Solving the housing affordability crisis
- Thread starter Cupcakes
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Actually, I think Americans were building the largest homes in the world pre-GFC
I wanted to start another thread but since it this thread is about affordability I thought I'd ask it here instead.
In terms of affordability, affordability compared to what? I've dealt with a few immigrants and my previous role and some have become friends of mine. I am talking about dual income with kids that came here 3-5 years ago purchased their property a few years back and have taken a big chunk from their mortgage. Back where they came from, they wouldn't have been able to do it in that short amount of time because of the lack of opportunities.
Recently, I've been involved in checking out some asian properties where you can purchase a penthouse on a 30+ storey building for around $100k Oz dollars converted (around 4 million in their currency) or $60k - $70k for a 2 bedroom apartment and not many people (90+ million) can afford it. So they go overseas marketing to expats that can afford it. So again, affordability compared to what? Lifestyle? Economy? Purchasing power?
In regards to Australian property, is it deemed expensive because of the high value of the Australian dollar against the US? What if the value of the Australian dollar goes down to 60 US cents, is a house valued at $500k (average sized 3 bedroom 2 bath and study on 500m2) still expensive?
In terms of affordability, affordability compared to what? I've dealt with a few immigrants and my previous role and some have become friends of mine. I am talking about dual income with kids that came here 3-5 years ago purchased their property a few years back and have taken a big chunk from their mortgage. Back where they came from, they wouldn't have been able to do it in that short amount of time because of the lack of opportunities.
Recently, I've been involved in checking out some asian properties where you can purchase a penthouse on a 30+ storey building for around $100k Oz dollars converted (around 4 million in their currency) or $60k - $70k for a 2 bedroom apartment and not many people (90+ million) can afford it. So they go overseas marketing to expats that can afford it. So again, affordability compared to what? Lifestyle? Economy? Purchasing power?
In regards to Australian property, is it deemed expensive because of the high value of the Australian dollar against the US? What if the value of the Australian dollar goes down to 60 US cents, is a house valued at $500k (average sized 3 bedroom 2 bath and study on 500m2) still expensive?
There are a lots of different ways to measure it. I'm not sure of all of them but there are two I've read about.
One is to look at how many multiples of the average yearly household income the average house price is. So if the average household income is $100,000 and the average house price is $500,000 then houses cost 5x yearly income.
You can also look at how much the average mortgage or rent costs compared to the average household income. So say your mortgage repayments or rent cost you $300 per week and you earn $1,000 per week then you would be spending 30% of your income on your mortgage/rent. Obviously the more you earn the higher the percentage you can spend on your house though (as a luxury/choice), so for example a person earning $30,000 spending half their income on their housing would be living under severe stress, but a person earning $300,000 spending half their income on their housing would still have an excellent lifestyle.
I don't think it matters if foreigners can afford our property or if we can afford foreign property. When you're looking at affordability it's about can Australians afford Australian houses? Or can Americans afford American houses?
One is to look at how many multiples of the average yearly household income the average house price is. So if the average household income is $100,000 and the average house price is $500,000 then houses cost 5x yearly income.
You can also look at how much the average mortgage or rent costs compared to the average household income. So say your mortgage repayments or rent cost you $300 per week and you earn $1,000 per week then you would be spending 30% of your income on your mortgage/rent. Obviously the more you earn the higher the percentage you can spend on your house though (as a luxury/choice), so for example a person earning $30,000 spending half their income on their housing would be living under severe stress, but a person earning $300,000 spending half their income on their housing would still have an excellent lifestyle.
I don't think it matters if foreigners can afford our property or if we can afford foreign property. When you're looking at affordability it's about can Australians afford Australian houses? Or can Americans afford American houses?
MI6 has opened a terrifying new front in the war against al-Qaeda, according to reports from London. Its highly trained hackers have infiltrated the website of Western civilisation's arch-enemy and replaced a recipe for homemade pipe bombs with one for cupcakes. The pipe-bomb recipe is no loss at all, but we do question the choice of replacement. We suspect MI6 may come to regret the publication of information which can only lead to an insidious form of blowback: we refer, of course, to the risk of widespread cupcake proliferation among people who are already disaffected and likely to despise Western values. Cupcakes, frankly, are a modern-day scourge. Tasting of nothing, fiddly, indigestible and pointless, they have come to dominate school cake stalls and birthday parties of children in the tween years. Spread from America, the cupcake menace has taken root and thrived in our soft and undisciplined society. No suburb in this country on primary school fete day is free from the telltale sticky smears of pink icing, hundreds and thousands and those wretched silver ball things that break your teeth. Try one, and you will instantly understand our qualms. All Australians should be on their guard.
