Sydney house prices to rise 22%

For every forecast/prediction, it should be mandated that an actual versus past prediction should be published as well.

But really, does anyone really take any notice of these?
 
Well , I'm gonna call that one a good news story & enjoy it for a few days, I feel a bit better now .

Cheers

Ps , Hang on , better make that the first few paragraphs anyway !
 
Mr Zigomanis says prices are expected to rise by June 2013 in line with wages growth.
So they are expecting wages to grow 22% over the next 3 years? I certainly hope so, but doubt we'll see them rise that much.
 
wanews are saying that perth's median is likely yo move the same amount in the next 3 years as well.

this makes me think we're in for a new GFC.
 
G F P

wanews are saying that perth's median is likely yo move the same amount in the next 3 years as well.

this makes me think we're in for a new GFC.

Yes....and in keeping with the Colonel's secret recipe perhaps the acronym of GFC for the coming wave of doom should be changed to include a different type of flesh: GFP

Global Fried Piigs

:rolleyes: :D
 
So they are expecting wages to grow 22% over the next 3 years? I certainly hope so, but doubt we'll see them rise that much.
Wages don't have to rise the same percent to see that 22% increase. If a household devotes 40% of its income to servicing its mortgage and its at its servicability limit, then they only need an 8.8% increase in their salary to have a 22% increase in their servicability. i.e. 22% of 40%. Or, put another way, their take home pay increasing by 8.8% would mean 48.8% of it now going towards servicing property. That 48.8% would result in a 22% increase in the amount of money put towards servicing debt and a 22% increase in property prices if everyone is in the same boat, which of course they would be if wages beat inflation in real terms by 8.8%.

I've pointed out previously long term analysis that shows property prices rise in line with "real" increases in income beyond inflation.

Cheers,
Michael
 
Wages don't have to rise the same percent to see that 22% increase. If a household devotes 40% of its income to servicing its mortgage and its at its servicability limit, then they only need an 8.8% increase in their salary to have a 22% increase in their servicability. i.e. 22% of 40%. Or, put another way, their take home pay increasing by 8.8% would mean 48.8% of it now going towards servicing property. That 48.8% would result in a 22% increase in the amount of money put towards servicing debt and a 22% increase in property prices if everyone is in the same boat, which of course they would be if wages beat inflation in real terms by 8.8%.
I agree with your analysis, but this is not what I read the article to imply. The way I read what I quoted was that they expect house prices to increase at the same % rate as wages.
 
I agree with your analysis, but this is not what I read the article to imply. The way I read what I quoted was that they expect house prices to increase at the same % rate as wages.
You're probably right mate, but do you really expect the media to understand this stuff and accurately represent it? When an economist writes "House price gains of 22% predicated on income growth" The media translates to "House price growth % = income growth %", which is wrong. They don't get it. They just take the formal economic projection and dumb it down for the masses and stuff it up in translation. They're good at that...

Cheers,
Michael
 
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