7:30 report discussion on a possible housing bubble ready to burst
- Thread starter b simpson
- Start date
Deltaberry
It only becomes a problem if prices come down and you are forced to sell which is an unlikely scenario.
Even if some people did buy at the peak, time fixes everything.
Buying near the top of the cycle is not the end of the world, one of these days the new cycle will start and prices will go up again
Deltaberry
It only becomes a problem if prices come down and you are forced to sell which is an unlikely scenario.
Even if some people did buy at the peak, time fixes everything.
Buying near the top of the cycle is not the end of the world, one of these days the new cycle will start and prices will go up again
If you bought properties that had reasonable yield, you are even more sheltered. There's a lot more to the story than simple capital value in the short term.
True, that's why the well yielding cheapies are flying out the door
Deltaberry
It only becomes a problem if prices come down and you are forced to sell which is an unlikely scenario.
Even if some people did buy at the peak, time fixes everything.
Buying near the top of the cycle is not the end of the world, one of these days the new cycle will start and prices will go up again
Yes time fixes everything, especially if you have 15 years to wait. Great employment of capital. You'd hope in the meantime you're not working too hard trying to meet mortgage repayments and make ends meet.
If you're working like a dog to meet mortgage repayments and make ends meet you've probably overextended anyway.
Hi mate,
Why we can't just handle the key if we can't afford to pay off the mortgage anymore ?
how come now is the good time to buy as the house pricing already high and not affordable anymore for a young family with combined income $100k
JH, lets do some quick analysis. Assuming one partner earns $70k and the other $30k. (I am not taking into account family tax benefits). After tax including medicare levy you have a combined income of $80,350.
Let's assume the old adage of 30% of gross income as being the measure for affordable housing. That's $30,000. Then a property worth $440k, with 20% deposit, at 7.2% variable interest rate gives you an annual P&I payments of $28,672. The $1328 balance are for rates and some maintenance if needed. In Wollongong, I can see many property options at $440k.
If you wanted to assume 30% of income net of tax, you would need to look at a property worth in the vicinity of $375000. You may have to compromise on location and size, but again, Wollongong gives you those options. (I am picking Wollongong because that is where you are located)
The spin often bears no resemblence to reality.
Say hello to lots of people I know around the Sydney area
I also know people who have done this. But that is because they borrowed too much to start with. What amazes me is that so many people can't see the separation between loans and associated payments, and value of what they buy. Even if their property rises in value, they still have to make loan repayments (or interest payments).
Although loan payments become relatively less over time, you still need to be able to get through the first few years. If you bitten off too much - chew like crazy! If I were in that position, I'd probably take on extra work if need be to hold on.
That is probably why loans are at their most likely to default about 2 years after origination. Over time relative to someones income loan repayments shrink even if they are interest only.
Could also be usually you would see property prices rise after 2 years in the Australian context so even if you are in a defaulting position the banks can twist your arm to sell rather than taking it and selling it once it looks like loser.
