Baby boomers have no clue about housing affordability

Last week, retiree Ron de Gruchy was featured on the front page of The West Australian claiming that today’s mortgage holders “have it easy” and that it was much harder for the baby boomer generation when they were trying to service a mortgage:

“The high interest rates were a real squeeze on finances but you just adjusted… Overseas travel was non-existent for us and we never went for night’s out, or to the casino”.

“We were pretty frugal and we were happy. Back then, people didn’t complain – they just adjusted.”

These sorts of comparisons always make me cringe because commentators like de Gruchy only ever consider the initial cost of a mortgage, not the lifetime cost.

As we know, Australian property values as a ratio of household disposable income have more than doubled since the early-1990s, from 2.7 times in 1990 to 6.4 times as at December 2021:

Australian housing values to income

The relative cost of Aussie homes has more than doubled over the past 30 years.

While record low mortgage rates have certainly reduced the interest burden, principal repayments have soared alongside prices. This is evidenced by the widening gap between the Bank for International Settlements’ debt servicing ratio (green line below), which accounts for principal and interest repayments, and the RBA’s interest repayments ratio (blue line below):

Australian debt servicing ratio

Principal repayments have grown as Aussie house price have soared.

Second, the record high (17%) mortgage rates that the baby boomers complain about didn’t last long. A home buyer back then got to enjoy the benefit of a massive drop in mortgage rates over subsequent years and the corresponding massive rise in house prices:

Australian mortgage rates

Australian mortgage rates plummeted in the early 1990s.

Does anyone honestly believe that recent first home buyers are likely to face similar conditions in the years ahead, whereby mortgage rates more than halve and values skyrocket? The opposite is likely to happen whereby mortgage rates could double and house prices tank.

Third, not only do low mortgage rates make it harder to raise a deposit for a home (via lower returns on savings), but they also mean that a mega-mortgage today will remain a very big mortgage in a decade’s time thanks to anaemic wages growth. For recent home buyers, the mortgage pain will be both deep and prolonged.

This is the polar opposite of what happened to the baby boomer generation, whose small mortgage debts were quickly ‘inflated away’ by stronger nominal wage growth.

The final word on this issue must go to last week’s excellent Per Capita report, which neatly illustrated how home ownership and the lifetime cost of housing has gotten much worse over the generations:

Since the 1990s, house prices have risen from 2.5 times annual household income, to over six times today. Australian households are among the most indebted in the world…

House prices versus wage growth

The cost of housing as a proportion of an individuals’ income has been increasing over the past 50 years. Taking three generations as examples, and comparing median mortgage costs to median wages, we show that the lifetime cost of a home purchase shows a quite different picture to that provided by just comparing single year mortgage costs…

Lifetime mortgage repayments

We estimate the Gen X family is paying $1425 per month on their mortgage in 2021. If they were on the same repayment trajectory as the Boomer family their monthly bill would be $910, while if they were on the Silent Generation trajectory it would be just $440 a month.

For the individual family, this is a huge loss of income – almost $1,000 a month – that would be far better directed toward education, health or day-to-day living expenses. For the nation, it represents a significant constraint on household consumption, which accounts for more than half of Australia’s
economic activity…

Perhaps the single most distressing and socially challenging contemporary housing issue is the decline in affordability between generations.

People born between 1947-1951 have experienced historically high levels of home ownership, from their 20s, through to their 70s. Following the 1947-51 birth cohort, there has been a decline of around 1.8-2.5% of home ownership every 5 years. For example, 37.4% of people born between 1987-1991 own a home when aged 25-29, down from 54.2% for people born between 1947-51. This trend is consistent across sub-60 age groups…

Home ownership by birth year

For people born between 1982 and 1991 we can expect, on current trends, to see around 55% owning a home before they are 40, 10% lower than their counterparts born between 1962 and 1971…

The above explains why commonly used measures of housing affordability – which only consider the size of the initial mortgage repayment on a brand new loan at a particular point in time – should be binned. They massively understate the affordability pressures facing today’s aspiring home buyers, many of whom will either miss out altogether or will still be repaying jumbo-sized mortgages for decades to come.

Unconventional Economist
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Comments

  1. Back then, people didn’t complain – they just adjusted.”

    Why then does every Tory loving Boomer you meet still bring up 17% interest rates 30 years later?

