It is July, the start of the new financial year and start of the new growing year. Once the winter solstice is passed we know sales and plant growth will start to improve. Each year the cycle starts again with a new set of idiosyncrasies. The only one that really matters to us is the weather. Will we get sunny weekends, will spring slowly change to summer and will we have enough, but not too much rain? As good nurserymen we always start the season off saying yes to all of these.
This time last year I was asking about what the associations were doing about penalty rates? Were they going back to the Fair Work Commission with a revised award? I was hoping they were planning something but alas no signs so far. The commission is interesting in that it doesn't seem that impartial. They have a heavy leaning towards ex-unionists or partners of unionists. Perhaps this is why the IR scene in Australia hasn't changed much in 20 years.
I find this hype about foreign buyers and investors in Australian business and land quite interesting. First off, for everyone who is finding 'buying' a house an expensive exercise there is someone who is selling into this market. I am sure they aren't complaining about the rising house prices. I am sure the governments who raise money from stamp duty and the professionals who earn a percentage of sale prices aren't complaining.
The comments that it is so much harder for first home buyers to get into the market are interesting. The constant increases in price mean banks are much more willing to loan on a lower deposit percentage. It seems there were these magical days when young people were easily able to go out and buy their first house. Not quite what I remember.
My parents bought their first house in Vermont in 1962. They paid 20,000 pounds and bought it off the plan from the middle of an apple orchard. The road entering the estate was dirt and the house was a massive 10 squares. The land was heavily sloped with no landscaping, no driveway, no furnishings and the 'gardens' were bare clay. My mother didn't work but my father was on a good salary of 7,000 pounds. The property was in the outer eastern suburbs and surrounded by bush and farms. It took an hour to drive into the city for work.
His job now would be about $200,000 and a similar property would be on the real outskirts of Melbourne like Officer, Kalkallo, Whittlesea, West Melton, although you would struggle to buy a house that small on bare ground. I suspect if you could buy a similar one it would be around $350,000. I am not exactly sure but I seem to remember his interest rate was about the same as now but his deposit was around 25%. I am sure he could not have bought it on a 5% deposit and interest only repayments.
Saving a deposit would be a lot easier now as well. In 1978 fuel was 14c/lt and my car did 15lt/100km. It took me 9 minutes as a store hand to earn a litre; now that same job would take around 4 minutes. This is the same for so many of our staples, eg bread and milk take half the work time to earn. I also remember when I first started going to the pub; beer was 27cents a glass meaning it took me 15 minutes to earn it. I haven't bought a glass of draught beer for a while but I think it is about 7 minutes at the average wage. Clothes are much cheaper, furniture is more affordable and overall we can get a lot more for a lot less than 40 years ago.
The real issues is those wanting to have everything at once are struggling. They want to live in the city or suburbs, they want to have everything new and update things annually. (How many people buy a new phone every year even though their current one works fine?) Yes, the buyers from Asia are pushing up prices but these are mostly in established leafy suburbs where people are buying their second or third home.
Although Joe Hockey's comment was politically poor it made sense. If you want to buy house in inner Sydney you will need to have a high paying job. If you want to drive a new Mercedes you will need a much better income source than if you wish to have a used Hyundai. I suspect the whinging hasn't changed much in 50 years and I suspect the response is the same. Get a good job, work hard and spend wisely then you will be able to afford to buy a house.
Also some people will have lots of money and can live where ever they want and other will have less and have to compromise on what they can afford. My message to these people is: That is the nature of our society so just get on with life. Also when you do buy your first house you will feel a lot better if you buy lots of plants for the garden.
Let's all hope another great and early spring with lots of good weather and plenty of sales.