As a foreigner in Australia, I can't help but to think that Australians really don't know how to handle finances and are too irresponsible to use a credit card, so Afterpay and Zip stepped in.
Maybe it's because I grew up in Europe, but "Don't buy it if you can't afford it" has served me well. The majority of people I know just use credit cards for the perks but never miss a full payment.
Australia has gone 20+ years without a recession, meaning many people have grown up without ever seeing anything except full employment and house prices going up up up. It's thus been a "safe bet" to leverage yourself up to your eyeballs to get on that "property ladder", and while many (including myself) thought this would finally pop last year with COVID, nope, after the briefest hiccup the property market has gone even more nuts this year.
If you look at interest rates from 1990 to now, and average household debt, it's easy to see why the economy has been up up up up. People have been spending way more money than they make for 30 years in Australia. That will make any economy boom.
The difficult thing is... when does it stop? The above could have been said 10 years ago, just replace the 3 with a 2. Should it have stopped then? Now? In 10 more years?
That type of economy (powered by extreme consumerism beyond the customers’ means) isn’t unique to Australia. It’s only sustainable so long as the target population continues to increase (kind of like social security). The forecasted global population drop that will hit home in the next 15-20 years is going to completely destroy economies propped-up by fake money.
I agree that Australia's economy is propped up by continued
ion growth, a giant pyramid scheme if you'll excuse the hyperbole.
However Australia has such a large amount of land, and such a small population that forecasted worldwide population drop won't affect Australia so much. It's such a desirable place to live that immigration at the current rates will be sustainable regardless of the rest of the world's population growth rate. Whether or not our cities can keep up with the growth and maintain their high levels of livability is another question.
I'd also question your statement about population drop on the next 15-20 years. All forecasts I have seen are that the world's population will continue to grow until the end of the century. If the world's population were set to start shrinking in such a short timeframe, I'd think it would be a huge talking point in any discussion about sustainability and global warming.
15-20 to start feeling it in the most developed nations, end of the century worldwide. Immigration can stall the former but current policies are not promising. Germany will sing songs of praise in Merkel’s name.
Well the sooner countries can start to transition to an economy that is not reliant on perpetual population growth the better.
I am always amazed at news reports from Japan about how the sky is falling because their population is shrinking. For some reason no one ever says "on the plus side, Japan is one of the most densely populated places on the planet, a slow decrease in population will help improve quality of life measures and sustainability".
It's not unique, but in the first world Australia has gone from being ranked one of the lowest in average household debt in 1990 to one of the very highest in 2021.
It's not fake money. It's likely not even "beyond means". The debts can likely be paid back. But it seems quite unlikely the level of spending can continue to grow.
It’s fake money in the sense that, assuming people aren’t in over their heads with loans they shouldn’t have been approved for, everyone is fully leveraged at some multiple of their monthly salary. In that regard, the present is fully leveraged taking a debt that the future will have to pay back, and it can only be pushed out indefinitely so long as the economy continues to grow. That’s regardless of GDP: it can be - and this is what people futilely speculate when it’ll hit - because the economy took a turn south (GDP looking only at the working-aged population drops) or, as mentioned above, even if the economy is doing spectacular on a micro level and GDP (again calculated only against working-age population) is up, but there simply aren’t enough cogs in the machine to keep it spinning at the same rate it was before.
That's likely a combination of extra money being printed, maybe people doing more remotes and looking for better houses, government schemes to prop the house prices up (eg. by slashing taxes on property).
There is still time for a pop once governments decide things are normal again after covid.
> There is still time for a pop once governments decide things are normal again after covid.
While thats true on its face, in practice trying to make that bet is a fools errand at this point. People have been telling me that for a decade plus, now. It still hasn't happened, and the Australian economy (and household wealth) is inextricable intertwined with real estate -- I can't see any government deciding to let it "pop", personally.
People need to be much stricter on what they mean my "pop".
Australian property prices are cyclic with an upward trend. There are (substantial) cyclic decreases in prices, especially in Sydney[1].
But people who talk about "popping" property prices seem to believe there will be a massive (50%+?) fall in prices.
But there are fundamental reasons why this is unlikely. The 2008 GFC causes a 16% decrease in prices in Australia[2], and it's hard to imagine something being worse. Prices recovered 10% the next year, because Australia avoided a recession and there is fundamental demand for living areas in out major cities.
