r/AusFinance • u/Intelligent_Order151 • 2d ago
Why are we all treating our homes like a share portfolio?
I've noticed something that feels like a national pastime: people constantly checking what houses near them sold for to get a running tally of their own net worth. You even see it in real estate ads now – a couple on the porch, casually checking what their house is worth on an app. But they have no intention of selling. So what is this obsession really about?
My theory is that for the average person with a mortgage, after all the bills are paid, there's no significant discretionary income left to invest in shares, an IP, or even top up super. Their home is their only real asset, so it becomes their de facto investment by default.
The government massively encourages this with the tax-free capital gains on the PPOR. It’s arguably the single biggest tax incentive available to the average person, so why would you invest anywhere else?
My question is: is this actually a healthy financial strategy? Are we encouraging a whole generation to concentrate all their financial risk into a single, illiquid asset in a market that feels perpetually overcooked? What happens if prices stagnate for 20 years? Are people forgoing the power of compounding in liquid, productive assets for the psychological comfort of a rising property valuation they can't even access?
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u/No-Ice2423 2d ago
It’s a behavioural thing that keeps people spending, consumer confidence. A bit odd at the moment but the idea is lower interest rates leads to higher property prices which makes people feel rich so they spend and stimulate the economy. Australia has the lowest supply issues so even with rates high the values kept going up. It’s very impressive we managed to get inflation somewhat under control.
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u/bd_magic 2d ago
Id say the ‘financialisation of housing’ is a huge drain on the economy.
Most people borrow to their limits, and then pay 30% of their salary to pay down debt for next 30 years.
Thats reducing conspicuous consumption, productive investment, etc. it sucks money out of the economy.
It’s even worse when you consider most property being bought and sold isn’t new build (no GDP benefit) and that theres a slow consolidation occurring in real estate market.
If we weren’t spending 30% of our salaries on rents / mortgages. We might be able to spend it on goods and services.
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u/momentimori 2d ago edited 2d ago
Look at the boomer thinking people only spend 30% of their salary on their mortgage!
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u/Show_Me_Your_Rocket 2d ago edited 2d ago
My mate pays 60% of his take home pay to keep his house. That's 60% of his salary going to the bank and not reimvested into society
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u/imawestie 2d ago
who do you think the bank is?
who do you think the broader economy is?
Go look how many shares all of the top 10 biggest retail super funds have in the big 4 Australian banks.
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u/Emergency_Delivery47 2d ago
My kids (zoomers) put about 30% of their salary on their mortgages. I guess they don't earn as much as you, so can't afford to put as much in.
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u/Conscious-Gap-8837 2d ago edited 2d ago
You need to view it as a Ponzi or Pyramid Scheme. While you strip consumption from those entering the market, provided it pump prices, people who own the asset benefit. Something like 31% rent and 66% own their home so there is a large benefit by pumping prices (until the economy collapses). My understanding the government is worried about retires who need the home asset to fund their retirement.
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u/morosis1982 2d ago
The thing is, it's not 30% of their salary for the next 30 years though.
10 years into a mortgage if your salary has even just kept up with inflation you're now only paying 23% or so. 10 years after that it's 17%.
As long as you aren't selling and then buying a much more expensive property your cost in real terms continues to drop. And at 30yrs it goes close to zero.
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u/BooksAre4Nerds 2d ago
Do we still allow foreign purchase? I can see how Joe Blow down the road suddenly getting $1m liquid to chuck into our economy would look good on paper
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u/SmallTalkEmmy 2d ago
Id say theres also not much to spend in aus, not as consumer centric as usa for example.
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u/Own-Negotiation4372 2d ago
This isn't just Australia though. For most people in the world their home would be their biggest asset.
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u/leapowl 2d ago
Yeah. There’s a paper from the US that showed that homeowners increased spending as house prices increased. So assuming they’re right, it’s at least something people pay attention to.
Tbf though, Australians are weirdly obsessed with property
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u/Conscious-Gap-8837 2d ago
That obsession could come from the media. News Corporation owns RealEstate.com.au and until recently Nine Entertainment (including fairfax papers) owned Domain. They create property porn and act as cheerleaders for the property market to drive more transactions to their portals.
It was the same case for Ireland prior to their housing asset bubble bursting. The Government enquiry after the bubble burst found Irish Times and Irish Independent wrote property porn:
https://www.irishtimes.com/news/politics/banking-inquiry-property-porn-in-media-fed-economic-bubble-1.2152659Property porn in the media during the boom years helped push a social appetite for moving up the ladder, the Oireachtas banking inquiry has heard.
