda: No! The pellet with the poison’s in the flagon with the dragon! The vessel with the pestle has the brew that is true!
    Hawkins: The pellet with the poison’s in the flagon with the dragon; the vessel with the pestle has the brew that is true.
    Griselda: Just remember that.

    Oh never mind…

    Poor Andrew

    • There is a McMansion. For some that may be a palace with the poison in. And if the loan is from St George then it gets more interesting.

  5. Wow, talk about your quintessential Sydney bluff and bluster! A rambling, fact-free rant.

    I’ll happily defer to body language experts on this one, but Mr Wilson (it is laughable to call him “Doctor”) looks like a man under the pump in this video. Wide-eyed, wild gesticulations and delivered at full volume. I couldn’t imagine a presentation style less likely to convince me of the viewpoint he’s arguing.

    That’s as polite as I can be.

    • Hang on a second guys. I think we’ve got it wrong as Dr Andrew Wilson is actually a Dr in gynecology. As a gynecologist his earning capacity is roughly 1 million a year so there shouldn’t be any problems with affordability there. The median multiple in his case is around 1-1.5. The only thing I have problem understanding how comes we have medicos working for financial institutions. Hopefully there are no many financial advisers working as surgeons!

  6. Comical Andy just following the first rule of the Ministry of Disinformation. Never let an uncomfortable piece of data go unchallenged. As long as you can allow the muppets to believe there’s an element of doubt and the experts disagree they will not be moved away from “common sense”. Nothing’s as safe as bricks and mortar, especially in Sydney, the best city in the world!

  7. frankly I dont get why Wilson (or anyone for that matter) waist good oxygen on arguing about Demographia’s stuff.Not worth it.

    in the meantime, NZ market is skyrocketing even higher, expect the same here, since conditions/banks are similar.

    How many years some guys can be wrong without accountability, I am wondering πŸ™‚

    At one point, keeping the head in the sand that long should suffocate the brain.The most precious things is time, you cannot buy it back.

    • He wastes his time on it because its the top news story on fairfax news, and it scares the bejesus out of lots of readers…. who are also property investors.

    • dam – This bait just ain’t so tasty.


      Next … objective comment to read apart from this ******* ****** **** ***** ****

      *NB Self Censored.



    • I’d dispute the fact that NZ is skyrocketing and that is relevant to Australia. The majority of markets (e.g Wellington 1.7%pa, Dunedin 2.9%pa) are flat in real terms with only two markets moving significantly. Christchurch because of the market disruptions caused by the earthquakes and Auckland due to the city council implementing strict new planning controls.

      Unless you think Australian markets are going to be hit by an earthquake or a sudden shift in planning regulations I don’t think those examples are relevant to Oz.

      Why you would be hoping for a massive increase in debt during a period of limited economic growth is beyond me.

    • Dam, hardly constructive to rubbish Demographia’s stuff in such general terms, without providing reason. I have my own thoughts about their stuff – as with any attempt to benchmark, it needs to be considered with a bit more focus on an individual/local level.

      Comparison to NZ (same banking system/conditions, therefore expect similar results) is quite obviously a ridiculous comparison.

      Fact remains that there is an economic maximum that can be afforded. Wages growth is the primary driver in price (so roughly in line with inflation). The price equilibrium will always be below this level, and often substantially below it due to market forces.

      As you say:

      At one point, keeping the head in the sand that long should suffocate the brain.The most precious things is time, you cannot buy it back.

      I agree. I often wonder why someone would buy a depreciating asset yielding a (roughly) inflation adjusted 4% gross, that costs 1.5%+ p.a. in maintenance/rates, and 5%+ in transaction costs each time you buy & sell….and they are happy to borrow money to do it!

  8. Love the repeated head-tilt. Always a dead giveaway – head-tilters are invariably trying to sell you something.

    “See how caring, earnest, and concerned for your best interests I am?”

    • “Get out of my face – I feel sick” would be my reaction if I had the misfortune of getting a one-on-one sales pitch like this.

  9. michael francis

    If the stats don’t fit the Real Estates agenda this month at least they can blame record high temperatures and the bushfires.

  10. arescarti42MEMBER

    Oh lawdy, he would’ve been better off not responding at all, or simply flat out denying the Demographia results, rather than that sweaty palmed, weasel around the truth effort.

  11. Andrew,
    Saddam called, he’s offering you a position to spruik real estate in hell and be his replacement comical Ali.

