How much can people really earn?

For anybody who starts comparing property prices in Melbourne to London or Mahhattan and expresses some concern that Melbourne is catching up, here's a simple fact - people in Melbourne earn as much as people in those other cities!!!

Aussies aren't underpaid, compared to Londoners or New Yorkers. (And that's at normal exchange rates, not the silly figures we have right now)

There might be a 10% to 15% difference, depending on jobs, but that's about it. And housing is a lot more than 15% cheaper in Melbourne than London...more like half the price, property for property.
 
Jonathon has hit the nail.

The people buying the $1m houses aren't really the ones on the average 60k salary. The bank wouldn't lend to them in the first place.

Young Professionals - Gen Y
There're now lots of young professionals in the mid to late 20s earning easily into the 6 digits - I had 6 digits in my first job straight out of uni and most of my friends who didn't hit 6 digits by 25 or 26.

If you have a partner (ie a girlfriend/wife/fiancee) and you both earn 6 digits, you'd probably have anywhere between 200k to 250k disposable income even at the age of 26 or 27.

These people hold off having kids until say 30 or so so have plenty of cashflow to service the loan at 7% interest rates. They each might've saved 80k or so over their 2-3 years of working by living at home.

Few of my colleagues bought their inner city $1.1m or so houses when they were quite young - maybe at around 28 or so. They're now around 32 and have probably paid off a good 60% or 70%, and their house is probably worth $2.0m now on comparable sales.

Professionals - Gen X

Tend to actually only have as much as money as Gen Y it seems as many seem to be more independent and moved out earlier (hence saved less over time). But nevertheless they're now in the same position as most Gen Ys and most my Gen X colleagues around 32 or so who haven't already bought a place are easily eyeing $1.5m houses with around $400k or so equity.

Overseas Investors
Chinese - enough said. Deal with several frequently. Buy with suitcase of cash. Most of them don't take out loans on purchases less than $5m as it's just like peanut money for them. Easily sustainable. They love places close to good schools and good universities as most of them come here to provide their childeren with an overseas education.
 
Jonathon

Property prices in London and Manhatten are not really a function of how much people are getting paid as you say!. So your arguement is not valid.

If that were the case prices in Bombay would be very low!

BTW have you checked prices in manhatten recently against prices in downtown middlepark or albert parl recently. Throw in the exchange rates and per sqre foot you will be surprised.

30 percent of manhatten owners work on wall street aparently and they have been decimated over the last 2 years.

http://www.businessinsider.com/henr...ate-prices-to-fall-at-least-another-35-2009-5


Cheers
Aussie
 
There're now lots of young professionals in the mid to late 20s earning easily into the 6 digits - I had 6 digits in my first job straight out of uni and most of my friends who didn't hit 6 digits by 25 or 26.

What job do you do to earn 6 digits straight out of Uni. I find it a little hard to believe.
 
mining, maybe lawyers?

I fear that we are now talking about the median house price against upper decile DINKS. Apples vs oranges?
 
What job do you do to earn 6 digits straight out of Uni. I find it a little hard to believe.

All of the large investment banks will pay grads circa $100k straight out of uni, admitedly that's a very small number of grads, much less than 100 in Melbourne each year. The law firms will pay $60-70k, the large accounting firms $55-60k. Large ASX companies will pay $45-60k.

All professional grads (accounting, law, etc) will expect to be on $100k within 5 years of leaving uni - that's in today's dollars and in Melbourne. Sydney is 10% higher, Perth and Brisbane perhaps 10% lower and Adelaide lower still.
 
All of the large investment banks will pay grads circa $100k straight out of uni, admitedly that's a very small number of grads, much less than 100 in Melbourne each year. The law firms will pay $60-70k, the large accounting firms $55-60k. Large ASX companies will pay $45-60k.

All professional grads (accounting, law, etc) will expect to be on $100k within 5 years of leaving uni - that's in today's dollars and in Melbourne. Sydney is 10% higher, Perth and Brisbane perhaps 10% lower and Adelaide lower still.


There're also other mid-tier firms apart from large investment banks that could do that. And for all the law firms, large accounting firms, large ASX firms (doing financial analysis), lots will hit 6 digits by around 25 or 26 if they started working at 21 or 22. Then you have all the dentists, pharmacists, optometrists and some have, from knowing a few, also hit similar figures by similar ages.

And then you have the bunch who's older and earns even more. So these are the people sustaining the $1m + houses. It's pretty obvious anyway because if they weren't on these figures, the bank wouldn't had lent to them in the first place unless you think low-doc loans are widespread here.

And I completely agree with Jonathan. Sydney is an entire leg more expensive than Melbourne and if you think Melbourne will hit similar achievements as Sydney financially, economically etc in 10 years, it's still underpriced now. All overseas investors I deal with from Asia think this place is a bargain too - and I'm not even talking about ones from NYC or London. Just people from KL, SG, HK, Shanghai etc.
 