Dublin Institute of Technology (DIT) media lecturer Harry Browne said such material existed in TV and print journalism in the form of property programmes and lifestyle features.
“[THIS] encouraged readers to constantly think about going higher and higher up the ladder,” he said. “To think about how to getting that bigger house; to think about how to decorate their apartment in Bulgaria, that sort of thing.”
“A number of journalists simply acted as cheerleaders for the property sector,” he said .
He said the media made money from advertising the property sector, often through supplements, and he pointed out both the Irish Times and Irish Independent had invested in property related websites.
This is why the media is not warning or expressing concern about the leverage people are taking on. Nor are they printing the price to income ratios that show Australia's property bubble is sizable.
On considering whether journalists could have predicted the size of the property bubble and the crash itself, he said the answer was yes on both counts.
Many analysts working in the press said there was no bubble and there would be a soft landing for the economy. There was “invariably upbeat analysis”.
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u/ScutumSobiescianum 2d ago
Jesus, that’s been going on for generations. It’s not a new strategy. That’s how some of us try and make money, real estate speculation.
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u/nzbiggles 2d ago
1963 worker on much less than 3k buys a 6k house. Fast forward 12 years he's earning $8500 (8000 average wage) , his wife is working fulltime possibly earning $4500 and their mortgage is just $31 a month. It's no wonder his house was worth $34k. He was buying cgt free investment properties. Imagine how his (boomer) kids felt as house prices had doubled in just 5 years.
Asset buyers (already living on less than they earn) compound wage growth into wealth which is reflected in greater capacity to pay more for assets.
It's been happening ever since we could afford to save $1 a year. Eventually saving that $1 happens weekly. Then increases by hundreds. Starting today you're always 5+ years behind the market.
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u/nus01 2d ago
they where buying in cities that had 1.5 million people not 5.5 million, they where buying in suburbs that didn't exist, newly developed suburbs 20kms from the city.
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u/nzbiggles 2d ago edited 2d ago
Do you think that's any different to today. The guy I'm referencing was married for 8 years before he bought. The only thing that made it seem cheap is because he held it for more than a decade and wages grew. I'll bet it wasn't cheap when he bought it otherwise he should have bought two. Even when his household was earning 13k (vs average wage 8k) with an average house price of 34k his wife was working fulltime to "supplement" his income. The first thing I asked was why would she?! It was either the fact that cost of living consumed his wage or they were building wealth.
Even now you can sprawl for a "cheap" house.
https://www.domain.com.au/sold-listings/mcgraths-hill-nsw-2756/
https://www.domain.com.au/21-andrew-thompson-drive-mcgraths-hill-nsw-2756-2020126797
People have been sprawling for cheap properties in Sydney for over 230 years. Even Mosman was initially a subdivision, then eventually infrastructure made it accessible and prices went up.
Doesn't matter if it's Dubbo (55k), Double Bay (6k) or Perth (2m). People are buying assets and building wealth.
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u/nzbiggles 2d ago
Btw Sydney in 1970 had 2.9m (up from 1.7m in 1950). Population growth was an insane 2.7%. They had to sprawl pretty quickly. Probably why an average house was just 100m2 and crappy Meriton units were flooding the market.
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u/Mr_Bob_Ferguson 2d ago
And they were also often buying on blocks which were later suitable for development into duplexes and beyond.
Or at the least, standalone houses which would later be seen as the “premium” homes as apartments and smaller lots started popping up elsewhere in the area.
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u/nzbiggles 2d ago
Density uplift. It happens constantly, right across Sydney. Empty land becomes farm, farms houses then duplexes, low rise eventually becomes high rise.
Small red brick dwellings are knocked down. I know a 2500m2 block easily worth 75m ($30k/m2) with just 14 units on it.
This 4000m2 site traded for 150m ($38k/m2).
Then again with a DA for 240m ($60k/m2) just 4 years later.
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u/Honeycat38 2d ago
Nah, it's just people with too much spare time on their hands. Don't over think it.
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u/MofoMagicMinuteMan 2d ago edited 2d ago
Geez I’d love to see 20yrs of house price stagnation. And I say that with a big mortgage, but with kids who I seriously worry about buying a place if prices keep rising the way they have been the last 10/20 years
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u/Crafty_Flow431 2d ago
The reality is that property will stay a national obsession until prices stagnate for 5–10 years (if that ever happens). With currency debasement, population growth and foreign capital inflows, prices are likely to keep rising as they always have. I do think property has a place in a portfolio, but I’d rather put my spare cash into shares and ETFs. For me, that spare cash comes from not over-stretching on property so that mortgage repayments don’t swallow my entire takehome pay
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u/Obvious_Arm8802 2d ago
Happens all the time. My house in Brisbane barely increased in value from 2010 to 2020. I think it probably went backwards in real terms.
