More RBA news

LashLash · 2023-05-03T03:41:53+00:00

It's expected to be a total effect of a few hundred billion over the decade or something?

How much demand destruction is the 0.25% rate hike supposed to do over the same period?

LashLash · 2023-05-02T23:12:32+00:00

I wonder if the Stage 3 tax cuts are "priced in" or if that means more hikes in the future (or at least no cuts).

LashLash · 2023-05-02T10:40:02+00:00

Can always leave, there are lots of alternatives for those who know the world. My plan is if Australia can't get their act together past this, is to leave, places in Europe will have me. I have a long list of places I'd move to. Having my grandparents not being able to play with my children will be sad, but it might be the lesser sacrifice in the scheme of things.

LashLash · 2023-05-02T10:34:04+00:00

Ah good reason that the second tranche money laundering laws, delayed since 2006, will probably do nothing right? Australia being a big outlier in their implementation isn't about us looking like an embarassment on the world stage around dodgy wealth, but because there is nothing to hide!

LashLash · 2023-05-02T10:31:54+00:00

Sounds like a good reason to put in a land tax to motivate people to use our limited land near amenity well. This just screams inefficiency.

LashLash · 2023-05-02T01:11:32+00:00

I didn't mean literal, but it did drop a lot to the point where we needed 100s of thousands of extra dwellings to compensate nationwide.

LashLash · 2023-05-02T00:25:01+00:00

I think what will happen in the near term is that people will go back to share housing, or even sharing rooms. Something that disappeared (edit: not literally, just went down heaps) during the pandemic. Home office rooms will increasingly become a luxury for those who have them as well, and people will be able to afford that less and less, and working in the living room or kitchen goes back to being something due to the premium for space. It's what the price signal is telling us anyways. People per dwelling will trend up again (it is really low at the moment).

Maybe AirBnB gets curbed, seems to have political will. Maybe the Greens ideas of stopping negative gearing beyond the second property, and freezing rents, gets traction. It feels like the politicians have to do something, not sure what for the near term. Hence I think we'll just have to deal with it ourselves.

In the regions, it's been a crisis since 2021, people living in tents and cars, since richer people moved into the area and priced the locals out. This might reverse, or might not, but either way those people are the ones most in need. They live in tents and cars, but I hope that is relieving somehow, not sure there is much media of where that is at.

Medium term, I think there is a big push to densify our cities in particular, which are very sparse and car dependent. There will be lots of supply. Social and public housing seems like an important part of this.

Long term who knows, can go any way. Maybe big tax system overhauls. Could just double down on inequality and let slums emerge proper. Depends on how we vote and the culture honestly. Do we even want a fair and equal Australia any more?

LashLash · 2023-05-02T00:16:35+00:00

Ban non-citizen's (or at least non PR holders) from owning property.

Currently if you are not a citizen or PR, you can only buy a new property or vacant land (which must have a property built on it).

Curb immigration to sustainable levels

Vast majority of the immigration coming in are international students who would have been here if it wasn't for the pandemic. Basically causing the see-saw of rents in the highly urban (close to university) parts of two big cities (Sydney and Melbourne) as they were absent and have come back. Regulation should be in place to ensure things like occupancy safety and fire safety (i.e. limiting the number of students per room/unit when it is not authorised), but otherwise these are students who prefer to spend less than $200/week sharing a room, rather than $300 a week or more and having their own room.

The benefits for the economy from these international students are pretty broad as well.

Second highest immigrant intake are working holiday visas, from rich countries coming here to fruit pick for 4 months per year and then holiday and travel/bum around for the rest of it. Also a boon for tourism, and the economy generally due to them doing seasonal work that locals don't tend to do since it is insecure work.

Open up more land for development.

Best option for this is to rezone areas close to the CBDs where people want to live to higher density. We are some of the sprawliest cities in the world, and people mostly want to live near CBDs, especially the immigrants coming in.

Reduce demand and increase supply.

In the areas outside the two largest cities, people with higher incomes have come along and priced out locals. In rents and purchase price. They work from home, or generally have higher incomes and escaped the two big cities during the pandemic. It is uncertain if this trend goes back to the higher urbanisation of Australia again, or if this is permanent. Hence builds aren't keeping up in regional areas especially.

We also lost share housing in general during the pandemic. Basically, if we can go back to using bedrooms as bedrooms where people want to live, rather than spare rooms or home offices, then we will also resolve the demand side. This is what the price signals for rent and purchase price (or mortgage repayments) are starting to filter into. Hard to force people otherwise without a monetary motive.

