Property And Me
Back in the day when I was young and dumb, I had this foolish notion that property was not something to sweat over. As crazy as it sounds I had my rationale and it went like this: Australis is a very big country with a low population density. Not matter how bad things get, I figured, property possibly couldn't get as expensive as New York as Tokyo in the late 1980s. Fast forward 30 odd years, and of course I was proven resoundingly wrong. It kind of begs the question how this might have come to pass - but I've already written a bunch on that topic so I want to discuss something else. What I do want to talk about is how incredibly contrived this housing crisis that is unfolding, and how it's still best to look at Australian property prices with the eyes of a cynic.
The kind of money a family is being asked to fork over for a house in any Metropolitan area in Australia us now higher than what somebody might pay for a Greek island villa. It's been that way since the GFC however, even as villa prices have recovered, Australian residential real estate has climbed faster. Granted you can't commute to your job in say Parramatta from a Greek island, but I'm pretty sure any of these Greek villas would be nicer than the 3 bedroom house in say, North Parramatta. If I didn't have to earn a living, I know which one I'd choose at the drop of a hat - it's not Church Street Parramatta, walking distance to the Temasek restaurant ("and other amenities").
Yet cities the world over have this problem now, where thanks to the deflation exported by China for a whole generation, nobody's wages have risen enough to keep up with the inflation in house prices, and it just so happens rents and house prices don't factor into CPI. You pretty much have to wait for your parents to fall off the perch and share in the inheritance. And really, that's no way to live. If you're unfamiliar with it, maybe you should read 'Of Human Bondage' by W. Somerset Maugham. The main character stands a good deal of the latter part of the book waiting for uncle William to die so he can get his money. It's grim.
The stark reality is that real estate is totally overpriced everywhere, and in a really weird way, everybody in the market is committed to the idea that sky high prices are normal, oblivious to the social effects this is having. Not to mention the old adage that a market will remain wrong and uncorrected a lot longer than you might think. The social process involved makes even the best of us somehow 'downwardly mobile' according to some.
There's a part of me that thinks "you are not your house, you are not your farm, you are not your high-rise penthouse". In all honesty, you're not - but you need shelter. It's completely absurd that you spend your entire life working to pay for a place, you live in it til you die, and then somebody else inherits it. Surely one's life should be more important than to exchange it for a financial asset in one block.
I did used to have a mortgage back when I started this blog many years ago. The run of events was a life lesson in of itself. I worked for a company that exported video content to the US Education market. When 9/11 and the War on terror got rolled out, the American government cut back on its education budget to pay for the military. Around the time of the Iraq invasion, it became evident that the company I worked for had lost revenue drastically, and so it was time to wind it up. My boss, the late John Davis sold out the catalogue and retired, which had knock on effects. For me, I had to sell out from my place because I couldn't find the next job fast enough. And just like that I was out of the property game.
And I've been outside ever since. I've rented instead, and I invested the difference I'd pay if I had a mortgage, into equities. Now I have to move and I'm thinking I would like a modicum of control over that side of my life. So now I'm on the lookout for a place to buy - and boy they don't come cheap anywhere any more. When I tell my friends that's what I'm doing, they all have this enthusiastic response saying it's important to get into the property market, get on the ladder, and that ownership of a place is the be all and end all. Somehow I'm still ambivalent.
There is a government report that says retirees who retire without property do it much tougher than those who own their own place. And at this point in history, I have to consider that factoid. Australia has become the land of landlordism. The gap between the haves and have-nots grows on the back of the absurd property market. No government has addressed this in the last 30 years because either the politicians are themselves invested in property, or because they're ideologically invested in inequality, or both. Even as I look for a place to buy, I have to say this all makes us all the poorer.
Anyway, I'll write more on this later.
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