Australian (ASX) Stock Market Forum

As @moXJO and @MovingAverage both say it has been brought about by lazy politics, on both sides.
There is no point in having population growth, without having secondary and tertiary sector growth, importing a population into an economy where the only growth is in the service sector is a recipe for a third world living standard.
Without encouraging manufacturing and higher skilled job opportunities, importing more competition for fewer and fewer jobs, just festers resentment.
Both parties have been asleep at the wheel regarding this since the early 1980's, it is o.k to reduce tariffs to improve productivity, but when you don't put in place a structure to nurture industrial growth, you end up exactly where we are now, 40 years on.
Neither party can take the moral high ground on the demise of Australian manufacturing, they are both equally to blame.
With the advent of renewables and the pandemic, it gives an opportunity for a kickstart of a growth economy, not completely focussed on mining.
Whichever Party comes up with a viable plan, will win the upcoming election IMO, the ball is in both parties court. :2twocents
Alternatively, it's deliberate.
 
Deliberate stupid short term thinking perhaps. Politicians are not smart enough to pull off a Deliberate plan. This is to well executed otherwise.
Opening the borders is not exactly difficult.
 
Deliberate stupid short term thinking perhaps. Politicians are not smart enough to pull off a Deliberate plan. This is to well executed otherwise.
I think the problem was brought about by Australia agreeing, with most of the other industrialised nations, to offshore a lot of manufacturing to lift the third world countries out of poverty and it has worked to a degree.
However Australia's unique situation of being a large country a long way from any markets, makes it a problem to entice manufacturing back here, from a business perspective it is a no brainer to build your product in a low taxing, low labour cost country close to the market places.
Therefore Australia's tax base shrinks to income tax, GST and resources, as the higher paying manufacturing tax base dried up, so you have to increase the income tax base by importing tax payers to increase the government revenue.

The real issue is how to get manufacturing back here, which isn't easy, we are a high taxing country, as we have to be, because it is a small population.
Yet we supply first world infrastructure in a large sparsely populated land mass, add to that the welfare systems and it is all very expensive on a per capita basis.

The opportunity presenting at the moment IMO is, we have a distinct advantage over all the other first world countries, when it comes to renewables and especially hydrogen.
If there is a push to clean up industry e.g steel production etc, Australia is in the box seat to have the process done here, as transporting hydrogen will be problematic.
So if manufacturers decide to produce the steel here, where the raw materials and the clean energy is, rather than transport both ingredients O/S for processing, Australia as a manufacturing base becomes viable again.
Let's see if any of the parties can come up with a plan, or else it will be back to importing taxpayers, to support our lifestyle, until it can't do it anymore, then $hits are trumps.
 
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Unless you are wealthy, the housing options are quite small.


Rubbish, houses are expensive everywhere.
Beginning to think I was a little out of touch with the housing market so thought I'd do a little research. Adopted the persona of a first home buyer and did a little research on domain. Found this cute little 3 bedroom house in Granville NSW: https://www.domain.com.au/16-o-neill-street-granville-nsw-2142-2017032371?topspot=1 I didn't have to look too hard to find this and I'm sure if I was a little more motivated I could find more options.

The house presents well, is clean and very livable. Has 3 bedrooms and is on about 370 square meter. Granville is hardly the bush and is well serviced by public transport for an easy commute into the Sydney CBD if need be. Granville is also a livable area and far from a bad area. HAs some good public schools and the other stuff young families might like. This place would serve a first home buyer with a young family well.

A quick check on propertyvalues.com has the place priced at $800k to $900k. https://www.propertyvalue.com.au/property/16-o'neill-street-granville-nsw-2142/2585466 Now, I here you say it's worth more blah blah but let's stick to the data we have at hand.

So let's see, several years back the ALP more or less came out and said if you earn more that $150,000 per year you're rich. https://www.news.com.au/finance/bus...s/news-story/5fed388c14abfbdd40803cf772c42cf7

Ok, so let's assume I'm not rich and I have a combined pre-tax income of $140,000 with my wife and I've saved up a $40,000 deposit. My wife and I both earn around $70,000 per year so we have a combined after tax income of around $111,406: https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=STC&anchor=STC#STC/report . This ATO tax calculator link show the tax payable on just one of our incomes. This after tax combined income of around $111,406 leaves us with around $9300 per month after tax income.

