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The housing cost spiral – it can’t go on. What’s going to happen?

“This can’t go on” – reports the Canberra Times. This can't go on

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.

Where are we heading
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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.



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About

Pete Wargent is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. He’s achieved financial freedom at the age of 33 - as detailed in his book ‘Get a Financial Grip – A Simple Plan for Financial Freedom’. Pete now manages his investment portfolio, travels and works as a consultant in the finance industry from time to time. Visit his blog


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