Time to ponder?

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.

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.

Time to ponder the differences.

Germany population 81 million, Australia 23 million
Germany has manufacturing, Australian governments have done their best to get rid of ours.
Germany has infrastructure, bullet trains etc. Australia, we have a couple metro trains that can't even run on time
Germany land size 357,114 kms2, Australia land size 7,692,024

Germany has lived through 2 world wars, wars transfer funds. There was a good documentary series called the Ascent of Money.

Germany has a huge population to land size ratio. They must fit their whole population and manufacturing and farming, and infrastructure and cities into this tiny area. This means they must have a regulated housing market. Without regulation in a market such as theirs people would be dying in the streets, they would have plague and riots etc and that's not how a well oiled German machine works.

Australians have seen property as a way to create security. If people pay off their house, they never have to move until they die. You are also forgetting one of the main reasons deep down for people buying property in Australia. Everyone wants to own a piece of the lucky country.

People came on boats (now and in the past) looking for a better life. Part of the better life was owning some security in your life. Never having the government or the bank or the mob (or whoever) take it from them.

If you look at property with unemotional eyes you will get a good picture, but you will miss the motivation, the "WHY".

D

Well at 200 years old, it is probably one of the youngest countries.

And yes, that is exactly what I'm saying, people love their houses. It is part of their family, why do you think Aussie banks are laughin gall the way with 30 year loans.

I don't agree that they care what it is worth, only if they need to use any of the equity, and really if you paid $80,000 20 years ago and it is worth $900k then they wont care.

The only thing the older generation is worried about (they being the ones most likely to have paid of their loans) is how their super is going as that is what fund their lifestyle.

Emotions are there, I don't believe in the Bubble of Oz.

Well, if I had any kids, the value of my home makes a difference as to how much of a legacy I leave to my children. Not only that, the OP is proposing a 20% estate tax. I know that life isn't going to be easier for the next generation and would like to give them as good a head start as I could. My decision to bring kids into this world, hence my responsibility to look after them in any way possible. Look, I'm not even a parent yet, but I'd like to know how the parents amongst us feel about this.

I am amused at the apparent apathy towards our future generation by saying things like:

1. I don't care if the home, which I fully own, drops in value. I don't take the money with me when I die.
2. Implement estate tax of 20%, because it's a 'sperm lottery' if we don't.

Why do we have 'deceased estate' houses for sale? That's because children who inherit these houses from their ancestors usually decide to sell the house so that they can get a 'fresh start' and move on without being reminded of the parents who they've lost. They usually also have to sell within a set period to avoid CGT (basic understanding). So, come time to sell, the sale price obviously determines how much of an inheritance the kids will receive.

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!

Haha, sometimes I come scarily close to being like that. Thank goodness for an early financial education from Dad (gave me books to read) and Mum (got me excited about the stock market).

Gotta admit, I've played the lotto once…when they had that $90 million grand prize up for grabs. In case nobody remembers, two sisters won it. Wonder how much of that $90 million they have left…