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A Debate on Housing Affordability

November 16, 2015

At the moment, a pressing social issue has arisen in the cities of many developed and developing cities – rising asset prices, especially rising housing prices. This is, as I will argue, a matter of concern for policy makers and the citizens of those countries.

Such concerns can often be seen in the media, and many points are raised in such discussions. But rarely is a full analysis given.

Today I’d like to try my amateur hand at discussing the multitude of causes affecting housing affordability, then assess whether rising housing prices are a good thing, while simultaneously discussing the ramifications of any solutions posited to the problem, before then giving you some short advice on what to do if you need to buy property. While doing this I will try to avoid a deluge of statistics at you, dear reader. The views in this article are the product of reading hundreds of articles over the year, and tidbits in books. As you can imagine, I haven’t given you every single link in this article.

Like any rational discussion of such a complex topic, this post is a little long, but I hope its well worth it. I’ll be focusing my discussion on Sydney and Australia, but these points often cross apply to many other countries and cities.

Why is the price of housing rising?

During the past 60 years in, the price of housing adjusting for inflation and for changes in the quality of the housing stock, has risen at an annual average rate of around 2.5%; in contrast, real per capita disposable incomes have increased just 1.6%. Furthermore, the median dwelling price in 1985 was 3.2 times a household’s income, now, it is 6.5 times the median incomes.

Of course, this doesn’t measure the true cost of home ownership. For that you need to consider resale costs, interest rates, maintenance outlays etc. In particular, low interest rates mean housing is still somewhat affordable despite the median dwelling price doubling as a % of household income over the past 30 years.

What figures you use may vary the information, but the broad principle is the same. So, why are prices rising?

Tax and policy system incentives

Inherently, changes to the taxation system have spurred the development of rising housing prices.

The financial deregulation of the late 1980s in Australia was a strong microeconomic reform, that increased the liquidity of money supplied to households. Like any increase in supply, this drove down the cost of finance for borrowers.

On the taxation side, many government reforms make investing very favourable. Negative gearing, for instance, in effect acts as a tax subsidy for any *loss* made on an investment. Of course, thanks to the government introducing an allowance for depreciation, this loss can be higher, thus, the tax benefits are increased. This tax subsidy is an even more significant factor now because bracket creep slowly pushes people into higher tax brackets, thus the tax benefits of property investment – depreciation allowance, interest payments being tax deductible etc. are so significant.

This change to negative gearing was also accompanied by a halving of the capital gains tax rate in the late 1990s. In effect, for assets held over a year, the tax payable is now half what it used to be. Thus the benefits of any investment return are higher than what they used to be.

We could go on about tax at length, but the basic point is that taxation rules have shifted to (even more than they used to) favour investment spending over either consumption or leaving it in a bank.

For instance, if you spend $100,000 on a round the world trip, you have nothing. If you get a 5% return on $100,000, the ATO then tax you on the $5000 you earn, reducing it to an after tax benefit of $3500 which then has to outpace inflation. If inflation is 3%, then your net return is 0.5%. Not much! By contrast, if you invest in a property, you get the ATO subsidising any losses you make, you aren’t taxed until you actually sell the property – which can be whenever you choose to minimise your tax… – and, being a higher risk investment, you’re likely to get a higher return. And, if you’re using borrowed money to fund a property, say you only have 20% of the money down, then you’re rate of return on your equity is (before interest costs and etc.) 500% magnified. That is, your 5% return is magnified to a 25% return as its 5% on the whole investment, which, even if you have 10% investment loan costs quickly adds up… remembering that those loan costs are tax deductible!

Oh, and if you’re a renter, tough luck! There’s no tax breaks, and any payments you make for rent come out of after-tax income. So, its not like you can put yours earning into superannuation to dodge tax, or shares. You have to pay from after tax dollars.

Without writing a book about tax and personal finance, the tax system REALLY HEAVILY rewards investors into assets. That includes property investors. The net effect has been to increase the flow of funds going into housing stock. That has greatly increased demand, increasing housing prices.

This massive flow of funds by investors into profits looking for rental returns from tenants has been accompanied by record low interest rates following the GFC. These rates reduce the cost of borrowing further. Reducing borrowing costs increases investor’s ability to borrow funds to leverage and acquire property. Remember, negative gearing (as distinct from positive or neutral gearing) actually means your cash flow from a property is a net negative, but is offset by (unrealised) capital gains. This is all fine and all, but too many properties and people get a short term cash crisis / don’t want to give up their standard of living. Lowering interest rates massively increases the demand for borrowings. The effect of this has been to seen first home buyer and owner-occupier buyer rates plummet against the % of properties bought by investors.

