[cobran20]

link

Quote

...In the United States, for example, the question of whether the growth boundary around Portland, Oregon, has had an effect in raising housing prices, as some observers claim, or that the dual focus on development at the center and regulation at the edge has kept housing prices reasonable, has raged for a number of years now. The same debate has been joined in many other places, for example in Australia where the recent rise in prices has been particularly sharp and, given the vast extent of the country, the urban containment policies particularly contentious...

...Their conclusion, that the land use policies in places like coastal California, Vancouver, Britain and Australia, have dramatically driven up the cost of housing...

[cobran20]

SMH: Prices drop but houses still up on global list

Quote

HOUSING affordability improved in Australia last year, according to an annual international ranking, but local real estate still remains some of the least affordable in the world.

Australia's national unaffordability ratio sank from 6.1 times in 2010 to the still ''severely unaffordable'' ratio of 5.6 times, helped by sinking home prices, according to analysis by a US research group.

''Australia exhibited the worst housing affordability of any national market outside Hong Kong,'' the eighth annual Demographia International Housing Affordability survey of 325 markets concluded. The unaffordability ratio is derived from dividing the median house price by the median household income.

Advertisement: Story continues below Demographia considers a median multiple rating of three times or under to be ''affordable''.

Housing markets with a median multiple of 3.1 to 4 times are dubbed ''moderately unaffordable''. The ratio of 4.1 to 5 times is ''seriously unaffordable'' while ''severely unaffordable'' markets have ratios of 5.1 times or above.

''There were no affordable markets in Australia in 2011 and the overwhelming majority of markets were severely unaffordable,'' the report said.

Hong Kong's national median multiple of 12.6 times topped the list for unaffordability, followed by Australia, New Zealand (5.2), Britain, (5.1), Canada (3.5), Ireland (3.3) and the US (3).

Britain, Ireland and the US have suffered crippling house price collapses, while Australian prices, after falling in 2008, rose through the September quarter of 2010, helped by rate cuts and cash stimulus. Capital city home prices have slipped 3.7 per cent in the 11 months to November, according to RP-Rismark data.

The Housing Industry Association-Commonwealth Bank housing affordability index, released last month, showed a 1.2 per cent rise in September quarter affordability. The median home price in November was $450,000, RP data showed.

Australia's property has been characterised as the most overvalued in the world by The Economist magazine and the bubble-watching investor Jeremy Grantham, from the US investment fund GMO.

In the Demographia survey, Sydney was the 323rd most affordable with a house price-to-income ratio of 9.2. Melbourne was 320 with a ratio of 8.4. Coffs Harbour was 319, the Gold Coast 318, and the Sunshine Coast 317.

[Sally Periwinkle]

Some interesting income data being used by Demographia.
Gross median household income:
$105,100 Canberra
$71,500 Brisbane
$70,500 Townsville
$69,400 Sydney
$67,400 Cairns

Incomes higher in Brisbane and Townsville than Sydney?

Also, the median house price for Sydney is given as $637,600. That must be just for detached houses.
The median house price for London is given as 290,000 pounds. That looks to be for all dwellings.

Is the Hong Kong house price they used just for detached houses like for all the Australian cities?
Doesn’t look like a like for like comparison.

[cobran20]

Sally Periwinkle, on 23 January 2012 - 12:49 AM, said:

Some interesting income data being used by Demographia.
Gross median household income:
$105,100 Canberra
$71,500 Brisbane
$70,500 Townsville
$69,400 Sydney
$67,400 Cairns

Incomes higher in Brisbane and Townsville than Sydney?

Also, the median house price for Sydney is given as $637,600. That must be just for detached houses.
The median house price for London is given as 290,000 pounds. That looks to be for all dwellings.

Is the Hong Kong house price they used just for detached houses like for all the Australian cities?
Doesn’t look like a like for like comparison.

If you look at the seasonally adjusted weekly wages (Earnings; Persons; Total earnings) from the ABS, it shows NSW was $838 whilst QLD was $1025.20. So it would be reasonable for QLD, being a bigger recipient of the resources boom than NSW, to have average incomes. There is also the issue that income used by demographia would be pre-tax, hence Australian would face a bigger burden (on an equla income comparison) than a lower tax country like Hong Kong.

