expert-q-a

Investors ask: Property affordability

By Sam Saggers

Q. I have read various media reports about Australian property prices booming and first-time buyers being priced out of the market. It's hard to judge is this is accurate because the value of money changes over time. Do you think property in Australia is now out of reach of the average investor?

A.Australia today has a small workforce. It has a small population. It has a large land mass. And we have a high cost of labour and a high cost to build property.

So people often ask me 'Are we in a property bubble because housing is so expensive?'

Developed countries with seeminly lower house prices than Australia also have comparatively low minimum wages - like the US, for example. Cheaper labour, more affordable labour, can deliver less expensive house prices.

But today, house prices in Australia are as affordable as they have been in years. In fact, wages have kept up with house price growth.

Today, the averafe 24 year-old person out in Sydney is making well in excess of $60,000. When I was 24, some 20 years ago, I was making around $24,000. So wages have grown and house prices have grown.

There is absolutely no bubble. Don't believe the fear and paralysis out there in the market. Get out there and go shopping and buy your dream property.

Sam Saggers, CEO, Positive Real Estate 

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Investors ask: Property affordability
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