MELBOURNE, Australia — In a typical Australian household, when it is not football, cricket or rugby that dominates dinner table discussion, it's property being discussed.
Likewise, property is the subject of news reports, and the talk of the town for a large part of Saturday.
The chatter is about what the prices are doing, how the market is behaving and whether now is a good time to hold onto investments or try and cash in your chips.
For younger people wanting to play the property game, the questions revolve around whether they'll ever be able to afford their own home.
With an ownership rate of around 70 percent of the adult population, Australia sits alongside Canada, New Zealand the U.K. as a nation with the highest concentration of home ownership in the world.
Yet there are some key differences between these countries.
Since the global financial crisis began, a hole has been gouged in the housing markets of the U.S. and the U.K., while Australia’s property market has held firm.
And the Reserve Bank of Australia last week endorsed the strength of the country's economy (Australia's economy was the only one in the developed world to expand in the first half of 2009) by raising interest rates, increasing its key cash rate by 25 basis points to 3.25 percent.
Christopher Joye, an economist and managing director of global funds management company Rismark International told GlobalPost that the global financial crisis has had little impact on Australian property prices.
“In Australia in 2008, house prices fell by only 2.8 percent. House prices in 2009 are up 4.9 percent," he said. "We’ve recovered all the losses in 2008.”
Which is what those desperate to get into the property market are noticing — there is no depressed and deflated market so the young and unleveraged can gain a toehold.
The prominent investment commentators, David and Libby Koch, wrote recently in a newspaper column that “the Australian residential property market currently defies all investment logic and is likely to remain that way for the time being. House prices overseas have plunged over the past year but ours have stayed steady while a shortage of rental property has kept rents up. It’s all because of a lack of supply.”
Compared with the rest of the world, our residential property prices are 10 to 30 percent more expensive, and with the supply problem set to worsen due to population growth, it is unlikely that prices will drop.
According to Joye, “Australia has the strongest population growth in the [industrialized] world right now. It’s the strongest since 1971 — and a huge driver of demand."
CommSec chief economist Craig James says: “We’ve got the fastest population growth of any advanced country in the world, and really up there with some of the developing economies, faster than a lot of the Asian economies. We’re not building enough houses, so there’s a housing shortage."
Potential buyers agree.
Johannah Leggatt of Melbourne is house hunting. The 32-year-old union-worker wonders how any first-time buyer can afford housing in Australia, with demand high and supply low.
“How on earth do you save $33,000 as a 10 percent deposit for a one-bedroom apartment? Who has that much disposable income?" she asked.
Leggatt is looking in inner Melbourne suburbs that are slowly being gentrified. The houses need a lot of work, but are close to the city, good cafes and bars and public transport.
"To get a really nice place you need almost half a million dollars … that’s a huge mortgage and a $45,000 deposit. The only people I know who’ve done it have had help from their parents. Housing affordability is an oxymoron,” she complained.
Australia’s intense interest in property is not just investment chatter. Owning property is probably the closest thing to an Australian rite of passage — of feeling as if they have entered the portal to adulthood. Rebecca Huntley, a social trend's researcher and Director of Ipsos Mackay Research said: "Nothing can dim the Australian dream of owning your own home. The thing that has amazed me over the last three years doing the research [into home ownership], is no matter whether the market is up or down — none of that seems to dent the home owner's focus and aspirations."
Instead she believes the financial crisis has strengthened Australia's love affair with property.
"It's reinforced people's ideas that the focus is the home they live in. When people explain why they want to own their own home it’s a sense of controlling their own destiny. If I want to knock a hole in the wall — no one can control me. In a country where tenancy laws haven’t developed to the extent they have in Europe, home ownership is something that protects you."
For some Australians, being in the minority — and renting — can be uncomfortable.
Sydneysider Jo Freeman has never felt like she’s needed to own property, but at 43, she feels she is being “bombarded by peer pressure” from friends and family to buy property.
The office administrator is hunting in the popular Sydney beachside suburb of Bondi — passively for the last 18 months and now "aggressively in the last month, every weekend."
She now finds much of her conversations revolve around property, and she’s found no shortage of people to offer advice.
"I want to buy property because of the peer pressure — all of my friends own property and they have done so for a long time and have built equity which gives them the freedom to live where they want to live. But a lot of people I know who have bought property have inherited money."
She was happy renting but last year her rent went up $150 a week and she thought: "Maybe I should wise up and get some control. I felt like a bit of a dill."
But saving around $40,000 for a deposit (Australian banks generally require around a 10 percent deposit) means sacrifices.
Says Freeman: “People don’t eat out. They don’t eat red meat or travel."
AMP Capital Investors chief economist Shane Oliver said the Australian housing was very expensive by global standards.
"For example, to buy an average house in Australia is about six or seven times the average household income after tax. In the U.S., it’s about two-and-a-half to three times, so we’re paying about double relative to our incomes what Americans are paying," he said.
This means many Australians will either miss out on a house, or put themselves through significant financial and emotional stress in order to finance a mortgage.
A report released in mid-September by South Australia's Flinders University concluded that the nation’s housing market is in "a very dangerous and unstable situation which has received little adverse attention."
"The country that promised limitless land, cheap housing and near universal home ownership to all comers now has the most expensive housing in the world amid very tight housing and land markets and little prospect of restoring the balance,'' said the lead researcher, Dr. Flood.
The study — based on census data — found home ownership fell by 15 percent between 1986 and 2006 for both low income earners over 45 and medium-high income earners under 45. Even government assistance for first home buyers, in the form of popular initiatives — such as a grant of $7,000 cash, and even more money if you are building in a regional area — have not alleviated concerns about housing affordability.
Says Leggatt: "There's a social pressure that says if you are renting by a certain age, you’ve missed the boat and you're not successful. It's not the same in Europe. In Australia, there’s a lot of pressure to get on the housing ladder — and if you’re not heading in that direction you are missing out."
Huntley thinks the pressure to own a home is buried deep in the Australian psyche and provides a key to understanding the Australian character. "We have been a nation of people seeking freedom, land and the ability to move from one social class to another. Owning land is a ladder out of an insecure life."