A tale of two cities -Melbourne and Sydney

[VYBerlinaV8]

Because with historical (or is that hysterical ) rises as justification, people are prepared to risk what they perceive is a short-term unaffordability pain to achieve a long-term affordability gain. It all goes topsy turvy if those expected capital gains don't come through as quickly, and that seems to be unfolding now.

Respectfully I have to disagree. A large part of the property market is people who want to own their own for two reasons:
1) Over time, the cost of owning (ie interest, etc) reduces in real terms, due to inflation
2) Once you own your home outright, the costs of providing your home drop significantly.

Sure, there are investors who want to buy a property for capital gain, but do you think it is these people paying top dollar? Perhaps these people are the ones who search for bargains (I know I do, as do most here).

Many people do not buy because of potential capital gain. Also, just because your property rises in capital value doesn't mean it's more or less affordable to you. As above, the cost of ownership decreases with time, and this is not correlated to capital value.

Prices have risen significantly over the past decade for several reasons:
1) Easier credit, especially if you bring something to the table (ie good income, existing assets, etc)
2) Dwelling sizes have increased by about 50% over the past 30 years
3) Cost of building (development costs, building costs) has dragged existing stock prices upwards
4) People have higher incomes in real terms
5) etc - there are others

What this boils down to is that yes, housing costs more than it used to, but people are still paying. At this point in the cycle (very generally, location specifics vary), we are past the peak to the point where prices soften a bit (some more than others, some not at all). This is the property cycle at work. Sure, the last one was a big one, but it still fits what we would expect of the market. I would now expect many areas to stagnate for some time, as pressure builds for the next big surge, which I would see happening in 6-9 years time.

 

[HomePage]

Respectfully I have to disagree. A large part of the property market is people who want to own their own for two reasons:
1) Over time, the cost of owning (ie interest, etc) reduces in real terms, due to inflation
2) Once you own your home outright, the costs of providing your home drop significantly.

Sure, there are investors who want to buy a property for capital gain, but do you think it is these people paying top dollar? Perhaps these people are the ones who search for bargains (I know I do, as do most here).

Many people do not buy because of potential capital gain. Also, just because your property rises in capital value doesn't mean it's more or less affordable to you. As above, the cost of ownership decreases with time, and this is not correlated to capital value.

Prices have risen significantly over the past decade for several reasons:
1) Easier credit, especially if you bring something to the table (ie good income, existing assets, etc)
2) Dwelling sizes have increased by about 50% over the past 30 years
3) Cost of building (development costs, building costs) has dragged existing stock prices upwards
4) People have higher incomes in real terms
5) etc - there are others

What this boils down to is that yes, housing costs more than it used to, but people are still paying. At this point in the cycle (very generally, location specifics vary), we are past the peak to the point where prices soften a bit (some more than others, some not at all). This is the property cycle at work. Sure, the last one was a big one, but it still fits what we would expect of the market. I would now expect many areas to stagnate for some time, as pressure builds for the next big surge, which I would see happening in 6-9 years time.

I agree with most of what you have written. I still think there are a good slab of people not doing the detailed sums and just hoping for more of what has happened in the past without realising many of those factors you mention have been milked for all they are worth at current prices. As always, savvy investors and homebuyers will make things work in a challenging market, but the days of others being carried up by the tide must surely be numbered for the next few years at the very least.

 

[VYBerlinaV8]

I agree with most of what you have written. I still think there are a good slab of people not doing the detailed sums and just hoping for more of what has happened in the past without realising many of those factors you mention have been milked for all they are worth at current prices. As always, savvy investors and homebuyers will make things work in a challenging market, but the days of others being carried up by the tide must surely be numbered for the next few years at the very least.

Fair point - there will always be people who just follow the crowd., and who get burnt as a result. And it's not nice if you get caught.

 

[Different Here]

So what mkes 4.7 'affordable', but 7.3 'unaffordable'? Also, why are you comparing the lowest point of the cycle to the highest point of the cycle?

If houses were genuinely unaffordable, why have prices gotten so high? Why are people still buying?

I'll let my blog do the talking, rather than typing it out again here.

Everything's Affordable!

Please read it before jumping to conclusions about me.

 

[VYBerlinaV8]

I'll let my blog do the talking, rather than typing it out again here.