        • 17% was the interest on my first mortgage – the bank would only lend so much, then you had to go to a ‘finance company’ (owned by the bank) to get a second mortgage. My second mortgage was 21%. Just so you know. I mean, there was no air-conditioning, not in houses, not in cars, avocados hadn’t been invented, dentists really hurt, and then … 21% interest!

    • I remember some woman on the news trying to drum up a “mortgage payment strike” because of the sky high rates. There were plenty complaining loudly at the time.

      • boomengineeringMEMBER

        Sounds similar to my advice when some members here were complaining about rent costs a few years ago . What could they do if everyone in solidarity stopped paying rent and mortgage together.

        • ErmingtonPlumbingMEMBER

          A mate raising a family in Tea Gardens owns 2 places there and rents one out as a permanent rental.
          His new property manager told him he can be getting $500/week for it now. He’s been renting it to the same Tennants for only $350/week for years now so he raised the rent to $450 but they’ve said they can’t afford that.
          So my mate just said, I’ve decided to renovate and gave them an eviction notice.
          Well they’ve stop paying rent and said they are not moving until another affordable place is found for them in Tea Gardens/Hawks nest.
          Apparently there is almost a dozen landlords in the same predicament in this town.
          Once they are out the mate is thinking about Air B&B or holiday renting only.
          These regional places really do need Social housing.
          A large and increasing percentage of housing in these areas are owned by investors outside of these communities or capital city retirees.
          The locals don’t have a chance.

          • Totes BeWokeMEMBER

            Everyone is suffering big Australia. Why should these people be any different? Move to where they can afford like everyone else. No more social housing.

            Labor mentality that’s allowed enormous immigration, while looking after the unemployed.

          • boomengineeringMEMBER

            Solidarity brother. They are your words not mine. If you had time you could teach them your faith.
            I remember the old days at Garden Island when we were constantly on strike. It occurred to me that a majority there were war pensioners so that while they had a job the gov’t didn’t have to pay. So it was in the Gov’t interest if they went on unpaid strikes.

          • ErmingtonPlumbingMEMBER

            Most of Last 25 years of immigration is on the LNP Toatsie.

            And yet with the last 2 years of Zero Immigration thanks to Covid how do you explain increasing house prices and increasingly unavailable/unaffordable rental accommodation?
            It not all “because immigration” you goose

          • BoomToBustMEMBER

            We were given 60 days notice on Dec 1 2021 as the landlord wanted to sell with vacant possession, given the state of the rental market we didn’t hand the keys back until the 18th March. They started VCAT against us, but to get to hearing was about 3 months, should VCAT have ruled we needed to leave they would give us another 90 days. Should we have not left, they would need to apply to VCAT for a forces possession order, so another 3 month for the VCAT hearing, then I think we got 60 days to leave or the police are involved.

            The place went to auction on Saturday, didn’t sell, bad timing given the first rate rise and federal election as well.as high inflation. They purchased it mid 2015 for $780k, and are asking $1.06-1.15 million for it.

          • Totes BeWokeMEMBER

            “Most of Last 25 years of immigration is on the LNP Toatsie”

            Who’d guess the business/wealth party would run high immigration if the workers party, MSM, Greens, and “independent consultants” allowed them to do it unopposed?

            “And yet with the last 2 years of Zero Immigration thanks to Covid how do you explain increasing house prices and increasingly unavailable/unaffordable rental accommodation?”

            Returning expats, foreign buying left empty, pent up demand, lower rates, lower standard of lending, migration to the regions like Tea Gardens.

            “It not all “because immigration” you goose”

            Of course it is. Or there’d be plenty of cheap options for those tenants to take.

            Walk me through the fairness of taxpaying kids locked out of housing, while Labor builds housing for the unemployed.

          • Chortle

            A cap/tight controls/huge tax on Air BNBs might be a good start

            Don’t like it? Don’t AirBNB, turn it over to long term renters.

          • Aren’t there rules about raising the rent by more than 10% from year to year?

          • drsmithyMEMBER

            Walk me through the fairness of taxpaying kids locked out of housing, while Labor builds housing for the unemployed.

            Perhaps you should first walk us through the fairness of kids being homeless because of a system that deliberately keeps them unemployed to suppress wages.

