Don't get me wrong. The period of acquisition is over for me because I am FULLY invested, NOT because I'm staying away from property as a form of investment. They're two different things altogether.

Yes, Australia might seem expensive when using simple calculations, but I've seen far worse in other countries.

First home buyers CAN compete. They should look to buy a house in an area that is currently not so trendy. The house should be solid but older and without the mod cons, with the potential to comfortably live in immediately and to add value over time. The biggest mistake is for a FHB to think he/ she can keep up with all the Joneses and buy a property so expensive that the loan repayments cause severe stress and make it impossible to pay off any principle. The first home does not have to be the LAST. But it provides a substantial platform to step up to a higher quality property down the track.

Of course, you could also decide to rent and direct savings towards other forms of investment, such shares or commodities. That requires discipline however. A home loan forces a person to save, to pay their loan before paying themselves. For some people, the natural inclination is to spend all their savings if they don't already have some big commitments in place. In this way, I have benefited much from property investment. I'm extremely tempted to buy a new car and would have done so if not for my loan repayments. And we all know that a car will be worth less in 10 years time, whereas property is likely to have increased in value over that time, even above and over your interest payments or any other expenditures on the house, if you have bought well.

Coastal is where I'd be buying now if I had the cash. Then again I've always been partial to properties near the sea.

"Rather than capping rents in the private rental market, we need to be focusing on increasing supply in both the public and private rental market."

Fully agree. The final statement in this article is arguably the most important, highlighting a pertinent issue best described by the dreaded 'S' word.

Sorry, what discussion were these figures in relation to? What do you mean by the part about '$61k each'?

Sorry, but if this happens, I'll pack my bags and head back to Singapore to die instead.

So, life is gonna be real tough for our next generation. And in the light of this information, you're proposing we slap a 20% estate tax on the 2/3 of boomers who WILL leave some form of inheritance?!

Then again, I believe that amongst the 1/3 of boomers who aren't leaving any inheritance, a good proportion of them simply can't because they have hardly enough money to get them through their golden years.

Going further from this, I suggest all of us need to do some serious financial planning NOW to ensure we are self-sufficient in our retirement years, instead of relying on our future generation to pay for our pension! Gotta say, I pity our kids!

What is the ballpark figure for the salary of the said teacher? Can you elaborate further on what constitutes an 'average home'?

Combine that with a tax free threshold for those under $40K pa salary as you suggest and it'd be a recipe for disaster. This will be further compounded by my prediction that there will be an even greater proportion of Australian residents at that salary level (adjusted for inflation) compared to today, should this tax structure come into place. Tax on those earning over $40K pa is likely to increase compared to current levels.

Thanks for the information, very revealing. It remains to be seen if this trend of increased emigration is likely to continue. In the last article it mentions that half of emigrants have chosen to move to UK, US, NZ and Singapore. Given current economic conditions, it'd be interesting to consider if some of those emigrants who previously went to UK and US would return to Australia. I know a little about the veterinary industry and can say that it is (or was) common for vets in Australia to seek employment in UK and US because of superior benefits and remuneration. With the advent of the crisis, many of those vets lost their job and have since returned to find jobs in Australia.

I'd have to wonder if those migrating to NZ have done so for reasons other than employment. Retirement perhaps? And for those migrating to Singapore, my condolences to them, for they shall experience 'unaffordable housing' in every sense of the word. Fortunately, the tax structure in Singapore is favourable and does not discourage high-income earners.

Hence the previous point that population growth and Am I right in saying that you suggest the proportion of lone occupant households is set to increase? If this is the case, wouldn't it increase the demand for housing?

We have yet to see 'massive falls' as a result of bursting of 'massive bubbles' in the Australian property market. I entertain the possibility, for the sake of discussion here. As such I agree with your statement about Germany to a certain extent. However I disagree that affordable housing is the result of anti-speculation laws. Consider that Germany's population is little changed today compared to what it was in the 1970s. I have to argue that their 'more affordable' housing is in part due to very little population growth and over an extended period of 2-3 decades.

The population of Germany has been headed down since 2002 with an average loss of 50,000 people per year. Nevertheless, neither this population drop, nor anti-speculation laws stopped the growth of house prices, with the average price of an existing home increasing by 4.5% YOY in September 2010.

http://www.globalpropertyguide.com/Europe/Germany/Price-History

Anti-speculation laws that existed from the time of Hitler did not prevent the 'bubble' from occuring in Germany in the 1990s, which is discussed in this article:

http://www.spiegel.de/international/business/0,1518,552901,00.html

It possibly gives us yet another reason why German property has yet to experience a 'boom' and hence remained affordable.

I'd like you to define 'affordable housing'. Consider the factors of land size, size of the house (just basically, number of bedrooms, bathrooms, living areas, off street parking in the form of carport, garage or lack thereof) and also location (eg. how many km from the CBD). I also firmly believe that decentralisation will alleviate the affordability issue.

Looks like the figures from ABS are a little more optimistic than these from the source you quote. Perhaps consider figures from both sources in your research?

That paints a very bleak picture for Australia. How many people will be left to pay the taxes and welfare benefits with the increased proportion of the graying population in this country? People may talk 'anti-immigration' now, but they'll double back quickly when they see the negative effect its having on the country. The key point is that this country needs new blood and on a regular basis, otherwise it's going to be in strife and turn into another 'Germany' in terms of population growth.

