I've been reading Social Gap Widens from Outer to Inner Melbourne from The Age. The article claims that rising petrol prices and higher interest rates have divided outer Melbourne and inner Melbourne. Residents of inner Melbourne suburbs such as Toorak and Fitzroy have access to better public transport and social infrastructure while those in the outer suburbs (e.g. Lynbrook, Epping, Sunshine, and South Morang) have little. Home prices in inner Melbourne have been booming while prices in outer suburbs have been stagnant. Those in inner Melbourne also tend to earn more.
Google has set up Street View in Melbourne, so I decided to dive into some of these houses in the outer suburbs. What I noticed is that many houses in the outer suburbs seem very large, which is quite surprising given that these people are supposed to be low-income first-time home buyers. Many houses in the inner-suburbs, by contrast, tend to be smaller, e.g. the ones in Carlton. I have a screenshot below.
At work I have heard anecdotes about young people who have such high expectations that they immediately buy a large McMansion instead of a small unit. Such extravagance was apparently common in the post-9/11 era of excess that was encouraged by low interest rates. Now that the global credit crunch has hit, people are starting to feel the pain as interest rates rise.