Average Wage vs Median Price

[willister]

After Hockey's infamous line....interesting about avg wage vs median price by suburb. Nothing scientific about this nor can any conclusions of substance be drawn from this but nonetheless:

http://news.domain.com.au/domain/re...-afford-to-buy-and-where-20150610-ghkg9j.html

Look at GW!!

 

[Scott No Mates]

The story hasn't changed from last boom, the boom prior to that or the ones beforethat. This is a price correction. Wages growth will catch up and rebalance the equation.

FHB priced out of the market. Our kids will never be able to afford a house. Release more land. Government puts brakes on land releases.

Move along. Nothing to see here.

 

[Nick Valsamis]

People have the option of renting too. Prices haven't changed as much in that area as well.

 

[Ausprop]

People have the option of renting too. Prices haven't changed as much in that area as well.

that can only ever be temporary, something has to give - either cap values or yield.

 

[BayView]

Joe's statement was factual too - something that everyone seems to have missed.

Try buying any property at all without a (good) job that allows you to save for a deposit and show the Banks you can service a loan....

This Society is ridiculous; everyone wants things to get better (for their own pocket), yet when it comes to hearing the reality of bad news required to improve things that effect that end (improvements for our own pockets) ...noone wants to hear the cold hard truth.

Someone said it well yesterday via a text to the ABC Radio about his statement:

"Go out and get a good job, and if you can't find a good job; get two bad ones!"

 

[Perp]

The story hasn't changed from last boom, the boom prior to that or the ones beforethat. This is a price correction. Wages growth will catch up and rebalance the equation.

FHB priced out of the market. Our kids will never be able to afford a house. Release more land. Government puts brakes on land releases.

Move along. Nothing to see here.

But wages haven't caught up, for over 50 years now.

Imagine you're blowing up a balloon.

When it's 60% full, some people call "it's going to burst!".

At 70% full, skeptics say "see, it didn't burst!"

At 80% full, the concerned parties say again: "it's going to burst!"

And at 90%, skeptics respond "it still hasn't burst, they're talking ****!"

The fact it hasn't yet burst, doesn't mean it's never going to.

I think there does eventually have to be a significant correction, or - more likely in my humble and completely amateur opinion - prolonged periods of stagnation. i.e. Houses that cost $700K now, will still cost $700K in 10 or 15 years' time. If wages grow at 3% in that time, that's equivalent to dropping the ratio of average house price to wages from its present 4 to just under 3 (which is still high by global standards).

 

[jerrybee]

or - more likely in my humble and completely amateur opinion - prolonged periods of stagnation. i.e. Houses that cost $700K now, will still cost $700K in 10 or 15 years' time. If wages grow at 3% in that time, that's equivalent to dropping the ratio of average house price to wages from its present 4 to just under 3 (which is still high by global standards).

But that IS what happens, and that's what DID happen after the last 2003 boom. It was flat for a decade. This is how real estate cycles are. And, this is what most people are already predicting after this boom...so I'm not sure what you're saying is much of a counter argument. This is already the expectation of most people here.

 

[Perp]

But that IS what happens, and that's what DID happen after the last 2003 boom. It was flat for a decade. This is how real estate cycles are. And, this is what most people are already predicting after this boom...so I'm not sure what you're saying is much of a counter argument. This is already the expectation of most people here.

I don't know if you looked at the chart, but um, no, prices have not been flat since 2003. The ratio has increased from around 2.5 to around 4 in that time.

 

[peastman]

Looking at the Real House Price chart above, is there a co-relation with inflation?
Without doing any real research, it looks like when we had high inflation the price stays relatively static, but in low inflation times, the price rises.

But actual house prices (not inflation adjusted) tend to keep rising. So by using the power of gearing we will all do OK.

 

[alexm]

Joe's statement was factual too - something that everyone seems to have missed.

Try buying any property at all without a (good) job that allows you to save for a deposit and show the Banks you can service a loan....

This Society is ridiculous; everyone wants things to get better (for their own pocket), yet when it comes to hearing the reality of bad news required to improve things that effect that end (improvements for our own pockets) ...noone wants to hear the cold hard truth.

Someone said it well yesterday via a text to the ABC Radio about his statement:

"Go out and get a good job, and if you can't find a good job; get two bad ones!"

+1 Absolutely spot on.