The GFC caused a 18% decreases in prices in the US[3]. Given that Australian mortgage rules are different (there is no ability to walk way from a mortgage in Australia, unlike the US) it's unlikely a bubble in Australia will "pop" worse than that.
But 10% decreases occur relatively often. For some reason these are ignored, but the truth is these are the "pops" that take the froth out of the market.
By "pop", people mean something like the impact of the GFC on many parts of the US, where houses were underwater on their mortgages and getting repossessed left and right.
There's also reason to believe that the Australian property market has decoupled from the rest of the economy, and that's because tax breaks like negative gearing incentivize buying properties even when it makes no financial sense otherwise. This could change overnight with the stroke of a pen, but it would take an awfully bold politician to do it.
As a naturally risk averse Australian it's been incredibly frustrating. Even 15-20 years ago I was thinking this can't keep going. Turns out I just should've invested everything I own.
I’ve lived in Australia for 10 years and still cannot believe how flippant people here seem to about getting into debt. Tens of thousands of dollars of credit card debt, a mortgage covering 60% of a salary, and a leased car seem to be fairly standard for a lot of my peers. It feels like they’re all 3 missed months of salary away from having absolutely nothing. Obviously all anecdotal but still astounding and probably not too uncommon here in Sydney.
1. As long as your LVR isn’t too high your interest payments on a home loan will probably come in well below what renting an equivalent house would cost. Further rent will generally rise over time with inflation, whereas your interest will decrease to zero over time as you pay down the loan.
2. If you’ve got a home loan with a 100% offset account (very, very common in Australia) then a credit card makes financial sense. I purchase everything on credit and pay the full balance each month. I pay no interest, earn points and this maximises the amount of money in my offset account at any one time.
3. Depending on your usage and tax situation a noveated lease (car lease) can make good financial sense.
The thing worth pointing out that explains how both this, and the person you are replying to are correct is that in Australia we haven't had an unemployment crises since the 1990s.
If you have never seen unemployment, and can't imagine not having a job then arranging your affairs for tax efficiency makes perfect sense, even if it means you are carrying more debt.
Feels like that chart is slightly misleading - it’s easy for credit card debt to appear to be low when there are so many high value mortgages. $20k CC debt is only
2% of the value of a $1m mortgage.
I'm not American, so I have less insight than you perhaps, but I'd say America is much more affordable than Australia. In Australia most jobs are in Sydney and Melbourne. Perth is mostly for mining and Brisbane doesn't have many tech jobs.
Real estate prices in Sydney and Melbourne are in the million(s), but incomes are ~100+k AUD. Some people earn 200k+ as a principal engineer, but that's pretty much it.
In America you have much more cities where you can find a decent job and different lifestyle. If New York is too expensive, you can move to Raleigh, NC. I don't think that exists in Australia.
There is also a very low degree of innovation in Australia, it's all related to real estate and mining.
Personally I just feel like it's not worth building a life here unless you get a large inheritance, but for an immigrant, America is a much better place to build a future.
Is it possible you don't like living in Australia and that may be making you a bit myopic? You are talking about Australian's cavalier attitude towards debt and issues with housing affordability in the two most expensive cities in the country whilst imagining other anglophone countries being better.
Look at property prices in Vancouver and Toronto, New York and San Francisco or London. You're going to find them just as unaffordable relative to the median salary. The difference is that for you personally - a worker in tech, the US will likely pay you a better salary relative to the median than you receive in Australia.
Except that Australia doesn't have a broken migration system so actually getting a visa is much easier. Also no broken healthcare system, gun laws or student loan crisis. I'd rather raise a family in Australia than America.
Australia is not too bad as an expat, but I'd never encourage anyone to become a citizen here. It's basically the only developed country without a bill of rights. America has many issues, but at least it has freedom.
Ironically, Australians have access to a special kind of visa that allows them to migrate very easily to the US, with work rights for your spouse and everything!
I think you're underselling Sydney a bit there - there is a google campus, Atlassian, and a lot of finance companies offering high salaries. Not SV level, but pretty close.
Melbourne is pretty decent for high end tech jobs, but not as good as Sydney.
Certainly real estate is extremely expensive and broken, but it's not like New Zealand where the real estate is almost as expensive but the pay is much lower. I had to leave for this reason - New Zealand's housing crisis is much worse in real terms.
> a lot of finance companies offering high salaries. Not SV level, but pretty close.