Dudes - why do i keep getting misquoted

I never compared the reasons behind property prices between Melbourne and Manhatten/London. I merely stated that more and more people will be commuting from the country side like they do in places like manhatten and London.

Geez.

Deltaberry

I dont reckon there are many financial analysts, pharmacists or optometrists earning that k at 25-26...the others yes. A few but not many..

BTW - On what basis do they feel that melbourne is underpriced? i can show you figures that say Mebourne is one of the most expensive cities in the world to buy property. And yes i have lived in asia and travel there every few months.

Only one really cheap place to buy property right now - USA! (comparitvely speaking)

sorry - and Spain!
 
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Dudes - why do i keep getting misquoted

I never compared the reasons behind property prices between Melbourne and Manhatten/London. I merely stated that more and more people will be commuting from the country side like they do in places like manhatten and London.

Geez.

Deltaberry

I dont reckon there are many financial analysts, pharmacists or optometrists earning that k at 25-26...the others yes. A few but not many..

BTW - On what basis do they feel that melbourne is underpriced? i can show you figures that say Mebourne is one of the most expensive cities in the world to buy property. And yes i have lived in asia and travel there every few months.

Only one really cheap place to buy property right now - USA! (comparitvely speaking)

sorry - and Spain!

er....every graduate investment banker I know is on $100K+ (if you include bonuses, then probably $200K in their 1st year of being an IB analyst). My mate at Citi says graduates are on circa $200K including bonuses, with base at around $100K.

Oh...not just investment bankers....here is a list (other than those Deltaberry mentioned) that I could think of on the spot which already earns, or potentially earns $100K+ in their 1st year out of uni (graduate starting salary)

1. Actuary industry
2. Derivatives, equity and arbitrageur traders at prop trading (market making) firms
3. Same as no.2 but at non-prop trading firms
4. Mining - especially explosives and geological engineers, and a host of mechanical, chemical, hydraulic (fluid & mechanics) engineers (there will be a lot of other sub-specialised engineering disciplines I missed out)
5. Forensic weaponry and engineering mechatronics firms
6. pharmaceutical and drug companies (i.e. development of biotech, specialising in pharmaceutical kinetics and psychotherapy)
7. statisticians (i.e. anything quantitative), such as those that make financial models, specialise in time-series forecasting
8. research analysts at IB firms
9. Software engineers and computer science firms (top-tier)
10. Petroleum industry (oil & gas graduates)

That is a quick list of 10 I can think of (of which there are many more).

Those are also just the corporate ones...as theoretically speaking, anyone who gets paid by performance/commission based can earn 100K+
 
Guys

I am a director of a business unit for a Wall st Investment Bank (derivatives specialists)! One of the largest of its kind in the world.

We dont have any graduates on that money...thats for sure..

Plus the only ones i questioned above are pharmacists, optomotrists and analysts so another case of being misquoted.

Your last line is correct though - if its performance or commission based there is no limit...but the base is not above 100k except for the very very few.

But some interesting ones you listed there - im about ready for a career change!
 
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Guys

I am a director of a business unit for a Wall st Investment Bank (derivatives specialists)! One of the largest of its kind in the world.

We dont have any graduates on that money...thats for sure..

Plus the only ones i questioned above are pharmacists, optomotrists and analysts so another case of being misquoted.

Your last line is correct though - if its performance or commission based there is no limit...but the base is not above 100k except for the very very few.

But some interesting ones you listed there - im about ready for a career change!

Firstly, I shall apologise for misquoting you. It was unintentional.

Let me guess, you are a director of trading at either one of the following

1. Citi
2. U.S. Federal Reserve (opps, I mean Goldmans)
3. UBS
4. JP Morgan
5. Morgan Stanley
6. DB
7. Credit Suisse

Did I leave anything else? Don't think there is any other global Wall St investment bank with a major presence in Australia and Melbourne.

I know personally (or heard of) people at all those firms that are starting on $95 - 110K base graduate salary for 1st year IB M&A analysts. Apparently Credit Suisse pays the highest base salary (just a rumour I heard of), but are the stingiest when it comes to bonus time. You should know if this is true. Bonuses can be in the order of 100% (as in the case of Citi this year, according to a mate who works there). Research analysts are close to $100K at graduate 1st year level (won't name which firm) and maybe those in DCM and ECM are close to it (the $100K, although I could be wrong here...might be more like $70-80K base).
 
Just curious, how many hours per week do these graduate investment bankers work?

The effective hourly rate may not be that impressive......
 
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er....every graduate investment banker I know is on $100K+ (if you include bonuses, then probably $200K in their 1st year of being an IB analyst). My mate at Citi says graduates are on circa $200K including bonuses, with base at around $100K.

