Jan 23, 2013

Posted by in Economics, Issue of the Day | 0 Comments

A slice of this Aussie life – bricks and mortar

 

Having a roof over your head is a near-universal status symbol though there are admittedly some vast disparities in the level of status involved.

We in Australia are fortunate to enjoy some of the most privileged living conditions on the planet. Yet that does not mean there is not substantial poverty or plenty of homeless people but most of us could not legitimately complain about our circumstances.

Still, all is not necessarily sweetness and light, especially when it comes to affordability. It seems our house prices are among the least affordable in the developed world.

An outfit called Demographia conducts an annual survey which measures the gap between income levels and housing prices. It concluded that Aussie homes are ‘vastly overpriced’. Not just costly. Not expensive. But ‘vastly overpriced’. That’s a serious disparity!

The afford

Ability benchmark is set at a house price which is three times average pre-tax income. There is NOTHING in this category in Australia. Bummer!

By contrast, America had 261 markets measured and 100 of them were classed as affordable.

In fact, the average across all Australian markets (39 were measured) is 5.6 times. The level in our capital cities is 6.5 times average earnings.

Interestingly, urban sprawl – or, more accurately, measures to contain it – is nominated as the key factor in pushing prices through the roof.

It’s superficially strange that urban sprawl is even a fact of life in such a vast continent as Australia with a mere 22 million people squatting here, mostly clinging to the very edge of the landmass.

Trouble is, providing essential infrastructure ever further from established service nodes for a comparatively small population is tremendously costly. So, the authorities have spent three decades trying to contain the sprawl only to artificially inflate prices to levels few can afford.

The environment benefits, naturally, but the real price is paid by younger generations who now cannot get a foot in the door of the property market.

Just another of the many contradictions of our capitalist system.

But, while sheltering indoors may be a fading dream for many, we still have the most glorious outdoors where we can revel in the wonders of nature.

As always, life is a game of swings and roundabouts.

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