Buying into the Aussie dream: should we care about house prices?

Clayton Barr MP says some experts believe that the property market needs to fall by at least 30% to 40% to bring it back to being “affordable”.
Clayton Barr MP says some experts believe that the property market needs to fall by at least 30% to 40% to bring it back to being “affordable”.

The sky is falling – house prices (in Sydney) have fallen by six per cent!

This is essentially my summary of the media over-emphasis on the property market during the past few weeks. If you are one of the very fortunate people in our society today, that actually has managed to buy, or at least have a mortgage on, a house, then you are part of an ever shrinking 60 per cent of the population. That’s right, just 60 per cent.

By comparison, in the early 1980s the home ownership percentage was above 80 per cent. Surely we can all realise that going from 80 per cent, plus home ownership down to 60 per cent, and falling, is a massive failure of our society. Surely, we as Australians all want a fair go for everyone and for the wealth and opportunity to be shared.

The most basic way to think about the cost of housing is to think: how many annual average salaries are required to buy an average house?

As recently as the early 1990s, the average home cost about four times an annual wage. So if the average wage at the time was $30,000 per annum, then the average home was 4 x $30,000 = $120,000.

Today, the average home is more than eight times the average wage and heading fast towards 10 times the average wage.

Currently, the average wage is at $55,000 per year, and averages being averages, half of our society are on less than this.

This growing cost is not limited to Sydney or Melbourne or Brisbane. Try this little experiment for me; working on the old four times salary for average homes, have a look in a real estate window and try to find a home in our area for $220,000. Good luck!

And then look at the current eight times salary for average homes at your local real estate and check the availability of houses around the $440,000 and you will find this to be closer to the reality.

People not being able to afford a home has a massive impact on our entire society. Many will want to use the value of their home in retirement. Families that don’t own their own home get shuffled around from home to home and then the kids get shifted from school to school severely impacting relationships.

The pressure on social housing is growing out of control and governments don’t have enough money to respond, with many working families unable to afford to rent in the expensive rental market. And don’t get me started on homelessness, holiday rentals and Airbnb!

Some experts say that the property market needs to fall by at least 30% to 40% to bring it back to being “affordable”. This will scare the bones out of most people, but here is a truth – if you are not selling your home tomorrow or in the next 10 years, how much will it affect you?

And would you be willing to wear an “on paper” loss in the short term, so that the great Australian dream of owning your own home becomes a reality for more Australian families?

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For enquiries regarding the State Government or its departments, or to put you in contact with someone who can, please contact my office on 4991 1466, or email cessnock@parliament.nsw.gov.au or call into 118 Vincent Street (PO Box 242), Cessnock 2325. You also follow me on my Facebook page “www.facebook.com/claytonbarrmp”, go to Twitter and search @claytonbarrmp or check out my website at www.claytonbarr.com.au