How close? let's say AUD 300k (I'm honestly curious, does Optiver/Atlassian/Google even pay that much here?) which is a mind-blowing salary in Australia, tops all kinds of taxes, it converts to USD 220K give or take, adjusted for higher taxes and cost of living, down to about 200k.
So a top earner 0.1% in Sydney makes as much as a strong 3 yoe engineer in America.
I’m not overly familiar with US salaries but it looks to me like you’re comparing net salary for a high paid job in Sydney, to gross salary for a FAANG role in SF.
Presumably they have to pay taxes and have a high cost of living as well :)
I don’t know how accurate it is but the 2020 SO developer survey puts the median salary for an engineering manager in the US at $152k and an SRE at $140K.
In my experience that’s maybe slightly higher than going rates in Melbourne and probably about the same as Sydney.
200k is like a low base for FAANG, and there are other great companies that pays well not just them. It is a good salary in America but not that impresive, as you can get that by just being an individual contributor.
On the other hand, AUD300k is a C-level salary here in Australia and way past the start of top tax bracket (AUD180k)
SO numbers are way off comparing to levels'. They're heavily skewed toward the low end. Think about it, who even bothers reporting salary there? I don't even find SO useful in general, these days when I look up an issue I usually end up on github, not SO.
I dunno looking at the SO developer survey most respondents were reporting 5+ years experience.
Out of interest I had a look at roles advertised on indeed.com in Atlanta and SF for SREs and data scientists. Estimated ranges seemed to match SO survey results reasonably well.
Maybe both just have bad data.
I don’t doubt that there’s some great tech salaries on offer in the US but I do suspect the massive salaries reported here aren’t necessarily representative. Nor of course is 250k/year in Australia.
SREs are usually higher, up to about 180k last I checked, with the market getting really hot in the past 12 months, I would not be surprised if that number's passed the 200k mark now.
250k for non-contracting is indeed impressive. I'm guessing a trading firm, in that case, they are outliers, curious if they have presence in Brissie though.
props for your employer to build a lean bussiness that can sustain paying bank to engineers, and for sharing the profit. This is a reminder for myself not to overlook companies like yours
I was as shocked as you are when we started talking salaries.
Thought I'd interview because I was getting sick of the old job. Wasn't intending to start actively looking.
External recruiter approached me on LinkedIn, had an interview with her, another 3 interviews with the company. No leet code nonsense. Did do a personality and IQ test though. And a problem solving excercise which involved troubleshooting Python and SQL. The final interview followed by a group chat with the whole engineering team.
Honestly the whole interview process was really enjoyable. I'm stoked to be here.
That said, I've worked for small companies in the past. Two in fact. And they both hold the rungs for second worst and actual worst companies I've worked for. With this new company though they also hold the top! But it's early days. So far so well.
Targets change quarter to quarter and are what ever I and my Manager/VP decide.
Typically the targets are technically focused. E.g. product needs in the next 12 months require specific SLO/SLI's being met, in addition to some future customers who we're looking to onboard require us to be compliant in certain security standards. Those are my goals for this quarter.
I'm inclined to believe another commenter who suggested that millennials and younger don't really like credit cards, and this is a different way to get a similar thing – better cash flow.
As an Australian living in Germany I've got to point out that finances in Germany are just as dysfunctional as Australia. Just in completely opposing ways. Both are a burden on sustainable growth and development.
For some examples of Germany's issues it's worth looking at the weak state of retail banking (Deutsche Bank / Commerzbank proposed merger), and the financial scandals.
The Germans are so spooked by debt they rather hand the debt to weaker countries even though the German economy can sustain much higher debt levels than their neighbors. It's completely backwards.
Being responsible is a tough call give that institutions in Australia charge enormous interest rates on credit cards, typically 20%+. I find it staggering that they can get away with it actually. Regardless, many (less ‘responsible’) consumers get burnt by this and spend years paying down debts, so I’m not surprised these BNPL players have seen such success. Also they’ve done well appealing with younger consumers. How though I’m not sure exactly, is it a mix of attributes like mobile first product and the simplicity of accessing credit compared to traditional banks or is there something more overarching?
>institutions in Australia charge enormous interest rates on credit cards, typically 20%+.
I think that is the case as well in the US. Credit card interest rates are atrociously high. Which makes it difficult for people who get caught in the CC debt-loop to get out.
Maybe it's because I grew up in Europe, but "Don't buy it if you can't afford it" has served me well. The majority of people I know just use credit cards for the perks but never miss a full payment.