Australian House Prices - an Analysis Going Back 50 Years

AssociatedLjonathanbargain @ datamentary.net on 15/12/2020 - 19:21
Last edited 20/12/2020 - 00:18 by 1 other user

Hi guys.. I spent some time figuring out how much housing affordability has changed over the last 50 years, thanks to a bunch of RBA and ABS data. The tl;dr is that house prices have gone up - a lot. I know, I know - big surprise there.

But actually, it's a little more nuanced than that when you look at things like the cost of servicing a mortgage… Because although house prices are at or near all time highs, interest rates are also at all time lows. At one point in the late 80's / early 90's they were on the way to 20%!

If you're interested in taking a look at the full analysis, here it is: https://datamentary.net/australian-house-prices-over-the-las…

Mods, not sure if this is cool to post or not - please remove if it's a no-no!

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Comments

  • Muzeeb on 15/12/2020 - 19:27

    Page took forever to load. I gave up.

    • follow on 15/12/2020 - 19:29
      +3

      fttn?

      • CandyMan on 16/12/2020 - 13:01

        Dialup?

    • Ryanek on 15/12/2020 - 21:09

      OP should do an analysis of our NBN next.

    • Cartman2530 on 15/12/2020 - 21:22

      worked for me in a second, maybe everyone at Ozbargain was trying to get in at once.

  • Associatedjonathanbargain @ datamentary.net on 15/12/2020 - 19:29
    +3

    That's weird - super quick for me, even on incognito with cache cleared.

    Anyone else having that issue?

  • Hithere on 15/12/2020 - 19:32
    +1

    Interesting reading OP.

    Very quick to load for me (FTTN)

  • tsunamisurfer on 15/12/2020 - 19:39

    What are the key data that you use to make this determination? Did it take into consideration the jumps in rent, the CGT concessions and increases of tax brackets?

  • [Deactivated] on 15/12/2020 - 19:42
    +4

    House prices went and are going up, started early 90s.
    The amount of new GOOD jobs, which allow people getting into the market, have and are going down.
    Foreign money and local political manoeuvres are the only thing keeping the auslandian economy going.

  • tsunamisurfer on 15/12/2020 - 19:44

    Doesn't load for me at all. Using Edge.

  • rgr on 15/12/2020 - 19:45
    +5

    constant propping up by the RBA and govt via interest rate cuts, FHB grants and concessions etc.

    • Bystander on 16/12/2020 - 19:40

      This.
      And they're almost out of ammo.
      I can't see prices rising past mid 2022.
      Time to bail.

  • Drakesy on 15/12/2020 - 19:56
    +3

    Doesn't load for me

    And unfortunately with the RBA trying to jump start the economy with rate reductions and in theory increases in disposable income isn't going to work as Australian's have become property obsessed and any extra savings provided by rate cuts will just go into taking out larger loans.

    I feel with rates at almost 0 there's not a lot left they can do.

    Unpopular opinion, they should be increasing rates to reduce the price of houses, however we know this is never going to happen with lobbyists

    • Associatedjonathanbargain @ datamentary.net on 15/12/2020 - 20:02

      Weird… Can I ask what browser you're on?

      • Drakesy on 15/12/2020 - 20:13
        +2

        Chrome
        Just looked on my phone and it works

        Bloody good analysis imho
        I've been looking for this info for ages

        Two thumbs up

        • Associatedjonathanbargain @ datamentary.net on 15/12/2020 - 20:41

          Thanks for the kind words :) Not sure why it didn't work for you on Chrome - I'm on Chrome too.

  • iNeed2Pee on 15/12/2020 - 19:56
    +2

    If anyone is looking to offload one of their 7 investment properties at a cheap cheap price, let me know 🤣🤣

  • horice on 15/12/2020 - 19:59
    +2

    Fecken Johnny Howard started the Rot !

    • Bystander on 16/12/2020 - 19:41

      True.
      He should be in jail!

  • ihbh on 15/12/2020 - 20:08

    They key graph is: Annual Income to House Price Ratio

    You can find data back to 1959… it's in a book. :)

    • Associatedjonathanbargain @ datamentary.net on 15/12/2020 - 20:41
      +4

      A… what?

