I was pretty much forced to buy a condo in the late 70s when the building in which I lived went condo overnight. I owned it 14 years and didn't make any money. I later moved to another fine neighborhood for a quarter century and had to bring money to closing for a huge special assessment after the unit lost value due to the Great Recession. I would have been happy to be a renter my entire life and would have been ahead financially, even factoring in the tax deduction.
4
The same insanity that I observed in Ireland... go and ask the Irish how that worked out.
7
The purchase price may be high, but if you bought something you could afford, it doesn't really matter if it goes up and down as long as you can live in it. Houses used to be seen as an investment, but that is long over. Houses are a place to live, to make your own, and over time, to own and sell if desired. It breaks my heart that there are so few 'starter' homes and that rent is as high as it is. Don't know whatever happened to rent caps, but we need them. We also need banks to say NO, NO, NO we will not loan you money when you cannot afford to pay back. If the monthly payment is more than a third of one's take-home (reported) pay, then "NO" you cannot buy that house. Pretty soon, those homes will come down as too few can get loans for the inflated price.
3
There is no other country as obsessed with property ownership as Australia. This is not a a recent phenomenon as generations of Australians will attest. Real estate has long been the path to wealth. Tax laws like negative gearing encourage taking on huge debt for investment properties. Uncontrolled foreign money added fuel to the fire. It sounds like some sanity is being restored but successive Australian governments have refused to tackle this issue. Not easy to change the culture when the most important economic indicator in the evening TV news is 'home loan' interest rate.
9
This is a good article, but I can’t believe a respected news organisation would lend credibility to local looney and housing doom mongerer Martin North, whose wildly overstated and unverified ‘surveys’ of ‘mortgage stress’ for years have predicted mass defaults that haven’t hapoened, don’t line up with arrears data, actual household survey data or central bank or rating agency research. Also the regulatory tightening on lending standards began in 2014. For the last 3 years, all borrowers assessed as if they were paying a 7% interest rate, along with other restrictions.
3
Dear NYT, as an American in Australia, thank you. News articles here are so superficial. It is a pleasure to read NYT-style reporting on Australian issues. It's long overdue. PS. Here on the Gold Coast in Queensland, property values have risen by 50-100%+ over the past 6 years, too. The value of the land that our house sits on has risen from around $400,000 (not including the house) to $900,000 over the past 6 years. (And rents are out of control, too.) It is scary how many people will not be able to afford their mortgage payments once interest rates rise, although I guess that will be the final death knell for inflated property prices. You have put what is happening into better perspective than the Australian newspapers.
13
Substitute Vancouver for Melbourne and Sydney and you have the same story.
10
@Ru Add, any major city (metro area) on the west coast of the U.S.-- Seattle, San Francisco, Los Angeles, San Diego and soon, even that little old timber town, Portland.
1
@Ru: OR substitute San Francisco, all of Northern California, Los Angeles, all of Southern California, New York City, Boston, Chicago....mostly all of the large, blue, wealthy coastal cities....the places where most of the "good jobs" are located....have seen dramatic, explosive rises in home prices that EXCEED the 2006 peak of the "housing bubble" that lead directly to the 2008 CRASH of the "housing bubble".
A slight decline means nothing; the only thing that shuts this down is an economic crash, layoffs and foreclosures until things cool down. And the lesson of 2008 is how quickly we go RIGHT BACK to irrational exuberance and speculative price increases....so many people profit from this (banks, investors, realtors, etc.), that they do not see how destructive it is to society as a whole (the primary cause of poverty & homelessness).
2
@Concerned Citizen
Seattle too.
The press is SO proud that we are the crane capital of the US. I'm just amazed and sad.