Recently our treasurer Scott Morrison had a truly ‘disruptive’ idea for solving housing in affordability.
If you want to be able to afford a house, go live in the country town of Tamworth, he suggested.
While it’s true that Tamworth is cheaper than Sydney, for example, I am not sure that’s a solution.
Would it be sustainable for 1 million Sydney siders to move to Tamworth?
It might lose its pleasant easy going country lifestyle – you’d need a huge refugee camp with Wifi and good coffee to cope with the influx.
Also, if you really want affordability….why not move to Coober Pedy.
You can go live in a cave in this Opal mining town for less than $100,000.
For real – people do live in caves there. True story, google it.
Anyway, obviously, I am kidding around.
But, one thing that Scott Morrison does have right is that the Sydney and Melbourne price values are ‘real’…
And, that the problem is about supply.
What Morrison means by that, is that the prices are not just artificially driven by us investors hoping to sell for more down the track. (Although that is a factor).
The reason it costs a lot of money to buy a house in say, Manly, is because, lots and lots of people want to live there.
It’s a beautiful place, close to a city full of high paying jobs.
And, there’s a limited supply of homes.
So, this pushes prices up.
This is why when people say, ‘I am waiting for prices to fall, before I buy’ I think they are going to be waiting a loooonnnngg time.
They are hoping that all of a sudden the laws of supply and demand turn on their head.
So while we might see price falls in certain types of apartment markets, I don’t think it’s likely in major city housing markets, because of the high demand, and limited supply of land.
Obviously, this has an impact on cost of living, and the ability of our kids to buy homes in the future.
Which is why it’s so important to focus on building up your cashflow/income so you can support them to get ahead..….
As well as supporting yourself to have a better lifestyle, and pay off your property debt.
Here’s a free webcast to show you how to do that