Sydney housing prices are crazy. This article from the Sydney Morning Herald says that for those living in Sydney, the next generation will be the first to live in a lower standard of accommodation than their parents.
Expect a boom in Bathurst!
It would be easier to bear if the public transport in this city was slightly above atrocious.
5 comments:
Didn't read the article but have heard the argument. Have also heard from friends working in long term property-super investment area that the death of the baby boomers will see property prices fall in real terms. Who do you believe?
The Son of Man coped without a roof over his head.
Well said Michael.
I still think the public transport could be about 1000% better!
as much as I loathe melbourne, the trams do work
I am looking for a rent at the moment and finding it quite painful. Price jumped, and places are scarce. and I can't agree more with Gordon about the public transport!
We don’t spend enough time looking at the cause. If you have say 1.42 million homes in Sydney and 1.45 million families looking for a home then 30,000 families miss out. There are only two ways to fix this – build more homes or move families out of Sydney. We can get side tracked by talking about affordability. At an individual level, doing things that change your position in the queue are beneficial but it is a big mistake to think that you can apply those changes in bulk. The reality is that the market is very efficient at increasing costs until 30,000 families miss out and will do so every time you hand out more money or find a way to make the money go further. Interest rates go up and it is very disruptive because the queue is reorganised when it does. Some who previously were sufficiently near the top to get a house now don’t. The names change but it’s still 30,000 families missing out. There are only two solutions: build more homes or change peoples minds about where they want to live.
Why is that not working already?
Normally the market fixes that. However today, State Governments have policies that cause the market to solve different problems. The State wants more houses on existing land. That means knock down the single house and build higher density. In order for that to be economically sensible, the land needs to be worth more than the building you are knocking down. Add to that, the value of the fees to build something new. It’s all simple economics really. Policies to generate urban consolidation are policies to increase the value of land. They have to be – that’s the way the market works.
The next problem is that planning and in particular taxation on development has to be timed according to market needs. Tax increases can be accommodated during a boom but not in a slump. .
What can be done practically?
Throw away the books on what you should do and buy new books on when you should do it. (Unfortunately now is not a good time for change but what choice do we have?)
Make the alternate places that people might live more attractive. That means tax the popular areas in order to fund improvements in less popular areas – drop user pays principles, put urban consolidation on hold till the crisis passes.
Release more land and get it to the market quickly
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