boom, boom
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boom, boom
I'm calling Aus the Saudi of the Pacific over the next decade!
Cheers,
Michael
..... Probably, nowadays if you buy an average home with an average price (without haggling for it) and don't do anything to renovate and upgrade, it might take more than 10 years to double.
Well the news is out......Av. Sydney house prices just doubled in the last 10 years........I won't say I told you so
http://www.dailytelegraph.com.au/pr...uble-in-a-decade/story-e6frezt0-1225804705068
Do you know what the stats are for Melbourne?
Well the news is out......Av. Sydney house prices just doubled in the last 10 years........I won't say I told you so
http://www.dailytelegraph.com.au/pr...uble-in-a-decade/story-e6frezt0-1225804705068
On average you may be right. But no-one every buys a city average, they buy specific houses in fixed locations that they can afford.Over a decade that would mean houses would become 50% more expensive relative to incomes, and double relative to incomes every 18 years. I can't see that being sustainable over the long term.
Over a decade that would mean houses would become 50% more expensive relative to incomes, and double relative to incomes every 18 years. I can't see that being sustainable over the long term.
You'll see we had a thread about it in 2006... and others since.KeithJ, take a look at the Herengracht Index.
If you haven't come across it,
400 yrs isn't a time frame I'm especially interested in.... 20-50yrs is. Too much is different now as opposed to 100 yrs ago, let alone 400 yrs. I feel the more recent past (20-50yrs?) should be weighted far more than 100+ yrs ago. To many differences in eg inflation, population growth, planning laws.The central finding was that over the very long term, prices tend to track wage growth. Good areas don't keep on rising faster than incomes.
Affordability is what someone can afford the service ie debt/income ratio rather than price/income ratio. $270K is the average new loan taken out. That's easily serviceable by the vast majority. Obviously many of these people have a large deposit. So your hard limit is a hard limit on serviceability or debt. And as long as more affordable houses are being paid off on the periphery, inner ring house prices will rise faster, creating equity. And so less debt is needed to upgrade to the next suburb up.I don't know the growth rate of wages, but even if the median rises by 5% or 6% per annum there's going to be a slow, but continuous, worsening of affordability if house prices are rising at 7% or more. And at some point there will still be a hard limit to what buyers can afford to pay.
Hi Andrew,One of the multi century studies I have seen has property 'only' tracking inflation over a longer term, which I think makes a lot of sense, everything might just mean revert over a long enough time frame I think.
If KeithJ's right, then by 2020 FHBs will need to save a deposit equal to what their parents borrowed to buy their home. I can't see that working out.
As for Hooray's comments, the Netherlands is a bit different from Australia. The population there has grown fairly rapidly (from 11 million in 1960 to 16 million now, versus 10 million in 1960 to 21 million now in Oz). But the country is much smaller (would fit into Tasmania) and more densely populated.
There's also a good transport network, so it's possible to commute across the country. I know, I used to do it.
I'm happy to go along with all those assumptions except the last one. A city may do an average of 7%pa, but not every single house does exactly 7% - some do more, some do less, and lots of cheap houses are added to the statistical population around the edges. These cheap houses that FHB can afford drag the city average down - the rest of the city rises ~7%pa ave. - Therefore the deposit required by FHBs rises a lot more slowly than 7%.For ease of the maths, let's say that FHBs have 1.5 times their salary as a deposit, plus 3.5 times as a mortgage. They can then afford a house worth five times salary. Salaries rise by 4% per annum and house prices by 7%.