Pete Wargent blogspot


'Must-read, must-follow, one of the best analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, must-follow for accurate & in-depth analysis' - David Scutt, Markets & Economics Editor, Business Insider.

'I've been investing 40 years & still learn new concepts from Pete; one of the best commentators...and not just a theorist!' - Michael Yardney, Amazon #1 bestseller.

Monday, 5 December 2016

Where are we heading? The housing cost spiral - it can't go on

Canberra swap

"This can't go on" reports the Canberra Times. 

Home-building costs are moving the price of houses beyond the means of the average purchaser. 

A home sold a dozen years ago has seen an increase in value of 209 per cent. 

As a generally accepted though unproven safe economic limit, the average home purchaser should spend no more than 2.5 times their average annual earnings on a home. 

As such, only a man with an above average salary can purchase a medium-sized dwelling.

The current situation is leading to a lopsided economy.

The country finds itself in a serious situation. 

It can't go on...

Source: Canberra Times, 2 August 1950.

The article goes on to discuss the rent controls that were in place in Australia until the mid-1950s, with properties falling into decay since rent returns were too low to encourage investors to repair them.

Laments the Canberra Times, the system has spent a decade cutting down tall poppies instead of encouraging the "short buds" to flower by means of self-help.

Advantages should be "weighted to the thrifty, instead of the unthrifty".

Basically the 1950s version of avocadogate with archaic language.