  12. The demographia survey is based on median asset prices and median incomes. It ignores Equity that punters already have in real estate.

    For Example
    Up Sizers: Use equity + Income.
    Down Sizers: Use equity + have $ left over.

    Income levels are most important for first home buyers. First Home buyers don’t normally buy into the middle or upper of the market. In addition on average first home buyers have a lower income than median.

    So assessing affordability for first home buyers based on median asset values and median incomes does not make a lot of sense.

    I think its hard to group buyers with equity and those without equity in the same set of numbers….. For me the number 1 thing that affects affordability is equity.

    just my 2 cents.

    • Equity isn’t absolute. It depends completely on how much the next group is willing to pay. If they won’t pay, you don’t have any equity.

      The whole thing is a house of cards.

      • I agree…. However just being the devils advocate for a second. if I wanted to discredit the survey then I would paint a picture of complexity and contrast it to the coarse grained criteria used in the survey.

      • I generally like the survey, yes the methodology is simplistic but sometimes thats actually best. And I definitely think the order of cities generated seems accurate both on other data and anecdotal experience.

        What other choices are there? … a Daily house price index … gimme a break.

    • Bang on. The debate is about, and driven by, those that have missed out on what is just a debt fuelled P/E step up for housing.

      Those that that own their houses don’t really care what prices do as long as they play in the same market. Paradoxically, this hurts sellers as much as buyers – you have to get a ridiculous amount for your pad when you sell because when you become a buyer you will be screwed.

      The purveyors of debt are laughing hard here – a whole generation of new entrants tricked into debt servitude.

      So what to do for the first timers? opt out and put up with manky landlords etc while the thing takes an age to play out. opt in and take a big bet and get played by the usery machine. Nice.

      Putting a metaphorical stake through the heart of the shameless party politicians that sold out to the financiers is probably a good start.

      • Idk why people call rent ‘dead money’. Its not dead money. I’m paying for a home. I don’t consider it dead money when I buy a car or eat food. Why is a home something that is supposed to be free?

        I pay $450 a week rent, where I would pay $700 in interest alone for the same house + principle + maintenance + rates + insurance + stamp duty to get in in the first place. And if I get a job in a new city I gotta pay all the taxes and conveyancing and agent fees all over again.

        The difference between what I pay as rent and what I would pay if I bought the place is the dead money. That is the premium you pay just to say ‘i own my own home’. The rent is the underlying cost for living that should not be resented. Homeowners still pay this via the opportunity cost of their equity that is tied up in their home (and they pay a bucket load more than a renter unless you value opportunity cost at a mere 3%!).

        What to do for first timers? Save that difference and invest elsewhere. Even if my investments are meager they will end up earning me a lot more than the cost of rent – making my home effectively rent-free anyway.

        The real problem is we resent ‘manky landlords’ too much, and look down on ourselves for ‘renting’. These cultural issues interfere with rational economic decision making. That’s what makes Australia ‘different’.

        Frankly I reckon my landlord is a wonderful person. They continue to subsidise my living allowing me to build up capital; and they hold all the risk in these uncertain times. I think they’re a bit of an idiot, but very generous nonetheless πŸ˜›

        PS I’ve been a homeowner and landlord in the past.

      • my landlord is a wonderful person. They continue to subsidise my living

        You were making sense until you posted that rubbish. You are paying $450pw for your shelter. You are not being subsidised.

    • I would have thought many up-sizers are also reliant on property prices rising significantly. Someone who has purchased their first home in the last 3-5 years or so on a 25 year mortgage would hardly have made a dent in the loan principle. If that was a $400k first home was purchased with a $40k deposit which is now worth $380k, I think the move to the $600k property isn’t going to happen like it might have in the past.

  13. It’s Dr Andrew Wilson not Mr Wilson. He’s a Dr and he knows what he is talking about so everyone should just trust him.

  14. Ok, if the good Dr is living in Sydney he might have seen his house price stagnate over the last 8 years and wants to experiance a 30% surge so any hint of the empire under attack, we must defend …. to the matresses

    ok really. affordable?? even my grandmother aged 92 couldn’t believe her luck when an speculator offered her money to buy out her 1953 built home with an effective yield of 1.15%
    she nearly told the “young couple” (mid to late 40’s) off, for “not being prudent with their money” and they could get more “with debentures” …. sssssh gran ….

