Completely Stuffed, page-119

That's what they all say, in all property bubble, all over the world.

Just look at China... lots of people, skyrocketing growth in property. Yet, there are plenty of empty cities, empty apartments... and in some pockets of major cities, four family to a house etc.

Property at the current level is not about population growth, not about demand and supply either. Sure, we all need a place to live, we all want to live closer to where the jobs are, where the amenities are etc.

But ultimately, it's not about demand... we all demand stuff, we all want things. It's about affordability.

Can an average Aussie on an average income afford to buy any property at current prices? No.

That's the average Aussie. There are, what, 50% of those below that average who's having it a lot tougher. And no, they can't all move to the bush.

So the other alternative is to rent, not buy. Renting doesn't keep property prices up - investors don't invest in property for the rental yield, not anymore - It's the buyer that will keep the prices up.

So how many Australian could honestly afford to buy a roof over their head? Not at these price level.


Give you an example... there's this 5-year old McMansion on a fairly sizable block of land. It's near a stinking creek where the water barely move. The house is not shabby, it's nice and roomy enough. Now, 5 years ago a similar block near it would go for $500K, let's give it $550, tops. The build would costs somewhere between $250K to $350K.

It's now listed for $1.8M.

This is not a high flying, professional, white collar, high finance sort of suburb. Just your ordinary suburbia. And I haven't seen any noticeable increase in population, prams, babies or new immigrant growth in the area.