            Because being “locked out of housing” is an unrelated issue.

          • Totes BeWokeMEMBER

            smith

            More victims of immigration you support. You either oppose immigration, or stop whinging about unfairness. The purpose of immigration is to create unfairness (or more accurately opportunity for the elites to exploit everyone else).

            You can’t have it both ways.

            You think the bulk of the unfairness you support should be felt by working kids?…lol…that’s why Labor can’t win an election.

          • Totes BeWokeMEMBER

            I saw what you wrote dennis.

            Labor won’t win anywhere near as strongly as polls or the woke think, if at all. It’s all the same stuff. Australia doesn’t want what they’re offering (for example…..social housing while our kids can’t buy a house), and LNP etal will do far better than expected as a result.

            You think I’m some LNP loving redneck? No, I’m your average ex Labor voter, who will never vote Labor ever again. Labor’s in terminal trouble because they’ve betrayed their voter base. It’s behind every problem we’ve got, including perpetual LNP government.

          • drsmithyMEMBER

            You think I’m some LNP loving redneck?

            LOL. Fvck no.

            We think you’re a standard-issue “I’ve-got-mine” Tory.

            No, I’m your average ex Labor voter, who will never vote Labor ever again. Labor’s in terminal trouble because they’ve betrayed their voter base.

            A strong supply of public housing is about as textbook a Labour Movement / Labor Government policy as you could imagine.

          • Totes BeWokeMEMBER

            “We think you’re a standard-issue “I’ve-got-mine” Tory”

            My opinion has never changed. I’m pro worker, pro union, pro environment, pro safety net welfare, anti globalisation, anti immigration. My personal circumstances don’t change my view of how Australia should be run.

            “A strong supply of public housing is about as textbook a Labour Movement / Labor Government policy as you could imagine”

            Along with mass immigration? No thanks.

    • They’re expert complainers! Tremendous complainers! A whole. lotta. complaining. I could build a wall with their complaining!

      (Build the wall! Build the wall!)

      Jesus, could you imagine the complaining if their excessive super/frankencredits/other boondoggles were curtailed? Or if they had an intergenerational fairness equaliser (inheritance tax) imposed for their sins? I mean that cohort is directly responsible (as well as that before it) for the current climate crisis. Captains of industry. Politics. Fk em.

      • No need to imagine. When Kelly O’Dwyer brought in the still generous $1.6m cap on tax free super, some wealthy retired local party members tried to get her disendorsed as the local candidate WHILE SHE WAS ON MATERNITY LEAVE HAVING JUST GIVEN BIRTH.

  2. boomengineeringMEMBER

    Boomers were if fact the lucky generation living between depressions and world wars but it doesn’t help the young,uns to look at the greener grass on the other side of the fence when all they have is a sand patch. Deal with the hand you are dealt with and grow succulents. Remember there will always be others better off, just be grateful that also there will always be a lot that are worse off.
    The day of reckoning is upon us, no point comparing, complaining about the cabin next door getting served more food as the Titanic is about to go down.

    • There is a generational war because the youngins have asked the older generations, ‘Could you please take your boot off my throat’, only to be met with, ‘There is no boot, and there is only a comfy footrest.’

      The denial then sparked the ‘war’, and the denial continues to this day, as per news articles, toxic stoic dinner table discussions, and the existence of this very article, even the very existence of MB…

    • GonzificusMEMBER

      “Deal with the hand you are dealt with and grow succulents”
      This is exactly what I have been doing, they are mostly all cacti of the genus Trichocereus,
      That should keep me entertained when I eventually reach retirement, and I can make a few bob selling the cuttings.

    • WTF. ” just be grateful that also there will always be a lot that are worse off.” I seriously don’t understand this thinking, It’s even worse than “keeping up with the Jones’s” and why the dole is so low; must have someone I can look down on!!!!!!!

      It isn’t intergenerational warfare, Boomers keep up with the “I worked hard crap…I had it hard bs…you lot have it so easy” etc, etc, etc.

      Boomers parents accused boomers of being lazy bastards and they were right.

    • boomengineeringMEMBER

      Mine went to 20%. But that would mostly benefit the teenagers of today and wipe out mortgaged families.
      Got pissed on, homebound this morn.

