The Australian housing bubble furphy
- Thread starter ziggy2214
- Start date
Depends on how much of the wage is excess to essential needs. If at point 1 you need to spend 45 on survival you only have 5 to spend on housing. If at point 2 you need to spend 70 on essentials you have 30 to spend on housing. You have 6 x more surpluss to spend on housing. That would make housing more affordable. Cars, TVs, food,clothing etc have become reletively cheaper.
or maybe tax rates in 2 are 99% so you really only have $1 making the multiple 200.
Imagine if the market tanked like the US did. Interest rates might fall to 0, and inner city properties within 5-15 minute walking distance to the CBD would probably still be rented.
Hmmm... that means I might actually retire.
Hmmm... that means I might actually retire.
You're probably not looking hard enough. If you ever meet me, I'll introduce you to some.
Would you rather be in a situation where you buy into a house that has a Price / Income is 1000 but interest rates of 0, or a house that has a Price / Income of 2 but an interest rate of 300%?
As usual, deep and meaningful analysis from me - actually I just copied it from that ANZ report. That's why I get paid the big bucks you're wondering about. I specialising in copying analyses from other people.
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i'll take the income multiplier of 2 and save the full amount b.c I can't pay off 1000 times my income in 30 years, even with an interest rate of 0...
somehow I doubt I'd get an interest only loan @ 0% interest..
Well no point introducing a third alternative. Might as well say I'd rather take the 2.0x and invest in MCE and watch my money go up 5x in 18 months.
Somehow I doubt we'll see 1000x ratio either. The point was just to get you thinking that there's more to it than just a ratio, which I obivously failed at doing.
Somehow I doubt we'll see 1000x ratio either. The point was just to get you thinking that there's more to it than just a ratio, which I obivously failed at doing.
I think you've mislaid it looking for your bus fare.
I don't get why you people seem to think one single indictor needs to tell the worlds life store.
Income vs house price is a ratio. wtf else do you want it to be ?
If you made a ratio of mortgage payments against income it'd be similarly high, indicating unaffordability.
Isn't it you who thinks one indicator is the be all and end all? Obviously a comprehension issue somewhere.
Speaking of which, that's also a skill to copying from one presentation to another... you need to know what you're copying.
Speaking of which, that's also a skill to copying from one presentation to another... you need to know what you're copying.
Nope pretty sure I know what a ratio is.
There are many methods of measuring affordability, none of them flawless. Funnily enough, they all seem to conclude pretty much the same thing - prices are high whilst affordability is low. We can bicker about how high and high low, whipping out graphs, charts and quaint 'can-do' personal tales, but there is no denying that property is expensive. I've yet to see anything other than anecdotal 'evidence' deduce otherwise.
...either now or back in the 50s.
the glory days of wages moving and prices remaining stagnant (ie around our parent's/grandparent's time) was a period when
1) the US dollar was backed by the gold standard.
2) the AUD had not been floated
3) probably half the time we were still using pounds and shillings.
4) local manufacturing was a solid portion of the australian/uk/usa economy and jobs.
reinstate 1, 2 and 4 and we will see house prices stabilise along with economies. but there's no money to be made out of stagnant or small, incremental growth.
so what would you like? a pay rise each year and a new car every 5 years with a smaller house?
or no wage growth, 1 car every 20 years and the same size house?
i certainly don't remember my parent's or grandparent's house being 'big' even by the day's standard.
We need to reintroduce the gold standard, de-float the AUD and rebuild our manufacturing sector for house prices to stabilise? What a basket case property market we must have!
In terms of property, modest incremental growth coupled with decent rental yields is far from a bad thing. Investors buying now will lose money (short to medium term) if prices don't rise yet a period of stagnation (if not price drops) is required to allow rents to catch up. Some investors buy well and achieve positive cashflow from day one but most are chasing capital gains which, if achieved, would only further widen the gap between prices and yields. It's a viscous cycle.
Then there's the pressure the situation is putting on renters, many of whom are struggling as it is, as investors manically increase rents in a desperate attempt to achieve positive cashflow. Despite the rhetoric and carefully tweaked figures, long term unemployment is the highest it's been in a decade. Many are struggling. The cost of essentials (housing utilities food) is outpacing wage growth. This rosy world where everybody receives an annual pay rise and can afford a new car every 5 years does not match the reality I see around me. Maybe things are different in WA.
Of course property is expensive - we're at the top of the cycle in most places.
That doesn't mean the world is about to explode, however. I'm looking forward to the next big boom, which should be in full swing in the early 2020's.
No it's not. It's lazy and pointless. Try house prices to disposable income, for a start.
Then compare the average house built in the 1950's, compared to the average house built now. Apples and oranges.
Oh dear, another one...
Where do these people come from? I'm all for informed debate but this is just annoying.
Quote: "Investors buying now will lose money (short to medium term) if prices don't rise".
Excuse me? Really? If you put down a decent deposit then its easy to run a CF+ portfolio at present after factoring negative gearing and depreciation. In the medium term prices are probably going to rise so you'll be ahead in capital terms as well. A blanket statement that investors must lose money if buying now is just outright delusional.
Quote: "yet a period of stagnation (if not price drops) is required to allow rents to catch up."
Again? Really? What about rent rises? Don't you think that will allow rents to catch up? Another blanket statement that is outright wrong.
The market is fairly balanced at the moment with decent yields and a fairly strong floor under prices due to high replacement costs, wage pressure, low unemployment, average interest rates and undersupply of stock. Rents are set to increase ahead of inflation in the near term due to the wage price pressure and the undersupply in residential housing stock.
Why are you here? 42 posts and from Melbourne. Admittedly Melbourne is one of the markets that has run hard recently and might have lower than acceptable long term yields so this might be tempering your opinions somewhat. But overall your statements read as baseless statements of fact not supported by anything other than your own misguided conviction.
Sorry, but another member to join my ignore list with Beebop and others. It does make reading the threads a fair bit easier but seeing them quoted all the time is still somewhat annoying. Where do these misguided souls spring from...
Cheers,
Michael
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