Is Housing Affordability Creating A Gap Between The Rich and The Poor?

By Peter Sarmas on 7 Aug 2017
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Melbourne Auction Results 7th of August 2017



Sold at Auction: 523    
Passed in: 159  


Sold Before: 73    
Sold After: 19    
Postponed 11  





Melbourne Market Wrap March 7th August, 2017

A clearance rate of 77 per cent was recorded this week compared to 76 per cent last week and 76 per cent this week last year. There were 682 auctions reported to the REIV, with 523 selling and 159 being passed in, 79 of those on a vendor bid. In metropolitan Melbourne, more than 2,400 homes sold under the hammer in July – breaking an 18-year-old record. (REIV)

New banking regulations by the Australian Prudential Regulatory Authoirity have seen the investor market taper off and the owner occupier market pick up. Property forecasters are predicting clearance rates to fall as stock levels begin to increase and in some cases cause an oversupply as has been the case in the past over the Spring period.

Properties priced sub $1 million seem to be doing best in Melbourne as a result of the first home buyer incentives in Victoria. The REIV also reporting strong demand and price growth for properties in Melbourne’s middle ring especially for homes with three or four bedrooms.

Affordable housing is disappearing

According to a report by Core Logic, “there has been a significant decline in the number of suburbs with a median value below $400,000 while there has been a significant increase in suburbs with values above $1 million.  The decline in lower value housing and rise in more expensive housing is most prevalent in Sydney and Melbourne however, it is also prevalent to a more moderate degree in other capital cities.”

This phenomenon has become prevalent in Sydney but now is taking effect in Melbourne as well. “In June 2012, 9.5% of Melbourne suburbs had a median house value in excess of $1 million and by June 2017 that figure had increased to 32.6% of suburbs.  On the flip-side, 24.3% of Melbourne suburbs in June 2012 had a median house value below $400,000 compared to just 2.7% by June 2017.”

Corelogic figures show Melbourne’s median house price is up from $485,000 to $651,000 in the past five years, a rise of 34.2 percent. Median unit prices have risen 11.2 percent for the same period, from $445,000 to $495,000.

Street Advocate – Vendor Advocacy

Congratulations to our wonderful vendors Bruce and Margaret who with the help of our services set a new record price for their location, the Mossfield Estate in Hoppers Crossing 16 Hunter Avenue, Hoppers Crossing


For more information about selling your home

Visit our Street Advocate website or send an enquiry below or just call

Peter Sarmas on 0418 740 606.

[email protected]


16 Hunter_Ave_1

Recent Auction at 16 Hunter Ave, Hoppers Crossing

Is Housing Affordability Creating A Gap Between The Rich and The Poor?

Last month my family and I were fortunate enough to holiday a few weeks in Europe. It’s the first time we have been back since my lovely wife visited some 18 years ago.

Apart from enjoying the break and time with the family there were things I noticed which made me think whether these will have an impact on our economy and property market going forward.

Firstly and most surprising are the number of people travelling. Nearly every flight we took was at capacity, whether this was a long-haul or a short intercity flight within Europe, the planes were all full.

Secondly, airfare prices to Europe from Australia have not changed in 20 years, so travelling in real terms is now cheaper. Flights and train travel within Europe was ridiculously cheap, for example a flight from London to the Greek islands could be as low as 20 pounds one way. This meant that we have become more globalised.

Thirdly and most relevant is the cost of living in the city centres was extremely expensive relative to wages and seemed to be only for the very wealthy. In fact the gap between the rich an poor, haves and have nots was very evident, homelessness was an issue in every city we went. There is much debate in Australia about wage growth but again this is a global issue which came about as a reult of the GFC.

Venice for example was so expensive to live in that most locals had moved out only to have a city filled with tourists. In fact Venice did not see the effects of the GFC experienced by other cities in Italy due to its toursim.

