I hear this a lot and it is completely illogical.
Lets say the renter can afford to rent but not buy the house they are living in. Then who is paying for the house?
Forecaster tips house price rise of 40 per cent in five years
- Thread starter Gools
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I hear this a lot and it is completely illogical.
Lets say the renter can afford to rent but not buy the house they are living in. Then who is paying for the house?
What are your investments Yeildmatters?
Yeildmatters:
Ok, you don't believe that property represents a good investment, so what is your alternative?
Let's cut the BS completely - do you have strategy for achieving wealth, and if so, what is it?
And if you don't, how do you intend to support yourself in retirement?
Do you actually have anything positive to contribute at all?!
Yeildmatters:
Ok, you don't believe that property represents a good investment, so what is your alternative?
Let's cut the BS completely - do you have strategy for achieving wealth, and if so, what is it?
And if you don't, how do you intend to support yourself in retirement?
Do you actually have anything positive to contribute at all?!
One of your puzzle is if price growth of house outstrips wage growth then it becomes unaffordable to the people. If Australia is a close system then yes your logic holds, but we have over a 100,000 migrants coming in, many have been financially qualified to be able to support themselves (and buy their houses). New money and at a higher level is injected into the Australian housing equation.
The other thing about affordability is about income. The average wage may not be rising fast enough, but if you take multiple jobs then the statistical average or median wage is not a reflection of the individual's wage, which may be a multiple of that.
Regarding your quote above, it is an empirical fact that the financial situation of the investor/owner is not the same as the renter. So, who is paying for the house is really rhetorical as the house could have been paid off generations before.
F
This thinking may be wrong so jump in and grill me if i have missed something.
All this housing affordabillity and % of wage calculations are worked out on the average of Australias entire work force.Including the people on minimum wage who basically will not buy a house and basically dont plan to unless there income changes. If you cut them out of the calculations and just include the people on higher wages who are actively planning on buying.Does this improve the affordability calculations.
Its like Showing a graph of ferrari owners. Yes it will be a small % of the population but if you cut out the people who obviosly cant afford them and have no plan on ever buying one. The % improve.
Basically im saying that lower income earners should not be part of affordability calculations in inner rings of major cities because it is basically a market that they cant be part of until there wages improve.
Hope that makes sense.
All this housing affordabillity and % of wage calculations are worked out on the average of Australias entire work force.Including the people on minimum wage who basically will not buy a house and basically dont plan to unless there income changes. If you cut them out of the calculations and just include the people on higher wages who are actively planning on buying.Does this improve the affordability calculations.
Its like Showing a graph of ferrari owners. Yes it will be a small % of the population but if you cut out the people who obviosly cant afford them and have no plan on ever buying one. The % improve.
Basically im saying that lower income earners should not be part of affordability calculations in inner rings of major cities because it is basically a market that they cant be part of until there wages improve.
Hope that makes sense.
You can't exclude them unless they are going to go live in tents. If they are occupying the house (even as a renter) then their income matters to the equation.
quick edit: if they aren't occupying those houses then yes it is correct to exclude them from the equation.
I remember, 35 years ago my sister borrowed $30,000 to buy a home, it was a lot of money and the projection said it would eventually cost her $100,000 to pay off over the 30 years.
35 years later, the house is worth $300,000 and she still lives there!!
un -bloody- believable !!!
This, in my opinion, is the story to keep in the back of your head when you complain about current prices...
Affordability:: It's all relative, if you're willing to live in a number of outback QLD towns, it's cheap. But people won't do it, complain about affordability and then go back to renting just so they can sit in a shitty unit in the city. Grow up Australia.
I've had my vent...
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But if they are renting and have no intention of buying as is the case with many.Then why would they be counted in affordability calculations.
When they work out the % of pregnant Australians i bet they dont include the men in the calculations.
Also can someone answer this
When they work out the affordability of somewhere like Sydney compared to average wages. Is it the average wage of Sydney or Australia they work it out on.If its Australia wide then i dont see the relevence of a workers income in a small country town to the affordability of Sydney.If its worked out on Sydneys median income then disregard this paragraph.
Affordability:: It's all relative, if you're willing to live in a number of outback QLD towns, it's cheap. But people won't do it, complain about affordability and then go back to renting just so they can sit in a shitty unit in the city. Grow up Australia.
I rent a $1M house in the city and complain about affordability on behalf of others.
Fair enough. Agree with you then.
My perspective was more an economic one - trying to justify current prices. In that case it doesn't really matter whether its a renter or an owner occupier - somebody, somewhere has to pay for the house.
When the value of the house you rent falls by 50% and your rent stays the same or increases, you won't be so happy
When the value of the house you rent falls by 50% and your rent stays the same or increases, you won't be so happy
Actually thats when he would offer to buy it
Actually thats when he would offer to buy it
Yeah - not sure what Wylie meant there - could have been a typo. If it halved I'd be thrilled - I'd buy it or go out and buy something similar. I don't mind paying a premium to own - there are lots of intangible benefits to owning so it is worth it. Just wouldn't pay triple to own though - it's too big a gap.