The net point of all this is that 30 years ago investing in property was FAR less favourable, so investors didn’t invest. They also couldn’t access funds before financial deregulation. Times have changed, and now there is a tonne of money going into property.

A very quick sidenote – a bit of this money comes from self-managed superfunds investing into the property market.

Now, another policy factor that drives rising house prices is immigration and foreign investments.

On immigration, increasing the size of Australia’s population inherently creates greater demand for housing stock. Since, as I’ll discuss more below, most housing stock demand concentrates in cities as Australia becomes ever more urbanised, demand pushes prices up. Increasing the no. people in the population fundamentally increases housing prices because the supply of land is finite. People talk about rezoning land for development, and there’s potential scientific developments that can open up parcels of formerly arid land… but, at the core, the size of NSW is fixed. We can’t create land. We can’t ever change the amount of land we have (short of building artificial islands). That means, to my mind, the housing debate is fundamentally a demand size equation. Immigration can only perpetually increase demand for housing, so long as their remains a desire to live in cities and we don’t decentralise. Food for thought. That’s why I think a large part of the solution to any housing problem must come with building new hubs of development – Western Sydney, Newcastle etc. – with enough glamour to discourage further populations flows into Sydney, assuming we don’t want upwards pressure on house prices.

Just a quick aside, but a fundamental issue with the supply of land is also Sydney’s geographic boundaries – the blue mountains to the west, the sea to the east, plains and some marshland (if memory serves) to the South, and limited northern development limit the potential for Sydney’s borders to expand.

Now, as to ‘foreign investment’, that’s an external factor. Arguably this is being caused by a multitude of factors – the corruption crackdown in China causing capital flight, international attractiveness of Australian property, rising middle class with disposable income worldwide, greater capital mobility etc. – but the basic point is that foreign investment = capital inflow. Capital inflow = more capital for demand, raising prices.

That’s where you get shrill media cries like “ban foreign investment so Aussies can afford a home!” And yes, foreign investment does have an impact… but its much less than people think. Earlier this year, when there was a huge media storm about foreign buyers, and buying was at a beak, only 19.5% new housing demand was from overseas buyers; making up just 11.2% of overall housing demand. That’s not nothing, but it clearly implicates developers and investors as the cause of approximately 80% of demand – first home buyers are like a piddling 5% of the market.

Furthermore, being more Machievellian, we’re happy to accept foreign investment… for the right price. In a really cool instance of “did you know?”, did you know that, for all our anti-immigration stances and such, we’ll just let anyone come in on business migration… if they bring us $5 million dollars! http://www.industry.nsw.gov.au/live-and-work-in-nsw/visas-and-immigration/business-migration/state-nominated-visa-categories

Let me amend that. If you give $1.5 million to the Treasury upfront and then continually invest, we’ll also let you in. And if you’re okay to live in regional areas, we’ll let you in for just $750,000! What a bargain!

It may seem terribly cruel, but so long as we charge a high enough entry price on these ‘business migration’ programs, we get enough money that can be used to benefit Australia that more than offsets any tiny impact on housing prices any individual migrant has.

I should mention, just for your edification, that the NSW government is often condoning criminal behaviour in doing this! In China, for instance, its illegal to bring the amount of money out of the country as is required for this business migration scheme. So, basically every time the NSW government accepts a $5 million paycheck, its condoning the breaking of Chinese laws on capital movements.

Who knew property investment had so many cool “did you know?” trivia facts?

If you’re still reading right now, we’re about to go into the murky waters of social causes of rising house prices, which add more complication to the story of housing demand. To give the TL;DR version so far:

Tax and other stuff has made property a really attractive thing for investors. They are the big bad people pumping in the majority of money driving demand, all in the name of rent seeking. Foreign investment is a sideshow, though an interesting one.

Onto part 2!

The Social Causes of Rising House Prices!