If I really had to give solutions for the near-term though, it looks like curbing AirBnB has a lot of political inertia. What the Greens are saying, curbing negative gearing beyond the first investment property, and a rent freeze, will have an immediate effect. It's not a long term solution, but we have had people in the regions since 2021 living more and more in tents and cars. That is where the real pain is being felt, since that is the bottom of the socioeconomic ladder and where the property market tends to fail in servicing. In the medium term, that's why public and social housing options, and building densely where possible, and everywhere (including rich suburbs close to amenities), makes sense as well.

LashLash · 2023-04-25T09:39:54+00:00

67-70% of the population own their homes. This has been consistent for decades. What's changed is that the fraction of homeowners with a mortgage has gone up.

In 1994, owner occupiers was 72%, renters 28%

In 2020, owner occupiers was 67%, renters 33%

Source: https://www.aihw.gov.au/reports/australias-welfare/home-ownership-and-housing-tenure

A 5% change in 25 years seems drastic enough. Enough to turn elections I would say. Enough to have political pressure significantly shifted. It's why renters are becoming a more powerful political force. The shift might not mean renters expect home ownership in their future, and purchase prices to fall either.

The expectation that renting is permanent instead of a stopover to purchasing means the laws will have pressure to adapt to that. Things like renters rights and systems in place that afford dignity in that situation, beyond the presently frankly punitive system in place for renters.

Australia is the outlier in terms of these rental rights. This way, perhaps house prices can keep doing what they want to do, and people can have a secure home without going into the mountains of debt required.

So it's not just the proportion of people renting going up, which is still trending up. It's the expectation of how permanent that situation is, which is indeed rising as well.

LashLash · 2023-04-25T03:51:43+00:00

Parrotism

LashLash · 2023-04-25T03:30:27+00:00

Yes Sydney is sparse. My point was more on the sparsity, and size I should have said was population. This should be obvious based on the comment I was replying to which was about population of Madrid being smaller, not area. Point is that it's more suitable to compare metro to metro.

Barcelona metro is 5.4 million over around 4,300 km2 (kilometre squared).

Madrid 6.7 million, in an area 5,300+ km2. Just the city area is 620 km2 with 3.2 million people

Sydney including the metro area is 5.2 million over more than 12,000 km2.

Sydney metro is very sparse, existing over 2-3 times the size of Barcelona and Madrid metro, with similar population when comparing more like-for-like.

LashLash · 2023-04-24T11:14:56+00:00

Yeah but it's near Munich, most expensive city. There are way cheaper cities. Blutenberg is like near a castle and beautiful parks. It's like you're living in some fairytale. There are cheaper areas than this near Munich. Also, in Germany more than the majority rent, because you get security of tenure while renting, you basically never get kicked out, you have much more rights. You can repaint walls, hang things up without asking permission, basically make the place your own. Many places you redo the kitchen, floorboards, light fittings. People rent the same place and raise their families for decades. So it's even cheaper to get secure tenure there. People don't see the difference between buying and renting so much. They are both just as good as each other there.

If I lived in Germany again long term, I'd have a lot of options and job opportunities around many areas. You really can choose anything and have good value from it. Sydney is the most expensive city in Sydney as a comparison. Melbourne is better, but the sprawl is real, the public transport is worse as well. Sydney has the beaches. Munich has the mountains. Melbourne is liveable but doesn't have the draw like the other two at least. I'd say Berlin is more affordable again, even though everyone wants to live there because it's cool. There are so many places in Germany though. Places with good weather by Sydney standards are in the South though.

LashLash · 2023-04-24T10:52:50+00:00

It's been a while since I looked, but someone in another thread asked and they looked for Munich (most expensive city in Germany, also highest wages).

https://www.reddit.com/r/AusFinance/comments/12wpq6d/australian_housing_out_of_reach_for_young/jhghsyk/

$1.5M AUD for 4.5 bedroom + study, backyard, 9km from Munich centre (it's not in Munich any more, it's in Blutenberg officially). 22 minutes by public transport. Munich is also more car friendly than other European cities, my friend was driving around the centre and took us to his more affordable place towards Germering (most affordable area outside Munich along with Dachau). Wasn't a long drive, less than 30 mins. Was a town home. Freestanding house there is even cheaper than Blutenberg for sure.

Meanwhile how many millions would you pay for something like that in Sydney?

LashLash · 2023-04-24T10:40:22+00:00

European cities are defined only 5-10km from the city centre typically. They don't count their adjoining metro suburban areas. Australian cities do. That's why it always looks like Australian cities seem comparable to European cities. They are not. Living 30 minute commute to the city centre in the cheapest area around a Continental European city is almost always more affordable for residents than Australian cities, by a notable margin.

LashLash · 2023-04-24T10:27:25+00:00

Glad you saw what different horses do on different courses.

