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(AUSTRALIA) Housing Class Divide Report: An un-renovated semi-detached home in Bondi sold recently for more than $2.7 million. It had last traded back in the early 1950s, in the pre-decimal currency era, for about a thousand pounds #AceNewsDesk report

#AceNewsReport – Nov.07: The “mint original condition”, three-bedroom home, up the hill from the famous Sydney beach, provides a window into the extraordinary escalation of Australian real estate prices: Had its value merely tracked the rate of consumer price inflation over those 68 years, today that 1,000 pounds would only be worth about $37,000: It is not hard to see why the level of home ownership — once a defining feature of Australian society — has tumbled.

#AceDailyNews says according to a Four Corners Investigation Report: From a ‘class divide’ to ‘intergenerational theft’, Australia’s real estate frenzy leaves many behind in its wake as #ProfitB4People becomes the ‘WATCHWORD’ of GREED says Kindness & Love❤️ Amen

A modest red brick semi house in Bondi
This modest home in Bondi had not been sold for more than six decades.(Supplied: realestate.com.au)

Watch the full investigation on ABC iview or livestream on the Four Corners Facebook page.

A dated old bathroom with a pink bath

“We were expecting the magic number to be, like, $2.5 million to buy it. That’s what we heard through the agent,” says Rob Stanley, a buyer’s agent acting for a couple with a toddler who were interested in the home.

“When it came to the auction, we were expecting five or six registered bidders. There turned out be 17. 

“With that much interest, it just kept going, just kept going, and the fear of missing out was there.”

Dated dine in kitchen at house in Bondi

That’s Bondi, go figure, some might say, but the skyrocketing prices are widespread.

In June, official estimates from the Australian Bureau of Statistics put the average dwelling price in Australia — apartments and houses combined — at $836,000. Prices have continued to rise since then.

“These are the steepest house price rises in 31 years,” says Eliza Owen, head of research at the property data firm CoreLogic.

By year’s end, it may be the biggest annual house price surge in Australia ever.

A dated bedroom inside the multi-million dollar recently sold Bondi semi.

Home values have soared in every capital city and in regional and coastal towns too, as people freed from the need to work in the office make an exodus from the cities and the lockdowns.

All of this has worsened an already-existing crisis of housing affordability that is pricing the young, and people on modest incomes, out of the Australian dream of home ownership.

“What’s really striking is the decline in the home ownership rate among people under the age of 45,” says economist Saul Eslake.

Economist Saul Eslake
Saul Eslake says he is surprised there isn’t more anger from young Australians about being locked out of owning a home.(Four Corners)

He says that, at the 2016 census, the rate of home ownership among people under 45 was lower than it had been at the census of 1954. 

“I suspect when the 2021 results come out, the home ownership rate among younger Australian adults — that is say between their 20s and mid-30s — will be lower than it was at the census of 1947.” 

Jason Falinski, a federal Liberal Party backbencher who is chairing a Parliamentary inquiry into housing affordability, calls this a “moral failure”.

“We have created some of the least-affordable housing in the world,” Mr Falinski says.

“It is akin to intergenerational theft.”

Federal Liberal Party backbencher Jason Falinski portrait
Jason Falinski has been advocating for changes to planning and zoning rules to boost housing supply.(Four Corners)

The surging house prices stand in complete contrast to wages growth, which has been stagnant for years. Nationwide, over the past year, the cost of a mid-priced home has risen by about $2,500 a week.

In the Greater Sydney region, it has grown by $5,600 a week.

Try getting a pay rise to match that.

It wasn’t always like this. For much of the 20th century, homes were far more affordable.

“Between the years immediately after World War II and … and the early 1970s, houses basically cost three times average male annual earnings. And that ratio didn’t really change much over a period of almost 30 years,” Mr Eslake says.

Now, house prices and wages have completely decoupled.

So, what’s changed?

In another old home on the market for the first time in decades, Four Corners found evidence that points to one of the big shifts that’s driven up house prices.

Under the floor coverings was an old newspaper from 1963. At first blush, the headline seemed to imply things weren’t so different back then. It read: “Why can’t young couples buy homes?”

An August 1963 edition of the Daily Telegraph
An August 1963 edition of the Daily Telegraph asks the perennial question.(Four Corners)

Read the fine print, though, and it tells a different story.

The problem then was that banks were heavily controlled, and lending was strictly rationed.

First home buyers had to pay huge deposits — up to a third of the value of the property — and banks were extremely conservative about how much they would lend.

Not enough “cheap” money available, the article complained.

That all changed in the 1990s because of two things: The deregulation of the banking system and a huge fall in interest rates after the crushing of the era of high inflation.

Suddenly, banks were willing to lend people huge sums of money to buy houses, and lower interest rates meant people could borrow plenty.

In markets with limited supply, the combination of easy credit and cheap money has just encouraged people competing for homes to borrow more and more.

That’s been turbocharged in the COVID-19 era by the lowest interest rates in history.

sold sign
Home ownership’s now fallen to its lowest level since the mid-1950s.(ABC Gold Coast: Dominic Cansdale)

The result is that house prices in Australia have risen by 550 per cent since the early 1990s, with no letup in sight.

 Rising real estate prices have created a lot of winners.

“For a majority of Australians, the property market has been an escalator to ever-greater levels of personal wealth. And, if you’ve been able to get on that escalator at the bottom, you’ve done exceptionally well over the following 30 years,” Mr Eslake says.

“If you’ve been able to hop onto it at different points during that period, you’ve also shared in those gains. But, if you’re part of an increasing minority of Australians who haven’t been able to get the first foot on that escalator, you’ve missed out.”

The gap between the housing haves and have nots is often seen as a generational divide, but the reality is that many young people will be helped into the property market by their parents — the bank of mum and dad — and many will also inherit enormous wealth generated by the soaring price of real estate.

The real losers are those who do not come from money.

People like Ashley May, who works as a mental health nurse in Hobart and resides in social housing with her mother, who lives with a disability. Ashley yearns to buy a home for them both.

She has a master’s degree, a good job, and she assumed she would be able to save up and buy a home. But, amid soaring house prices in Hobart, once an affordable city, she’s been priced out.

Ashley May stands outside in front of fence.
Ashley May says she did everything right to prepare to buy a home.(Four Corners)

“The situation’s left me feeling completely defeated, you know, like there’s no point,” she laments. “I did everything right. I did everything that every politician has ever told us to do.

“We were told, growing up, that, you know, the Australian dream, owning your own house, all you have to do to get that is you go to school, go to college, go to university, get a good job, and boom, Bob’s your uncle. But it’s just not turned out that way.”

 Adrian Pisarski, executive officer of the housing advocacy group National Shelter, believes the problem is only going to get worse.

“Only the children of people who already have wealth, will be able to acquire home ownership in the future,” he said.

Ashley May with her mother in the living room

“People who come from poorer backgrounds won’t. It’s really become a class divide.”

A nation that once prided itself on its egalitarianism and its high levels of home ownership is experiencing rising inequality, due to a growing chasm of wealth between those who own homes, and those who never will.

“Housing has become, rather than a place of security where you raise a family, something that you seek to create wealth from and speculate on,” Mr Pisarski said.

“So, that is a really big shift over the last 40 years. And it’s one that I don’t think will serve the future well.”

Additional reporting by Lesley Robinson and Patrick Begley.

#AceNewsDesk report ……………Published: Nov.07: 2021:

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