Reading what I wrote above, you could be forgiven for thinking that the housing crisis is all about faults in government policy. But in truth, many of the government policies outlined above were sound. The fault lies in part in social trends, and some of our own actions

Take shifting patterns of the workforce, for instance. Australia has increasingly shifted towards an urbanised environment as the % of workers in services industries has increased. Urbanisation drives housing process, as cities become more populated, yet city boundaries hardly increase. But more than this is the development of a process called agglomeration. As Herald economics writer Matt Wade has described many times: http://www.smh.com.au/comment/better-public-transport-makes-for-a-smarter-sydney-20140422-zqxsi.html

As cities across the world wrestle with globalisation and the advance of technology, effective mass transit systems are proving valuable. Fast-growing knowledge industries are clustering together rather than spreading out. Individuals, businesses, cities and nations stand to gain from this process which economists call “agglomeration”. Knowledge workers rely heavily on face-to-face communication in order to share information, generate ideas and cut deals. So agglomeration fosters innovation. It also offers deeper labour markets which improve job matching and enhance skills. This results in higher productivity.”

What Wade discusses is the need for public transport to create an environment that allows us to reap the benefits of agglomeration. But at the core of this proposition is that as our financial services sector, our legal sector, our technology sector –our number of professionals – rises, their productivity is only maximised by the centralisation of human capital. But this creates a problem. If all the knowledge workers get plum apartments in the inner city, then where does the rest of society live? And, just because knowledge workers  might ‘need’ to live near the city, that’s not going to change the general demand for inner city life, is it?

Tied into this argument is that people generally have preferences for city living. Jobs are in cities, people like shopping, people like the beach, people aren’t country fans etc. You’ve got a lot of sociocultural factors that make city living very attractive to a vast segment of the population. That increases demand again.

Now, let us move onto a more controversial argument. Some conservative commentators, and indeed many in the community, would argue that young people expect too much far too quickly, and buying a home as your first property is ridiculous. Others would argue that housing demand is driven by people wanting ‘McMansions’ and not smaller homes. Indeed, there even articles in the Sydney Morning Herald ominously almost implying that a failure for older people to downsize was a cause of housing prices rising http://www.smh.com.au/federal-politics/political-news/housing-crisis-report-says-backyards-for-children-vanishing-as-oldies-stay-put-20151028-gkl3eh.html

These commentators say people expect too much. Are they right?

The first thing to say is that a heat graph analysis of Sydney suburbs finds that a full time minimum wage worker can only afford rents in 0.1% of Sydney suburbs within 40km of the CBD. That is, only 1 in one thousand homes are suitable for the poorest in society. Whatever may be said about people earning higher incomes and excessive demands for housing, to me our long term goal should be to foster housing for all. As I’ll discuss later, I think housing affordability is an important thing to retain.

Now, as to the argument that young people shouldn’t move into a home at first, I totally agree. The idea should be to rent a cheap place in a slightly distant Sydney suburb, and then slowly move up either the rental scale, or property scale as incomes rise, if you desire better property. For any university graduate to expect to have the capital to invest in property is a questionable notion. Consider human history. For thousands of years very few have actually owned land. Only as resources have increased have people actually earnt the buying capacity to own land in their own right. You’ve gone from communities owning tracts of land to families creating wealthy estates, to now every individual wanting land. That’s been driven by rising prosperity, but it has limits. You can’t demand a house at first, so moderating expectations is advised.

But, when expectations are discussed, ‘moderating expectations’ inherently has a different meaning today. In the old days, to read some columnists, your young man saved hard, and then bought somewhere like Paddington, a quiet suburb – nothing ritzy. Yet now, suburbs like Redfern – just less than 10 years ago with a median house price about $500,000 and not perceived as a very… stylish area – now command a median price over $1 million. Student rents in the area are many hundreds of dollars. So, the quiet suburb like Paddington near the city is not an option. You’ve got to moderate your expectations, and move further afield, which has its own problems…

Fundamentally, a cause of rising housing demand is that everyone wants better homes in better suburbs, simultaneously. Which, of course, rapidly raises prices. This phenomenon is given an interesting discussion in Elizabeth Warren’s book The Two Income Trap, of which a nice summary and discussion is give in an article by Warren here http://www.yale.edu/law/leo/052005/papers/Warren.pdf Though the article is dated (2005) , Warren did in effect predict the GFC, and here the point broadly applies.

The Two Income Trap

Warren discusses bankruptcy in the US. Warren goes on a discussion of why, despite incomes rising as we now have two income families, there is such problems with bankruptcy, and housing prices. Surely, with all the extra money, even if women are paid significantly less, we must be far better off?

The issue in this case is that the mother’s income is not actually much of a gain – its not like a 50% pay rise. The mother has to pay taxes. Because the mother needs to get to work, a second car is often needed. This second car increases debt. Furthermore, because the mother not being means domestic work isn’t done, costs like preschool and domestic services rise. But, generally, there is a small incremental gain, so why the struggles?

