Australia has become a debt-slave nation and the number of million-dollar-plus suburbs has doubled in just four years, says a former Treasury expert.
Leith van Onselen, chief economist at MacroBusiness, has made this point in an essay with a provocative title: “Australia: a nation of housing millionaires and mortgage slaves.”
“Australia has condemned prospective home buyers to debt bondage or being trapped in the rental market,” he said.
In just four years, the proportion of suburbs with a median house price above $1 million has more than doubled, worsening Australia’s housing affordability crisis, new CoreLogic data showed.
The median home price in Australia’s capital of $997,352 is now almost 10 times Australia’s median full-time salary of $100,017, and only working couples or the very wealthy can buy.
Van Onselen argued that this wealth was false because it was based on younger generations having to take on more debt.
“Rising house prices in Australia have negatively impacted our children, grandchildren and future generations, who will have to pay significantly more for housing than they should, making them poorer,” he said.
‘In short, most Australian household wealth is bogus, tied up in overvalued property and unable to be realised.
‘Is Australia really “rich” when housing affordability is at an all-time low and our younger generations cannot afford a home without financial support from their parents?
Australia has now become a debt-slave nation due to unaffordable housing, says expert
Nearly a third, or 29.3 per cent, of Australia’s suburbs had a median property value above $1 million in August, CoreLogic revealed on Thursday.
At the onset of Covid in early 2020, only 14.3 per cent of Australian suburbs had a median home and unit price in the seven-figure range.
CoreLogic economist Kaytlin Ezzy said national home prices had risen $53,000 in a year despite the Reserve Bank raising interest rates 13 times in 2022 and 2023.
“With almost 30 per cent of suburbs now recording a seven-figure median, the increase is a natural consequence of rising values and worsening affordability,” he said.
Australia’s debt crisis is so serious that the Reserve Bank’s own Financial Stability Report released this week says mortgage stress levels could worsen unless interest rates are lowered.
“The strain on households and businesses would be magnified if economic conditions deteriorate more than expected and/or if inflation and interest rates remain high for longer than expected,” he said.
Leith van Onselen, chief economist at MacroBusiness, has made this point in an essay with a provocative title: “Australia: a nation of housing millionaires and mortgage slaves.”
Little Real Estate executive managing director of sales and marketing James Kirkland said younger Australians could no longer afford to buy a home in a big city like their parents’ generation.
“Right now, it’s really difficult for any young person,” he told Daily Mail Australia.
“I have a lot of young family members and clients who have kids who are trying to take that step and without mom and dad stepping in, which is different than most generations before us, it’s too steep a mountain top.”
Young people could now only enter the property market as investor owners, rather than as owner-occupiers of a house close to where they worked and pursued their careers.
“It’s harder to buy a property and move into it,” Kirkland said.
The increase in immigration has caused a lack of housing supply nationwide: more than 500,000 foreigners, on a permanent and long-term basis, arrived in the year to March.
This has also meant that house price growth has far outstripped wage growth, leading to ever-increasing debt levels for those entering the property market.
Australian household debt levels now represent 184.7 per cent of disposable income, after tax, which is significantly higher than the US level of 97 per cent.
“Australia would be a significantly more equal society and we would be better off financially if our houses were half the price they are today and we didn’t have so much debt,” Mr van Onselen said.
But possible rate cuts in early 2025 could lead to even steeper increases in house prices, and banks could lend more when the Reserve Bank cuts the cash rate from a 12-year high of 4, 35 percent.
“I think we’re going to see a lot of transactions between now and next winter,” Kirkland said.