      • ihbh on 15/12/2020 - 20:57

        Annual Income to House Price Ratio … data can be found back to 1959

        • Associatedjonathanbargain @ datamentary.net on 15/12/2020 - 21:17

          Yeah I was making a joke about not knowing what a book was ;)

  • BargainCowboy on 15/12/2020 - 20:45
    +1

    Well done OP. BTW using Edge and it's all good for me.

  • elgrande on 15/12/2020 - 20:51
    +4

    I like being able to see what year I was priced out in real time..

  • Ivegottadog on 15/12/2020 - 21:00
    +1

    Great analysis. Subscribed to your YouTube channel.

    Good luck getting to 2000 subs

    • Associatedjonathanbargain @ datamentary.net on 15/12/2020 - 22:23

      Thanks :) Only… sigh… 1650ish to go!

  • tebbybabes on 15/12/2020 - 21:06

    Good stuff, OP!

  • Ryanek on 15/12/2020 - 21:11
    +1

    Youtube won’t let me monetise until I hit 2000 subscribers

    Just subscribed mate. Cheers.

    • Associatedjonathanbargain @ datamentary.net on 15/12/2020 - 22:23

      You're awesome, thanks :)

  • whooah1979 on 15/12/2020 - 21:29
    +2

    The LTI ratio in the 1930s was 2.25x compared to 4.0x to 7.0x today.

    It would be priceless to see the houses of dominoes crash.

  • Farrba on 15/12/2020 - 21:31
    +1

    is it true changes in cgt laws around 20 years ago doubled the house prices? what was the change and why it triggered major increase?

    • horice on 15/12/2020 - 22:19

      Howard the prick
      for starters

      Cgt discount
      Negative Gearing
      First home buyers grant

  • xfiledavid on 15/12/2020 - 21:43
    +6

    Im still pissed off that i was helping pay off Joe Hockeys home. well it was his wifes home, well it was one of her homes. well it was just when he stayed in Canberra.
    The age of entitlement is over.
    fat pig.
    i have spoken..

    • horice on 15/12/2020 - 22:18
      +2

      Dont forget Hockey used his father to sucker the previous owner !

      Playing the poor ethnic card

      According to Hockey’s biography, 25 Furneaux Street’s former owners didn’t want to deal with real estate agents or lawyers.

      Instead Mr Hockey, a former lawyer, sent his father, a real estate agent, to have have a beer with the owner. Mr Hockey’s father managed to secure the home at land value.

      https://www.allhomes.com.au/news/look-inside-joe-hockeys-fur…

  • amsaini15 on 15/12/2020 - 22:24

    Subscribed youtube mate. Excellent work.

  • netjock on 15/12/2020 - 22:51
    +3

    Good job but here is a few things you want to look into:

    Cost P&I
    The ratio of P to I has gone up massively. Here lies your problem. On the flip side savers are well screwed. So is property investors because they are paying not much interest therefore get small tax deduction. Imagine having to pay whooping high marginal tax rates on the rental income because it is paying principle.

    Mortgage servicing
    In every city listed cost has doubled if not tripled. In 1970s the median house price was 6x average salary but it looks like the ratio hasn't held Would be interesting to see the after tax take home in 1970s when average salary was $6k pa compared to average salary now.

    Dual income households
    Would like to see how many dual income households from 1970s until now. I'd suspect that has a lot to do with house prices. For a lot of people unfortunately they'd buy as a couple mid to late 20s and find out they can't afford to have kids until their late 30s. I'd suggest the fertility rate probably mirrors the interest rate.

    Interest rates
    If interest rates stay low, which they might because there is no way of getting out of this one unless everyone takes a (financial) haircut. If interest rates go up forget about the people paying mortgages, the government will go bankrupt and who are they going to try to fleece? The tax payers which will probably be bankrupt already.