Is it consumption? NO, Warren finds that consumption broadly speaking hasn’t risen. In fact, Warren recommends spending on frivolous consumption! Why? So long as you can scale a cost back, like frivolous consumption, you’ve got buffer room. Such is not the case with fixed expenses like a mortgage, which you can’t scale back…

The actual cause, Warren speculates, is that people are trying to buy property in better neighbourhoods to get access to better schools. Thus, they use the second income for their kids – using a second income to leverage a larger mortgage for better property – but since everyone is doing this, it simply stretches the budget, pushing up housing prices. As housing prices rise, sucking up the income from second income earners, it can actually seem necessary to have the second family member work, because house prices have risen.

Of course, this promotes instability. In the old system if one person’s income fell or a job was lost, the second partner could step in to bridge the loss of money. But that can’t be done with a second income, if its depended on to meet costs. The flexibility drops. That’s why Warren found that bankruptices often very highly related with having a dependent child. The cause of bankruptcy was not overconsumption. It was driven by medical expenses, one parent losing their job, or divorce. All three link to this dependence on two incomes. Lose the job, and you’re too heavily mortgaged. Divorce, and there aren’t two income earners anymore. Medical expenses, or having to stop work, and the family fractures.

And as to the sizes of all these houses, are they much larger, with ‘media rooms’ and all sorts of extravagances? Well, yes, homes are slightly bigger. Warren found the no. rooms had increased from 5.7 to 6.1 over 2 decades to 2005, this increase most often being for a second bathroom or third bedroom… what luxury indeed.

Thus, rather than being due to increased size of homes, rising houses prices represent us all trying to move to ‘better’ homes simultaneously. The problem is, housing supply is highly inelastic – that is, if everybody wants to move into a better home, it takes us awhile to increase the no. houses. Building a house takes years, and redeveloping communities so they are ‘better’ is a long term project. No wonder, then, that if there is an increase in demand and supply is inelastic that you have rising prices.

The bitterly sad irony of all this about schools and neighbourhoods is that the impact of a given school is not that significant, rather, the individual teacher is what impacts how well a student does. The actual choice of school has a fairly minimal impact on academic achievement. And yet… it has such an impact on house prices – which has a big effect on everyone.

Why rising house prices are a really bad thing

Rising house prices are an absolutely horrible thing for everyone except property owners and landlords.

As discussed above, the two income trap has seen gains in incomes eaten up by housing prices. The dependence on more income makes people more fragile to the vicissitudes of life, increasing stress and volatility. Even if you’re doing fine, you’re loan repayment being larger means less money for other things in life. While Warren, and myself and many others would say that only one income should be used on housing, and another for savings, the problem is when society as a whole dictates that house prices rise.

A second argument for why rising house prices are bad has to do with wealth inequality. As the largest asset anyone ever owns, homes represent an equalising factor for wealth inequality when home ownership is high. When people rent, by contrast, we are simply seeing a transfer of wealth from renters to owners. Rent seeking exacerbates inequality. This is in contrast to 1960s and 1970s Australia wherein higher rates of home ownership made Australia one of the most equal societies on earth.

But why is inequality a bad thing, you ask? Surely, if we wanted equality, we’d just go communist?

The first answer to that is that this is about wealth inequality, not income inequality, and thus doesn’t directly affect the incentive to work. But, more significantly, new evidence in economics studies, including from the IMF, finds that rising inequality harms economic growth, contra to traditional mantras. Its not hard to see why. More inequality means more people need welfare. More inequality means low income earners spend less, when they actually have a higher marginal propensity to consume. More inequality also results in social division. When the Gini Coefficient rises above 0.4 we see social and class divisions, which fracture a country’s politics and inhibit its unity. This has flow on effects, and is generally unpleasant. So, fundamentally, in exacerbating inequality, the practice of rent seeking is deleterious. And when the only way to prevent inequality – by minimising rents – is to move away from the city centre, you are in effect shifting longer commuting times onto low income earners, who are the most time poor – the ones who can’t afford to outsource domestic tasks for money. Longer commutes correlate with worse health outcomes, and in spending more time on trains and buses, commuters spend less time with families. Such a cycle harms the lower class viciously.