Read more: http://www.smh.com.au/opinion/edito...a-slow-leak-20110603-1fkts.html#ixzz1OIi2dJRb
Read more: http://www.smh.com.au/opinion/edito...a-slow-leak-20110603-1fkts.html#ixzz1OIi2dJRb
It's expensive via the average wage, no rocket science or fancy tricks needed for that one but they use them when they dish out the numbers non the less.
Notice how the average wage has quietly blended into "wages " over the last decade , umm , as in both or 1 1/2 , to make it seem more than what it is .
We both have to work now, Costello and Howard made that the norm and then proceeded to brainwash the country into thinking that's just the way of the world.
Hardly any of the mums in my area had to work when I was a kid , except single ones.
But even at that the real Aussie average house price is still 6-10 x what they try to tell us is the average wage.
Well , that is very expensive property , it's double what it should be , more compared to many.
Notice how the average wage has quietly blended into "wages " over the last decade , umm , as in both or 1 1/2 , to make it seem more than what it is .
We both have to work now, Costello and Howard made that the norm and then proceeded to brainwash the country into thinking that's just the way of the world.
Hardly any of the mums in my area had to work when I was a kid , except single ones.
But even at that the real Aussie average house price is still 6-10 x what they try to tell us is the average wage.
Well , that is very expensive property , it's double what it should be , more compared to many.
Ps , I hope government doesn't interfere this time , if it goes down it goes down.
It's fact that usually anywhere in the world when they do ,it only causes imbalances and trouble later.
Australia's just been through a boom twice the size of any other in it's history, according to some charts it's more like 3x the pace and price rises of any other.
It's only natural and typical boom scenario that from here it drops off and finds it's more realistic balance again.
Their last handouts are just gonna cause a whole lot of grief in the near future for a lot of suckered in people now I reckon.
It's fact that usually anywhere in the world when they do ,it only causes imbalances and trouble later.
Australia's just been through a boom twice the size of any other in it's history, according to some charts it's more like 3x the pace and price rises of any other.
It's only natural and typical boom scenario that from here it drops off and finds it's more realistic balance again.
Their last handouts are just gonna cause a whole lot of grief in the near future for a lot of suckered in people now I reckon.
lol I heard about this on the radio and it made my day. Someone over there obviously has a sense of humor, very creative
Not so much a sense of humour, PorpE, as as connection to reality. And this from the editorial team of the SMH, no less, so hardly undergraduate excess.
Whingeing today, with the world virtually begging for our resources at our doorstep?
Pull up your friggin' socks. If it gets any better than this I'll demand life-time pensions for today's conveyorbelt uni students!
Whingeing today, with the world virtually begging for our resources at our doorstep?
Pull up your friggin' socks. If it gets any better than this I'll demand life-time pensions for today's conveyorbelt uni students!
God yeah; they are the "in thing" to do now in places like LALALand.
Everyone turns up to anything with a plate of cupcakes, spewing forth things like "like" and keeuuuwt" and uttering "you know what" before every sentence.
simple, if the Govt. really mean it then the negative gearing policy will be abolished to cause the RE bubble to pop, and yes it will be a fair share for everyone to have a affordable property
Get rid of negative gearing, and while your at it get rid of tax on positive gearing, stamp duty, land tax, and CGT. Investors pay through the nose. It's a surprise that anyone bothers investing in Australian property given the massive disintentives. And all you can do is whimper about negative gearing, how unfair it all is, and how if only they got rid of it everyone would be on an equal playing field.
The average investor works nine-to-five, pays a mortgage (or rents) and has a family the only difference is how they spend their money, they choose to set aside a portion of their income to invest in their future.
The rules of the game are already the same for everyone, it's in your court but you just don't have the balls to play.