[Sally Periwinkle]

cobran20, on 23 January 2012 - 04:03 AM, said:

If you look at the seasonally adjusted weekly wages (Earnings; Persons; Total earnings) from the ABS, it shows NSW was $838 whilst QLD was $1025.20. So it would be reasonable for QLD, being a bigger recipient of the resources boom than NSW, to have average incomes. There is also the issue that income used by demographia would be pre-tax, hence Australian would face a bigger burden (on an equla income comparison) than a lower tax country like Hong Kong.

No. The figure for NSW is not shown as $838. It is shown as $1028.00. Table 12A.

[cobran20]

Sally Periwinkle, on 23 January 2012 - 06:09 AM, said:

No. The figure for NSW is not shown as $838. It is shown as $1028.00. Table 12A.

Oops. I accidentally looked at the wrong column - the $838 was for females rather than all persons.

[staringclown]

Sally Periwinkle, on 23 January 2012 - 12:49 AM, said:

Some interesting income data being used by Demographia.
Gross median household income:
$105,100 Canberra
$71,500 Brisbane
$70,500 Townsville
$69,400 Sydney
$67,400 Cairns

Incomes higher in Brisbane and Townsville than Sydney?

Also, the median house price for Sydney is given as $637,600. That must be just for detached houses.
The median house price for London is given as 290,000 pounds. That looks to be for all dwellings.

Is the Hong Kong house price they used just for detached houses like for all the Australian cities?
Doesn’t look like a like for like comparison.

The report has a link that asserts median incomes rose less in certain metropolitan areas in comparison to the rest of the state between 2001-2006. This might explain the figures. It will be interesting to see what the report says next year when the 2010/11 census data is available.

The report raises the average income/median price issue but it doesn't mention whether the data is for all dwellings or detached houses. Seems a tad high for all dwellings.

Quote

Yet if the opportunities are in metropolitan areas, indications are that this is taking place over a wider area than in the past. A review of income growth between 2001 and 2006 in four nations shows that incomes rose more in some surrounding regions than within the metropolitan areas, at least during the first half of the decade. It will be interesting to see if these patterns have changed in the second half of the decade, something we will be able to discern once the 2010/2011 round of census data is available.

Australia

This dispersion of opportunity is particularly evident in Australia, where data from the last two national censuses indicates that incomes overall have risen more quickly outside some major metropolitan areas. In three of five cases (the three largest) incomes rose higher outside rather than inside the major metropolitan areas (Figure 1).

In Sydney, the largest metropolitan area in Australia, median household incomes declined 6.6% relative to those of the state of New South Wales.
Melbourne median household incomes declined 3.5% relative to those of the state of Victoria.
Brisbane median household incomes declined 4.4% relative to those of the state of Queensland.
Median household incomes in Perth rose marginally more than those in the state of Western Australia (0.2%), while Adelaide incomes rose the strongest against state (South Australia) incomes at 4.4%.

[ummester]

cobran20, on 23 January 2012 - 08:21 AM, said:

Oops. I accidentally looked at the wrong column - the $838 was for females rather than all persons.

I got caught looking at some female columns recently by mrs ummester, I also claimed it was accidental:)

[staringclown]

Here's 2009 gross household income (in Sydney?) The table says capital city income. Anyhoo.



1491 pw week or ~$77500 in 2009. That's ~11% difference with Demographia from now. Let's say it's risen 10% to ~$84000 since 2009. A median for all dwellings is ~$450000?

Westpac say the median of units is about $410 and houses about $600. I'm not sure of the makeup of the respective groups so it's an estimate.

That's a ratio of 5.3 median income to median all dwellings

If it was $410 (the unit price median) then it would still be a ratio of 4.9

4.1 is seriously unaffordable by demographia's scale. The headline remains the same.

