Undoubtedly house pricing has been on a constant rise in Australia.
With the exception of a few small falls the overall price has been steadily increasing. For Australians, however, there has been a massive push in the media about “housing affordability” and “The busting property bubble”. So why is it that suddenly property investment has become such an unreachable goal for a large majority of Australians? It comes down to the ratio between property price and income.
Looking at both the Median and Average measure there has been a significant increase in the ratio between the amount people are earning and the actual cost of housing. This would appear to be a major distinguishable difference between now and 30 years ago, not just that house pricing is on a rise but more that the due to various economic conditions average income has failed to inflate at the same rate as house pricing. This has caused housing unaffordability. Unfortunately, the people that are going to experience housing unaffordability the most are the low income earners, specifically young Australians. Even those who attempt to invest in property will be slammed with high interest rates and long repayment plans making property investment not only unpredictable but often detrimental to their overall long term finances.
“Property investment as a means of financial security”
It is an ambitious goal and often one that is pitched to people, wrapped up in a whole bunch of lies and ambiguity. Lets be honest we have all seen the flip shows on TV where in four weeks a young couple turn a $90 000 property into a $400 000 property and run away with a clean couple hundred thousand. Although these reality programs might not be the best source for young australians there are a variety or property investors and experts who have still been very successful in the past and through a range of strategies have been able to create enormous wealth though the property market. The real question raised then is not “how they did it?” but “how can young people learn from their success and failure and apply this information in their own situation?”