I think some may say that the following situation looks familiar here in Malaysia? Please refer to an article in theurbandeveloper.com “Gen-Y is earning more but buying property less’ The article says that the inequality in Australia is the worst in the past two decades; rich are getting richer and the poor struggles to keep up with inflation. The one bright spot may be the Gen-Y in Australia. They are earning better incomes compared to other Gen-Y outside Australia. Despite this growth in income however, Gen-Y’s capacity to enter the property market remains is uncertain because the property price increases were benefitting the older generations. (In brief, this meant that property prices may be rising faster than their income and the earlier buyers were all benefitting from the super increases in property prices for some cities)
Professor Peter Whiteford from the Australian National University says that younger households aged 25 to 29 experienced household income growth 27 per cent higher than the national average. (27 percent is huge! Actually, there are many Gen-Y friends here in Malaysia who is already earning much higher income than most other older working population, usually the Gen-X. One key reason would be the skill gap; IT related skills for example. In fact the Gen-Ys are also very fast in capturing opportunities and even taking calculated risks. Gen-X are well, slower and may not be exposed to all the latest trends of today, not even online shopping for example) However, this higher household income may not be enough to translate into home purchases. Whiteford shared, “Younger households have seen both declining rates of home purchasing and higher overall indebtedness associated with housing.”
Professor Alison Sheridan shared that in Australia, where gender is concerned, the female workers are paid 15 percent lesser and this has remained unchanged for the past 2 decades. (Dear Malaysian female professionals, do you agree? Frankly, I have never paid any of my female staffs lower salary. To me, everything comes down to ability and not the gender) The AustraliaHousing and Urban Research Institute (AHURI) shared a few suggestions on how to improve Australia’s housing affordability. For example, mandating the development of affordable housing when land is rezoned, offering developers voluntary planning incentives and providing density bonuses. (Sounds familiar right. Ever higher density for some areas, especially within the city centre and those with access to public transportation. Incentives are also given in the form of cheaper land prices for example. Plus there are now a lot of affordable units being built and offered.)
The Planning Institute of Australia (PIA) Chief policy officer Rolf Fenner said that the government must be aware that the housing affordability crisis stemmed in large part from demand-side factors. He said, “Wholesale adoption of inclusionary zoning provisions may lead to perverse outcomes if they’re implemented without due regard to local market conditions and specific city-wide, or regional plans. A surer bet would be affordable housing targets developed in consultation with the community and based on quality urban design and architectural foundations.” Here’s that full article for reference.
Remember that property prices are up because of transactions. The cause may be us. When there are more demand than there are supply for some hotspots, the prices automatically go up and will reflect the new prices for that particular area. Then, the other secondary areas next to these hotspots also rise in-tandem. It is thus important to ensure demand is spread wider instead of just buying in the same hotspots every time! Anyway, tough to do which is why even the Australian government could not control the prices in cities such as Sydney or Melbourne for which the median property prices versus the household income is already higher than Kuala Lumpur. Happy following and learning.
written on 30 April 2018
Next suggested article: Wondering why property prices are not going down?