Now, I consider the above arguments as significant. And that’s not to mention the stress, bankruptcy and issues Warren raises with home payments. The effects of defaulting on fixed incomes, and missed conspicuous consumption and not having the secuiryt of your own home, or not meeting up to cultural expectations of the ‘Great Australian dream’ can all also be considered. But, I’m no sentimentalist. If all these sacrifices were being made for some noble enterprise, it would be worthwhile. If for this stress and struggle, like a person saving so they can invest in shares and make a long term return, we were to actually get something worthwhile out of it, then of course I would support it as supporting the national interest.

But that’s just the thing – rising house prices do nearly nothing for society. Housing and land is inherently a non-productive investment. Building a new house doesn’t do anything for society. Refurbishing a house doesn’t do anything for society. That new coat of paint? Nothing. At least, not like building a road, or investing in hospitals does… you know, something with a return on investment.

Pushing up the price of houses is like pushing up the price of art. If the Mona Lisa sells for $1 million, but then later sells for $10 million, you’ve still only got the one artwork. No value has been created for society by raising the price. But, some poor chap has just spent $9 million that could have been spent on something productive. Its classic personal finance for a society – prefer income producing assets rather than things which give no value. Like housing.

But surely, you say, these more expensive houses are actually better  than those built 50 years ago? That represents the cost. Surely?

As discussed earlier, the supply of land is finite. And most of what you buy is the price of land, not the house. And I can tell you, you aren’t paying hundreds of thousands of dollars more because the soil quality of land has improved over the past 50 years. You are paying more because there is a space to build something on. But lets be charitable. There are improvements to houses, and money spent on houses. In accounting, we consider spending on assets as either being expensed or capitalised. If you make something better than it was originally, you can capitalise the cost and add it to the value of your asset. Like adding solar panels or better insulation. But if you’re just repairing the roof, adding a coat of paint to cover cobwebs etc. that’s just a regular expense of maintenance. Now… just try to tell me that on a 40 year house you spend less on maintenance than you capitalise…

Of course, even if we were to dreamily say it was capitalised, we forget that buildings are a depreciating asset! An asset forever going down in value. Forever experiencing wear and tear. So, even in the best case scenario, any investment into housing is like ploughing money into assets that depreciate… as opposed to income producing assets that increase in value. As any personal finance book will tell you, that’s the height of stupidity.

The only thing worse thing, after all, is spending money which doesn’t even depreciate afterwards, but instead leaves you with nothing. And you know what? That’s EXACTLY what bidding up the price of land does – nothing! No land is created, no soil quality improved! The land supply is inelastic (barring building into the sky) . So when, for all these things we bid up house prices, we are pushing our savings, the fruits of Australian workers and the nation, into a bottomless pit of nothingness, a pit that can never be filled, can never produce anything.

Now as a nation, that’s just plain incompetent to recommend as a policy position.

Solving the Housing Crisis

Having discussed the causes of the housing crisis for awhile, the question is how do we solve it? How do we take action? How do we turn this problem around?

For the most part, there is no quick solution. As discussed ad nauseum, the supply of land is finite. The development of new land is a very long process. Rezoning takes time. Building apartments to increase housing stock is a possibility, but this backfires insofar as apartments need infrastructure on the ground to support them… which requires land. Furthermore, demand is also price inelastic. People want to live in homes and need accommodation. That people view homes as assets is great for asset holders, yet doesn’t change fundamental beliefs in getting homes.

In the long run, the development of multiple city centres and decentralising the city population is the best way to reduce housing prices. Building away from the centre where demand is strongest, and creating jobs in more remote regions eventually stems the flow towards the centre. More centres like Newcastle, Bathurst and Western Sydney need to be developed. Ideally, new settlements along the Sydney-Canberra corridor could progress. Long term decentralisation is the ideal solution.

Now, since this is a demand side problem mostly, we must act to lessen demand. So, before we attack solutions, let me saying that housing subisidies, first home buyer grants, and letting superannuation retirement savings be allowed to be spent on housing – heaven forbid – should not be countenanced. Onto solutions.

In the short term, there are policy levers. Foreign investment could be reduced, but for the reasons I gave earlier, I don’t see this as a significant driver of housing prices, and we can actually use the funds we generate from business migration to good effect. Rather, the main issue is investment owners driving the bulk of demand. This could be significantly reduced by eliminating negative gearing – though this would have to be phased in – as well as potentially looking at the tax deductibility of interest repayments. While tax deductible interest could be axed as a tax loophole, it actually serves a genuine purpose – to encourage investment – so I would be hesitant. But negative gearing? Yes. I would also try to stop self managed super funds investing into property (or limit investment) , to reduce demand.

