Foundation,

I await with eager anticipation the results of your "correlation analysis". I will be fascinated to see how you attempt to refute what I have shown to be common knowledge in property speculation circles and what I also would have thought was basic intuitive common sense.

I would also be fascinated to see how you attempt to disprove the graphs based on data obtained from the HIA and CBA on pages 7 and 8 of http://www.candobetter.org/sheila/spaVicAffordableHousingEnquirySub153.pdf.

Dagget, those graphs show only one indisputable fact - that inflation-adjusted house prices have risen less in rural areas than in cities. That is all! Are population growth and immigration THE ONLY other factors that differ between rural areas and cities?

If yes, you've proven your point. If no, there's a strong chance you're reading too much into the charts. I reiterate, concurrent population growth and house price inflation does not prove correlation. Furthermore, even correlation does not prove causality.

But you write "I would also be fascinated to see how you attempt to disprove the graphs..." What nonsense! I would think it is up to you to prove they demonstrate the effect you describe.

Here's a clue - gather every possible variable (not just the two that suit), then mathematically test the influence of each variable on the value of house prices, while holding all other variables constant. Change your constants. Repeat. Rotate variables. Repeat. Change constants....

That is science. Pointing to two lines, claiming they support your argument, then challenging others to "disprove them" is counter-constructive.

Intriguingly, I live in a small, rural, coastal town. In the last 5 years, average prices have risen from below $80,000 for a 3br house to $300,000. Far more in percentage terms than any capital city. Yet the only non-Australian-born residents I can think of have been here for decades. Funny, huh? You’ll find the same thing right around the rural coastline. Perhaps there should be a 3rd chart on that report…

Foundation you can't just extrapolate by just looking at your own small coastal town, which sounds delightful.

Sydney grows by 50,000 people each year, that is perhaps 10 times the population of your small coastal town. Each year people migrate to Sydney from rural NSW and other parts of Australia as well as from overseas. If you look at immigration figures from after 1945 you can see that state housing authorities had to build whole suburbs [and towns] to house the overseas migrants. Look at the housing around the car plants in Elizabeth, SA and Broadmeadows Vic and North Geelong Vic.

Daggett “Calculation of affordability of the price of a median house with reference to a mean measure of income.”

“Affordability”, in that context would need to assume “all other things remain equal”.

Let me assure you, all other things have not remained “Equal” consumer goods, whilst more abundant and diverse, have collapsed in price – price of TVs and video recorders in the 1970’s for instance, New Cars are cheaper than they ever have been.
Computers, on any power : price calculation are a tiny fraction of their 1970 price – example – 2 gigabyte (2,000 megabyte) memory stick costs $99 whereas a 200 megabyte harddrive (1/10 the capacity) in 1978 cost $200,000.

Having lived and bought property in the 1970’s and 1980’s my view remains the same, “affordability” is no different today than it was 30 years ago. It is no harder, today. The only thing that has changed is the expectation of more folk these days that the world “owes” them everything and thus lack the character and self discipline to budget, save or accept hand-me-down second hand furniture when it is offered.

Col,

Over a year ago shared with us that "I design and implement corporate financial forecasting models. The current price I charge for these is in excess of $25,000 each." (http://forum.onlineopinion.com.au/thread.asp?article=3737#13522) So you can hardly expect the rest of us to accept that you are a typical homebuyer and that your experience should be applicable to the rest of us. Indeed, I would be surprised if in your case housing was not a good deal more affordable for you today than it was in the 1970's.

You wrote: "The only thing that has changed is the expectation of more folk these days that the world 'owes' them everything ..." That describes very well in my view the mindset of property speculators and landlords. A few years ago, I reluctantly sat in on a negotiation over the purchase of an investment property. The real estate agent confided in us that because of the negative gearing laws that one out of every three properties bought by an investor was paid for by his tenants.

As I showed above (http://forum.onlineopinion.com.au/thread.asp?article=4834#53863) we once had a housing system which made it possible for nearly everyone to have affordable good quality housing and plenty of space. This was largely due to the fact that much housing was owned publicly and not privately.

This situation has been changed over the past few decades to what we have today due to the political influence of land speculators and property developers behind the scenes. As a consequence many of us have to become debt for much more for much longer. At least two incomes and longer working hours are now necessary to pay a typical mortgage.

Mal come and turned it to Bull . . . .- RBA interest rate rise

Comments made by a NSW Liberal politician from the seat of Wentworth, was reported to say that all Australians will be able to manage the latest rises in interest rates by the Reserve Bank of Australia.

His comments made also on the release of a high National statistic of Homeowners defaulting on mortgages and Banks reclaiming Australian family homes.

At least 70% of Australians remain average wage earners, whilst the remainder of 30% with above average wages, stack National figures with an assumption that affordability in increases of costs can be absorbed.

The average affordability of an Australian family to buy their own home has taken only six years of Liberal governing and policy to eliminate an Australian Ideology.

The government response to this is that renting is nothing to be ashamed about.

The safety net assurance by our Government that "Handouts" supplement the poor and low income households should be kept in the context of only providing the basic necessities and are only committed to maintaining a below the poverty line society.

This presumed reasoning by our Government continues to provide the smokescreen to the increasing divide between rich and poor, whilst other Government handouts are also enjoyed by high-income households who do not need them.