How the two iron laws of Australia’s property market put the squeeze on every generation | Cameron Murray

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Buyers today will be stretched to their limit, just as they were by the interest rates of the late 1980s

‘Property prices grew. And as they did, the advantage of low interest rates unwound. Now, as interest rates rise, the situation only gets worse.’‘Property prices grew. And as they did, the advantage of low interest rates unwound. Now, as interest rates rise, the situation only gets worse.’Every generation has their own housing problems. With interest rates now rising, the late 1980s is an era we are going to hear more about.

, noted that in this period low-income groups were “seriously neglected” and “had not been able to afford a home of modern standard as well as adequate food and clothing”.In the postwar era shortages of materials for new housing were the main problem. What was unique about this era was the heavy-handed government involvement in housing development and provision for the working class.

In the 1960s conservative mortgage lending, requiring high deposits, saving requirements, stable jobs and family structures, created a different limit on who could buy homes. The modern era started in 1993, when Australia began managing the macroeconomy with monetary policy. Higher interest rates are used to reduce house prices and spending, and low rates to boost them.

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Article misses a key points, high interest rates dampen demand but less public housing, more/bigger family homes yet smaller families (upselling?), ignores more older singles, stagnant wages & demand in working age cohort vs. above median age voters being catered to, status quo?

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