I'm not very financially literate so I go straight to CBA for a home loan. I apply for an $800,000 loan over 30 years, which at current interest rate comes in at around $3240 per month. https://www.commbank.com.au/digital/home-buying/calculator/home-loan-repayments

So with our income of around $9300 per month we have to pay $3240 per month on the mortgage leaving us with around $6000 per month on all other living expenses. Things might be a little tight but hey, gotta make some sacrifices to get into the market

I agree my back of envelop calculations are pretty high level--but the point I'm trying to make is that on face value you do not need to be wealthy (as defined by the ALP) to get into Sydney real estate. Sure, if you want an inner city terrace in a trendy suburb with 1 or 2 k's of the city you will probably need some serious cash behind you, but to make a blanket statement that houses are expensive everywhere--I'm not so sure. I know I haven't factored in things like stamp duty but I'm sure the bank of mum and dad will come to the rescue there
 
Following on from that, @MovingAverage and using your start point on google maps, I looked further out, with good train access.
Penrith is 1hr and 4min out on the fast train, similar distance as living in Mandurah and working in Perth, which many do.
So I looked on Real Estate dot com and saw this on the first page.
To my mind getting a $800,000 loan is asking for problems, I would buy further out, pay down as quick as possible then flip and move closer. The first house is just saving you rent and giving you the opportunity to buy equity and hopefully get some capital gain IMO.
Rinse, wash, repeat, but I'm just very risk averse.
 
Another problem related to urbansiation in Australia is that infrastructure has not kept up with population growth. There should be trains and express buses travelling on dedicated bus lanes from all corners of the city going into the city. However, public transport and roads have not kept up with growth in capital cities, and as far as I can tell this is universal and a problem in all capital cities.

Governments are happy to generate revenue from us, but they can't seem to spend it on critical infrastructure that will make getting around our crowded cities easy and quick.
 
Following on from that, @MovingAverage and using your start point on google maps, I looked further out, with good train access.
Penrith is 1hr and 4min out on the fast train, similar distance as living in Mandurah and working in Perth, which many do.
So I looked on Real Estate dot com and saw this on the first page.
To my mind getting a $800,000 loan is asking for problems, I would buy further out, pay down as quick as possible then flip and move closer. The first house is just saving you rent and giving you the opportunity to buy equity and hopefully get some capital gain IMO.
Rinse, wash, repeat, but I'm just very risk averse.
Couldn't agree with you more. My first house many years ago was a long long way out of the CBD and we bought it for the very reason you mention. I suspect the way you and I think is considered old fashioned these days
 
Another problem related to urbansiation in Australia is that infrastructure has not kept up with population growth. There should be trains and express buses travelling on dedicated bus lanes from all corners of the city going into the city. However, public transport and roads have not kept up with growth in capital cities, and as far as I can tell this is universal and a problem in all capital cities.

Governments are happy to generate revenue from us, but they can't seem to spend it on critical infrastructure that will make getting around our crowded cities easy and quick.
Again, you think this an accident?
 
Again, you think this an accident?
Maybe not an accident, maybe unintended consequences, that have actually gotten out of control?
A bit like crypto, once the herd saw that buying crypto, was a sure fire way of making money it is difficult to stop.
Even more so with Syd, Mlb property, because whatever the gov put in place to crash Syd/Mlb hits the other 95% of the country where their isnt the same problem.
 
Again, you think this an accident?

I think this is:

1. Governments generally thinking and planing one election cycle at a time.
2. Urban planning is not given the priority it deserves.
3. Outer suburbs receive less funding than inner, wealthier suburbs

I think it's a mix of bureaucratic incompetence and suburbs populated by those on lower incomes getting the shaft. Governments favour special interest groups, and those on lower incomes do not fall into those special interest groups. Wealthy suburbs receive better services. Their roads are fixed faster and more money is pumped into them. Suburbs further out of the city are overlooked and often ignored, especially when it comes to public transport. It's always been this way, but as our cities get more crowded it appears to be getting worse.
 
I think this is:

1. Governments generally thinking and planing one election cycle at a time.
2. Urban planning is not given the priority it deserves.
3. Outer suburbs receive less funding than inner, wealthier suburbs

I think it's a mix of bureaucratic incompetence and suburbs populated by those on lower incomes getting the shaft. Governments favour special interest groups, and those on lower incomes do not fall into those special interest groups. Wealthy suburbs receive better services. Their roads are fixed faster and more money is pumped into them. Suburbs further out of the city are overlooked and often ignored, especially when it comes to public transport. It's always been this way, but as our cities get more crowded it appears to be getting worse.
The money will go where the government (local, state or federal) needs votes or to sure up its power base. It rarely goes to those areas in desperate need.
 
There is no point in having population growth, without having secondary and tertiary sector growth, importing a population into an economy where the only growth is in the service sector is a recipe for a third world living standard.
High population growth.

Resource extraction is a key activity.

Lots of people working in service industries.

Those three are common to most Third World countries. :2twocents
 
I think this is:

1. Governments generally thinking and planing one election cycle at a time.
2. Urban planning is not given the priority it deserves.
3. Outer suburbs receive less funding than inner, wealthier suburbs

I think it's a mix of bureaucratic incompetence and suburbs populated by those on lower incomes getting the shaft. Governments favour special interest groups, and those on lower incomes do not fall into those special interest groups. Wealthy suburbs receive better services. Their roads are fixed faster and more money is pumped into them. Suburbs further out of the city are overlooked and often ignored, especially when it comes to public transport. It's always been this way, but as our cities get more crowded it appears to be getting worse.
The fact that none of the high (or even medium) rise blocks etc have been built in eastern sydney should really tell you everything you need to know.