  • screensaver on 16/12/2020 - 02:12

    I have been in sydney for about 35 years. Houses were cheap then, my boyfriend at the times father offered to buy us one so I went on the hunt and found one at tempe for 65000, They bought it but I didnt want to be with that guy. First home owners grant was about 5000. Around 25 years ago I rented a house at Croydon they had just bought for around 200000. 20 years ago I started renting a house at Bankstown which was worth about 220000. Now he would get over 800000. Im still here and luckily only paying 70 a week more than the croydon house per week. (Both were 200 a week).

  • usbc activist on 16/12/2020 - 09:24
    +2

    Please correct my understanding if I am wrong…

    House prices are increasing, but the salaries are not keeping up with it. Earlier, people were able to buy a house and afford to pay the monthly installments with a single income. The house prices kept increasing so much that now both the partners have to work to service the home loan. So, unless the wages increase the house prices will finally stagnate at some point?

    Also the landsizes are dropping? The land sizes used to 700sqm. They then dropped to 550sqm, 375sqm and now I am seeing houses being constructed in 200sqm.

    Unlike rest of the states where people can buy any home (new or existing) they like and still get the first home buyer benefits, NSW has this rule where they apply only to newly constructed properties. The construction companies made a killing with this rule. They just constructed new suburbs in the fringes of the city, artificially inflating the prices. The current prices in these fringe suburbs which are centre of nowhere, near to nowhere does not make any sense. I think the low interest rates and this rule are keeping the property market alive. The artificial demand in these fringe suburbs due to this rule is being confused by many people for real demand. For example, if they get first home buyer benefits for existing properties, people will not go all the way to the fringes of the city to buy a property.

  • ozbjunkie on 16/12/2020 - 09:24

    Cool visualisation.
    not sure I understand the paragraph about …since the 1970s "having said that, it’s reasonable to infer that household income has increased significantly, both because wages have typically outpaced inflation, and because there are a lot more women in the workforce".

    I would have thought that increased workers meant more demand for work meant lowish wages, as overall now you have 2 people making 1 persons money. Happy to be educated about this.

  • Ashbargin on 16/12/2020 - 09:59

    Some good information in all of that. I would question the CPI adjustment compared to AWOTE adjustment when looking at affordability however.

  • MontyMacaw on 16/12/2020 - 10:47
    +3

    Now go and do the same thing for Germany and Japan and you’ll see that Australian house prices have risen a ridiculous amount compared to other OECD countries.

  • speedracer on 16/12/2020 - 12:29
    +2

    Great Job.

    Love the infographic. Felt like I was watching Melbourne Cup.

    Regards

    Tate

  • Densor on 16/12/2020 - 13:21
    +1

    Excellent work. Thank you for your time you spent preparing that. Subscribed to your YouTube.

  • xdigger on 16/12/2020 - 13:53

    Good job mate. Goes to show how the federal government backed by the powerful developers and builders industry have progressively ripped off regular Australians, in collusion with the hamstrung RBA.

    Self-owned housing should be a universal right in Australia. While successive governments might boast of increased fundings for social housing, an good economist will tell you they actually just serve to perpetuate poverty and low socio-economic status for those living in them while enriching the government's developers mates. Instead they should have strived to make private housing affordable to all Australians by curtailing developers profits, but then no politicians would get cushy advisor jobs after exiting politics would they?

  • TransportPosters on 16/12/2020 - 22:38
    +1

    I thought the old Woolworths catalogue was interesting.

    • Associatedjonathanbargain @ datamentary.net on 20/12/2020 - 16:38

      Same! $1.09 for a chicken :)

  • dimitryp on 17/12/2020 - 12:28
    +1

    great analysis!

  • whooah1979 on 20/12/2020 - 06:23
    -1

    The other post was flagged as spam. How is this of different?

    • CandyMan on 20/12/2020 - 13:36
      +2

      This is not spam

      • whooah1979 on 20/12/2020 - 13:47

        I read the other post. It's the same as this one and was deleted.

        • Associatedjonathanbargain @ datamentary.net on 20/12/2020 - 16:36

          Not sure what your beef is tbh… I don't think this post is spam, and I also don't think the other post I made was spam. But the OzBargain admins did, so I wont post again.

        • CandyMan on 21/12/2020 - 15:18
          +1

          I think it was very informative
          We need more posts like this
          I see where you are coming from but most of the article is relevant

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