Stop Press: Another B(I)S forecast
It's been reported that BIS is forecasting that YM will be posting 40% more of his same old story by 2013. However (even after adjusting for inflation) this will fail to impact on the majority of property investors. The supply of economics based verbiage has exceeded the demand for it for almost a year. But there seems to be no end in sight for SS members desperate for some relief from the seemingly endless number of reasons why property investment will fail to be a good investment in the future. The current trend shows D&Gers have increased at 7%pa on average for the last 20 years. But even they admit that there is no reason for this trend to continue for the next 20 years. Some D&Gers are suggesting that according to their models this level could fall by 50% next year! Even with this huge increase in D&G many first time D&Gers feel they are being ignored & some have even resorted to posting at GHPC.
Furthermore, BIS are expecting that over the next 5 years the reasons for D&G are very likely to change at frequent intervals. This is likely to be for two reasons -
Stop Press: Another B(I)S forecast
It's been reported that BIS is forecasting that YM will be posting 40% more of his same old story by 2013. However (even after adjusting for inflation) this will fail to impact on the majority of property investors. The supply of economics based verbiage has exceeded the demand for it for almost a year. But there seems to be no end in sight for SS members desperate for some relief from the seemingly endless number of reasons why property investment will fail to be a good investment in the future. The current trend shows D&Gers have increased at 7%pa on average for the last 20 years. But even they admit that there is no reason for this trend to continue for the next 20 years. Some D&Gers are suggesting that according to their models this level could fall by 50% next year! Even with this huge increase in D&G many first time D&Gers feel they are being ignored & some have even resorted to posting at GHPC.
Furthermore, BIS are expecting that over the next 5 years the reasons for D&G are very likely to change at frequent intervals. This is likely to be for two reasons -
- the unfolding facts over the next 5 years will disprove their highly theoretical economic hypotheses
- what should happen and what actually does happen are rarely the same
Very good ...
(edit: I should add that I stick to the appropriate threads so people can switch off if they choose)
LOL... you should give him kudosVery good ...
Yes, existing properties may become unaffordable (although not all) - but there is always new supply coming on the market. People aren't necessarily supposed to be able to afford any property. That's never been the case.
I think it's a valid point. People keep referring to median house prices increasing and saying how FHB's etc. can't afford it. I don't accept this argument. Now show me prices of the cheapest prices dwellings in a city being unaffordable - then I will concede there is a problem.
You can't exclude low income earners - but that doesn't mean that they should be able to buy the median house price which keeps being referred to, or just a house they desire for that matter. Low income earners (at the moment anyway) can still buy the cheaper dwellings in capital cities.
We've had this discussion before YM, and I've posed this question to already - but here goes again: If people can still afford the cheaper houses in a city - where is the affordability crisis? Put aside all the theoritcal arguments of median prices, and wages, and debt since the 90's etc although I know that's hard for you as you live for it.
Then after you answer that people usually come back with the social justice argument etc - my follow up question goes: Even if dwellings became unaffordable at some point, where is it stated that ownership is a right for all? There are hundreds of thousands who couldn't afford to buy 10yrs ago (before the affordability issue supposedly hit), that's been accepted. The trouble seems to be that that group seems to be expanding, supposedly. But again, we're talking about aspirational, not affordable.
It's accepted that the majority of people living in countless cities (NY, HK, London) can't afford to buy. Why do people conceive such a problem with this happening in Australian cities? Whilst it isn't a reaility yet, it could well be in the future - so?
I've never argues a FHB should be buying a median house. But I think entry level houses have risen a lot in the last 10 years relative to incomes as well.
It would infact be statistically difficult for the median house to increase without the low end increasing also - unless the distribution of housing assets in Australia has suddenly changed dramatically (i.e. we've bulldozed all the crap and replaced it with upmarket expensive stuff!). Or to put it simply, if more or less the same houses are sitting across Australia that were sitting there 10 years ago and the median house has increased then you can be almost sure the entry level has increased as well.
Lets say the majority TRULY can't afford to buy (i.e. - it's not due to poor budgeting, or poor work ethic, or it's not a lifestyle choice to rent). Then we have a massive economic problem as we can not pay for the housing we have - as I keep saying, SOMEBODY has to pay for the house regardless of who is living in it. Maybe these houses were purchased a long time ago, but one day every house has to turnover at the market price.
hmmm ... 40% rise in 5 years ... am i supposed to be impressed or depressed? - some places will, some won't, some will do 40% in a year, others 40% in 10 years - what a nonsense story - i can't believe all these people are debating it !
The issue around the affordability is not only serviceability (% mortgage payments as a porportion of income), but the significant amount people need to find for deposit & stamp duty.
If median price today is $450k, you will need over $100k for deposit & costs. back in 1997, if that same property was worth $225k, that initial deposit & costs would have been around $50k. That makes a huge difference. Even with today's income levels, how quickly can you save $50k from your income only?