Everything's Affordable!

Please read it before jumping to conclusions about me.

Jumping to conclusions is what I am trying not to do. But it's not always easy

EDIT: Wow, just looked at your blog. Don't expect any more responses from me.

 

[Fifth]

I'll let my blog do the talking, rather than typing it out again here.

Everything's Affordable!

Please read it before jumping to conclusions about me.

You're just after page views, you hoodwinker you.

 

[Different Here]

You're just after page views, you hoodwinker you.

Perhaps you'd like to comment on my conclusion?

The problem is two decades ago, single income families could easily afford a certain standard of dwelling. Now it requires dual incomes to afford that same standard of dwelling. Houses are less affordable then they used to be, it really is that simple.

Of course, if you make enough sacrifices, scrimp and save, and take on a massive soul destroying mortgage, then anyone can 'afford' to buy. But does that make it affordable? I don't think so. Housing is not affordable if we're forced to trade housing for quality of life. If we're forced to take no holidays, never treat ourselves to any luxury, delay having children, put our children in daycare all week, just so both parents can work 80 hours a week to 'get on the housing ladder', then housing is categorically not affordable.

Yes, property investors, 'good suburbs' were always more expensive, cheap housing can always be found in the less desirable suburbs, people on single incomes are always able to afford something if they make enough sacrifices. But this doesn't change the fact that affordability has declined.

It used to be hard for young families to afford a home, but now it's twice as hard.

 

[Fifth]

Perhaps you'd like to comment on my conclusion?

If you insist.

I actually, gasp, agree with you. But as others have said, this topic has been covered many times before.

Personally, I expect the situation to rectify itself. If house prices are genuinely unsustainable, the market will eventually correct itself through either price drops or an extended period of stagnation.

I doubt many will want to discuss this further with you knowing that you're handpicking their responses to paint them as villains on your blog. It is kind of cheap, to be honest.

 

[dan c]

One thing that I need to point out; this site often has new members join, harass people for buying investment properties and claim they themselves can't buy a property because it's 'too expensive'.

These posters also talk about the impending property crash as if it's a fait accompli, laugh at others for failing to see the impending doom, then disappear after a week or two.

So that's probably why some regulars take what you say, or your reasons for saying so, with several grains of salt.

Housing is not affordable if we're forced to trade housing for quality of life. If we're forced to take no holidays, never treat ourselves to any luxury, delay having children, put our children in daycare all week, just so both parents can work 80 hours a week to 'get on the housing ladder',

I would suggest that you have over exaggerated the housing situation. People can get on the 'housing ladder' without sacrificing everything and working 80 hours a week. This sensationalism doesn't do your position any good.

I'm also struggling to work out your agenda. Why are you here, other than to get content for your blog?

 

[Different Here]

Why are you here, other than to get content for your blog?

Frankly, I was so amazed by the overreaction to my comment on affordability, and the abuse I received from members here, that I felt compelled to blog about it. Note that my blog does not actually mention this forum, nor does it mention the names of any members.

 

[devo76]

Your blog clearly shows that you have an interest that apposes the majority of people here.
You are an AFL lover in a NRL forum
A Ford lover on a Holden forum

Sugar coat it how ever you want. You dislilke investors.
people can see your colours now and expect you to head the same direction as the ones before you. Ruffle some feathers then.... Gone.

You are nothing new and sadly not likely to be the last.

 

[depreciator]

Don't take it personally, Tony. Somersoft, like all forums, has the odd nutter, but most people here are like you - people with families, and jobs, trying to secure their future. They have chosen to do this by investing in property.
Every few months someone new pops up and either challenges the morality of what they are doing, or tells them that they are doomed. So they cop an earful - or an eyeful, I guess. It honestly does happen regularly - stick around and you'll see. Or do a search for some old threads. There were some crackers about this sort of stuff when Steve Keen was getting lots of press.
If I wandered into a church with a copy of 'Origin of the Species' and said to the congregation; 'I'm sorry, but you lot have got it all wrong about this whole God thing.' they would probably politely usher me out - and I don't think I would be invited to hang around after the service for tea and scones.

 

[dan c]

Frankly, I was so amazed by the overreaction to my comment on affordability, and the abuse I received from members here, that I felt compelled to blog about it. Note that my blog does not actually mention this forum, nor does it mention the names of any members.

