Mountain Tech Analysis

Written in November 2022

• Australian way of living is changing with inflation and the unaffordability crisis.
• Young people have to work much longer to afford to buy a house whilst real wages inflation adjusted have actually fallen. 
• Owning vs Renting?
• Debt Servicing is becoming more expensive and is eating away families food budgets

Gone are the days of Australia being the lucky country, Australian first homebuyers have to work twice as longer as their parents just to be able to afford their first home. In post lockdown Australia their wallets are getting over stretched with dictatorial government created inflation and the current global supply shock energy prices. The weather didnt help either ,La Nina caused flooding in the past 3 years has devastated many crops and created fresh food shortage across East Coast supermarkets.Petrol prices are normally hovering just above around $2 now days , increasing our daily cost of living.

When you are meant to live closer to your work, young Australians are now buying further and further from their workplace,some even going 50km away and traveling for more than an hour each way , as it is all they can afford now.Many of them are trapped in this mirage of a dream family life , where they are expected to provide a good life for their families , but instead they are stuck in a debt trap,seeing their buying power shrink day by day, and having to work more hours to keep up with it all.

Dont want to buy a home , should you rent one?

Rent is dead money as everyone knows, if you are single this could be an easy option, one can get a place next to their workplace and share costs with a room mate. But what will happen when you get older and have spent hundreds of thousands of dollars on rent, when you could have used it as a first home buyer deposit.Today there is another problem in Australia , low vacancy rates which are hovering around 1% in Sydney at the moment.

Australians are now having to compete with one another just to be able to find a place to live, with homelessnes at records all across the country.

Income and Debt Servicing

Nominally wages are rising every year , but when you put the price of housing ,fuel and basics into the equation , real time wages ticked lower.

To succeed in life now days a young independent person needs a future proof strategy , depending that they stay healthy of course.

An Average Gross Salary in Australia is around $80k , after tax that’s $60k.

An average apartment in western Sydney costs around $500k , if you go into the more affluent neighbourhoods with a better lifestyle and closer to the beach your looking at something more expensive around $800k.

Just to afford your first property which is 30km from the CBD , you will have to work around 10 years and using 100% of your earnings into mortgage repayments just to pay it all off. That’s if you exclude other costs such as starting a family, paying bills, sending money overseas to your family and even going on vacation. 

But if you want to live in house , you will never even be able to afford it as an average house 30km from the centre costs around $1mill. 

Basically unless your family helps you out and repays half your property off or if u don’t make a ton of money off bitcoin or by winning the lottery you will be working like a slave just to put a roof over your head. Stress is real .

Now let’s not talk about petrol prices and the inflation ,especially the rising interest rates , ooh boy don’t go there.

Mortgage interest rates are hovering around 5-6% , petrol over $2 a litre, record grocery prices at the shops, record house prices, even catching a train now days is expensive. 

In reality all those crazies that have been saying the market will collapse and the dollar will collapse are all starting to look extremely smart , they’ve predicted it all. 

Like the people that bought bitcoin for a couple of dollars as a joke and sold it later for tens of thousands of dollars each and became millionaires. 

You really have to go against the tide to to come out as a winner.

The smartest were the guys that went out in the rural areas and built environmentally friendly homes and installed solar panels on their rooftops , built their own creeks and own water wells and gardens with farm animals roaming around the farm .They are now enjoying a peaceful existence leaving off the land with free electricity. They can easily enjoy this inflationary crises by building another home on their lot and putting it on airbnb, let the dividends flow in .

AUDUSD is at record low at 0.62 as I’m writing this article. This week Reserve Bank of Australia lifted its rates by 25 basis points to 2.85 % , whilst the Federal Reserve in USA lifted their rates by 75 basis points , to 4% to fight off inflation.