My theory on why the market is a little spooked

[zed_kid]

Anyway I am not here to bash tradies. they get extremely well looked after and respected in this country and that's just the way it is here. if you are smart and want to be paid well, head overseas, if you are better with your hands stick around here - it's just rational economic behaviour in the midst of a distorted economic environment, but all economies have distortions, even good ol' free trade USA

Quoted for truth. I’m trying to bail on Australia but too much stuff is holding me down at the moment.

Course my comment was a broad generalisation, I know that not all tradies are making a killing, just like I know that not all finance analysts (myself included) are making a killing. Most of my mates are tradies and I used to feel pretty damn average when they were going to Thailand for full moon parties and I was stuck at home studying for exams and working for my parent’s business helping them pay off IPs. It’s ok now though as my collection of suits and my car are worth more than what they take home p.a. but it was super painful in my early 20s, taught me how to forego instant gratification for future prosperity though so not all bad.

 

[Jase H]

Yeah, screw people who work. they're idiots. Trying to do the best they can. What morons. Everyoner should be a property inve4stor.

What's wrong with being both a 'moron emplyee' and a property investor

 

[CHam]

Do you know how they get to 4 1/2 times multiple? Seems too low considering wages are i think about $65k average and house are circa $600k average price.

I know you're going to say dual incomes etc. I just want to know how they get to 4 1/2 times.

They are talking about median or average home prices compared against median or average home income (which may be combined depending on the number of income earners in the home). Therefore it is incorrect to simply compare the standard single wage against the median / average home price.

There is significant amounts of recently published articles outlining the figures which state the current ratio is 4.6 nationally.

The amount of negative press around this at the moment is very frustrating, and the sooner people stop misquoting the facts the better. I think that there are a lot of people out there with an alternate agenda (shares, etc.). Property prices will certainly soften this year (and possibly drop in a number of areas), however I know that I am in it for the long term and not interested in selling up as soon as someone talks about a possible drop in values!

 

[evand]

fair enough. Can you supply some evidence to support your post?

How do they get to 4.6 times? I still say its too low. And as the figure originally comes from private companies with an interest in property, i'm not surprised.

They are talking about median or average home prices compared against median or average home income (which may be combined depending on the number of income earners in the home). Therefore it is incorrect to simply compare the standard single wage against the median / average home price.

There is significant amounts of recently published articles outlining the figures which state the current ratio is 4.6 nationally.

The amount of negative press around this at the moment is very frustrating, and the sooner people stop misquoting the facts the better. I think that there are a lot of people out there with an alternate agenda (shares, etc.). Property prices will certainly soften this year (and possibly drop in a number of areas), however I know that I am in it for the long term and not interested in selling up as soon as someone talks about a possible drop in values!

 

[Deltaberry]

LOL, your collection of suits are worth more than their take-home pay?

When I was an analyst I bought $150 suits from China. I don't know why analysts need to buy expensive suits when they're in the office looking at excel/ppt. But even if you did go see a client, I'm sure no one cares what suit you wear.

 

[CHam]

fair enough. Can you supply some evidence to support your post?

How do they get to 4.6 times? I still say its too low. And as the figure originally comes from private companies with an interest in property, i'm not surprised.

Just trying to find a couple of articles that I read on the Web over the past couple of days.....will post the links as soon as I find them (they are buried amongst all of the doomsdayers blogs and articles stating that the world is coming to an end, get out now, etc.)

 

[zed_kid]

LOL, your collection of suits are worth more than their take-home pay?

and car....

 

[CHam]

Just trying to find a couple of articles that I read on the Web over the past couple of days.....will post the links as soon as I find them (they are buried amongst all of the doomsdayers blogs and articles stating that the world is coming to an end, get out now, etc.)

Try this link from RBA Governor Glen Stevens:

http://www.yourmortgage.com.au/news/rba-chief-untroubled-by-house-affordability/5218

 

[CHam]

http://www.theaustralian.com.au/bus...inue-to-be-wrong/story-e6frg9if-1225892981265

 

[evand]

I've seen the articles. What i havn't seen is evidence or proof or whatever of how they came to the x4.5 multiple.