  3. The Grey RiderMEMBER

    Old Ron is 85 years young…he’s a member of the Silent Generation…not a Boomer.
    He’d be best to stay Silent…ex Public Servant…has a demonstrated predilection for sucking on the Gov’t’s teat…there’s only so many of those to go round you know.

  4. ErmingtonPlumbingMEMBER

    Being an Election period Sydney’s, #1 radio station for Boomer ignoramuses, 2GB is really doubling down and singing all the Boomers favourite “we had it tougher” narratives.
    Even if you truely Hate the Cnts at 2GB, as do I, it’s quite entertaining listening to them mould and manipulate enfeebled rotting old minds.
    I also like listen to them to get a heads up on whatever talking points my Boomer father in-law is going to bring to the dinner table.
    We all went over to theirs on Mother’s Day with our extended family and I was under strict instructions to not wind up her day with my usual “Bull sh!t” (since when is sticking up for our kids Bull sh!t!) because the father in-laws emphysema is getting worse after a quadruple bypass years ago and a more recent (less than a week) insertion of a couple of stints in his arteries. So I wasn’t allowed to pull him up on any of his boomer schtick.
    It only left the footy to talk about.

  5. rob barrattMEMBER

    Boomers just got on with it. No one could have foreseen the future. The reason young Australians are in the (admittedly) unfortunate position they are today is due to immigration, immigration, immigration, immigration. ….

    And you aint seen nothing yet. Ambulance ramping? Wait till the current middle age lot get a bit older. Ironically, what will limit ramping is that the ambulances will be in a traffic jam somewhere so they won’t actually get to the hospital.
    Wate?, sewaqge? Same thing. The basic issue is that immigrants tend to stay in urban areas. The more congested the area the more expensive it is to upgrade existing infrastructure.

    And whose policy is immigration? Why, everyone’s of course. Australia sold it’s inheritance off long ago.

    Oh, and personally, as a Boomer, I would much rather the Soylent Green solution than lying in a bed covered in my own excrement, which is looking like where it’s going.

  6. boomengineeringMEMBER

    The next intergenerational was might be the teenagers of today pointing out how lucky the previous generations had it getting proper jobs.

    • UpperWestsideMEMBER

      Bingo – we need a manufacturing base to offer non-academic types a proper paying job. We also need the Govt to have a sensible tech strategy coz tech doesn’t suffer from the tyranny of distance.
      And we need to have a long hard look at what we import and decide which items should be created locally.
      I would start at the bottom with basic fuels, nuts, bolts and nails and work up the food chain. Might have to nationalize Bunnings and Reece to make that happen.

      • I would start at the bottom with basic
        So if I understand your proposal you are going to force Australian’s to invest in industries with very low gross margins (like making nails and bolts) and you’re doing this so that we will have the capital and labour base to develop high tech products.
        Have I got it right so far?
        It’d be a massive understatement to say that I’m confused by how this will happen.
        Will Australian’s suddenly catch some brain bug which has them running around making nails and nail factories building nail empires, or will the impetus to invest in nails come from a well meaning government edict which forces only Aussie nails to be used? But that’s just the beginning, how does the transition from nails to (say semiconductors) happen…I know it’s all metallurgy but I suspect there are a few additional skills needed to make / market semiconductors , how do you propose we gain these skills?

        • UpperWestsideMEMBER

          I was being a bit facetious but I think the general idea needs to be considered (waving hands, spilling beer).
          You cant manufacture high value product economically if you don’t have much of the underlying component chain available economically to start with.
          Take a look at Apple’s attempts to assemble the MacPro in their new Austin factory.
          They found they couldn’t get the low value parts in particular the nuts bolts and specialty fasteners locally. And the imported parts were way more expensive than the same parts sourced in China/Taiwan ( lots of reasons, some nefarious ) which is why they manufacture in China in the first place. They worked with various US manufacturers to build the capacity locally to produce the low value components required for their 20k plus PC’s.