Quote

Affordable 3.0 & Under
Moderately Unaffordable 3.1 to 4.0
Seriously Unaffordable 4.1 to 5.0
Severely Unaffordable 5.1 & Over

Edit : fat fingers

[staringclown]

Sydney and Melbourne more affordable than Demographia suggests

Came across this article about why demographias median multiples are different from the ABS Household Income and Income Distribution (HIHD).

Quote

"Our median household income estimates start with a base of the ABS 2006 census data for the corresponding capital cities (statistical divisions) as well as the other areas reported upon. These figures are then adjusted based upon the change in earnings per person (using ABS data)," Cox says.

"There are differences between the income data from the census and the Household Wealth and Wealth Distribution report data. For example, the 2005-6 report had a median household income for Sydney approximately 9% higher than the median household income as reported by the 2006 census," he says.

"Our first choice for estimating median household income data is census data, where it is available (such as Australia, Canada, New Zealand and the United States) because of its virtual universality (more than seven million households nation-wide). The 2009-10 Household Wealth and Wealth Distribution data is from a national sample of 18,000 households (2,245 in Sydney).

"We do not question the Household Wealth and Wealth Distribution report, but consider the census data more appropriate for the comparisons in the Survey. We anticipate updated median household income data from the 2011 census and plan on using that as a base next year.

Be interesting to see if the figures as applied by demographia check out against earnings change per person and the base rate from the 2006 census. If so why the large discrepancy between the 2009 numbers. The ABS will have taken into account the decrease in interest rates in calculating the income. 9% difference between demographia income and ABS is very large to be explained solely by sample bias.

I found this 2006 Census Median Gross Household Income figures of $1027. (Australia) I couldn't find the figures for Sydney. Buried deep in some datacube no doubt. By applying the annual income increase they could be compounding some error and that might partly explain the discrepancy. Especially as it is the end of the cycle. The 2011 census data is due this year so there will be a correction either way.

18000 is a fair sized sample though.

[Mr Medved]

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since 2007–08 there has been a decline in the number of households whose main source of income is unincorporated business income and an increase in the number of households whose main source of income is government pensions and allowances (page 5)

the average number of persons per household declined from 2.69 to 2.57, or about 4%, between 1994–95 and 2009–10. (page 7)

The proportion of couple only households increased from 23.7% to 26.2%, a higher increase than with any other family composition type. (page 7)

Younger couples without children had the highest mean equivalised disposable household income of $1,162 per week (Table 13), with an average of 1.8 employed persons in the household. For couples with dependent children only, and with the eldest child being under five, mean equivalised disposable household income was $822 per week (29% lower than for the young couples without children). This lower income principally reflects the lower average number of employed persons in these households (1.5) and the larger average number of persons in these households (3.4) over which incomes are shared. (page

While the mean equivalised disposable household income of all households in Australia in 2009–10 was $848 per week, the median (i.e. the midpoint when all people are ranked in ascending order of income) was somewhat lower at $715. (page 9)

The Gini coefficient is a single statistic that lies between 0 and 1 and is a summary indicator of the degree of inequality, with values closer to 0 representing a lesser degree of inequality, and values closer to 1 representing greater inequality. For 2009–10 the Gini coefficient was 0.328. (page 10)

Gini coefficient
0.302 1994-5
0.296 1995-6
0.292 1996-7
0.303 1997-8
0.310 1998-9
0.311 1999-0
0.309 2002-3
0.306 2003-4
0.314 2005-6
0.336 2007-8
0.328 2009-10
(Estimates presented for 2007–08 and 2009–10 are not directly comparable with estimates for previous cycles due to the improvements made to measuring income introduced in the 2007–08 cycle. Estimates for 2003–04 and 2005–06 have been recompiled to reflect the new treatments of income, however not all new components introduced in 2007–08 are available for earlier cycles)

[cobran20]

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since 2007–08 there has been a decline in the number of households whose main source of income is unincorporated business income and an increase in the number of households whose main source of income is government pensions and allowances (page 5)

So all the retirees who got burned when the share market rolled over are now poor and requiring assistance. What will happen in ten years when all the BB's are retired and no tax base to pay for them?!