I think a couple of people went over the top, but for the most part people here just argued your points. But the reason, I think, that people may have got a bit short with you is because the topic has been done to death.

From what I read, posters here gave their own examples of buying on single incomes and buying what they could afford.

Comparing house prices to average single income is a waste of time, because the majority of households now are dual income. House price to household income is a much better measure of affordability.

 

[buzzlightyear]

Frankly, I was so amazed by the overreaction to my comment on affordability, and the abuse I received from members here, that I felt compelled to blog about it. Note that my blog does not actually mention this forum, nor does it mention the names of any members.

Have a look at my post on this matter previously.

May give some context to these comments.

 

[skater]

Firstly you are a liar, because you said this, and promptly kept comming back with nothing at all new.

Gee whiz. So much anger in response to my comment on affordability.

Fine. If you don't like it being mentioned then I'll shut up about it..

Secondly, you have shown your true colours. You are not here to discuss or contribute anything at all. You don't even discuss your favourite topic, affordability. All you do is say "Oh, it's unaffordable nowadays".

You have an ulterior motive. Like Fifh said, it appears that you want page views, so, like Berlina, I'm not going to bother saying anything at all to you, because you are nothing but a troll.

EDIT: Wow, just looked at your blog. Don't expect any more responses from me.

You're just after page views,

I doubt many will want to discuss this further with you knowing that you're handpicking their responses to paint them as villains on your blog. It is kind of cheap, to be honest.

And yes! It is kind of cheap.

TROLLS BEGONE!!!!

 

[Different Here]

Just to set the record straight, I don't dislike property investors (I have some in my family) and I don't think what property investors do is immoral. It's natural that investors will take advantage of a government induced environment where holding multiple properties can lead to great wealth. It's human nature to desire to improve one's wealth.

However, having said that, there are over 100,000 homeless people in Australia, it is twice as difficult for single income families to afford housing now, and there are many people holding dwellings in excess of their need for shelter. I find this situation disturbing, and I believe it is bad for Australian society.

Also please note, I don't expect house prices to crash in a major way. I didn't claim a major crash is likely to occur any time soon. Prices are held at current levels due to government manipulation of the real estate market. While they are able to, the government will prevent prices from returning to more affordable levels.

I'm sorry if these facts bother some of you, but there you go.

 

[Aaron_C]

However, having said that, there are over 100,000 homeless people in Australia, it is twice as difficult for single income families to afford housing now, and there are many people holding dwellings in excess of their need for shelter. I find this situation disturbing, and I believe it is bad for Australian society.

People who hold investment properties generally rent them out - which means that there is no 'excess housing' relative to their need for shelter. The only exception would be holiday houses in Portsea etc. But the basic premise that investors take up necessary shelter is just plain wrong.

 

[Different Here]

People who hold investment properties generally rent them out - which means that there is no 'excess housing' relative to their need for shelter. The only exception would be holiday houses in Portsea etc. But the basic premise that investors take up necessary shelter is just plain wrong.

Read my blog. Earthsharing have shown there are almost 50,000 vacant dwellings in Melbourne alone.

 

[depreciator]

Ah Tony, Tony, Tony.

Your concern is noted. So what are you planning to do about it - apart from starting yet another blog which not many people are going look at. (They probably should call those sort of blogs 'bleats'.)

You mention you are sitting on a fully paid off home. How about spreading the love? You could take out a mortgage and invest in some low cost housing. C'mon, put your money where your heart is.

And that 'vacant house' thing has been done to death over the years. There were three recently in the street behind mine a couple of years ago. They would have come up on the stats. All three of them were unliveable. One has since been knocked down, one bought and made liveable, the other is still vacant and unliveable. It needs about $100K thrown at it.

 

[MathBoy]

Your blog clearly shows that you have an interest that apposes the majority of people here.
You are an AFL lover in a NRL forum
A Ford lover on a Holden forum

Sugar coat it how ever you want. You dislilke investors.
people can see your colours now and expect you to head the same direction as the ones before you. Ruffle some feathers then.... Gone.

You are nothing new and sadly not likely to be the last.

I wish the bulls were like that on the bear forums, there they just tend to turn in to raving lunitics and troll for years.