As a property copywriter and former Sydney resident, I take more than a passing interest in the Australian ‘property bubble’. In recent months, I’ve also been watching how house prices have risen in other capital cities.
If you think UK prices are unsustainable, take a look at places like Hong Kong, Auckland, Vancouver, New York and – yes – Sydney!
In Australia, they blame the Federal Government for limiting land supply. This is a bit rich when you consider that around 90% of the huge Australian landmass is virtually uninhabited!
In Hong Kong, you can see what the problem is. This small part of China is ridiculously over-populated – much like the Chinese mainland itself of course.
What about New Zealand? The South Island is all big skies and National Geographic – so what could possibly be the issue there? Is it to do with everyone seeing Kiwi-land as the most civilized bolt-hole on the planet? Or is the reality more to do with Chinese investors piling into Auckland?
What About Affordability?
When it comes to house prices, why hasn’t ‘the affordability factor’ kicked in? Why haven’t we seen any price crashes? Surely one day the markets will wake up to the fact that ordinary residents of the world’s great cities (as opposed to the migratory super-rich) can no longer afford to live and work in these places?
In cities like London and New York, we’ve seen the steady gentrification of former working-class areas where house prices have rocketed and local cultures emasculated. This strange form of ethnic cleansing has seen established populations driven out by middle-class types on the make.
And who could blame them for taking advantage of low interest rates; investing in property as a source of rental income; or simply exploiting the ever-increasing asset value of property.
Of course, people have been fleeing the countryside and flocking to the cities since the Industrial Revolution. When it comes to chasing the dollar, everyone wants a slice of the action – and cities hold out the ‘big promise’, especially for well-qualified, creative and motivated individuals.
Ironically, successful city-dwellers will often look for homes in the suburbs, or maybe a second home in the country. Crowded and expensive living can also have an extra price tag that goes beyond pounds, shillings and pence.
So where is all this rampant price inflation heading? Some would welcome a price crash – or even a modest ‘correction’. Others cite property as the ultimate Capitalist good – and therefore ‘a good thing’. Or was Marx right when he said ‘property is theft’?
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