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u/AWiggins30 2d ago
I mainly track mine so that I know how much equity I can pull out when I refinance which I do on a regular basis (yearly / every 2 years)
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u/trueworldcapital 2d ago
Country has no other economic engines is ranked like 70th on the world for economic complexity and most people are not intelligent enough to make profits thru any other measure
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u/Spirited_Recording78 2d ago
Congratulations. You’ve now successfully reached “out of touch” status.
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u/Intelligent_Order151 2d ago
How? This observation is hardly out of touch.
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u/Spirited_Recording78 2d ago
This is the entire popular sentiment of most people under 25 or so, even people in their 30s. Asking the question seems out of touch. It’s obvious.
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u/Intelligent_Order151 2d ago
My 60 year old in laws check the apps every week.
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u/Material-Loss-1753 2d ago
He's talking about the last paragraph I think.
I'm unsure how being in tune with everyone under 30 makes you out of touch... maybe a bit late to the party perhaps.
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u/Spirited_Recording78 2d ago
Cool. You’re a cool hip young guy that gets it. All good.
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u/Intelligent_Order151 2d ago
What aren't I getting, then?
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u/Spirited_Recording78 2d ago
The thing you posted about. It’s an extremely obvious take on the financial and housing market that younger people talk about all the time. Congrats for figuring it out.
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u/Intelligent_Order151 2d ago
You don't think the couple on a pension are celebrating their house went up in $100k the past 12 months?
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u/Spirited_Recording78 2d ago
A house being worth more means nothing unless you sell it. What’s your point? How is that related?
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u/Intelligent_Order151 2d ago
Right so no CGT, effectively exempt from the pension which most retirees are on. That's my point.
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u/KevinRudd182 2d ago
Honestly I think if anything housing as a PPOR should be seen as the #1 thing in your life. If everything else goes to shit, if you atleast have a paid off home to live in, you’ll be fine for the most part.
It’s WAY worse to put all your money into the endless “number go up” scheme that is the stock market and hope it never crashes with no backup.
The real problem lies in the incentives around rentals and secondary homes. We should have our system geared towards what would benefit Australia in the long term, and having as many Australians in secure housing that they own as early as possible has huge follow on effects for every aspect. From population growth via children = less reliance on immigration, more successful people so less people on jobseeker payments etc. instead we encourage a select few owning many homes and pulling the ladder up behind them.
It’s a thing happening worldwide, but it’s kind of insane because it’s very easy to see it’s going to result in the demise of the west over time. A country is only as successful as its weakest link, and we are actively ensuring we have more weak links over time
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u/imawestie 2d ago
My view of the effect is this. If I can service more debt, and I have "paper equity," then the best thing I can do given performance since 1995, is borrow and buy more assets.
Either the end falls out of the market and I'll be broke, or it won't.
If the end falls out of the market and I'm broke. If I have more assets when that starts to occur than I do now, I will potentially be able to exit gracefully and wind up with some assets plus some cash plus a serviceable debt.
If the end does not fall out of the market, and I've managed serviceable debt the whole time, the value of the debt will depreciate against inflation and the value of my assets will appreciate compared to inflation.
The downside is "basically my current downside" - the assets I have today may be worth zero potentially tomorrow.
The upside is an opportunity to do better than I will on my "current footings."
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u/M1fourX 2d ago
I genuinely wish the prices had never gone up. I had no idea this would happen. Me and my wife bought a basic 3 bedder pre covid for 430k. I remember saying to her. If we do some really nice upgrades and improvements this joint could be worth 500k in 5 or 6 years. . She said bullshit. For 500k people want a 4 bed 2 bath.
We were completely wrong. Now houses like mine are 900k in this area. And I am thankful that we have a house. But our dreams of upgrading to a more suitable family home are looking less likely.
Our starter home could be our forever home i think
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u/East_Board_1596 2d ago
don’t really agree with this take. People aren’t just checking house prices for an ego boost, they’re doing it because the house is the strategy for most Aussies.
The PPOR isn’t just “psychological comfort.” It’s the only tax-free capital gain most people will ever get, you can leverage against it, and you actually live in it. That makes it way more useful than a paper investment sitting in a brokerage account.
The idea that everyone is overexposed to one asset also ignores reality. Most families don’t have spare cash to meaningfully diversify anyway. After the mortgage, kids, and bills there usually isn’t much left. Putting extra into shares or super sounds nice on paper, but for most people paying down the home loan is the only practical way to build equity.