Now I don't know how your research led to your figure of a population of 29 million around 2040. I had a look at the figures in ABS and they show that projected population in 2056 is actually somewhere between 30.9 and 42.5 million, and in 2101 the projected population is between 33.7 and 62.2 million. So your estimated figure is really at the lowest end of that scale. The lower end of the projection will occur when deaths outnumber births starting in 2048, with NOM henceforth accounting for continued population growth, although at a slower rate.

On the topic of peak emigration, how did you come to this conclusion? What are the reasons for people leaving? I had a look at net migration rates for Australia and found the figures for a 10-year time frame.

http://www.indexmundi.com/australia/net_migration_rate.html

It shows net positive migration for the entire period. In 2000 it was 4.26 migrants/ 1000 persons. It was at its lowest in 2007 at 3.78 migrants/ 1000 persons in 2007, and highest in 2008 at 6.34 migrants/ 1000 persons. It currently sits at 6.03 migrants / 1000 persons. Is this the 'false peak' that you are referring to, the one that occured from 2007?

From ABS, Australia's population increase for the year ended 31 March 2011 is still greater than that recorded for the year ended 30 June 2006 (312,400 versus 303,100). Australia's population growth rate has declined since 31 December 2008 and is at its lowest since 30 September 2005. Nevertheless, what was the trend of house prices since 2005/ 2006? I'd hence venture further to say that house prices can rise on the back of strong population growth, but the rate of house price growth is NOT inextricably linked to the rate of population growth.

Now I appreciate all those figures but unless we're going to be armchair academics, we'd be better off discussing more practical things.

As alluded to earlier (and as other writers have also stated before), decentralisation is a realistic answer to the 'housing affordability crisis' that some like to debate about. I'd like to suggest offering rebates and benefits to companies that set up offices in 'satellite cities'. In Melbourne, such 'satellite cities' include Frankston, Box Hill, Dandenong, Ringwood…there are some ailing commercial properties in these areas that the government could purchase, revamp and increase the density before leasing or selling back to the public.

Moving jobs to these satellite cities, a number of which are currently considered 'outer suburbs', we increase the 'desirability' of these suburbs accordingly, with people settling there to be close to work, taking the heat off the CBD. Currently, travel times are ridiculous. My brother takes a 90 minute (each way) bus ride to and from the city every working day from a 'middle-outer suburb' 20kms from the CBD. The roads to the city and within the CBD itself are choked with traffic many hours of the day. I personally drive through the Metropolitan Ring Road to get from the same house to an outer North suburb to work, a trip that takes anywhere from 50 to 70 minutes each way. Really, the Ring Road was obsolete even before it was completed. At only two lanes each way at some parts, it's just not sensible.

What this hence means is that concurrent with efforts to decentralise jobs and businesses, infrastructure and transport to such satellite cities needs to be dramatically improved to keep up with the associated traffic flow. To me, this is the key. People want to live near to their place of work. Move the jobs wherever, provide the necessary infrastructure, and people will follow. Currently there are a lot of low-rise commercial buildings in these satellite cities that could benefit from being revamped and transformed to become a more vibrant hub of activity. Watch out however, for the NIMBY attitudes that are likely to arise, and understandable of course. There's going to be some resistance from current residents because few people enjoy seeing a big business park go up just across the road from their house.

Another suggestion that I raised on this forum in the past was that of governent subsidised housing. People in Singapore are well familiar with this concept. People who qualify for the [strict] criteria for government subsidised housing can buy high-rise flats or apartments that are substantially more affordable than 'landed' property, not because it is paid for in its entirety by the government, but mostly because their associated land value is much lesser. These apartments are small and comfortable but they're far from glamorous. There's several hundred of them stacked into each block, and there could be numerous blocks clustered into a fairly small area. Additionally, you purchase them from the government on a 99-year lease, not freehold.

Someone once remarked that we shouldn't ever see something like that in Australia because it would be the equivalent of a ghetto or a slum. Far from it however. If done correctly, as Singapore has, it performs its function more than well enough, and is still clean and safe. But for this to succeed, people's mindset also has to change. At the moment it appears that most people value having space and a real backyard. When price is a deciding factor however, we can either choose to live in a house that has space but is a long commute from work or in lodging that is not as spacious or private but in close proximity to amenities and our place of work.

Buying a house these days is difficult, something I fully appreciate because I'm one of those people. But this is reality. Can't have your cake and eat it. Affordable housing is there, just a matter of where you're prepared to live, or what you're prepared to live in.

1. Agreed. Like saying we are all human and we are all sinners.

2. Since when was greed EVER good?!

3. Obviously, to a great extent. In general, people do not care about things that do not belong to them. Looking at it another way, their opinions are based on their personal interests. Altruism does exist these days but you got to look a little harder to find it.

4. In respect to 'house prices rising faster than wage growth', depends on what house prices you're referring to. $350K houses were available 10 years ago when our 'inner city' was previously the 'outskirts'. $350K houses are still available these days, but they're more like 'apartments' in the CBD or little McMansions in the outskirts of the city.

Expensive houses indicate that both you and I do not live in a slum and that we're part of a growing city that is pushing its boundaries with burgeoning population growth. It is a sign of 'good things'. That same population growth pays the taxes and helps with welfare payments. That has its pros and cons. More revenue to the government, but it puts a strain on infrastructure if the city does not keep up with the increasing urban sprawl. It also makes some things more expensive, particularly if they are in limited supply and demand for them unrelenting.

It is not difficult to understand that house price growth is natural and a given if you have continued population growth and constant demand for the same limited resource.

Having lived in both a studio apartment (as a student) and in a detached house (currently), I cans see the advantages in each and could live quite happily in either, but got to agree with you that a house with all it’s space is still the way I’d go, given the choice.