PHOTO: Property boom
An un-renovated semi-detached home in Bondi sold recently for more than $2.7 million. It had last traded back in the early 1950s, in the pre-decimal currency era, for about a thousand pounds.
The “mint original condition”, three-bedroom home up the hill from the famous Sydney beach, provides a window into the extraordinary escalation of Australian real estate prices.
Had its value merely tracked the rate of consumer price inflation over those 68 years, today that 1,000 pounds would only be worth about $37,000.
It is not hard to see why the level of home ownership — once a defining feature of Australian society — has tumbled.
“We were expecting the magic number to be, like, $2.5 million to buy it. That’s what we heard through the agent,” says Rob Stanley, a buyer’s agent acting for a couple with a toddler who were interested in the home.
“When it came to the auction, we were expecting five or six registered bidders. There turned out be 17.
“With that much interest, it just kept going, just kept going, and the fear of missing out was there.”
That’s Bondi, go figure, some might say, but the skyrocketing prices are widespread.
In June, official estimates from the Australian Bureau of Statistics put the average dwelling price in Australia — apartments and houses combined — at $836,000. Prices have continued to rise since then.
“These are the steepest house price rises in 31 years,” says Eliza Owen, head of research at the property data firm CoreLogic.
By year’s end, it may be the biggest annual house price surge in Australia ever.
Home values have soared in every capital city and in regional and coastal towns too, as people freed from the need to work in the office make an exodus from the cities and the lockdowns.
All of this has worsened an already-existing crisis of housing affordability that is pricing the young, and people on modest incomes, out of the Australian dream of home ownership.
“What’s really striking is the decline in the home ownership rate among people under the age of 45,” says economist Saul Eslake.
He says that, at the 2016 census, the rate of home ownership among people under 45 was lower than it had been at the census of 1954.
“I suspect when the 2021 results come out, the home ownership rate among younger Australian adults — that is say between their 20s and mid-30s — will be lower than it was at the census of 1947.”
Jason Falinski, a federal Liberal Party backbencher who is chairing a Parliamentary inquiry into housing affordability, calls this a “moral failure”.
“We have created some of the least-affordable housing in the world,” Mr Falinski says.
“It is akin to intergenerational theft.”
The surging house prices stand in complete contrast to wages growth, which has been stagnant for years. Nationwide, over the past year, the cost of a mid-priced home has risen by about $2,500 a week.
In the Greater Sydney region, it has grown by $5,600 a week.
Try getting a pay rise to match that.
It wasn’t always like this. For much of the 20th century, homes were far more affordable.
“Between the years immediately after World War II and … and the early 1970s, houses basically cost three times average male weekly earnings. And that ratio didn’t really change much over a period of almost 30 years,” Mr Eslake says.
Now, house prices and wages have completely decoupled.
So, what’s changed?
In another old home on the market for the first time in decades, Four Corners found evidence that points to one of the big shifts that’s driven up house prices.
Under the floor coverings was an old newspaper from 1963. At first blush, the headline seemed to imply things weren’t so different back then. It read: “Why can’t young couples buy homes?”
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