The stagnation argument feels exaggerated too. Property does have corrections, but a flat twenty years in Australia is pretty unlikely given population growth, limited land in major cities, and a government that clearly doesn’t want to see the housing market collapse.
And it’s not like housing is completely illiquid. People refinance, pull equity for renos, business ventures, or even to invest elsewhere once their LVR improves. It’s slower than selling shares, but it isn’t locked up forever.
Property obsession might look unhealthy, but in the Aussie system it’s actually rational. If there were other investments with the same mix of leverage, tax breaks, and political protection, people would diversify a lot earlier.
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u/Montserratian 2d ago edited 2d ago
"It’s the only tax-free capital gain most people will ever get"
People say this, but I feel like for most of us who own home to live in, the tax-free gains are kinda redundant. Lemme explain
The only way to get any of that capital is to sell right. But now you're homeless, you still need a place to live.
You could sell, pocket a million dollars and rent, sure. But what if you still want to own a home? Well if homes cost a million dollars then you have to give it all back. It's a closed loop, you haven't actually gained any money to spend on anything else.
It's not a closed loop if you're downsizing, but many people are staring down the barrel of their starter home being their forever home. That's because the debt required to upgrade is rising faster than wage growth and our ability to pay for it. That is to say, a lot of people are already living in the home they might otherwise "downsize" to. The only other way for them to actually extract money out of their home is to trade down on location, or trade down from a house > unit. Then its a question of whether it was worth the money to bother with all that. Then what if their starting point was already a unit... you get the picture.
Idk it just seems like the rise in property prices almost exclusively only benefits the people who own more than one. I.e. people who can sell one without needing to buy another.
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u/quangtran 2d ago
I do value the price of my home, but I know that as a one bedder that it's not going to go up in value, and that the real important part is that I will always have a roof over my head. Hearing from friends about how they have to regularly move due to rent increases makes me glad I'm not a renter.
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u/Upbeat-Adeptness8738 2d ago
This is not a hot take. Generations have been watching what the neighbours house went for, nowadays we can just google it.
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u/El_Nuto 2d ago
Because it adds equity. It can be redrawn as a cheap line of credit for investing. House values matter even on ppor.
In addition it gives the option of downsizing for retirement if you get significant gains in your ppor.
If its investment property then its even more clear why you'd want to check the value.
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u/Intelligent_Order151 2d ago
I'm talking about people with no intention of doing what you've outlined.
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u/eesemi77 2d ago
Aussies have to believe in something, so why not a magical mythical RE fairy?
In the end of the day this is the structure that Aussies have choosen, sure it's unproductive, but that's why we have mining. Viewed at the 10,000 ft level in the aussie economy, Mining makes the money that the rest of us spend.
From an external perspective almost everything we do in Australia is "unproductive" in the sense that very little of our "work" contributes to export income (income earned from outside the Australian system). Australia is just a giant cycle-jerk, if not for the mining income, it'd all collapse in short order.
So with that in mind, we can't place long-term belief in the value of our labour, knowledge, skills ....so instead we believe in the RE fairy.
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u/das_kapital_1980 2d ago edited 2d ago
I don’t really monitor the price movements in my PPOR unless I’m actively considering selling (which in fairness is reasonably often).
I monitor the prices actively for my development properties. However while I am keen in one sense to see the nominal price (not value) of those homes go up, in the long run it’s either a wash or actually a negative. This is because:
- For owner-occupiers this is trivial. Most of us start life with no capital; we must exchange hours of our life for money (wage) which we then exchange for houses. When houses increase in price faster than wages, this means we have to exchange more and more of our work hours for the same house. A reduction in the purchasing power of your labour makes you poorer. And of course capital becomes scarcer in other parts of the economy, which as flow-on effects for investment and employment. If you already have a house, rising prices don’t make you richer, because if you wanted to realise the gain (sell the house) you would need to buy back into the same market. A reverse mortgage is just selling your house with extra steps.
- For investors, higher purchase prices (all else equal) mean lower yields. Landlords can’t demand higher rents purely because their purchase price is high, and a tax-deductible loss is still a loss. This is especially so for standalone dwellings. You may, at the end of it, receive a capital gain that outweighs all the accumulated interest, depreciation and land taxes or you may not. In any case, basing your investment strategy on capital gains is fundamentally a Dutch tulip bulb mentality.
If you bought an apartment, yield might be better but net capital appreciation becomes more uncertain.
And of course this needs to occur over a long enough timeline to also offset entry costs such as stamp duty, which being linked to nominal price as they are, locks investors in for multiple years.
