Australia: Where the good life comes at a price

[Stark]

By 'everyone' I guess you mean 'a shrinking group'?

[Surlethe]

Surely you would be able to point me to data, perhaps at the ABS, which support your claim?

[Stark]

I could, but why? You obviously have no idea what you're talking about in context beyond 'policy better than US awful policy = you should be happy'. Its disappointing, like I said, that someone like you (who considers themselves intelligent and informed) apparently doesn't care about issues beyond the very limited. Less meaningful than Starglider, someone who literally only posts to troll knee-jerk liberals.

Uh oh, housing 1.9% more affordable this quarter! Maybe the number of dual-income families doomed to renting forever or living in crap has decreased too - but I mean, who cares about changing social values or structures or even how the arrangement of Australian population makes it more serious. Bubble never burst = good.

[Surlethe]

If you want to have a substantial conversation, you shouldn't complain about how things are amazing and expect sympathy. What do you want, a discussion about how a growing middle class and low interest rates might kick off a housing bubble, coupled with tossing around ideas about how to determine whether a rise in prices actually is a bubble? A discussion about social frictions caused by the rising incomes of lower-class people? Maybe a time series regression of the Australian home ownership rate over the last decade to see if it's really falling? Those are awfully nuanced for a thread whose original article starts by complaining about the price of limes absent any social or economic context, you know.

[Stark]

And also a bit beyond you, as it turns out. Are you implicitly assuming that housing prices rose in step with incomes? I kind of hope you are so everyone with a clue can laugh at you every time you open your mouth in future.

Its just sad that rather than actually discussing anything about the AU situation (of which you are obviously quite ignorant) you drive-by posted some smug bullshit about how much the US sucks. As intelligent people have already said, the article is pretty rubbish and is addressed in a social context unknown to you for obvious reasons (Howard battlers lol), but that doesn't mean no discussion about the changing economic face of Australia is possible in a thread about the changing social and economic face of Australia. I mean, it might not be possible FOR YOU, but that's not a general statement.

[madd0ct0r]

And also a bit beyond you, as it turns out. Are you implicitly assuming that housing prices rose in step with incomes? I kind of hope you are so everyone with a clue can laugh at you every time you open your mouth in future.

Well, you've spent more words trolling people who aren't sympathetic to your poor country's rosy economy then actually fully explaining the situation, so maybe some actual fucking numbers so we can all mourn the loss* of Australian resources together?

*And by loss I mean export at a large profit.

[Alkaloid]

Ok, Im on my phone right now so i cant post links, but the issue is that there are issues but they are being disguised by the mining boom, and because of that they are not being resolved. Three states are currently in recession, including the two most populous ones which contain most of our secondary industries. These are states that in the past supported what are now temporarily self sufficient mining states. Despite increasing amounts of land on the outskirts of our major cities being opened for development, exclusively housing development, house prices are high enough in the cities are high enough thatd a person on an average income (80,000k or so) will never be able to afford to buy in all but the cheapest suburbs, miles from anywhere and unserviced by public transport.

Failure to effectively tax miners is resulting in a failure to invest almost any of the absurd amount of money coming in from the sale of limited resources in national infrastructure, and all attempts to do so have been laughable failures.

Money is being stripped from primary, secondary and tertiary education by people who complain of a constant skills shortage, and the first serious investment in out telecommunications grid in 60 years will be scrapped by neoliberals come september.

[Stark]

Well, you've spent more words trolling people who aren't sympathetic to your poor country's rosy economy then actually fully explaining the situation, so maybe some actual fucking numbers so we can all mourn the loss* of Australian resources together?

*And by loss I mean export at a large profit.

I'm not sure you can actually read. Since you admit you need me to show you, why are you so confident your caricature of either the Australian economy or what I'm saying is actually correct? Simple arrogance? Butthurt 'but its better than where I am wah wah wah' bullshit?

PS, long term structural issues can exist in an economy that is currently selling heaps of dirt. Some of these issues can change the shape of a society and drive expectations in the population which feed right back into the structural decisions made. Are you able to understand this? Or are you some kind of cretin who says 'if companies in a company are making enormous amounts of money, the country itself must be doing fine because.... I dunno'?

EDIT - Alkaloid, what method is used to determine 80k as an average wage? Unless its heavily distorted by regional 100k cleaners, I'd be very surprised if that was the case. Regardless people who make 100k a year have moved to cheaper cities to buy a house... which is a bit of a bigger deal in a country with Australia's population concentrations that it would be in a country like America.

[tim31]

If I was on $80K I'd be laughing

But you know, I'd blow it all on the good life

[Stark]

There's a good possibility that 'average' wage is inflated by the money people earn in regional areas working for the mining industry. I mean, 80k is lower management or professional money.

[mr friendly guy]

And also a bit beyond you, as it turns out. Are you implicitly assuming that housing prices rose in step with incomes? I kind of hope you are so everyone with a clue can laugh at you every time you open your mouth in future.

Well, you've spent more words trolling people who aren't sympathetic to your poor country's rosy economy then actually fully explaining the situation, so maybe some actual fucking numbers so we can all mourn the loss* of Australian resources together?

*And by loss I mean export at a large profit.

