The video is a bit interesting . He says that lending to investors as a percentage of home buyers has always been 10 to 20 % and yet the chart in front of him shows that it has been well above that for more than 20 years .
The second chart talks about the increase in house prices after the introduction of the capital gains tax discount . The chart refers to ' dwelling price to household disposable income ratio ' . It claims that prior to the cgt discount the ratio was under 3 . I'm not sure where this number was taken from but I'd dispute that it was a fair average . Under three times in the early 90's ? All depends on where you were shopping .
Charts are great for historical comparison but you need to make sure that you're comparing apples with apples . As an example a new car is roughly the same dollar price now ( or cheaper ) than they were in the early 90's . Far better vehicles and much reliable . If you expand this thinking to many consumables ( clothes , tv's , etc ) then they are all much cheaper as well . So , in reality , they could be half or even 1/3 of 90's prices in buying power terms . So yes , house prices may have risen but so has disposable income and living standards .
Add to that the increase in average house size and the extra contents of those houses compared to the 90's . What about the rise of the second income earner per household ? I don't see him mentioning that ?
There is no doubt that house prices in some areas are nose bleedingly high but then again , they always were . I can remember people complaining about Sydney house prices in the early 90's as I knew some people that were relocated there for work reasons . I'm betting the Sydney prices weren't 2.5 - 3 average back then .