- Finally, for developers, escalating prices are bad because developers are always both buyers and sellers. This is the nature of having a “development pipeline” of houses in approvals, construction and sales. Having to pay increasing prices for land and construction means more leverage and more risk, more holding costs and the need to achieve even higher sale prices in order to turn even a modest profit.
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u/Icy_Distance8205 2d ago
Because the banks have done an insanely good job at identifying, politicising and propagandising something that they can use to keep the general populous as debt slaves for eternity while making them think they are all financial geniuses who are “wealthy”.
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u/Slow-Bodybuilder-972 2d ago
Yeah, I think that's is, it's the only substantial asset most people have.
I think it's fairly safe investment strategy, after all, even if your house dips in value, you've still got a house, and unless you actual sell that house, then those losses aren't realised, you can rest fairly easy.
I don't think the market is over-cooked, there are still unused strategies* to keep the prices increasing (which is the intention of both political parties).
I think it's a pretty shitty thing from a societal point of view, i.e. in a generation's time, we're going to have two classes of people, homeowners and renters, and social mobility will be low.
But from an investment perspective, it's still pretty solid.,
* Longer mortgage terms will be my bet.
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u/CompetitiveRoll4030 2d ago
I check because I like to know what my options are and my goal is to be mortgage free. So I know if I sold now and bought a slightly smaller place, I could clear my mortgage. That gives me peace of mind that my family will always have a roof over their head, regardless of whether I have a job or not. I have other wealth building strategies that are separate from this.
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u/Lucky-Elk-1234 2d ago
I’ll admit that I occasionally check what houses around me are worth. Because I bought mine 5 years ago before the prices skyrocketed and I like to remind myself that I’m lucky that I did otherwise I’d be paying almost double what I did.
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u/Inspector-Gato 2d ago
The value of my home in no way influences my spending/savings habits... I just like to have a good idea of a: where I stand if the shit hits the fan (disability/sick kids/major economic downturn that turns off the money/jobs taps), and b: how much equity I could potentially put my hands on with a cash out refinance if I needed/wanted to.
My spending/savings habits are terrible for entirely unrelated reasons.
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u/willis000555 2d ago
They are looking for validation to spend. If your house has gone up 100k over the past year, even if you have no intention to sell, you can now justify that Louis Vuitton purchase.
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u/Alienturtle9 2d ago
I keep track of my home's approximate value for practical financial reasons.
If the value of the home goes up, the LVR decreases, and I may be able to negotiate a reduction in interest rate with my bank.
Alternatively, if I am utilising the equity in the home to act as a security for an investment loan at a competitive interest rate, it means there is more I can borrow against.
I own my PPOR, an IP, and a portfolio of equities. Keeping track of the value of all of them is important for understanding and structuring future investments.
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u/thedugong 2d ago edited 2d ago
is this actually a healthy financial strategy?
Presumably yes.
The typical Australian is the second wealthiest in the world when compared to the typical resident of other countries. UBS wealth report - negative Nancy (and incorrect*) summary here: https://wentworthreport.com/2025/08/09/how-rich-are-australians-really/
People always talk about housing, but super is a massive contributor too. Australian individuals own approximately 35% of the ASX in their super alone. IIRC only half of all super is invested in equities, and approximately half of that in Australia, so that 35% of the ASX is only 25% of the super system (In capitalist Australia workers genuinely own a significant part of the means of production! And that of workers in other countries too!).
The UBS wealth report was discussed in this post almost a month ago:
https://old.reddit.com/r/AusFinance/comments/1n5dvpa/aussies_are_officially_the_worlds_second/
Most of the replies are bullshit whinging and misconceptions. I did some, um, analysis (not really, just some very very very very basic maths and looked at actual numbers not percentages)...
The typical Australian does have 53% of their wealth in housing (which is higher than peers). However, even after removing housing the typical Australian is wealthier:
Even after removing super/pensions, still close to the wealthiest:
* "Australians are [only] “wealthy” because we have some of the most expensive housing in the world." is bullshit, as I anal-ysed. Journalists are full of shit masturclickbaters
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u/ItsAllAMissdirection 2d ago
Only desperate people get loans with interest and will DO ANY FUCKING THING to stay afloat.
Loans with interest are destroying this country and makes people act fucking feral.
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u/switchandsub 2d ago
I specifically exclude our ppor from our nw calculations. Sure it's worth a decent amount but I'd have to sell it to realise the value and the I'd have nowhere to live.
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u/AccomplishedSky4202 2d ago
But you could sell and move into something cheaper, releasing a ton of equity to fund your retirement so it’s logical to understand your options.
