The Australian property bubble – you don’t save money by spending it

I’m so delicious, you don’t need a house.

Earlier this year I was interviewed on the Dingoes podcast where I had a somewhat tumultuous exchange with the main host. We disagreed over the cost of living for the average Australian in Sydney and Melbourne. His point was that it was all the fault of the boomers. My point was that it was up to each individual to do something about it. The exchange became quite ludicrous when he attempted to state that saving $25,000 in 10 years was useless because that sort of money “was nothing”, or words to that effect.

I had come up with that figure by calculating the average saving from not spending $50 on smashed avocado breakfasts, a particularly popular Millennial dish that was the focus of attention last year when commenter Bernard Salt used it as an example of the profligacy of young people who simultaneously complain about the cost of real estate while enjoying a lifestyle suited to those who have already made it.

Any justification for such behavior seems acceptable, such as claiming that 25 grand is nothing at all. Of course it is nothing when you have chosen to live a lifestyle where such money will slip through your fingers like treacle. Any fool can make money; the real secret to wealth lies in not spending it. This is the old fashioned and unfashionable concept known as saving. Such a concept is anathema to people who have been raised with the expectation that they are the center of the universe, that the world owes them a living, and they can “have it all”.

The same attitudes reside in the socialist left and the welfare state. How else can you describe the attitude that $100 a month of free money from taxpayers is not real money?

“The reality is this: Low-income families already pay zero federal income taxes, and the $100 a month they’ll get through the GOP Senate plan comes from an increase in existing tax credits, which are in effect an income subsidy from the government. So the Republicans are literally proposing that taxpayers give $1,200 a year to poor families, and Democrats are denouncing this free-money-for-the-poor plan.”

Staying on welfare is a victim trap. Blaming the Boomers for your own economic reality is also a victim trap. I have no time for victim hood. Take responsibility for your own actions and your own personal situation and take back your own personal power. This abdication of personal financial responsibility is just as evident on the right as it is on the left; it just takes different forms. If you’re blaming someone or something else then you are a loser.

By the way, yes this includes blaming the government. You keep voting for them. You elect to remain in such an environment. And this was the other argument that I had with The Dingoes; if real estate prices are so awful in Melbourne and Sydney then just move to another part of the country where the prices are more reasonable. Their response? Utter horror that they might have to surrender their inner city lifestyles and move out to some sort of squalid regional city or town.

As someone who has lived and worked on four continents I am a big proponent of the idea of getting off your bum and setting off for new climes if you can’t make it work where you currently are. Like what is happening right now in California.

“The rent steals so much of your paycheck, you might have to move back in with your parents, and half your life is spent staring at the rear end of the car in front of you.

“You’d like to think it will get better, but when? All around you, young and old alike are saying goodbye to California.

“Best thing I could have done,” said retiree Michael J. Van Essen, who was paying $1,160 for a one-bedroom apartment in Silver Lake until a year and a half ago. Then he bought a house with a creek behind it for $165,000 in Mason City, Iowa, and now pays $500 a month less on his mortgage than he did on his rent in Los Angeles.”

Like California, Sydney and Melbourne are over-populated shitholes, drowning in a flood of immigration from India and Asia. Their infrastructures are massively overloaded, while their regional footprints are amongst the largest in the world. The median house price in Sydney is almost $1.2 million while Melbourne is $865,712.

Anyone buying into this lunacy is out of their mind. Australia’s property boom has lasted for over 55 years. This is why Australians collectively believe that property prices never fall, because for most people they never have in living memory. Earlier this year there was a rush of articles in major Australian newspapers decrying the very idea that a housing bubble might exist. But as 2017 draws to a close some publications are beginning to sound the alarm.

“After five years of surging prices, the market value of the nation’s homes has ballooned to A$7.3 trillion ($5.6 trillion) — or more than four times gross domestic product. Not even the U.S. and U.K. markets achieved such heights at their peaks a decade ago before prices spiraled lower and dragged their economies with them.”

Young people might feel happy at the thought of house prices collapsing, but such optimism is entirely useless if you find yourself in such a dream market but you neglected to save your pennies so as to take advantage of such an event. If you don’t have money saved up you will discover that credit availability in such an environment will be very scarce. Cash will be king and that $25,000 that you dismissed as being nothing of value will in fact be quite desirable indeed.

I’ll say it again: the secret to money is in not spending it. The coming property collapse in Australia will be a huge opportunity for those who had the prescience of mind to not follow the herd and indulge in $50 smashed avo breakfasts on a regular basis. But for those who persist in such stupid indulgences, I wonder on whom they will lay the blame this time.

This article was originally published at, where Adam Piggott publishes regularly and brilliantly. You can purchase Adam’s books here.

Photo by ultrakml