  15. Your car burns a lot of petrol.1
    Reply: No it doesn’t; it is red.

    The Demographia report said that the median dwelling price is very expensive for the median earner. It didn’t say that property would not sell as there are many* people who are willing to pay the price.

    * “Many” might be decreasing to “a few” shortly.

  16. In reality he’s some talking head wearing a tie telling people what they want to hear. Doesn’t have to be well reasoned. Works for Yardney.

  17. Interesting that even the cash-for-comment contributors on MB don’t voice any support for Dr Wilson. He should be a little cautious, foot soldiers like him can end up in a lonely place when the music stops. Suggest he has a chat with David Lereah.

  18. dumb_non_economist

    By the way this is the headline for the Stephen Nicholls piece at the SMH

    “Economist tears roof off affordability study”

    • I regard the mainstream media as the most culpable player of the lot, in this long tragicomedy. The urban planners, the politicians, the economists, yes. But the mainstream media is supposed to be the public’s watchdog and give us the facts.

      One thing I have come to realise that the MSM are driven by, is that they slavishly adhere to whatever line the urban bureaucrats are pushing. I presume they all drink coffee at the same cafes and generally subscribe to the same worldviews.

      If there is a class of “gougers” and wreckers that it is long overdue they were exposed and shamed, it is the bureaucrats, especially the local government ones. But they get treated as sancrosanct by the media.

      Buraucracies NEVER do anything in the interest of the public. Everything is decided by them on the basis of what it does for their job security, pay, perks, and importance. Lee Kuan Yew (Singapore’s long term benign dictator) must have been a b—-y GENIUS to have devised a public service system right from the outset, where people only worked there on 3-year contracts and then were back out into the private sector again.

      It was also common knowledge decades ago, the public employees should not be allowed to form “Trade” Unions. Franklin D Roosevelt disappointed the people back in his day, who wanted public employee unions, despite his favouritism to “labour” generally. It was common knowledge that public employees would end up as one of the worst classes of gougers in the economy if they were given too much power. Who is sitting on the other side of the negotiating table keeping their demands realistic?

      I forget which administration it was in the USA that finally gave in and allowed public employees to unionise. At least over there, there is some kind of media attention to the gouging that has occurred; plus local governments are starting to actually go into bankruptcy.

  19. Andrew Wilson’s doctorate and life support mechanisms are rooted in the economic study of property. What else would any of us say given similar circumstances? I’m sure Lance Armstrong continued with an unsustainable line for a lot longer than he anticipated. In that regard Andrew Wilson is doing a Lance……

    • Lance Armstrong actually won races though… not even fellow spruikers take this man seriously πŸ˜€

  20. Dr Wilson clearly comes from the Bill Clinton school of semantics.
    Houses cannot be unaffordable because the last price paid must have been afforded by the buyer.
    Shortage-deniers should be proud of him. It is easy to attack one word, but the problem remains.
    Everyone knows that houses are too expensive and in short supply in this country. How to fix it should be the point of discussion.

  21. Derp derp.

    I have to have a good old LOL at the comments (like the previous Demographia-related thread) in here.

    Demographia is a right-wing think tank that is pro-urban freeway construction and pro-wholesale land release on the fringe. Demographia (via its head honcho Wendell Cox) is a firm believer that public policy should favour getting as many people in cars and public transport should be there for people who cannot afford a car.

    Their urban planning “policy” is merely an extension of the 1940s, 1950s, 1960s, 1970s, 1980s policy that saw people moving further away from existing infrastructure to live in the burbs with a white picket fence and drive to work in the city – made possible by —THE CHEAP LAND— (thus increasing the amount of dwelling construction)… that’s something a lot of the perma-housing bears on here are… what… how you say… against?

    You’ve all be majorly derp’d.

    Carry on though, it’s amusing.

    • Yep. That’s about right. This is an interesting bit of research into affordability from the Center for Housing Policy (US)
      “The inclusion of transportation costs affects the relative affordability of many metro areas. For example, housing costs in the Houston region are comparatively affordable as a share of income, ranking eighth out of the 25 regions examined. When transportation costs are included, however, Houston drops into 17th place, as one of the less
      affordable regions for the combined costs of housing and transportation.
      In contrast, metro areas such as San Francisco, Boston, and New York are
      some of the least affordable regions for local moderate-income households
      when just housing is considered, but are among the most affordable when
      housing and transportation costs are considered together.”