Oh...not just investment bankers....here is a list (other than those Deltaberry mentioned) that I could think of on the spot which already earns, or potentially earns $100K+ in their 1st year out of uni (graduate starting salary)

1. Actuary industry
2. Derivatives, equity and arbitrageur traders at prop trading (market making) firms
3. Same as no.2 but at non-prop trading firms
4. Mining - especially explosives and geological engineers, and a host of mechanical, chemical, hydraulic (fluid & mechanics) engineers (there will be a lot of other sub-specialised engineering disciplines I missed out)
5. Forensic weaponry and engineering mechatronics firms
6. pharmaceutical and drug companies (i.e. development of biotech, specialising in pharmaceutical kinetics and psychotherapy)
7. statisticians (i.e. anything quantitative), such as those that make financial models, specialise in time-series forecasting
8. research analysts at IB firms
9. Software engineers and computer science firms (top-tier)
10. Petroleum industry (oil & gas graduates)

That is a quick list of 10 I can think of (of which there are many more).

Those are also just the corporate ones...as theoretically speaking, anyone who gets paid by performance/commission based can earn 100K+

I have just come out of an oil and gas consultancy firm and I can tell you that the starting salary for graduates is nowhere near 100K, more like 55K if you are based in metro area, and perhaps an additional 20K for relocation allowance if you work in remote areas. Maybe some of the stories you have heard of are pre-2008 when sky is the limit. These days, the majority firms are just treading water.. e.g. Worley Parson had 2 rounds of redundancy plus 10% pay cut across the organisation, while other major consultancies are also struggling to find works and retrenched quite a few along the way.. CAPEX work (greenfield work) definitely hasn't filtered through the sector as yet.
 
I have just come out of an oil and gas consultancy firm and I can tell you that the starting salary for graduates is nowhere near 100K, more like 55K if you are based in metro area, and perhaps an additional 20K for relocation allowance if you work in remote areas. Maybe some of the stories you have heard of are pre-2008 when sky is the limit. These days, the majority firms are just treading water.. e.g. Worley Parson had 2 rounds of redundancy plus 10% pay cut across the organisation, while other major consultancies are also struggling to find works and retrenched quite a few along the way.. CAPEX work (greenfield work) definitely hasn't filtered through the sector as yet.

Hum...you are probably right with the pre-2008. Got a mate who is 1st year Shell petrochemicals graduate this year (he says he is on $80K, but he told me he knows of people that are on much higher), hence why I reckon they are 6 figures or close. He did an internship with them, so that could have helped. Oil & Gas consultancy firms would pay less (and I wasn't referring to those), obviously given the revenue and profits numbers we are comparing. One's income is on barrels of oil, the other is fee generation...
 
Just curious, how many hours per week do these graduate investment bankers work?

The effective hourly rate may not be that impressive......

hahaha....depends on which firm

Many IB analysts work till about midnight (if they get out at 10pm or 11pm, they would be laughing and throwing parties) during weekdays. Will need to do weekends as well and this varies, although lately, got a mate at Citi who has been working every Saturday 15+hours for the past 2 months. He says people get white hairs before 30, haha...

Probably anything between 90-100 hours per week I'd say. 100+ during big deals
 
hahaha....depends on which firm

Many IB analysts work till about midnight (if they get out at 10pm or 11pm, they would be laughing and throwing parties) during weekdays. Will need to do weekends as well and this varies, although lately, got a mate at Citi who has been working every Saturday 15+hours for the past 2 months. He says people get white hairs before 30, haha...

Probably anything between 90-100 hours per week I'd say. 100+ during big deals

So let's say at 200k pa, 48 weeks/yr, 90 hrs/week... that's $46/hr.

At say 100k pa, 48 weeks/yr, 90hrs/week... $23/hr.

Not impressive at all.

I think they call this stupidity!
 
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Jit is right and i think DeeHwa and his mates have been watching too many Gordon Gekko reruns....master of the universe stuff - and to be truthful the stuff that gives these types of jobs a bad name amongst the normal people in society....

Investment banking jobs differ. it depends on the markets you are working. And yes when you first start out the hours can be long etc. But many of these hours that are described are by young guys keen to impress - so its self inflicted. Then comes the drinking, drugs, womanising................its true...

The supposed payoff comes down the track when you work more efficiently, you have less people to impress, you have clients / counterparties / brokers that support you etc etc...

Some of the highest paid invesment bankers do very little actual work and have plenty of free time - because its about the markets. So if you make a few good calls per year then you are home and hosed...

And re bonus payments - again like everything in the IB bubble of a world - its a function of the market. Boom times - hard to get people...you can negotiate virtually any employment terms you want - as long as you perform..

The biggest challenge for IB'ers is to keep ones souls intact!

Cheers
Aussie
 
Is anyone seriously putting the view that a graduate who earns $70k+ per annum, at admittedly a job that they will need to work long hours for is making a poor career choice. :confused:

What's the alternative? Go and work a 9-5 job for $30k. :rolleyes: Hard work didn't kill anyone.
 
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