          If you start with a super low value product that Australia has internal demand for – be it galvanized nails, or nuts and bolts – and (with govt help) you work to build a manufacturing base that can produce these at any remotely competitive price then you most probably have developed a fully automated (robotic) manufacturing chain to get the prices down. There is a huge multiplier effect to any base level manufacturing capacity. Once you can do one level at a price point you can attack the next product up the food chain and figure out how to manufacture it at a price point that works.
          The Chinese did this, and yes they had super cheap labour, but you know the most interesting thing they did?
          Whenever a US factory was being shut down, they came in , bought the machines that made a specific part and sent them back to China so that they couldn’t be used to compete against the Chinese manufacturer of the same low value part.

          You have to attack the problem from both ends, most people only focus on the sexy high value end of the manufacturing chain.

          • ErmingtonPlumbingMEMBER

            So what if we pay more for our nails, public transport rolling stock and police cars. If they are made here by Australian workers it is better for the Country as a whole.
            It’d certainly be better than the way we are currently paying more for land, housing and essential services.

          • I’m the last person on this earth to shun any attempts to reboot Australian manufacturing but I’m also a realist.
            If you look at Australia from an Economic Complexity perspective, it becomes much clearer that very few options are available to us . This is why Harvard “opportunity analysis” and industry Growth avenues both suggest that Australia is one of the few countries where our best chance at re-industrialization is a so called “Strategic bet”. But here’s the thing, who would we trust to make this bet? I know many qualified engineers who won’t ever be asked their opinion and many unqualified politicians / accountants who’ll be paid a kings ransom for their gibberish, unfortunately that’s the nature of “strategic bets”
            I wish it were otherwise but just look at the AGL/MCB debacle, we have a dying industry spitting on a possible savior with a real plan. AGL’s plan would at best be called “Financial engineering” at it’s worst their plan is nothing short of the fraudulent transfer of Liabilities to an undercapitalized entity.

        • So if I understand your proposal you are going to force Australian’s to invest in industries with very low gross margins (like making nails and bolts) and you’re doing this so that we will have the capital and labour base to develop high tech products.
          Have I got it right so far?
          It’d be a massive understatement to say that I’m confused by how this will happen.
          Will Australian’s suddenly catch some brain bug which has them running around making nails and nail factories building nail empires, or will the impetus to invest in nails come from a well meaning government edict which forces only Aussie nails to be used?

          Probably the latter..

          But that’s just the beginning, how does the transition from nails to (say semiconductors) happen…I know it’s all metallurgy but I suspect there are a few additional skills needed to make / market semiconductors , how do you propose we gain these skills?

          It tends to happen by itself.

          Carroll Shelby didn’t walk into a pre-existing AC Cobra factory… he started pulling apart bicycles… work begets work, begets work.

          Now a vast majority of kids pulling apart bicycles don’t progress to starting their own high performance car factory…. but a culture of pulling apart bicycles needs to exist so Carroll Shelby can build AC cobra’s.

          In an academic sense, this is a pre-requisite learning outcome, technical tradesmen/para-engineers tend to work the same way…. and the trades learned in the US military did spawn a lot of private sector innovation after WW2… all from tearing apart DUKW’s and Jeep’s, DC3’s and Mustangs, XAF’s and CXAM’s.

          • Thanks for the inspirational post. I didn’t know that about Shelby. I started out on bmx’s and over the last 2 years bought, sold lots of them to get by. I’m a white collar professional who has become entirely disillusioned with my career. I rent factory space and tinker with cars/motobikes as a hobby. A mate referred to me as having “gone semi-pro”. It’s been incremental and the comment caught me off guard. I now have a fairly serious set up and quite a lot of tools/machines recently adding a hoist and a giant blasting cabinet to the mix. I’d like to monetize it but don’t necessarily want to be a regular mechanic. I’m open to offering services to mechanics or the auto trade but need to find my niche.

    • Boom, is this your attempt at “move along, nothing to see here”?

      If you look at standard of living Boomers got the peak and it’s all downhill from here. Boomers parent were the ones that suffered the financial and social aftermath of WW1, the depression and WW2. They did the hard work and Boomers are spending it while claiming they did the hard yards. That is nothing but a lie.

      I’d have no issue if we were looking at correcting what we allowed to go wrong, but we aren’t, we’re claiming we deserve it.

        • “The next intergenerational was might be the teenagers of today pointing out how lucky the previous generations had it getting proper jobs.”