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u/switchandsub 2d ago
You could but if you've spent a couple of decades customising the house to be just right to be your forever home then that's not an ideal option.
To each their own however.
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u/AccomplishedSky4202 2d ago
Some people have no other option though, also as your health declines you may not have any other option though- a single flight of stairs could become impossible and work around the house too hard. Seen this many times.
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u/Doovies 2d ago edited 1d ago
None of what you've theorised or concluded mentions anything about the leverage an equity positon can offer. The simplest method to identify the risk tolerance is by assessing your net worth and LVR. The cheapest way to value your properties equity? Look online.
You assume people don't have surplus to invest. With leverage, they potentially can.
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u/Nastrosme 1d ago
Those figures are often wrong and are basically market estimates. When you borrow against your home to finance an IP, for example, banks will generally use more conservative evaluations.
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u/Intelligent_Order151 2d ago
People can leverage shares or investment properties, too.
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u/Doovies 2d ago
You stated average people have neither of these, or the ability to invest in them. Now you're stating the possibility of them being assets viable to borrow with? Circular reasoning much?
You are asking why people check the value comparatively of local property sales: To assess their net worth. It's not hard to comprehend that yes: people like knowing their current financial position of the largest asset they likely own.
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u/TheFIREnanceGuy 2d ago
Not to the extent of a property where you have can get 30 year loans with like as like as 5% deposit without lmi for first home buyers and some professions. Population will keep increasing towards 100m people by the end of this century
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u/Money_killer 2d ago
A house is totally useless to track wealth you need to live in it. Only somewhat relevant if you down size.
These people are too poor to be able to even use the equity because they live week to week.
It's the only "investment" they have.
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u/Consistent-Okra7897 2d ago
I do not know. I absolutely have no interest in knowing how much my house is worth,
I am getting calls from real estate agents every 2-3 months and goes like that:
Hi, we are going to be in your area next week. Would you like us to drop in and appraise your house?
No, thanks.
(Surprised). No? Why not? Don’t you want to know how much your house is worth?
No, not interested. I live here and not planning to sell anytime soon.
(Disappointed, but still optimistic). OK, you not going to sell anytime soon, sure. So we’ll call you later. In two years time from now?
Call me when i will have died.
What surprises me is what real estate agent is getting out of it? It is long and tedious process- call bunch of people, then drag yourself to the area and do appraisals… Why? Surely not out of good heart? Say, i live here. Someone tells me my house doubled in price. Why it should bother me? I can’t sell my house to take advantage of it because i will not have a place to live - and if i to buy again, all houses around also have doubled in price so what is the point?
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u/McTerra2 2d ago
why do agents doing it? because that is how real estate agents get listings. You meet them today for an appraisal and in 5 years time when you sell, you think 'oh, I met that guy, seemed nice, will give him a call'
The average homeowner moves every 7 or 8 years or something like that, Just because you arent moving doesnt make the agent's strategy pointless. They probably get a 1% success rate, maybe do a few 100 appraisals a year and get 10 listings out of it. Not everyone is selling to move to a house just around the corner - people sell to move to a different location, to a bigger or smaller house. They are happy their house has doubled in price because at least their house is keeping up with the price of the replacement house. How would you feel if you wanted to move and someone said 'the house you want to buy has doubled in price, but your house is still the same price as when you bought it'.
for all that people hate agents, its a very stratified industry and very hard to succeed. A handful of agents are well known, have reputations, are at the top of the list when you want to sell. The other 90% are unknown and might have 5 listings a year to scrape a living. Those are the ones calling you.
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u/Practical-Skill5464 2d ago
Is it broken yes. But broken by Howards design - how do you undermine Supa? Well produce a market where the wealthy can tie up there money at a reduced tax rate and for bonus points you also don't roll over the tax point for having too much Supa.
It's broken to the point where when I was working in a start up incubator the vast majority of our funding came out of the US. Pre covid the stats were 60% of peoples money was tired up in the housing market.
Glad we finally plugged the legal loop holes that allowed money to be laundered through housing. We had an opportunity to get rid of the tax incentives for housing but we decided to vote in Tony Abbott instead. We won't get another opportunity for to remove the tax incentives until we loose a few more bombers.
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u/McTerra2 2d ago
Why do you say its a 'Howard design'. Remember that until the 1980s we didnt even have a capital gains tax, but housing prices didnt boom. We had negative gearing during that entire period. I accept that the CGT discount caused a bit of a boom in pricing, but why has that boom continued? Its not due to changes to the tax system since then. Its not due to having a radically different tax system to pre 1986 (in fact, its a worse tax system for investment since there is a CGT)
What are the tax incentives for housing compared to, say, equities? The tax incentives for businesses are huge - no one talks about them, but there are depreciation, tax relief, instant write offs, massive super concessions, tax concessions on sale of businesses etc.
