Last week, the Credit Suisse Global Wealth Report declared Australian households the world’s richest thanks to their expensive property assets:
Now, data from CoreLogic shows that the median house price in an additional 178 suburbs nationwide reached $1 million in the year to August, with 1,120 suburbs across Australia now boasting a median house price of at least $1 million:
Across NSW, 519 suburbs now command a million-dollar median house price, up by 66 suburbs or 14.6 per cent from the year ended August.
Queensland added 57 suburbs to its 187, which is a 43.8 per cent jump over the previous year, while 28 suburbs in South Australia crossed the million-dollar mark, lifting the total by 60.9 per cent to 74.
The ACT gained 12 suburbs, taking the total to 49, WA added 9 suburbs to 59 and Tasmania expanded by three suburbs to nine…
Upon release of the Credit Suisse Global Wealth Report last week, I argued that most of Australia’s ‘wealth’ was fake and not actually beneficial:
Everyone needs somewhere to live and expensive housing serve little purpose to the overwhelming majority of owner-occupiers, who typically must sell and buy into the same market.
Expensive housing also punishes recent entrants or those locked-out of the market. The former is required to take-out mega-mortgages and serve a life of debt slavery, whereas the latter are forced to rent.
Would Australia really be worse-off if the median dwelling price was $370,000 instead of $740,000, aggregate mortgage debt was 70% of disposable incomes instead of 140%, and the banking sector was smaller and less profitable?
The answer is clearly no. Having lower debt loads to service would make Australian households better-off, whereas the broader economy would benefit from the productivity-boosting effects of lower land prices, increased business lending (investment), and a more balanced economy overall.
Ross Gittins delivered a similar assessment yesterday, describing our world-beating wealth a “pipedream”:
Do you believe our homes are so much bigger or better, or better located, than homes in North America or Europe?
I doubt it. If not, then what we’re really saying is that the land on which our homes are built is much better than the land on which the Americans and Germans – and Kiwis – have built their homes.
Really? We have better views? Better soil quality? Less chance of getting flooded or burnt out?
No. If the market price of our residential land is higher than their market price, it’s just because we’ve bid our prices up higher than they have theirs.
And how exactly does doing that make Australians richer than people in other countries? If it does, why don’t we keep bidding our prices up until we’re twice as rich as we are now?…
We devote more of our incomes to housing than they do, meaning we spend a smaller proportion of our incomes on everything else.
While Australians bask in our fake housing wealth, we also carry the second highest household debt load in the world:
Personally, I would rather have purchased the house that I live in for half the cost (and be worth half what it is now), in exchange for having half the mortgage.
Expensive housing is a burden, not a blessing.
