Forget Median Prices! Discover the Real Way to Gauge Housing Affordability

In this episode, we discuss why Median Prices are not the best gauge for the real cost of property.

If you’ve ever tried to make sense of property prices and found yourself relying on the median price as a benchmark, this conversation is going to challenge your perspective.

We’ll be unpacking why the median price might not be telling the full story when it comes to housing affordability and what alternative measures might provide a clearer, more accurate picture of the true costs of buying a home in Australia.

Whether you are an investor, a home buyer, or just interested in the housing market, this episode will equip you with the insights you need to better understand the realities of housing costs and the metrics that matter most.

True Cost of Housing: Beyond Median Prices

In this episode of the Demographics Decoded podcast, we take listeners on a journey into the intricacies of housing affordability.

By dissecting traditional metrics, labour market dynamics, and societal trends, we arrive at a comprehensive analysis of the factors driving housing costs and potential solutions for making homeownership more accessible.

• [00:02:40] The limitations of using median house prices as a measure of housing costs
• [00:04:15] How a U-shaped wealth distribution impacts the relevance of median house prices
• [00:06:00] The need for a more granular approach to housing affordability metrics, focusing on specific suburbs and property types
• [00:08:30] The classification of Australian jobs based on skill levels and its effect on the labor market and housing sector
• [00:10:50] The transition from a manufacturing-based to a knowledge-based economy and its impact on middle-skilled jobs
• [00:13:08] How wage pressures and high-end housing developments have driven up median house prices
• [00:14:55] The growing concern of housing affordability versus house prices and the rising ratio of house prices to median incomes
• [00:16:47] How lifestyle changes and the demand for larger homes with more amenities have influenced housing costs
• [00:23:52] Potential future political and demographic shifts that could pave the way for policies aimed at reducing housing costs

Throughout the episode, our discussion sheds light on potential solutions for addressing housing affordability, making this episode a must-listen for anyone interested in the future of the housing market.

Some of our favourite quotes from the show:

“But in this U-shaped scenario, the poor people, they can never, ever even dream of living in a median house. That makes no sense. And the rich people? They wouldn’t be seen dead in a median house which is much below their standards. So this measure is precisely interesting for no one.” – Simon Kuestenmacher

“I know that I learned from you about the five different job skill levels and how they are very different and they affect how much your income is going to be and , over the long term then, where you can end up buying your own properties.” – Michael Yardney

“In my mind, that’s a slightly different argument because first-home buyers shouldn’t be expecting to buy a median-priced house when they start off, even though many of them want to own the sort of house that took their parents 20, 30, 40 years to be able to afford.”- Michael Yardney

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