With current interest rates and prices, my calculations are that you need a net income of 1400 per week and a 50-80k deposit before you can make serious money out of property. How many people have access to that sort of earnings and capital ? You will clean up, even assuming you get on 2% growth per year because rents rise faster. So I can see a lot of would by buyers dropping off b.c they simply can't afford it.
ABS says house prices have fallen
- Thread starter Tehanu
- Start date
Hi Beebop - that's an interesting assertion. Any chance you could share your calculations with us?
Just curious as to your thought process here.
I would like to see this also.
A very specific calculation to cover endless property investment options.
Very interested.
A net of tax income of $1400 per week, is an annual salary in excess of $97k. So are you saying no-one can make serious money if they earn less? And what is serious money?
Buy average property of $600k + stamp duty of $30k. Put down $50k deposit. Borrow $580k.
@ 7% interest rates, pay interest of $40k or $800 per week
Earn $1400 per week
$600 left to spend per week. Aust society is finished.
Or buy below average house and upgrade where possible in the future.
life goes on.
Someone change the station. This song is getting really old.
Lol earn a high salary and buy a below average house?
How about, earn a below average salary (say $30k) and try buy a below average house (how about $250k in Sydney, does that sound cheap)?
Old song indeed...
How about, earn a below average salary (say $30k) and try buy a below average house (how about $250k in Sydney, does that sound cheap)?
Old song indeed...
Flawed example. Based on the online serviceability calculators (and no other debts), you would be struggling to find any bank that would offer finance for a loan of that size, based on the above information.
In 1996 I moved to Ballarat for work and earned this amount. Not long out of uni, I rented a a 1 bedroom house, for $90pw. I was under no illusion that I could afford to buy a house to live in at that time.
Yet again, a person who earns $30k, could not afford to buy by themselves a PPOR for $250k, based on banks serviceability criteria. Not sure if just citing random salaries and house prices together serve much value in your argument.
...but they will....
If you earn half the average Australian income, I suspect you would always have had difficulty in buying anything more than a very modest property.
So you now expect to buy a house on a low income.
I remember just leaving school and earning minimum wage and even back then i remember thinking my wage must significantly improve to buy a house. I excepted that to break away from renting i must improve my job/career.
This is why i believe minimum wage must be taken out of the equation when looking at housing affordability. sure at times it was possible but hey, now its not.
How about a car comparison
High wage.....Porche
Med wage.....Commodore
Low wage.....Daihatsu
Im sure people in all the above income brackets have bought above or below the corresponding car at times in there lives due to external forces.
But i personally would not expect to own a new commodore or better on a minimum wage.
At low points in property you may buy a lot better with an average wage. During booms you will not. There is nothing new here.As i have said before the gamble now lies in what happens next.
If you wait and values drop. Good for you you rolled the dice and won.
If they track sideways or up. You bet and you lost.
A purchase viewed long term is a win regardless of which way the dice land.
Back in 1996, $250k probably got you a decent 500sqm house in a decent suburb. Today, that same house is probably $1.5m.
Back in 1996, many people earned $30k. Yet today, probably as many people earn $30k.
So in short, yes, citing figures does add merit to my argument.
Precisely. And the most likely scenarios are down or sideways. By the way, how do you lose if it tracks sideways...
so rent....?
Just thinking Victoria, you can rent a place for $200 within 20km of the city. Not sure what you'd get with $250k within 120m of the city.
http://www.domain.com.au/Search/ren...ntree-Gully/?to=200&searchterm=Ferntree+Gully
Even if you did find one, at 80% gearing interest alone costs you $270, without factoring in repayments.
http://www.domain.com.au/Search/ren...ntree-Gully/?to=200&searchterm=Ferntree+Gully
Even if you did find one, at 80% gearing interest alone costs you $270, without factoring in repayments.
While it's value tracks sideways you pay down the principal getting ready to either upgrade or release equity in the future.
( you could do the same with the money you save renting but we all know very few do this)
plus by the time value increases become aware to the majority. They have already moved which means you may have missed a bit of the growth.
Unless your crystal ball has an alarm that sounds a horn at the absolute bottom of the market.
Plenty of ways to loose in a sideways market really.
Still can't see you link here. The 6416.0 House Price Index Eight Capital Cities tracked house price rises from 1994 to today for Melbourne provide for a 4 fold increase in price. But let's assume your example is correct in anycase. What you are saying? One theoretical example of a property has increased substantially. Not remarkable.
Going back into time, those $30k salaried individuals are still not going to be able to purchase that $250k house. Someone undertaking the same graduate job would be earning my guesstimate is $60k today. Yes, they are even further away from buying the same property today. So?
The increase in value maybe an inner city area, whose value, cache to buyers today are worth more than they were in the mid-90's. It may also be a mid-range suburb, who land size / value due to falling land plot sizes, make the property worth far more.
In 15 years, buyers preferences, tastes, social infrastructure, amenities etc may be completely different to today, and make areas once looked upon as undesirable and therefore very cheap, far more valuable. It may laso work the other way for previously popular suburbs.
And if you can't afford a car, rent?
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