The Australian housing market represents a gaping cultural chasm. On one side you have renters and avocados, on the other you have landlords and full cream Flat Whites.
Or so the stereotype goes.
But though memes are often criticised as a way of outsourcing your brain (if you’re on Instagram, you don’t need to know the ins and outs of inflation, reserve banks and Australia’s ‘speculative’ attitude to property – you just need to know “Sydney = too expensive”) they tap into something real.
Memes, by definition, are widely felt. And when it comes to Australia’s housing market, particularly bonkers hotspots like some of those in Sydney, they hit the nail on the head.
As DMARGE reported last week, the property market is a more hot button topic than the stock market, because it affects us all more viscerally (we all need somewhere to live), and because there is a higher barrier to entry.
It’s understandable then that there is an insatiable need to analyse just exactly how screwed over we are getting (those of us looking to buy a house but who can’t yet). Every week or month it seems there is another viral graph or chart that makes people angry.
Though there are plenty of possibilities in this modern age so-called more ‘fortunate’ generations could never have dreamed of (don’t believe us? Read Steven Pinker’s The Better Angels Of Our Nature), and though there’s nothing worse than feeling sorry for yourself, let us coddle your self-destructive demons one more time…
Introducing: the latest thread to pop off in the r/ausfinance Reddit community.
Invoking as much masochism as you could need on a Thursday night, it claims to show what the average wage would be today, had average wages risen in tandem with house prices since 1993 (here’s a hint: they haven’t).
“Adjusted for house prices, the 1993 average wage would be $175,000 today,” the thread begins.
Unfortunately, the current (real) average Australian wage in 2021 is $89,122 per year (about half of $175,000).
“In other words, if most of your wages go into your house, and you currently earn less than $175k, you would have been better off as an average wage earner in 1993” the original poster of the thread continues.
“This may be obvious in reality, but seeing the numbers was surprising to me,” the Reddit user continues.
“Maybe it’s wages that are broken, not house prices. Now’s the time to ask for a raise.”
The user also adds, “This only takes into account the capital value, not interest rates, which were around 5% in 1993.”
It also sparked quite the debate in the comments section.
Some Reddit users commiserated…
“I was looking at a Malvern, Melbourne property, un-renovated…they bought it 37 years ago at $54,000. Now…$3m 😂 pretty evident things have gone crazy at those numbers!!!”
… While others disagreed with the premise.
“Yep, there’s really not much point trying to draw comparisons between what was then, and what is now in my opinion. My best friends parents paid $800k for their coastal home in 2001, and current valuation (REA’s trying to get listing) have it at $4-5.8million.”
The same user continued: “You obviously feel happy for them, but we will never see those kinds of returns again in our lifetimes. Property is fucking cooked, and I think we need reform on how we view the property market, and curb housing as a commodity.”
Other comments included: “These returns are consistent with property increase for the last 120 years. Each generation pines about the missed opportunities of the past,” and “No one can fathom the future increase.”
Interested in how likely it is for the bubble to actually pop? Head on over here to read the experts hash it all out.