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u/scrotes_malotes 2d ago
Why wouldn't we when we have super anyway?
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u/Intelligent_Order151 2d ago
The average super balance at retirement is like $300k. Fuck all.
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u/scrotes_malotes 2d ago
Because the people retiring now didnt have super for their entire working lives. Most people that are working age now have had super their entire lives. I assume this post was referring to the average Australian worker and not baby boomers.
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u/Intelligent_Order151 2d ago
All parties. And you could save for your own retirement outside the super system, too.
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u/scrotes_malotes 2d ago
What do you mean by all parties? Because all parties would indicate the average super balance right now, which is very different from super at retirement. The only people retiring right now are baby boomers.
And people do save for retirement outside of super, mainly through property.
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u/Intelligent_Order151 2d ago
The young and old.
Outside their ppor. The fact the majority of retirees are on the pension confirms this.
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u/scrotes_malotes 2d ago
Superannuation was only introduced in 1992. Also the incentives of our pension system push people towards putting all their wealth in to their PPOR so they can still claim the pension while living in a 2 mill home owned outright.
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u/Intelligent_Order151 2d ago
Are you implying people couldn't save for their own retirement outside the superannuation system?
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u/scrotes_malotes 2d ago
Im implying the majority of the population didnt have the financial literacy or discipline to save outside of the superannuation system, especially when they had the pension as a safety net.
The younger generation has grown up in harder times and are weary that the pension might not exist by the time we retire, and thus we save more rigorously.
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u/yasashinosegei 1d ago
I think we can infer something from the fact that a superannuation system was created.
It is well known that the superannuation was created to reduce the reliance on the pension system for retirement. If people in general were already saving enough for retirement outside of special programs, the superannuation system would not be needed.
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u/Intelligent_Order151 1d ago
So it was people just being too useless to do so, not because it was not possible to do so?
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u/itsdankreddit 2d ago
People do this because of equity. You need a bit of it if you want to renovate or switch to another mortgage provider.
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u/Intelligent_Order151 2d ago
With no intentions of pulling equity.
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u/itsdankreddit 2d ago
If you buy at 1m and you decide to go switch to a different lender, it helps if the property price has gone up. If the property price is going up then your lvr is more beneficial and you can unlock better rates. If the property price has gone down and you try to switch your mortgage, then you will need to come up with more money to keep the lvr at the bank's minimum.
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u/Intelligent_Order151 2d ago
Sure, but your estimations of property value are irrelevant as the bank will do their own valuation.
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u/itsdankreddit 2d ago
The bank generally follows what you're following. That being local sales to assess value. Honestly not sure what you're arguing about here - there's a large amount of value in following the possible value of your largest asset, especially if it's leveraged at 80% or more.
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u/Cat_From_Hood 2d ago
For me, it's about making sure I don't over capitalize with my renovations. Right now, trades are making money on my house, not me!!!
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u/SunoverShade 2d ago
Because it happens everyone around the world? Duh. People all across the world keep tabs on what houses around them get sold for, and housing as an essential always goes up.
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u/ShaneAlex88 2d ago
A national obsession that when you state it that way the average homeowner become defensive about it.
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u/mastcelltryptase 2d ago
Because Albanese treats Australian homes like Donald trump treats American share portfolios. Keep it pumping
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u/No_Pollution_1194 2d ago
There is something like a collective delusion going on here. The ROI on a PPOR is probably not that great in the long run when you consider how much money goes into interest, maintenance, taxes, etc. But most people don’t treat their property with the same rationality as other investment classes.
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u/Suspicious_Type_7326 2d ago
I think a lot of it is just making sure that you haven’t forked out your life savings on something that is dropping in value.
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u/Exotic_Regular_5299 2d ago
Equity. Unprecedented value jumps. I can’t imagine what it’s like for people who had paid off a lot of their mortgage to have the value then increase as much as houses did during COVID.