 

[Scott No Mates]

Better still, get two good jobs - oh I have to get up off my @rse and get an education/get up in the morning (read dark)...etc

 

[Beelzebub]

But wages haven't caught up, for over 50 years now.

Imagine you're blowing up a balloon.

When it's 60% full, some people call "it's going to burst!".

At 70% full, skeptics say "see, it didn't burst!"

At 80% full, the concerned parties say again: "it's going to burst!"

And at 90%, skeptics respond "it still hasn't burst, they're talking ****!"

The fact it hasn't yet burst, doesn't mean it's never going to.

I think there does eventually have to be a significant correction, or - more likely in my humble and completely amateur opinion - prolonged periods of stagnation. i.e. Houses that cost $700K now, will still cost $700K in 10 or 15 years' time. If wages grow at 3% in that time, that's equivalent to dropping the ratio of average house price to wages from its present 4 to just under 3 (which is still high by global standards).

Interesting graph; however, does it track average individual income or household income? The divide starts to shoot up just as the demographic changes of smaller and double income families start becoming more prevalent.

 

[Perp]

Interesting graph; however, does it track average individual income or household income? The divide starts to shoot up just as the demographic changes of smaller and double income families start becoming more prevalent.

Sorry, my mistake: it's not relative to household income, it's cost in real $, i.e. taking into account inflation etc., relative to 1890. So a house today costs four times as much, in real terms, as it did in 1890 through approx 1962.

A house now costs 4 times as much as it did 2 generations ago, in real terms, so it's nonsense to suggest that it's no harder to buy a house now than it was for our parents or grandparents.

 

[vbplease]

The fact it hasn't yet burst, doesn't mean it's never going to.

I think there does eventually have to be a significant correction, or - more likely in my humble and completely amateur opinion - prolonged periods of stagnation. i.e. Houses that cost $700K now, will still cost $700K in 10 or 15 years' time.

Considering the current trajectory in loan approvals for investors in the previous years, recycling of (increased) equity to fund further purchases could maintain exponential growth.. Unless lending criteria continues to tighten for investors..

 

[Perp]

Considering the current trajectory in loan approvals for investors in the previous years, recycling of (increased) equity to fund further purchases could maintain exponential growth.. Unless lending criteria continues to tighten for investors..

Equity's only half the equation, though. Rent is much more closely linked to growth in wages, and serviceability limits must eventually be reached.

 

[vbplease]

Equity's only half the equation, though. Rent is much more closely linked to growth in wages, and serviceability limits must eventually be reached.

Very true.......

 

[Peter Parker]

Look at GW!!

I don't believe those numbers.

Eg Glen Waverley with lower average incomes than Werribee?

Maybe those income numbers are based on postcodes rather than single suburbs. Eg Werribee is in 3030, but so is Point Cook and Sanctuary Lakes which have high incomes (and higher house prices).

 

[jerrybee]

I don't believe those numbers.

Eg Glen Waverley with lower average incomes than Werribee?

Maybe those income numbers are based on postcodes rather than single suburbs. Eg Werribee is in 3030, but so is Point Cook and Sanctuary Lakes which have high incomes (and higher house prices).

It's not hard to believe. I looked up Sunnybank's numbers (sort of the equivalent to GW in QLD) and it was a shocker, I think like 7-8% unemployment. These suburbs consist of Asians that have come over here with heaps of cash but unemployable due to the language and culture shift. I know plenty of middle aged Asians that just sit around sipping tea in their million dollar homes.

 

[Ausprop]

I know plenty of middle aged Asians that just sit around sipping tea in their million dollar homes.

sounds like a dream - isn't that what everyone wants to do?

In the 'new paradigm' phase of a mania there are a lot of reasons why house prices can detach from affordability. I think a tsunami of foreign money is one particularly good one.

 

[Beelzebub]

Sorry, my mistake: it's not relative to household income, it's cost in real $, i.e. taking into account inflation etc., relative to 1890. So a house today costs four times as much, in real terms, as it did in 1890 through approx 1962.

A house now costs 4 times as much as it did 2 generations ago, in real terms, so it's nonsense to suggest that it's no harder to buy a house now than it was for our parents or grandparents.

Yep okay four times as much to purchase. However, were they double income households? What was serviceability like in relation to interest rates? And I don't think that means there will necessarily be a long term correction. The demographic changes and regulations surrounding town planning have impacted greatly on supply and demand. Unless the government de-regulates town planning I think we're good.