There are no casual relationships between anything, just reasons, cause and effect if you will.
Refer to the reasons in the previous post:
Add to that
1st home owners grant, initially $5,000 which like all good intentions fuelled an immediate price rise in houses, believe me, the ink wasn’t dry before construction costs went up.
Restrictions on availability of land for development.
e.g. Article in 1968 about the reason Sydney land costs were so high, the State Government owned all the land around Sydney and sold some on a year by year basis. if 60,000 blocks were required they released only 50,000 to drive up their return. An act of sheer bastardry.
Abnormally low interest rates which allow the borrowing of more money than necessary driving up prices, God help them if interest rates go to 11.5% or higher.
No requirement for a savings history which allows people with no financial discipline to apply for loans.
No requirement for a substantial deposit meaning loan repayments are higher leaving little or no room for ongoing maintenance or loan interest rises.
95% home loans which enables the purchase of more expensive houses than would otherwise be purchased.
The main increase has been in the price gouging of land costs, with us the split was 25%-75% land and house, now it is 50-50
Little extras like recycled water, a development I saw in Pakenham pumps your grey water 30 km to Carrum, processes it and pumps it back. that infrastructure costs, no only in installation but in upkeep.
Ask you some questions:
At what age did you start work?
At what age did you start saving?
Did you have a gap year?
Did you have overseas holidays?
Did you restrain your spending prior to deciding to buy a house?
Did you put a deposit on a block of land as soon as you could and pay it off so as to anchor the price?
in my suburb in the foothills property is now moving rapidly as it is realised how cheap it was (but it is a hour to the city by train), but everyone wants to live near the city, supply and demand drives prices up.
Every year you delayed your purchase for whatever reason the prices rose by $10-$50K and once you are behind, you never catch up.
I grew up in a 10sq house with 3 families living in it that had been through the Great Depression and WWII and I had it drummed into me, get your own house as soon as possible and they can’t take it off you.
My point is a pretty simple one - that, over the very long term (measured in decades or centuries), house prices ought to rise in line with rents. This is ‘financial physics’ - long-life, variable income assets (such as real estate, listed companies or other productive businesses such as infrastructure assets) tend to appreciate in value according to the growth in income they generate. Short-term changes in this relationship - as we’ve had in the last 25 years apropos housing - tend to be driven by external financing considerations. Ergo, i’d argue pretty strongly that the global fall in interest rates over the last 25 years - from historically high to extremely low levels - has been by far and away the biggest driver of real estate appreciation that has been a multiple of the growth in rents, and there’s tomes of academic literature supporting this hypothesis. I’d also suggest that the next 25 years doesn’t look anything like the previous 25 years in that respect for obvious reasons.
Seeing as you attempted to answer my questions, i’ll respond in kind, but unfortunately asking me results in an atypical response that you probably weren’t looking for because my career and financial circumstances are rather atypical:
At what age did you start work? First paid job was 13 (ballboy at Australian Open - happy memories, even though it was pretty much slave labour given the $30 per day stipend!), but i assume you meant full time work, in which case the answer is 23 (immediately after completing my 5-year undergraduate double degree). At what age did you start saving? 19, from memory. Did you have a gap year? Yes, but at age 30 after i’d already worked professionally for 7 years. Did you have overseas holidays? Yes, frequently. Did you restrain your spending prior to deciding to buy a house? I’ve never bought a house because, in my particular life and financial circumstances, it’s a completely irrational decision. Financially it makes no sense for me to do so, because as a practicing financial professional the returns i can make elsewhere with my money far exceed the prospective return i’d make owning a house, and i’ve relocated internationally for work twice so tying up a material portion of my wealth in a fixed & illiquid asset with high transaction costs makes no sense. As for ‘restraining spending’, well, i would say i’m generally pretty cautious but my marginal spend is not what moves the needle in my personal financial circumstances - mostly as a result of being very lucky, i work in an industry that chooses to extravagantly pay its employees so the amount i save per year has only a small correlation with my spending. Did you put a deposit on a block of land as soon as you could and pay it off so as to anchor the price? Not applicable in light of the above response.
While I will defend us Baby Boomers from all sorts of rubbish that is laid on us, you cannot compare our good luck in housing to the shitfight that people have today. My first house in 1974 cost $22,000; today is worth $1.4 million. Who can afford that ? Not most young couple I know.
You deny climate change, hate renewable energy, and I can only conclude that your health is farked again and you are leaving us soon.
Good luck when you get to the Pearly Gates, fortunately Old Nick supports the Bombers so she should let you in.