The Great Australian Property Swindle
#31
Re: The Great Australian Property Swindle
I suspect the reason an entry level house costs more now is that we often have two people working so prices bound to be a higher multiple than in the 60's when only one worked. The other reason might be the tax concession on investment houses encouraging more investment in property. Both of these are guesses though not backed up with any research.
#32
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Joined: Mar 2009
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Re: The Great Australian Property Swindle
I think this is a major social issue that families are forced into this situation by the market. It will be interesting to see in the failed markets how this demographic develops. Where families have the luxury of having one partner raise the family full-time will they both choose career and disposable income.
#33
Re: The Great Australian Property Swindle
All that shows is that one person could get a mortgage on a house then, but now it requires two people. House inflation above wage inflation. If this keeps up we'll have to send our kids up chimneys and use their wages to increase the amount of mortgage we can get.
#34
Re: The Great Australian Property Swindle
Personally I think the rise in two people working drove house prices up which in turn forced more families to dual income to keep up with the joneses. A continuous cycle feeding off the other.
Last edited by fish.01; Nov 29th 2010 at 5:05 am.
#35
Re: The Great Australian Property Swindle
I think this is a major social issue that families are forced into this situation by the market. It will be interesting to see in the failed markets how this demographic develops. Where families have the luxury of having one partner raise the family full-time will they both choose career and disposable income.
#36
Re: The Great Australian Property Swindle
Bit chicken and egg isn't it. Obviously house prices are mostly to do with supply/demand. You can be sure as night follows day that if each family tomorrow was magically given double their income that house prices would follow.
Personally I think the rise in two people working drove house prices up which in turn forced more families to dual income to keep up with the joneses. A continuous cycle feeding off the other.
Personally I think the rise in two people working drove house prices up which in turn forced more families to dual income to keep up with the joneses. A continuous cycle feeding off the other.
As far as I'm concerned the thing that has driven house prices in Australia is three things, 1) Easy credit 2) Negative gearing 3) Government first home buyer bribes.
Arguments about supply/demand (of houses as opposed to easy credit), housing shortages and a constant stream of migrants are a combination of bullshit and/or minor factors in the bubble in house prices that has occurred.
#38
Re: The Great Australian Property Swindle
I was reading an interesting article recently disproving the dual income driving up house prices theory, on Zerohedge or Money Morning. I'll have to dig it out.
As far as I'm concerned the thing that has driven house prices in Australia is three things, 1) Easy credit 2) Negative gearing 3) Government first home buyer bribes.
Arguments about supply/demand (of houses as opposed to easy credit), housing shortages and a constant stream of migrants are a combination of bullshit and/or minor factors in the bubble in house prices that has occurred.
As far as I'm concerned the thing that has driven house prices in Australia is three things, 1) Easy credit 2) Negative gearing 3) Government first home buyer bribes.
Arguments about supply/demand (of houses as opposed to easy credit), housing shortages and a constant stream of migrants are a combination of bullshit and/or minor factors in the bubble in house prices that has occurred.
But I also think that one of the main things the majority of people look at when taking out a mortgage is the income they have to service the loan - and the security of that income.
If peoples income increases through strong employment and dual incomes so does their ability to pay higher mortgages. If unemployment stays low peoples faith in that income stream is more secure. After watching family and friends make these decisions over decades anything that discounts these decisions as part of the equation does not ring true to me.
#39
Re: The Great Australian Property Swindle
I was reading an interesting article recently disproving the dual income driving up house prices theory, on Zerohedge or Money Morning. I'll have to dig it out.
As far as I'm concerned the thing that has driven house prices in Australia is three things, 1) Easy credit 2) Negative gearing 3) Government first home buyer bribes.
Arguments about supply/demand (of houses as opposed to easy credit), housing shortages and a constant stream of migrants are a combination of bullshit and/or minor factors in the bubble in house prices that has occurred.
As far as I'm concerned the thing that has driven house prices in Australia is three things, 1) Easy credit 2) Negative gearing 3) Government first home buyer bribes.
Arguments about supply/demand (of houses as opposed to easy credit), housing shortages and a constant stream of migrants are a combination of bullshit and/or minor factors in the bubble in house prices that has occurred.
#40
Re: The Great Australian Property Swindle
Many people could have lived in a more modest house and just had one income. I would guess the majority of these have decided not to and instead have a higher standard of living. In the 60/70's on average people lived a lot more modestly in smaller houses.
#41
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Joined: Mar 2009
Posts: 1,412
Re: The Great Australian Property Swindle
In Ireland people assumed bumper overtime, ever increasing salaries and occasionally rent a room / rental income in their decisions. They never considered black swan events, even minor interest rate increases.
#42
Re: The Great Australian Property Swindle
I doubt this. An average wage of 20k/25k is going to get a mortgage of 70k/90k. You're not buying a public urinal for that in most of the UK/Aus.
#43
Re: The Great Australian Property Swindle
If you look at the massive increase in the average floor space of houses I think it is clear that people voted with their money for two wages and bigger houses rather than keeping one at home and buying a more modest house, or both working with smaller mortgage.
Not everyone has this choice of course...some had to have two wages even to afford a modest house....but many could have and chose not too. Human nature I guess.
#44
Re: The Great Australian Property Swindle
I assume you don't mean that as blanket as it comes across. I'm sure some people don't take into account even minor interest rate rises but many do. Not all are stupid
#45
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Joined: Mar 2009
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Re: The Great Australian Property Swindle
Judging by the number of distressed mortgages I would say quite a lot. If a bank wouldn't lend them what they wanted they would go elsewhere. It was rare for people to consider black swan events. I would wonder how many in Australia would factor in such scenarios as an interest rate hike, loss of one income, falling rents or rising voids. In fact, the whinging about how hard it is to save a deposit would seem indicative.
Last edited by Steve2009; Nov 29th 2010 at 6:35 am.