Million-Dollar Lottery Win Not So Great Anymore

When I was a kid, my mum used to buy the occasional lottery ticket. Back then, in the late 80s, or early 90s, the grand prize was usually a million dollars, which at the time, was a lot of money. I remember lotto winners always saying they’d buy a new house, buy a new car, and put the rest in the bank and live off the interest.

Building Your Own Home by George Wilkie: https://ebay.us/fgY5o8 (affiliate link)

“I would say don't take advice from people like me who have gotten very lucky. We're very biased. You know, like Taylor Swift telling you to follow your dreams is like a lottery winner telling you, 'Liquidise your assets; buy Powerball tickets – it works!'”
~ Bo Burnham, American comedian

0:00 Lottery 1987
0:46 Live off the interest!
1:06 15 Houses for $1,000,000
1:35 House Prices 2022
2:22 Inflation!
3:40 Housing Charts

Of course, interest rates were a lot higher back then, around 17% or so, so yes, I often heard of people depositing large sums of money and living off the interest. Back then, a million dollars could buy you a lot. In 1987, houses in Brisbane cost around $65,000. Of course, houses in Melbourne and Sydney cost a bit more, but you could still pick up a nice house for $100,000 or so. That means with your one-million-dollar lotto win, if you wanted to, you could have bought like eight houses in Sydney, or around 15 houses in Brisbane. But I didn’t know of anybody doing that. I don’t think many people were that interested in property investing, not when bank interest rates were so high.

Fast forward 35 years, and you can still buy a lotto ticket that has a first prize of $1,000,000. Of course, there are other games where you can win more money, but for this video, let’s just stick to the million-dollar one. Now of course, due to inflation, a million dollars is worth a lot less, but you can still buy these lotto tickets. There’s something about a million dollars that people like the sound of. But what can we buy for a million dollars in 2022? Well, in terms of houses, not much. A house in Brisbane costs around $780,000, so with your million-dollar winnings, you could still buy a house and car, and put the rest in the bank. But I don’t think you’d be able to quit your job and live off the interest. In Sydney, well forget it. You’d be lucky to buy a house for a million dollars, unless you’re willing to live way out in the outer suburbs.

Although I mentioned inflation, it’s not really “inflation” why we could buy say 15 Brisbane houses 35 years ago, but now we can only buy one. Actually, these official inflation figures don’t even take into account house or land prices, which I’ve spoken about before. Here’s an ABC article from earlier this year, “Why are soaring property prices left out of inflation figures?”. “However, if someone buys an already-existing home from someone else, that won't be included in inflation calculations. Why? For a couple of reasons. Firstly, it's because the household sector is purchasing a good from within the household sector, so the purchase and sale of the property is cancelled out within the same sector. Secondly, an already-existing dwelling is not adding to the supply of homes, and it didn't require the purchase of anything new. It's considered an asset. And asset prices are not included in the CPI — they're included in measures of wealth. That's why soaring property prices, and land values, are excluded from daily measures of inflation”. Perhaps I’m just cynical, but that sounds like a bit of a con to me. I mean, tell new home buyers that soaring house prices don’t add inflationary pressure to their lives. There’s no doubt that property values have increased much faster than other costs of living. You can look at any graph of Australian house prices over time, and they clearly are problematic. They’ve increased dramatically against people’s disposable income. The total value of Australia’s housing stock has gone up trillions of dollars in just a few short years. I really want to click that feedback button and tell the Australian Government that house prices are too expensive, but I don’t think they’d do anything about it. I mean, the system is obviously broken and is due for a crash I suppose. “Buyer demand collapses across Australia’s housing market”.

Anyway, I’ve gone a bit off topic. What was I talking about? Oh yeah, Gold Lotto! $1,000,000! And how you used to be able to buy 15 houses for that. Ah, those were the days!

MUSIC
Melancholia by Godmode

#lottery #housepriceinaustralia #housingmarket #housingcrash #housing #housingbubble #lotto