 

[silverx]

tradies are rich as hell. no need to say more. for hours worked, they still earn FAR FAR more than office workers.

being a tradie is almost like being an investment banker these days.

well it depends, you do get more than 100 dollar per hour by working in the office as well. i am thinking to do the same as most of the IT prof i know, by going contracting.

the rate is 100/hour and above and you will get long contract like 6 to 12 months so basically you are guaranteed full time job for a year with salary paid double to triple normal full time workers

 

[VYBerlinaV8]

And what percentage of office workers would be on $200k pa.

Not a huge amount, but it's becoming more common where I live, because of the number of contractor roles that are being filled.

 

[MrCrumbpacker]

I've seen the articles. What i havn't seen is evidence or proof or whatever of how they came to the x4.5 multiple.

It is a debated figure, and I must admit it seems low. The 4.5 figure was touted by Rismark, and involved a bit of bending. See here.

http://macrobusiness.com.au/2011/03...on-australias-dwelling-price-to-income-ratio/

The debate has been ding donging back and forth, an in the end seems to boil down the one own prejudices.

Common sense tells me the average income would be around 70K, and a house around 600 in say the larger Sydney area.

Fact of the matter is Australian houses are expensive by most metrics, why bother denying it?

That is not to say they are not expensive in a few other countries, where cheap credit has impacted. The thing is, the other countries are undergoing some fairly fierce corrections.

The overall price isn't the worry, cars are expensive in Australia too, and even after twenty years of declines, Japanese houses are fairly expensive, as you would expect with a high population, relatively good standard of living, and little available building land (lots of mountains).

What is a real worry to me is the price/earnings ratio, or yield, or whatever, which has been skewed by a manipulated market. Very dangerous, and as much as I like property in general, I'll be leaving Australian property alone for a while.

 

[Beebop]

I've seen the articles. What i havn't seen is evidence or proof or whatever of how they came to the x4.5 multiple.

These guys... omg. If the multiple of houshold income is now 4.5 then in the past it would have been even lower. So their point is moot.

 

[Deltaberry]

and car....

Driving the new E-Class? Looks nice

 

[sash]

Well....thanks to the unions.....they make it really hard for overseas trained personell from getting recognition for their qualifications.

If we went the way of the UK where they get a lot of Eastern Europeans tradie wages here would fall.

As for tradies earning good wages....this only there result of protectionism.

Why should it!!! you can earn that in many unskilled jobs.. tradies do 4 years to get a qualification and start on very poor $$$.
if being a tradie pays so much and is so easy why is there a shortage??

 

[Wunderbar]

Unions make life difficult and inefficient for everyone. Hope they die out soon - they've been in decline for the past 20 years

 

[tom32]

As for tradies earning good wages....this only there result of protectionism.

In fairness that is the same with nearly all Australians though whatever the occupation. Our wages are protected as the government does not allow unlimited immigration of your role.

I am sure I would suddenly cop a hit to the pay packet if 10,000 eastern european engineers were all given 457 visas. Who am I kidding last year it is likely more than this were....

Nearly all of us in a developed country like Aus earn more than our counterparts in other countries.

On tradies v others, hands on construction workers always earned top dollars if they were competant. It is just a more level playing field now...

Edit: I should add I am all for a liberalised workforce but just wanted to point out tradies are not the only ones protected.

 

[Deltaberry]

Can you imagine if all the Indians were let in to do financial analysis and IT work? Some of you IBM consultants and Goldman Sachs bankers out there would probably go back to $40k a year, if lucky. The free lancers will be out of work

 

[Ausprop]

Can you imagine if all the Indians were let in to do financial analysis and IT work? Some of you IBM consultants and Goldman Sachs bankers out there would probably go back to $40k a year, if lucky. The free lancers will be out of work

there are no barriers to financial analysis work other than getting into the country