From the end of WW11 through to now, there’s been much change. Reflecting on and understanding the past contains invaluable intelligence for the future. Lifestyles, technology, real estate values, population patterns, infrastructure, housing supply, property policies and more…
From deeply studying Australian real estate history, I can confirm that there were 8x constants in each of the last 8x decades.
Four (4) of those constants were topics which the wider public frequently bemoaned. They are:
1. Housing Affordability
Even when the cost of a standard house $4,000 there were cries of it being ‘impossible’ to become a homeowner. Despite the constant bemoaning, 7 out of every 10 households always manage to make it happen.
Related article: Affordable property investing
2. Overseas migration
Accusations of ‘over-crowding’ and suggestions that it was the main cause of rising real estate values have constantly been directed at overseas migration. The reality is that more than half of Australia’s current population are either first or second-generation migrants. Moreover, the official evidence confirms that migrants only represent 7 percent of real estate buyers each year.
3. Wages
They generally increase each year, often by 2 or 3 percent for the average household. People who work in certain industries and occupations enjoy higher wage growth. No matter what happens with wages though, they’ve never increased by enough.
4. Housing construction
At different times and in different cities, every decade produced a few years of strong growth in asset values and rents. Insufficient construction of new homes was constantly blamed. This is despite the official evidence confirming that the total volume of extra homes built was greater than the base level extra demand created by population growth. Often, the real problem was the volume of established properties available (to buy or to rent) was insufficient for demand.
Governments have always pretended to care about housing and housing affordability, but their policy actions have almost always been the opposite of what was truly required…
5. Real estate taxes
One of the biggest barriers for buying real estate is raising stamp duty. Over the last 20-years, the stamp duty impost on buyers of an entry level house (first home buyers and investors) increased from circa $3,000 to $40,000. People with a goal to upgrade to bigger and or nicer quality homes are now expected to raise $100,000. In 2022, stamp duty tax charged by state governments totalled $36 billion. The policy needs to change. Land taxes have also constantly increased over the 8-decades, creating another barrier for rental supply.
6. The rental pool
From the late-1950’s through to now, 3 out of every 10 Australian households have depended on rental accommodation. The contribution from state and federal governments for supplying rental accommodation has constantly been pittance. For perspective, the total volume of government-provided rental homes in 1976 (300,000 dwellings) was the same volume in 2021, even though Australia’s population increased by 11.5 million over that period.
Finally, there were two (2) other general constants which featured in each of the last 8-decades:
7. Adversity
There was one or more cause of major adversity in every decade. Multiple wars, economic shocks, significant natural disasters, oil crisis, interest rate spikes, large periods of high inflation, difficulty acquiring credit and the biggest ever health pandemic. Regardless of the specific cause, house values increased by no less than 3.6-times and up to 6-times during each block of 20-years.
8. Attitudes
Every single generation included segments of society who suffered apathy and complacency, other segments who were notorious for blaming and complaining, and those who set goals and actively pursued them.
Related article: Next 20-years for Australian real estate
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