An earlier article in businesstimes.com.sg: In the world’s most liveable cities, few can afford to buy a home. Seriously, we should do a similar survey like what was done by the Australian National University. From its survey, almost 90 per cent of Australians fear future generations won’t be able to buy a home. One of the reason contributing to this is because first-time home buyers were competing against investors. Investors could claim the cost of owning a property if they have a negative gearing and this is a tax deduction against other income. First time home buyers have no such negative gearing because they are buying the property for own stay and is not for renting out. Due to the rising prices, the home owner ship among young Australians have fallen to the lowest level on record. (It would be really good to have a similar comparison to the current situation in Malaysia.)
The article says that a few reasons contributed to this. They include record low interest rates (actually, the interest rates in Malaysia is only slightly higher than Australia’s), lack of supply (hopefully the affordable homes are being handed over in time and more being built. State and federal governments better just do their job and stop debating), a tax system that favours property investors (I think this is not the case here. Many ‘investors’ who bought too many units are now struggling. As for the rest, it’s not easy to get loans and only those who qualify could. That’s why our Non-performing-loan numbers are not considered high currently). Plus the fact that home prices in Sydney has surged more than 140 percent in 15 years. (Sorry yeah, not even Australians have such a high salary increment year after year and certainly top performers would only be the top 10 percent in all companies) Sydney is now even more expensive than London and New York. Currently, only 45 percent of 25 to 34 year olds own their own home. Historically,this is 16 percent lower than the 1980s. (Again, if only Malaysia have such numbers for comparison purpose)
Actually, most of my friends above 35 owns a home. Perhaps that’s because I do not have too many friends who could stand my lecture of why owning a home is a plus and not a disadvantage. In fact, the two friends who were asking me ‘when would prices drop’ last year have signed their SnP just two weeks ago. Both are barely 30 years old but both are working professionals. Would they be better off than their peers? I certainly think so. One drives a family car and another drives a Saga. Would they be able to enjoy more currently? Certainly not, as soon as the mortgage payments start. Haha. The advanced markets have shown us the potential future. If we read about them but take no further actions, it’s hard to find someone to blame in the future. Yes, that Starbucks in your hand may have been better if it’s just a pack of Old Town 3in1 White Coffee instead. (Here’s a comparison of homeloans from 15 different banks. ) Happy reading.
written on 1 Nov 2017
Next suggested article: Buying a home – How much am I able to borrow?
Whether a survey is bias or not, will depend on its questions or ticked answers. Questions like ‘do you think the future generation will be able to afford homes?’ reflect strongly the biasness of the survey!
Why should current generation worry about the future generations? The current generation should NOT to exploit, overconsume or even waste so much of the natural resources that future generations will be deprived when the time comes. All these QEs, low interest rates, indebtedness, overspending and overconsumption are depriving our grandchildren and great grandchildren of their wants and needs.
It is the current generation that causes the current crazy high prices of Melbourne/Sydney homes. Haha…this generation dares put in their survey of their worries about affordability of future generations to purchase their homes? Ludicrous!
Thanks for being direct Fred.