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High house prices making households 'vulnerable', says economist

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Australian Broker | 13 Apr 2015, 06:30 AM Agree 0
Rising house prices are making Australian households “vulnerable”, according to a leading economist, however the RBA still needs to cut rates
  • Phil | 13 Apr 2015, 09:47 AM Agree 0
    This observation should be just about Sydney not Australia.
  • Jason | 13 Apr 2015, 10:28 AM Agree 0
    The Sydney market is very concerning indeed, prices are so over inflated. Worrying times indeed.
  • Tom | 13 Apr 2015, 10:51 AM Agree 0
    Why do so many people think Sydney prices are unsound? Is it simply because they can't afford them? If so, that doesn't make them unsound - unaffordable, yes, unsound, no.

    Commonsense dictates that if you have a population of 4.5m people all trying to live within a 10 - 20km range of the CBD, prices are going to be pushed up by those with deep pockets who can afford the prices, at the expense of those who can't.

    Land in inner city locations is a finite resource, once it's gone, it can't be replaced.

    It doesn't sound like speculation gone mad to me, simply a supply and demand equation.

    Oh, and while I'm on the subject, how about we stop referencing the income to price ratio, and start comparing the house buying costs to rental costs. Because looking in from the outside where I'm sitting, it is cheaper to buy than rent.

    I'd much rather pay my "rent" to the bank so I own an asset in 30 years rather than pay off someone else's asset.

    But then again, I choose not to live in Sydney, so I don't face the problem!

    Perhaps it's time for those trying to buy in Sydney to start looking at their lifestyle choices and the potential for living elsewhere.
  • Papery | 13 Apr 2015, 12:54 PM Agree 0
    Theres a lot of Sydney outside that 10-20km radius. Like all averages exclude the top & bottom 10% & you might see a slightly better reflection of 'average'.
  • marty | 13 Apr 2015, 01:40 PM Agree 0
    Price to income ratios analysis is flawed because the bottom 35% of the population income wise will never own. All analysis should be done on the top 65% of incomes versus prices and this will paint a different picture.
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