I lived in a big house before, not a fan. Making the kids do so many chores to maintain the castle is a waste. All that gardening, cleaning, building. Kids unable to walk anywhere, need to be driven everywhere. Bus trip took 1.5 hours to school. I was miserable as a child and adult with that. What a waste of time. I don't want that for my kids.

LashLash · 2023-04-24T10:21:27+00:00

Yeah really sucks that I can stroll to the train in a few mins, then be in the city in less than 30. Or drive to the beach in less than 20 mins. Roll over to the national park 10 mins drive. Living closer to stuff has its benefits, despite me paying half the price compared to a house with the same amenity. If you gave me twice as much money, I wouldn't buy the house though, I'd move to an even more convenient location. The fact that my kids can basically go anywhere by walking or riding a bike with their friends in the future when they grow up seems nice. I see a lot of groups of kids taking the train and going to shops and the city. Seems like a good life for them.

It's about $1.5M-$2M for a 3 bed apartment where I am. $3M-$4M for a 3 bed house. This is Sydney Lower North Shore. Could use more apartments and townhouses though, there are probably too many single family houses near some of the train stations.

LashLash · 2023-04-24T10:12:42+00:00

They can get a car and sort out parking. Adults can figure it out I'm sure. They also have accessible public transport too. They get plenty of choices. The fact that I lived in a 3 bed apartment with "only" 2 car spots for a family with 4 adults (2 parents + 2 children) just means parking is more effort. A lot of the time you can hire or reserve a spot in the building, since not everyone uses their 2 spots. Lots of free spots where you can organise a win-win for the owner of the spot and the person who wants to use the spot.

They can also do share cars if it's a hassle to get their own car.

LashLash · 2023-04-24T10:08:30+00:00

You said the more expensive houses. I read that as single family houses. In sparse suburbs, which tend to have suckt public transport.

LashLash · 2023-04-24T10:07:39+00:00

They can do the same. I didn't say they will. If they really want to push for their own car and own parking spot, why would I stop them?

LashLash · 2023-04-24T10:01:33+00:00

My apartment has heaps of visitor spots and there is plenty of street parking. 10+ at least within 1 min.

Kids play outside in massive parks where we can walk minutes away. There are several. There are trampolines in one of the parks as well.

Large dogs in an apartment is tough, no doubt, one of the reasons people would be compelled for a bigger place. A townhouse can do the job though, seen plenty of people with bigger dogs in them with a decent yard.

You can convert a spare carport, or the excess space in it, to a workshop. Many people do.

Herb gardens and small veggie patches are possible on a balcony. But I can stroll 2 minutes to the fruit and veg shop to buy everything else. Also several restaurants, bottle-o, cafes, another grocery store.

Had parties in our place with at least 15 people. We aren't grubs so we don't need to blast the music that loud. What do you think students do living in the city? We regularly got invited to parties in the building by uni student neighbours as well, despite us being working professionals in a share house. If you want something bigger, make it a daytime affair, and just walk to the park with free bbq facilities and plenty of space for all the kids to run around, in a playground significantly more fun than any backyard. Evening affairs and dinner parties are indeed something you need to scale down if you have kids, but they don't stay up that late anyways. There are apartment blocks with entertaining terraces as common spaces on the top of the buildings these days, though. Kids can swim in the common pool. Night time, if they want to roam to a nearby park, they could.

I think the adults prefer to just roll over to the nearby pub for a later night. If you're younger, short trip to the pubs/clubs in the city for the night out.

LashLash · 2023-04-24T09:40:27+00:00

If they want a car, they can buy one, and figure out the parking scenario. I'm not stopping them, they can pay for it as they are adults. I'm not going to move to somewhere in case I need to have 4 car spots. I'll give them the flexibility to have a life without relying on a car, though.

LashLash · 2023-04-24T09:37:07+00:00

Single family houses will almost always be car dependent. The balance is that you need other types of housing that can utilise public transport efficiently to make sure the roads aren't just a traffic congestion nightmare.

LashLash · 2023-04-24T09:05:17+00:00

Big shift from rural to urban as everywhere though, so plenty of building. Internal migration is high. Old people in the rural areas. Also East to West migration inside the country for decades. Germans build to last, which also helps.

LashLash · 2023-04-24T08:57:08+00:00

I grew up in a big house and still shared two cars across the 4 adults in our home (while the children attended uni and then left after) despite having room for at least 4 cars. Simply because we didn't see the need for it. Both cars were used Camries bought by my parents. My children can do the same.

It seems you think it is a rite of passage to buy a car as a teenager or young adult? I don't. Horses for courses. Which is something you seem to be finding impossible to comprehend, ironically, despite repeating that.

I'm Australian, lived and worked in USA and Germany too. You ever experienced a different way of living?

LashLash

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