Like in all booms, there are winners and there are losers. People who work in the mines are winners economically. High incomes and all that. This also puts pressure on house prices, so tradies are winners as well. This may cause some resentment like in the OP that people with less education are making more money than the educated in sectors which hasn't boomed.

What you find is that people who aren't in these booming industries are being priced out of the housing market. Just like America, there is a cultural impetus to own your own home. Its called the Great Australian Dream. To give you an idea of the house prices, consider those McMansions in America which we see abandoned during the GFC. Well the average house price in Perth (in my state of WA) cost more than that. My house cost more than that, and its a house from the 1980s, large land area but obviously old and nowhere as beautiful, and certainly not a double storey.

This is causing problems for those who are new to the housing market. Its not helped by the Baby Boomers saying wah wah, we had 17% interest rates, stop whining Gen X's and Gen Y's. The thing is, house prices were much less then. When my parents brought our house in the 1980s in Adelaide, IIRC it was $100,000. Property these days nudge half a million. The Baby Boomers got their houses when it was cheap, and the property boom has made them rich. This in turn allows people who already have property to buy more property, by taking a loan against their mortgage. The old adage you need money to make money certainly applies here. Coupled with government tax deductions promoting this type of investment, and it becomes attractive. What you find is that it is forcing up property prices even more and creating people who can only rent. Now if you were economist Steve Keen that's not a problem (he predicted a drop in house prices so he sold his house and became a renter). However if you everyone else, its very disheartening.

The problem with the boom, is that is uneven. Attempts by the government to try and compensate for this via taxation has been met with opposition from the mining industry with their propaganda machine which would make those US conservatives proud. Its the same tune. The rich carry the economy, lets not penalise them. I suspect some Australians secretly hope to be rich as well so they like these conditions for when they finally "make it". So they support these policies.

I am arguably in the group of "haves" although I am not in the mining or tradie industry. Even I realise there is a problem, because I was finding it difficult to compete in the housing market and was priced out against people who are older (and most probably had property under their belt already). This was in 2006/07 and looking back at my records I was earning close to 90K then, and was already saving high amounts of income. Granted, I was perhaps too conservative in how much I should have borrowed, but it gives you an idea of how bad it is (Alkaloid gave another example, mentioning people with 80 K would have difficulty).

The thing is, if the government is going to promote a) negative gearing b) other tax deductions eg plant costs associated with property c) depreciation of property as a tax deduction - its just going to encourage people with the money to invest in property, perpetuating the cycle. I certainly have, because I need to get bang for my buck, because its not much point just leaving it in the bank for low interest.

[Stark]

MFG, my parents bought a house only 9 years ago that has since tripled in value. If they wanted to buy that house today, they couldn't dream of owning such a large home in such a location. People buying (very heavily geared) in 2002-2004 could still buy houses for 100k which are now 300-400k. What could go wrong? The bubble never bursting the way it did in the US means that people didn't lose their homes... and that huge land and housing banks still pwn poor people.

[mr friendly guy]

http://www.abs.gov.au/ausstats/abs@.nsf ... Nov%202012

Average Weekly Earnings, Key Figures, November 2012

Full-time adult average weekly total earnings $1 453.60 (this presumably includes over time)

That comes up to $75,587.2 per year. So the average wage is more likely $75 K than $80 K, but its close.

[Stark]

That's pretty funny since skilled professionals in mining-related industries make 80-90k in Brisbane (ie not on-site). The regional salaries must really distort these figures.

[Alkaloid]

Im not sure what the 80k was based on, but i recall it being for people in the city, so its probably kicked up a bit by professional/exec salaries.

[madd0ct0r]

hmmm, so your property market is going to the way of Ireland?
Once the construction juggernaut get's rolling, expect huge amounts of housing built, sold to buy to let people reinvesting, inflated by low intrest rates and repeat. Lag in the market means you're going to overshoot by a fair margin, but rest assured, property prices will drop in the future.
Unlike Ireland, Austrialia has some actual industry and could feasibly cool off the housing market by slowly raising intrest rates, and using the steady immigration to catch the extra houses, so it's hopefully not going to be a huge crash.

As for the mining boom being uneven - what's happening to all the money those guys are earning? Property investment? Boys Toys? Any estimates for the multiplier?
The finance industry in London (plus obligarch immigration) massively raised property prices in the capital. Those who could (ie, don't need to be near their job) sold their house and bought one in the home counties, driving up property prices there. Basically a slow wave of money rolling across the UK in the form of property prices. Perhaps the greatest wealth redistribution seen.

Now Australia's a lot bigger and less densely populated, so I'm not sure how true that will be here, but people moving to cheaper cities (as mentioned) indicates it's underway here. The inequality drives the redistribution. The greater the inequality, the faster the rate of transfer. (money will be lost at each stage due to friction, mistakes and property upkeep, so there are limits on how far it will spread) I guess you're still at the start of that process.

[Mr Flibble]

http://www.abs.gov.au/ausstats/abs@.nsf ... Nov%202012

Average Weekly Earnings, Key Figures, November 2012

Full-time adult average weekly total earnings $1 453.60 (this presumably includes over time)

That comes up to $75,587.2 per year. So the average wage is more likely $75 K than $80 K, but its close.

Average earnings are misleading, they are skewed by the Rineharts and Palmers, what you could be looking at is median earnings, unfortunately that is harder to come by.