London like Paris had many foreigners living in luxury apartments/properties inner city. Unused land or ‘underdeveloped’ property has been snapped up by developers and turned into hotels or inner city accommodation.

There was a real sense that locals and foreigners wanted to live in communities, near infrastructure, close to shops, restaurants and work, the CBD. My observation of these cities is that very few people drove a car in the city, it just wasn’t practical and or the transport systems in these cities was so efficient. The poorer you were the further out you lived from the centre.

So what did I learn ?

After not being to Europe for nearly 20 years I still think Australia is the best country and Melbourne is one of the best cities in the world and I would happily call it home. Which is why i believe over 100,000 people a year immigrate to Melbourne.

Housing Affordability is a global issue not just a local one which has been brought about by the current low interest rate/low inflation cycle. This has enabled those with assets and access to cash to take greater risk, buy more investments and property ultimately becoming wealthier over the past five years.

In US Dollar terms Australian property is still cheap.  Even at current exchange rates where the Aussie Dollar has risen 10 cents against the US Dollar a $1 million dollar property will set a foreign buyer back $US 800,000, tough to compete against. To put this in perspective I noticed when travelling one bedroom studio apartment approx 30sq metres selling in Soho London for over 1 million British Pounds, that’s about $1.7 mill Aussie Dollars.

The most expensive real estate in the world (see graph below) measured by income to earnings ratio exists in the following cities, in order.  1. Hong Kong 2. Mumbai 3. Beijing 4.Shanghai 5. London 6. Tokyo 7. Singapore 8. Paris 9. New York 10. Seoul. Coming in at number 12 is Sydney and at 14th Melbourne (figures as at 2016).

Cheap travel will mean more tourists coming to Australia and potentially considering this as their next home. According to the latest ABS figures (2016) the top 3 sources of tourists coming into Australia we from New Zealand, China and the US. However worth noting, of the top ten source countries in the year ending December 2016, short-term visitor arrivals from China recorded the strongest growth over the ten year period, with a percentage change of 284.1%. This was followed by India (222.0%), and Malaysia (162.4%).






Melbourne is one of the few cities globally where it’s central business district is still affordable due to the high amount of available land and supply of apartments. The new Fishermen’s Bend precinct which is expected to house 80,000 people and provide work for 60,000 will ensure the cost to purchase and rental for these apartments will remain low for years to come.

Melbourne’s choice of inner city living may not be on the top of every homeowner’s shopping list now however this may change as travel times to work begin to impact on the quality of people’s lives. State and Federal Govts need to start planning now and put in place a world class transport system and begin building hubs around major railway centres before Melbourne comes to a grinding halt and its populations suffers as a result.

Whether inner city living in Melbourne follows the same path as other major cities overseas, only time will tell but from what i have seen it does make sense!


What Our Clients Are Saying

Hi Peter,

Just would like to express my sincere gratitude towards your service again.

I have sold two properties both through the help of Peter. He has been very professional and a wonderful person to work with, and he would provide me with recommendations and improvement tips to maximise my sales return throughout the campaigns. Every property sale has its own difficulties, and on both occasions of my property sales, we had to overcome their unique obstacles, but Peter was superb at managing difficult situations and would come out winning  for his client. In all honesty, there might be a difference of opinion at times, but Peter is always willing to work hard and stick it out for his client to achieve the best possible result. I wouldn’t hesitate to recommend Peter to other vendors!

Thank you again!


8 Birchgrove Cres, Templestowe


Thinking of buying or selling a home?

Visit our Street Advocate website or send an enquiry below or just call

Peter Sarmas on 0418 740 606.



About the Author

Peter Sarmas is a Certified Property Investment Advisor (PIAA) and Vendor/Buyer Advocate. Before becoming the founder of Street News, Peter completed a Degree in Applied Science (Chemistry) and a Graduate Diploma in Property Valuations (Hons). Peter believes property investing is a major and potentially risky undertaking. In his view, everyone should have an independent person acting on their behalf when seeking property investment advice.

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