Prices Will Rise Or Fall, So Many People Will Be Unhappy Regardless

“Affordable housing” and the “housing price bubble” are dominating conversation about the property market.

- Paul Clitheroe

Ironically, the much debated housing price bubble popping would certainly sort the affordable housing issue, as a collapse in prices is a very effective way to make housing more affordable. As far as I can tell from following the debate, what we really seem to want is for housing prices to remain strong for those who own property but to fall for those, in particular young first-home buyers, who are yet to buy.

Clearly this is not going to happen. Prices will either broadly rise or broadly fall, so large numbers of people will be unhappy regardless. Our politicians hate people being unhappy, so their preference is to make housing more affordable for those who don’t own a property, while prices grow for the millions of current property owners. That result would indeed be a miracle and a great shock to pragmatic people like me.

I think we are best to separate these two hot property topics into two parts. First, the housing price bubble. Yes, property in particular in our major cities on the east coast is really expensive. “Expensive” can be looked at in two ways. You can take, say, a two-bedroom apartment in a particular location in global cities and look at the price per square metre and make a comparison. On this basis our most expensive city, Sydney, is right up there. Sure, it is cheaper than New York, London or Shanghai but more expensive than most. Or you could look at the price of property as a multiple of the average wage. Sydney remains expensive but on this basis very cheap compared with Shanghai.