          Because the above come across (to me, anyway) as an attempt to put the present situation as just the normal “present generation blaming the previous gen for their circumstances”, which is not the case. We had our parents leave us in a better position than them, they went without for us, while we are leaving our offspring with less.

  7. UpperWestsideMEMBER

    At least Leith shows a graph based on age, so you can actually look at it and draw some assumptions. A number of the “claimed” financially literate press cant get that right.
    Leith, if we were to correct for recent immigrants what would this look like? Are they more , or less likely to own a home?.
    Also the same graph using marriage age as a base would also be interesting. If I look at this graph I can see the increasing shadow of globalization which decimated the working class income base from the 70’s onwards. We have more stuff now, but it’s all imported and this really hurt the unskilled workers. Deferring your earning years to spend 3-5 years at Uni might explain a big chunk of the 25-29 year ownership gap. It is this starting gap between the cohorts that creates the inequality right out of the gate.

    I am not immune to the argument that the Boomers foot is on youths neck, there are some really stupid tax breaks out there.

    Dividend Imputation wasn’t originally meant to equal zero company tax, but instead make the tax on dividends the greater of the company rate -or- your personal rate. Handing retirees back unused imputation credits is just plain wrong, it should be a use them or lose them deal.

    Negative gearing recapture (you heard term here first folks). The govt should reduce the cost base of the property for tax purposes by the deducted loss. This will allow them to recapture some (but not all) of that tax at the back end and changes the nature of negative gearing from being a straight out tax arbitrage ( ordinary income converted to deferred capital gains) to more of an investment cashflow management structure —- as was originally intended.

  8. idk, but if you ask me problem can more easily be understood from an investment perspective.
    Put simply if 80% of the population owns their own home than that leaves just 20% of the population looking to rent.
    And here’s the thing we all know which 20% will be looking to rent, this 20% is all in the bottom quartile, the bottom quartile for income (many relying on government supports of one kind or another NDIS, Aged care, Centerlink…) the rest are the working poor.
    That’s it that’s your population of renters if we have have affordable housing.
    Everyone knows what happens to rental housing which can only attract the bottom quartile, it goes downhill, whatever quality was built into the house quickly dissipates and the value of such a dwelling pulls down the value of all neighbouring properties. Nobody want’s this, not for their “Investment Property” and most definitely not for their own house.
    And thus begins the well meaning restrictions. Restrictions on building size, restriction on building location, restrictions on the suitability of a building, restrictions on ….
    It’s these restrictions which increase the price of housing and support the concept of housing as a viable “Investment”, its’ these restrictions which must be abolished if we want affordable housing however 75% of the Australian population doesn’t want affordable housing, so good luck getting the restriction lifted.

    Housing will have run its course when Investors simply shun housing, they’ll stand around the BBQ and ask each other, how the F do you make money off housing?

  9. Hugh PavletichMEMBER

    Australia …

    Is housing our greatest policy fail? … Tom Burton … Government Editor … Australian Financial Review

    https://www.afr.com/politics/federal/is-housing-our-greatest-policy-fail-20220509-p5ajpj

    It is hard to think of a larger public policy fail over the past few decades than housing. A fail virtually every young Australian seeking housing is now paying for. Big time.

    Sydney is now the second and Melbourne the fifth most unaffordable cities in the world when prices are compared with incomes, according to a regular study by Demographia. Their latest 2022 international study shows it now takes 15.3 years of median household income to pay for the median-priced Sydney home. For Melbourne the ratio of price to income is 12.1.

    All five of Australia’s major metropolitan housing markets have been considered by Demographia to be “severely unaffordable” (price to income greater than 5.1) since the early 2000s. The housing price-to-income ratio has more than doubled since late 1980s, says the Centre of Independent Studies chief economist Peter Tulip. … read more via hyperlink above …

    Demographia International Housing Affordability: All Editions

    http://www.demographia.com/db-dhi-index.htm

    Demographia United States Housing Affordability Survey 2021

    https://urbanreforminstitute.org/wp-content/uploads/2021/11/Demographia-United-States-Housing-Affordability-2021-Edition.pdf

    New Zealand Metros Median Multiples | interest.co.nz

    https://www.interest.co.nz/property/house-price-income-multiples

    DEFINITION OF AN AFFORDABLE HOUSING MARKET
    (incorporated within all latter comprehensive Demographia International Housing Affordability Surveys)

    For metropolitan areas to rate as ‘affordable’ and ensure that housing bubbles are not triggered, housing prices should not exceed three times gross annual household earnings. To allow this to occur, new starter housing of an acceptable quality to the purchasers, with associated commercial and industrial development, must be allowed to be provided on the urban fringes at 2.5 times the gross annual median household income of that urban market (refer Demographia Survey Schedules for guidance).

