Comment by doubleunplussed | Hacker News Reader

Comment by doubleunplussed | Hacker News Reader

doubleunplussed

The debate annoys me. Housing has become more expensive and food, including eating out, has become cheaper. Yes, a totally financially responsible person should be minimising eating out in order to save. I do this. I'm on close to average full time wage. Even though I'm saving very carefully, it's still going to take me a lot longer before I own my own home than an average wage earner from the previous generation.

Yes, stop buying avocado every day, if you do. But also, Australian housing needs to come down in cost if you don't want people like me to be renting forever.

It's not the end of the world if I rent forever, but it is a bit sad. Everyone else got to own a home, why should that be so much harder for me?

Not to mention that it takes considerably greater qualifications now to earn an average wage compared to the past. So I'm starting later and with student debt.

I don't want to completely absolve myself of agency. I plan on doing the best I can with my situation and I will probably own a home one day. But is it unfair? Yes. There really is no argument.

Us modern folk have it easier in many ways, but in terms of home ownership we're not hallucinating that it's harder. Wages aren't going up as fast as house prices, and that's really what it comes down to.

> why should that be so much harder for me?

And my friends*. My social group (25-30yo) is generally pretty morbid about the whole situation and most are resolved to wait for some sort of bubble to burst in Australia. Investing in other markets which are stable and easy to enter in the meantime.

It's interesting to read an American perspective from outside of the largest cities. I wonder if Australia's more spread out nature and few high density cities skew the problem more here.

I'd propose a hypothesis that yes it does, for a couple of main reasons:

1. Concentration of job market - a lot of industries only exist (or at least, in a large enough volume) in the larger cities (e.g. financial services, tech). I'd say this is largely coupled to the location of higher education, where there is (relatively) less tertiary education once you leave the major cities.

2. Desirability of location - infrastructure and general "way of life" tends to lead people to wanting a more coastal existence. Australia didn't have the boom of city development in our regional centres, look at towns that are considered large in rural Australia, and they barely compare to even the outer suburbs of the major cities.

As much as our deputy Prime Minister would argue "just move to the country", it's not a realistic statement without addressing massive shortcomings in the long term planning of our rural areas.

Much like ECMAs reply in this thread, I've also resigned myself to pretty much never owning a home. Although I earn enough to get by on, I'm out 80-90% of my weekly income in rent, power, internet, and food leaving practically nothing to save. I hardly ever eat out, thought I had a decent job and try to put as much as possible in high interest, but every time I look in my savings and think yeah that's looking good, I check house prices and a deposit has gone up another $1500 on what I've saved. It's debilitating, a feeling that I'm literally putting in all this work for nothing. Sadly, it's not just living close to the city anymore, anywhere within a few hours of Sydney is ridiculously expensive. Much like you, I'm not too concerned about carrying on renting, and I have time to wait out the market, but if this trend continues I feel like my whole generation will be permanently locked out of the market, and hence out of one of the most effective retirement savings vehicles the system has.

Sydney prices are absurd. Keep saving and wait for interest rates to rise. If they ever go to the 17%+ territory which we had back in the 90s then there'll be a country wide firesale, and you'll be sitting pretty with your cash savings.

Interest rates would rise so high only after a significant increase in inflation, which means that your cash savings would fall in real value as well.

It won't need to be 17% this time around, that's for sure. Just to give people a sense of the magnitude of the debt Australians are in:

- When mortgage rates 'peaked' in 1989 at around 17%, aggregate interest payments ate up about 6% of aggregate household disposable income.

- When mortgage rates 'peaked' in 2007 at around 9%, aggregate interest payments ate up about 11% of aggregate household disposable income.

We're more indebted now than we were in 2007. An external shock that causes mortgage rates to rise by as little as 1% (relative to incomes) will probably be enough to trigger our long overdue 'Minksky moment'. [0]

[0] https://en.wikipedia.org/wiki/Minsky_moment

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