Average Wage vs Median Price

It's not hard to believe. I looked up Sunnybank's numbers (sort of the equivalent to GW in QLD) and it was a shocker, I think like 7-8% unemployment. These suburbs consist of Asians that have come over here with heaps of cash but unemployable due to the language and culture shift. I know plenty of middle aged Asians that just sit around sipping tea in their million dollar homes.

You might be onto something.

According to these both have about the same average income with Wezza a little more.

http://glen-waverley.localstats.com.au/demographics/vic/melbourne/east/glen-waverley

http://werribee.localstats.com.au/demographics/vic/melbourne/geelong/werribee

BUT household income for Glen Waverley is over $200pw more. And it's typically households that buy homes not individuals. I'm also guessing Glen Waverley has a more of an older demographic who are retired.
 
The story hasn't changed from last boom, the boom prior to that or the ones beforethat. This is a price correction. Wages growth will catch up and rebalance the equation.
I'm not sure wages will ever catch up. Mostly because Average Wage vs Median Price is a crap ratio that the media/pollies continue to use. It completely ignores the fact that the vast majority of non-FHB have a massive deposit (often > 50%) to put down against their 2nd purchase. This deposit grows exponentially with each subsequent purchase.

Back in 2008 the RBAs SOME OBSERVATIONS ON THE COST OF HOUSING IN AUSTRALIA made some good points that are still v. relevant today.

... the existing measures of housing accessibility have a few shortcomings. Most importantly, they tend to focus on the average income level for all households rather than focusing on households in the age groups that are typically looking to purchase homes.

....we have calculated an alternative measure which represents an estimate of the proportion of all dwellings (both houses and apartments) transacted in any year that would have been accessible to a typical household in the prime home-buying years, based on certain assumptions about bank lending behaviour.10 We focus on households headed by persons aged between 25?39 years as potential home buyers. The estimates suggest that in four of the major capitals, around 30?35 per cent of transacted dwellings (houses and apartments) would have been accessible to the median household in the home-buying age groups in 2006/07 (Graph 5). Perth was the exception, where only around 10 per cent of dwellings would have been accessible. Taking account of accessibility outside the capital cities, we estimate that on a nationwide average basis around 33 per cent of transacted dwellings would have been accessible to the median young household in 2006/07, compared with a longer-run average of around 45 per cent. Of course accessibility would have been much lower for many lower-income households.
....that was 2008 - it would be interesting to see the figures today.

It would also be interesting to see an updated chart of
sp-so-270308-graph5.gif



So as long as the Average FHB income / 30th percentile home ratio stays at a reasonable level (with adjustment for IRs), then the continued decrease in the Average Wage vs Median Price is unlikely to be an issue.

We also discussed it in this thread
 
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