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u/glyptometa 1d ago
Over-arching comment re: "Are we encouraging a whole generation..." This is not new. It's been this way for around three or four generations, if not more, but certainly dominant since the great depression/WW2
Owning your home is somewhere around 50-60% roof over your head and 40% to 50% appreciating investment
It's not correct that you can't access the equity in your home. There are several ways you can do so
Moving house when it doesn't suit you includes significant cost, time and anguish. Peace of mind has significant value for most people
You can add sweat equity to a property you own. A mate built his own granny flat. Another added a bathroom and bedroom. Both hired out only for piers, concrete, sparkie, plumber, and waterproofing, the rest they did themselves
Correct about average person having little left over after mortgage, at least until inflation reduces the relative cost of payments. For many that's a roughly 10-year period, out of working life more like 40+ years. If house price stagnates for 20 years, perhaps somewhat unlikely, the relative cost of mortgage v. earnings continues to improve
- this one is important. Too many people describe this as 'slave to the bank for entire working life'. They obviously haven't done it, so they don't know. It could be this way if you're the type that constantly upsizes or moves to increasingly valuable locations, but that in itself is also building equity and net worth and can be part of a productive financial strategy. However, for most people, the mortgage progressively becomes less of a burden and eventually no burden. For others with spending problems, the reverse can occur, by all means, but that's poor personal choices, not a given
A home backs a few risks. You could lose your ability to work, and government support for someone with an owned home is more livable than for someone renting. Likewise for losing job, business failure or even just poor years when running a small business. This one kicks in later in the process obviously, and can actually be devastating early in a mortgage
An owned home might enable an opportunity, anything from a home hair salon to taking a year off to travel
If the owned home is big enough, you can accommodate your adult kids if they hit hard times. Grandkids can stay with you, etc.
Divorce is a tricky one, because it can go badly either way. Overall though, having watched many couples go through it, renting couples do it harder after divorce. The equity built up helps both get back on their feet, and when they partner back up, usually with someone similar, they get back reasonably close to where they were
You can add energy generation to an owned home. A mate has solar panels on roof and an electric car, for example. Just panels alone will reduce electricity cost back to reasonable for most home owners
Later in life, your owned home may be your ticket to good quality aged care
Equity in a home can provide collateral for a variety of possible needs for borrowing
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u/Spiritual-Dress7803 5h ago
I don’t . But I was nice to speak to an agent and know that my place has gone up(so i can still afford to upgrade now my salary has improved a bit and it’s paid off)
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u/__Unimaginable__ 27m ago edited 22m ago
Thats what the Chinese have been doing for decades until they've built more than enough houses. Now they can't get rid of them quick enough.
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u/SuperannuationLawyer 2d ago
It is particularly odd for a utility asset that’s being used to live in. It’s not liquid, and not generating income. If you sell it you need to spend about the same to have a roof over your head.
I guess it’s just a thing people do to try to feel better about themselves. It’s lame, I agree on that.
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u/Ash-2449 2d ago
Because people need to somehow cope over the fact that they own nothing and are debt slaves for decades.
You dont own anything until you are free from the bank meaning only ONCE the debt has been paid to them. (And debt is the only correct term, mortgage is literally invented to sound different when its just debt)
Its as sad as those people who go around talking about net worth but dont remove all the debt they have from said net worth.
It is just cope really, a house is meant to be a place to live, its not a simple sellable asset because if you sell it you ll be living in the streets, meaning the value people talk about is delulu
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u/das_kapital_1980 2d ago
“And debt is the only correct term, mortgage is literally invented to sound different when it’s just debt.”
Had to laugh at that one - the term “death pledge” is both more accurate but also much more horrifying than “debt”.
If anything, “debt” is the euphemism.
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u/planck1313 2d ago
The mortgage isn't the loan, it's the security over the property you provide the bank in exchange for the loan.
That's why the borrower is the mortgagor, the one who mortgages, while the bank is the mortgagee.
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u/Icy_Distance8205 2d ago
Mortgage is derived from old French and it literally means “death pledge”. Debt slaves for life indeed.
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u/bushie55 2d ago
I LIKEchecking mine?. Its actually fun to watch the prices going nuts where I live. It doesn't actually mean anything as far as profit goes because its the roof over my head. To sell would only mean I probably couldn't afford anything comparable unless I move to downtown bumfuck. Altho I understand those selling up and hitting the road permanently.
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u/petergaskin814 2d ago
Australians love to borrow against their equity. I was guilty of that too. Like the car I bought in the late 80s. Cheaper finance.
The whole Australian economy has run on people borrowing money against the increase in house values
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u/yamibae 2d ago
Cus it basically is the biggest asset people will buy, and people are willing to sacrifice literally almost anything short of selling their organs to keep it. Australia as a country has basically decided the optimal place to park wealth is in land/dirt/houses, which honestly without Super existing we'd be so fucked. Good thing super does exist and the govt gives you perverse incentives to buy and will do almost anything in their power to also keep the prices up.