This is no accident.
 
Beginning to think I was a little out of touch with the housing market so thought I'd do a little research. Adopted the persona of a first home buyer and did a little research on domain. Found this cute little 3 bedroom house in Granville NSW: https://www.domain.com.au/16-o-neill-street-granville-nsw-2142-2017032371?topspot=1 I didn't have to look too hard to find this and I'm sure if I was a little more motivated I could find more options.

The house presents well, is clean and very livable. Has 3 bedrooms and is on about 370 square meter. Granville is hardly the bush and is well serviced by public transport for an easy commute into the Sydney CBD if need be. Granville is also a livable area and far from a bad area. HAs some good public schools and the other stuff young families might like. This place would serve a first home buyer with a young family well.

A quick check on propertyvalues.com has the place priced at $800k to $900k. https://www.propertyvalue.com.au/property/16-o'neill-street-granville-nsw-2142/2585466 Now, I here you say it's worth more blah blah but let's stick to the data we have at hand.

So let's see, several years back the ALP more or less came out and said if you earn more that $150,000 per year you're rich. https://www.news.com.au/finance/bus...s/news-story/5fed388c14abfbdd40803cf772c42cf7

Ok, so let's assume I'm not rich and I have a combined pre-tax income of $140,000 with my wife and I've saved up a $40,000 deposit. My wife and I both earn around $70,000 per year so we have a combined after tax income of around $111,406: https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=STC&anchor=STC#STC/report . This ATO tax calculator link show the tax payable on just one of our incomes. This after tax combined income of around $111,406 leaves us with around $9300 per month after tax income.

I'm not very financially literate so I go straight to CBA for a home loan. I apply for an $800,000 loan over 30 years, which at current interest rate comes in at around $3240 per month. https://www.commbank.com.au/digital/home-buying/calculator/home-loan-repayments

So with our income of around $9300 per month we have to pay $3240 per month on the mortgage leaving us with around $6000 per month on all other living expenses. Things might be a little tight but hey, gotta make some sacrifices to get into the market

I agree my back of envelop calculations are pretty high level--but the point I'm trying to make is that on face value you do not need to be wealthy (as defined by the ALP) to get into Sydney real estate. Sure, if you want an inner city terrace in a trendy suburb with 1 or 2 k's of the city you will probably need some serious cash behind you, but to make a blanket statement that houses are expensive everywhere--I'm not so sure. I know I haven't factored in things like stamp duty but I'm sure the bank of mum and dad will come to the rescue there

@MovingAverage

Great analysis !!!

I’ve been watching this discussion for a while now and there are lots of well made points. I’m going to add my 2 cents worth ……. And I’m a (younger) Boomer …..

1. Comments by politicians on levels of wealth are, and should be, ignored.
2. ‘Expensive’ is a relative and subjective term.
Objectively I have done a little bit more research to add to yours.

80% of couples earn less than your combined pre-tax income of $140,000. So I think in your analysis you are a bit high. (https://mccrindle.com.au/insights/blog/australias-income-and-wealth-distribution/). I believe (can’t remember the source) 40% earn less than $40,000.

The Average Gross combined income in Australia is about $116,584, giving a combined after tax monthly take home of $7,948, which is 15% lower than your number of $9,300.

Loan repayments on your example of $800,000 for 30 years is at a rate of 2.69%. Although this is may be the ‘advertised’ banks now generally stress test a couple of percentage points higher in order to get a loan, eg. 4.69%. Although your 2.69% is ‘advertised’ you will likely have to be able to service a loan on 4.69% in order to actually get the loan, $4,144 per month.

Yes wages are different across the country, as are prices, but your $800,000 house loan for an ‘average’ couple will only be provided by the lender is they can pay $4,144 pm on an income of $7,948 pm, which is 52% of disposable income. If we stick with the 2.69% we are $3.240 of $7,948 which is 40% of disposable income.

I hate to admit is, as a Boomer, up to 4-5 years ago I thought the Millennial’s were just whinging. I looked in to this a lot closer over the years and it is just simply shown by the numbers. I don’t envy the younger generation(s). This generation are by far worse off than I was in the 1990’s when I and Ms.Gunnerguy bought our first house.

1993 – Home loan was 33% of our combined after tax monthly disposable income. Two bedroom house in the suburbs. My commute was 1 hour each way to the CBD.
2021 –The average Australian combined after tax disposable income used on a loan is 40% of disposable income (or 52% if stress tested). Granville is a 45 minute commute I believe by public transport.

So, many variables, and subjective components, but yes I hate to admit it, I spent 33% of my take home pay on a loan, but nowadays you need 40%, if not higher if you are an average income earner.

In short 33% in 1990, and about >40% in 2021, but always difficult to do apples to apples, and as a Boomer I admit its well harder today.
The reasons/solution .... thats for another post.

Gunnerguy.
(Analysis freak)
 
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