nigel and wendy

indeed ,100% agree.....i rent,mortgage free,no cards no nothing and car paid for.......debt free.......and i intend to stay so until i can "properly"afford a reasonable mortgage for a reasonable house.

fortunately i saw what was happening a couple of years ago and decided to sell my house and clear my debts,best thing i ever did.......a good nights sleep is so cool

northernlights

An average house is the average price, approximately $460K in Australia. If a person wants to live in a 1 bed unit CBD, or 6 bed, pool and acerage in woop woop, then that's their choice. The problem is the multiples of an average wage to get that mortgage. Lets say $65K is the average wage. You'd need 6.3 times the average income to buy the average house, with a 10% deposit. You can't do it, the banks won't lend you that kind of money. Not everyone one has a partner or is married to get the double income.

Either wages have to go up or house prices come down, it's all unsustainable.

northernlights

You are in an enviable position.

I feel sorry for the all youngsters who have recently bought houses with little or no savings and a big mortgage. Not at all 'reasonable'. Another financial tsunami could well hit us very soon and they'd all be toast. With Australian mortgages you can't just 'hand the keys back' or 'jingle mail' as they call it in the US. You wear that debt forever, until you clear it.

nigel and wendy

do you not think all these young first time buyers were "pressured" into jumping in ? i mean....there`s adverts all over the tv sayin " the clock is ticking,buy now,the first home owners grant ends soon" they even have a couple on breaky tv from some company saying now is the time to buy buy buy.......WTF??? whats gonna happen when it finishes end of sept? whats gonna happen when interest rates go up??whats gonna happen if unemployment goes up? i`m thinking your right ,theres gonna be one hell of a financial shite storm hittin the fan.........on the up side it will probably bring housing down to an affordable level......perhaps my prudance in saving could pay off, i could own a house mortgage free in 12 months?

brendarover

Sounds about right, i started this thread, not to start a heated debate on how all the expats on here who have over borrowed against an asset which was and is vastly over valued against the one thing the asset can be valued against, and that is 3 times single income, 2.5 times double income.

Sorry no more, had my say, but seriously, i am quite surprised, not too heated, ABC Diamond, as expected, in complete denial, but hey, he is in it for the long term hey mate, and i bet you have more than one property hey?

24 months ago, this thraed would have been flooded with people talking it up, quite similar to ABC Diamond, but times have changed, Northern Lights has put forward the argument quite clearly and strongly in favour of resuming to a more balanced cost/affordable houses in Australia.


I really do feel that society in general will suffer should housing costs remain where they are today in Australia. The economy will really suffer, so if you think high house prices are a good sign, show that your economy is in good shape, think again, it is a sighn of a very sick economy, one where a hugh percentage of income goes on debt servicing or housing costs.


The UK at least now is in the midst of a housing crash, a good sighn the economy is heading into better health, we also have a very weak currency, this is not a good sign, but will speed up recovery, as when the currency rebounds, which it will, a huge amount of wealth will be restored.

In Australia, you really have some pain coming your way, there is no way around it, The US and the UK are feeling pain and on the mend, in Oz, you seem to be still taking the drugs, unable to come to terms with the fact that the drugs only deaden the pain for so long, eventually you will have to go cold turkey? When you do, i feel, it will make what is happening in the US, look like a sprained anke to the patient, your illness will be far more severe.

It does not matter how you dress up debt, it is real, but asset valuation, is an interpretation of someones opinion based a rules which are disconnected to long term levels which are proven.

Brenda.

nigel and wendy

i was wonderin when you were gonna jump back this brenda !!

i think its been (so far) a sensible look as to what things are going on in this world.

most poeple are blinkered ,they carry on as though nothing is going on until it hits them with redundancy/rising interest rates ect ect they then wake up to reality,relise they cant pay the bills and keep up there lifestyle, by then its too late.

the pain is hittin the uk now and has been for a while and its going to get worse......oz ? yeah.......its gonna hit here eventually (or are we different ).

all i can say is if your coming over here on a perm basis be prepared.


its all doom and gloom

i`m off to hang myself now with my expensive piece of rope bought from bunnings

ABCDiamond

An example of two suburbs in Victoria, showing the median values between 2004 and 2009



One area is a popular area, where people are prepared to pay a premium, the other isn't.

ABCDiamond

Being able to see both sides of the situation is, according to you, in complete denial of seeing only YOUR one possible side, that may or may not actually happen ?

What exactly am I denying ?

• I have said that I won't be surprised to see prices reach a height, in premium areas, that may need 3 incomes.
• I have said that there are areas where prices are still low.
• I have never said that prices will NOT drop.
• I have said in previous posts that WA prices WILL drop.

How exactly is this this a "complete denial" ?

Geelong Gent

You would be surprised

Geelong Gent

Will be interesting to see a flood of cases in Jan/Feb for misrepresentation by agents. As the penalty now rises to $1 million fine per charge. The other big substantial change is the agents now need to provide sufficient evidence too support their pricing ranges. None of this quote $800+ when house across the street sold for $1.2m. Also alot of junior (okay all) agents use very dicey language - case in point is a property claiming to be 150 metres from the beach (well true if you follow the crows flight) but in actually fact its a 2 km walk as you can't cross a deep creek behind the property.

I think also the term STCA (subject to council approval) will be removed as this gives naive property buyers a inflated view of the properties worth - ie they may not be interested in doing a development themselves but assume it holds additional value for a wider market.

A local agent told me (in my capacity as a vendor) that getting 100 people to an auction could rise the price by 10%. So this marketing by low quoting and pumping the market via the media (use that term loosely) has inflated the prices.

But on the other side you have a large part of the population who are so naive its beyound a joke.

BadgeIsBack

Agree with you on your concept of a home. I think a lot of lifestyles are built on the concept of a big house on a small block and give people a pretend life. Many of those houses attempt to emulate the lifestyles of the truly, for want of a better phrase, rich and famous.

The fallout from this will be apparent in less than a generation. At the risk of sounding as retired as you are I really wonder about the wisdom of all this.

I suggest with 1/3 of Sydney's population living in the cheaper W, people do want these cheaper houses. There is a market for it - but the market finds it own level.

BadgeIsBack

I own over 100k a year. My mortgage is about 170k. My wife has not worked for 5 years. This allows us to sleep at nights.

When I look at what people claim to earn - maybe 60pc of what I do, and buy 400k+ homes, I really, really want to know what magic they are working.

Yes - I know there might be 2 incomes - but even so. There is just no slack.

BadgeIsBack

It's OK mate - I understand you :-)

Geelong Gent

They do say that $500k debt is your problem $5m is the banks

lauralollipop

Same here, I no longer work and havent for the last year (studying at uni) and my OH earns just over 100k we have a modest 3x1 which we overpaid for, but due to making some cash on my previous UK house sale, we only have a 255k mortgage and run one car and can Just manage nicely. So how the hell are these Gen Y kids I know (21 year olds) who are earning around 50k buying 400k houses and running 2 sporty fuel gussling cars, and also having pools installed etc...?? They all still have all buy nice clothes and go out too?

Due to the time of the boom we are in a position of a 1st homebuyer when its actually my 3rd home. We paid full stamp duty on an over priced house and didnt get a 14kFHBG, like they do now, we got 7k which didnt even cover the stamp duty!

I really want to know how these kids are doing it and how they do sleep at night, I worry how we will ever be able to move up the ladder to a bigger house or nicer area when we do have a family - I dont think I would sleep at night with a bigger mortgage and know I would be lucky to break even if I sold my house now