Cutting immigration is another big policy lever that could be used, but, like many levers, dangerous to utilise. Fundamentally, a rising population puts pressure on housing prices, and requires supporting infrastructure. I think there’s a need for a population debate of actual significance in Australia, and its an overlooked policy debate, but the issue is that immigration supposedly counters our aging population and fills the gap for skilled workers (arguments I find faulty). Also, completely cutting out immigration is bound to earn international ire, popular cries of racism and popular disdain.

The RBA could raise the cash rate, and decrease the attractiveness of investment loans – this would be perhaps the biggest lever that we could pull. But this risks harming any recovery in the Australian economy. Also, the RBA’s independence from central oversight is a boon, which I would not alter.

Finally, we could introduce a land tax. For all the talk about the GST being an efficient tax by economists, its very hypocritical that we hear no talk of a land tax replacing stamp duty. Stamp duty is a stupid, distorting tax that causes economic inefficiency, where land tax is the perfect tax that impedes absolutely no economic activity, and can’t be dodged, unlike any other tax. You can move capital, but land is rather fixed in place. Taxing land would discourage some property investment. We could also add another tax – death duties – into the mix for high income earners to try an reduce the accumulation of wealth through property.

All these measures are good. Further measures would require the use of rather authoritarian measures. Changes to social expectations and such could make a difference, but fundamentally, I think the problem is not in people’s expectations, but in policy decisions, and the society I think is ideal isn’t a developers paradise.

Buying Property

I love a good policy discussion as much as the next 19 year old, but I know that some people are slightly less esoteric. They simply want to know if they can buy a house.

My advice is to go read lots of personal finance books for help. Start with books by Noel Whittaker. Reads lots of books. These books will help you fundamentally shift your mindset on spending and saving, and encourage you to develop a mindset conducive to wealth accumulation. That’s going to make things a lot easier.

My advice is to start young and focus on accumulating savings and assets. You want to start investing in income producing assets. To invest, your income must exceed expenditure, which is then saved and invested. Maximising income while cutting spending will allow you to begin investments. With the magic of compound interest, so long as you leave your money to the side, your long term wealth prospects are pretty much guaranteed, so long as you invest in the right asset class. I would recommend an exchange traded fund diversified across a stock index, with a minimum time horizon of 5 years as promoting the greatest capital growth to build your wealth.

The ultimate goal here is to expand your control of assets and slowly generate either passive income, or the capital gains sufficient to help put down a deposit. Once the deposit is acquired, your best advice is to strongly pay down the loan. The way mortgage loans are structured, you pay an awful lot of interest at first, but very little principal. If you have to pay $1000 a month on your mortgage, for instance, you can bet that maybe $900 of that is interest. By increasing payments by 20% to $1200, you’d actually pay back the principal thrice as fast, cutting hundreds of thousands of dollars in interest. It’s a tough short term cash problem, but well worth it in the long run. The numbers in this example are hypothetical, of course.

As a young man, for instance, if you earnt $30000 a year – not impossible while studying full time – then even if you had to pay 50% of your income as board to your family, you have $15000 in potential savings. Assuming you spend $7500 socialising and such, you still have $7500. Over 5 years, that’s going to be $40000 with even moderate returns. If you decide to get rather more creative and know what you’re doing, you could put down the $7500 as equity in a margin loan to gain control of $15000 of assets. With 5 years, you may control nearly $100000 in income producing assets, especially if you cut expenditure and only spent $5000 socialising. If your family doesn’t make you pay a 50% board rate, you could do much better. And yes, these numbers are based on personal experience, for a person whose name shall not be disclosed.

You must act now, however, as once your disposable income begins to wilt away and you get trapped, such plans wither to dust.

All this is to say that with a bit of short term sacrifice you can get a long way on the road to wealth rather quickly. I urge every reader now to go and read personal finance books today. What you can learn will change your life, properly applied. At some point, I may make a post about the subject, so vital is it for every person to know about. A proper understanding of finance is essential for eveyr citizen. Even as we face scary house prices, as individuals opportunity awaits us if we are willing to act.

The world beckons even as housing affordability dims. Yes, there is much you can do in the policy debate for housing. But for yourself, there is far more to do. I urge you today to go learn about personal finance.

If you’re still reading, let me thank you for getting this far, and do tell me what you think. I’d hate to think nobody read this long post.

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