    The critically important Development Ratios for this new fringe starter housing, should be 17 – 23% serviced lot / section cost – to balance the actual housing construction.

    Ideally through a normal building cycle, the Median Multiple should move from a Floor Multiple of 2.3, through a Swing Multiple of 2.5 to a Ceiling Multiple of 2.7 – to ensure maximum stability and optimal medium and long term performance of the residential construction sector.

    … so that today … different forms of dwellings should be about or below these Median Multiples to rate as ‘affordable’ …

    1. Standard detached housing should not cost any more than 3.0 times annual household incomes of specific metros ( refer Annual Demographia Surveys ; recent Glaeser & Gyourko paper ; Recent Reserve Bank of Australia paper ); Harvard JCHR Median Multiple Tables (accessible top left column front page this website).
    2. New fringe starter house and land packages should cost around 2.5 times … at development ratios of 20% serviced lot and the balance construction ( Definition of an affordable housing market http://www.PerformanceUrbanPlanning.org ).
    3. Apartment / townhouses should be around 2.0 times ( about 70% of detached … to illustrate refer Houston Association of Realtors Monthly Report ).
    4. Fringe manufactured house (prefab) and land packages should be around 1.5 times ( refer Leaky Homes And An Architect’s Musing’s | Scoop News March 2010 published Interest Co NZ as ‘Houston: We have a housing affordability problem’

      • Hugh PavletichMEMBER

        … and New Zealand … getting on top of supply … consented / approved a whopping 78% more than Australia in March 2022 ! …

        New Zealand May Eliminate Housing Shortage Within Years: Westpac … Tracy Withers … Bloomberg

        https://www.bloomberg.com/news/articles/2022-05-09/new-zealand-may-eliminate-housing-shortage-within-years-westpac

        New Zealand may be able to eliminate its housing shortage by the middle of the decade amid record levels of home building and declining population growth, according to Westpac Bank.

        New Zealand needs to build an average of 26,000 homes a year over over the next five years to address the existing shortfall and keep up with population growth, Auckland-based senior economist Satish Ranchhod said in a research note Tuesday.

        “Right now, consent issuance is running at nearly double that pace, with around 50,000 new dwellings consented over the past 12 months,” he said. “Although shortages of materials and labor are putting a brake on how quickly housing developments are being completed, we’re still looking at a period of rapid home building over the next few years.”

        House prices are starting to fall as the Reserve Bank ramps up interest rates to curb inflation. As the supply of homes increases, Westpac expects prices could drop 10% this year after rising 26% in 2021. … read more via hyperlink above …
        .
        .
        Australia and New Zealand new dwelling approvals / consents: Adjusted for respective population bases New Zealand outstrips Australia by wide margin of 78 % for March 2022 …

        … For the month of March 2022 the Australian Bureau of Statistics reports 15,183 new dwelling approvals (x12 annualized 182,196) … Statistics New Zealand reports 5.303 (x12 annualized 63,636)

        The current population clock for Australia is 25.884 million … New Zealand 5.164 million.

        Specifically for the month of March … the consent rate per 1000 population per annum for Australia was 7.04 … New Zealand 12.52.

        For the month of March on aa appropriate population adjusted basis, New Zealand’s new dwelling consents / approvals were 78% ahead of Australia’s …

        Building Approvals, Australia March 2022 … Australian Bureau of Statistics

        https://www.abs.gov.au/statistics/industry/building-and-construction/building-approvals-australia/mar-2022

        Building consents issued: March 2022 … Stats New Zealand

        https://www.stats.govt.nz/information-releases/building-consents-issued-march-2022

        … extract …

        … New dwellings consented per 1,000 residents

        The number of dwellings consented per 1,000 residents across New Zealand was 9.9 for the year ended March 2022, compared with 8.0 in the year ended March 2021. The record number of new homes consented per 1,000 residents was 13.4 in the year ended December 1973.