Regards
Andrew
Well said. This point is always missed in the whole NG debate. This is one of a number of taxation matters relating to property. If you want to look at reform, then lets look at property taxation across all levels of government and not cherry pick one. The Henry review had some suggestions but they have been mothballed.
The reality is that a noisy portion of those wanting NG removed believe it will be the panacea to their affordability issues as opposed to the appropriate public policy response to achieve efficient and equitable taxation policy
beautifully said Andrew.
Sent you a green dot.
So, all you effing whingers can go and get stuffed.
When a median wage earner can't afford a median home, it's damn clear there's an affordability problem.
That's very simplistic.
But since you brought it up...
What's a median home? A median home for somewhere like Burwood will set you back about 600 odd K. A median home in Dromana will set you back about $375k.
What's the median wage? I go by what the nurses and cops and teachers and plumbers earn; the average type of worker. About $80k would max it out.
When I was 25 - which is what I reckon a lot of FHB's would be - I didn't earn the median wage. I certainly didn't earn the average wage either.
Now, they all expect to.
The wage I earned - which was about right for my age, precluded me from anything but lower end housing.
Too bad for me.
So, I bought lower end housing in a area I didn't want to buy in; it wasn't near work, it wasn't cool, it was an older house that was dated and needed a bit of a refurb.
It was in the heart of bogan-ville, actually. Couldn't wait to move out, but took a few years.
Too bad for me.
You can keep crying, or move on.
Here's an article in the SMH, that effectively questions the notion of property as an investment.
http://www.smh.com.au/opinion/editorial/housing-market-needs-a-slow-leak-20110603-1fkts.html
"And policies encouraging home ownership have been popular precisely because they assume ownership is a first big step on the ladder to amassing lifetime wealth. But the fees associated with buying a home, the cost of upkeep and other risks of home ownership in fact make it a poor investment -
Read more: http://www.smh.com.au/opinion/editorial/housing-market-needs-a-slow-leak-20110603-1fkts.html#ixzz1ONiMCdp3"
Its a slightly confusing and schizophrenic piece, but appears to want to say a few home truths, but hardly dares to
http://www.smh.com.au/opinion/editorial/housing-market-needs-a-slow-leak-20110603-1fkts.html
"And policies encouraging home ownership have been popular precisely because they assume ownership is a first big step on the ladder to amassing lifetime wealth. But the fees associated with buying a home, the cost of upkeep and other risks of home ownership in fact make it a poor investment -
Read more: http://www.smh.com.au/opinion/editorial/housing-market-needs-a-slow-leak-20110603-1fkts.html#ixzz1ONiMCdp3"
Its a slightly confusing and schizophrenic piece, but appears to want to say a few home truths, but hardly dares to
Why? Because the world has to fit into the small and crappy package that Mr Median defines?
There's more to the story. Far more.
If the median house price has increased at a more rapid rate than the median household income then obviously median income households have two options:
1) Live in lower end housing
2) Take on more debt
But if the median income earners are living in the low cost housing then where are the low income earners living? And if home buyers are taking on more debt and we have become much more leveraged in property what is the impact on our economy during periods of rising unemployment and interest rates?
Am I missing something?
According to this forum young people think that their 4 bedroom, 2 bathroom house in the mortgage belt is an investment and doesn't concern themselves with questions such as "What happens if I lose my job?" or "What happens if interest rates rise?" Instead they buy iPods, iPads, Plasma TVs, brand new cars and yearly trips to Europe on high interest credit.
If these are the people who are buying houses why aren't you as worried as I am that something is going to go wrong?
The people who are worried about housing affordability like myself..are probably the sensible ones. We do the math and think should I take out a 30 year loan, which consumes 50% of my income and is worth 6x my annual income (assuming a $300,000 loan and a $50,000 yearly salary). Ummm..probably not!
I'm not planning on sitting around and complaining and I have a bunch of strategies to overcome my affordability issues like;
-Live at home/in a share house and buy an investment property
-Purchase a 2 or 3 br house and rent out the spare rooms
-Wait until my income increases
-Save up a massive deposit
-Buy a property with 1 or 2 friends
-Move overseas
But I just can't ignore this issue!
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