        National population estimates are updated quarterly, and subnational population estimates are updated annually in October and both are provisional. For more information about estimated resident population see Population.
        .
        .
        … Note historical ‘consents rate per 1000 population per annum’ graph from September 1971 below …

        Rise in new homes consented per 1,000 residents … Statistics New Zealand

        https://www.stats.govt.nz/news/rise-in-new-homes-consented-per-1000-residents

  10. Totes BeWokeMEMBER

    I’m not a boomer, but long ago at 23 I found a quarter of a block of land in my bank account. Surplus money I hadn’t drunk, eaten, spent on electricity, rego and insurance and having a heap of fun, much of it travelling. In other words…I hadn’t purposely saved at all.

    So I bought a block of land. 12 months later I borrowed more at huge rates and built a house on it. Didn’t notice any money missing from my life. It was so easy it’s ridiculous.

    FFW to 2019. Labor go to the election with NG and CGT reform. Back then, the regions were cheap. The election results map says Labor won where NG and CGT reform would hurt the most. Labor were smashed to pieces in the regions. i.e. boomers are not voting to prevent cheaper housing, but are voting against an overly woke Labor.

    Young voters outnumber older voters, but won’t vote against woke Greens and Labor.

    Young Australians are victims, for sure, but it’s not boomers doing the damage. It’s woke, Labor and immigration.

    Young Australians are victims of their own naivity and stupidity.

  11. and we never went for night’s out, or to the casino”.

    They believe this…

    FFS, we were in the same restaurants, but this is the narcissistic driven delusion of boomers… they have crystalised in their heads they never went… even though all forms of leisure spending, alcohol consumption, etc… are lower with younger generations, that boomers at the same age 25-35 years ago.

    But the galling part is the defence mechanism to continue it….

    You can scream out all the facts, boomers being the eternal welfare recipient generation, the least hardest working generation in history, the best jobs marke tin history, etc, etc.

    They will deflect, blame others, “it’s not really our fault, pother generations do it too !!!’, etc…. when the argument is “we now know it is unaffordable to continue this way. The social and economic cost is too much, it has to stop… and

    THEY.JUST.WON’T.STOP.

    • Totes BeWokeMEMBER

      Boomers did’t done this to you, but because they don’t understand it, feel they need to justify it.

      Look at how expensive fun/drinking, services are now.

      The only things that are cheaper are goods and travel, and we sold our soul for those.

      Elites, LNP, Labor, Greens and MSM did this to you. Not Boomers.

      • No Totes, Boomers voted in gov that lowered taxes, lowered gov services, fvked the PS, turned houses into a financial asset, had a policy of maintaining a higher UE while vilifying the UE and single mothers (all the usual anti-welfare crap) sold off gov assets, started and increased all the super / retirement rorts, and mostly all of this started with Howard and continued by mainly LNP gov with Labor too scared to push back. Why? Because voters wanted it.

        • Totes BeWokeMEMBER

          “with Labor too scared to push back. Why? Because voters wanted it”…”while vilifying the UE and single mothers”

          Australians are far more conservative than Labor. Labor isn’t able to juggle support for mass immigration, affordable housing, wages, conditions and employment because immigration rips the guts out of the others.

          This has made Labor unelectable, leading to perpetual LNP (until they’ve shafted us so much we’ll relent to Labor (is that this election?…I doubt it.

          I don’t know a single person that wants to sell off the country, and populate. Labor being pro immigration is at the core of every problem we’ve got. Including an LNP government.

        • Totes BeWokeMEMBER

          You also think Australians want very high politicians wages and conditions? CSG mining? Global corporations reaming us? Insurance companies and banks making humongous profits at our expense?

          You’re dreaming. We don’t want any of this.

          Most Australians want a fair Australia, where workers earn considerably more than welfare recipients, housing that’s affordable, a healthy environment, amenity, functioning infrastructure, border security, low immigration. Labor have wrecked all of this, because they push far too hard on the woke policies, are pro mass immigration, and we therefore just can’t vote for them any more.

  12. I can’t believe how little tax I pay on me 200k+. Presume someone’s paying their unfair share! Recent purchasers will be retiring with a mortgage waiting for inheritance.

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