pomtastic

One observation though. In 2009, 120,000 units were built and from what I can remember 180,000 people migrated to Australia in 2009. Bear in mind most of these would of been families, couples and would need only one house, so I can't see the shortage?

coolshadows

Don't forget all the little kiddies being born and those that are coming of age and wanting to buy their first house.

Also, was the 180k people or just the number of visas granted?

asprilla

Ah, today's money, thanks for clearing that up.

Perhaps I should clear something up for you. You are reading things into my posts that simply aren't there. You are seeing what you want to see. Yes, I am claiming that not all property is overpriced....and that view is not inconsistent with yours. Why would I want to try and prove to you that property is as affordable today, as it was back in 1980, when I agree with you that it has become more unaffordable??! That is why I was bemused at your post on the 3 bed property in Perth and the odd price of $128k.

As with all things in life, the people who hold extreme views are normally those who do not have a comprehensive understanding of the issues. At one extreme are those real estate spruikers who predict continual exponential growth into infinity.... and at the other, are those who think that suddenly every man, woman and dog in Australia will be able to buy their own comfy 3 bed house. People who hold extreme views tend to see what they want to see. The truth nearly always lies somewhere in the middle, not out at the extremes.

If you have a look at some of my older posts you will see that I am not just making this all up for you on the spot.. I have said several times that I reckon property prices will go down 10 or 20%.

asprilla

Just carry on reading what you want to read.

ABCDiamond

How much is a reasonable amount of household income, to pay for a median mortgage.

That chart quotes "Sydney 57.4% share of median household income to pay mortgage on median property prices."

Average Sydney wages are:
Male $1,353.00 pw
Female $1,103.60 pw

Combined income = $127,743 per year

57.4% of that = $6,110 per month in repayments.
That would cover a mortgage of about $1,000,000

However a mortgage for the median priced house would be about $400,000 with repayments of about $2,620 per month, or 24.6% of the income.

Does that look like a reasonable option for housing affordability. A median house with two full time average incomes, with repayments at 24.6% of the income. ?

pomtastic

The government banking guarantee is finishing March 31st. This means interest rates will go up regardless of what the RBA wants. Wholesale funding is going to get more expensive as Aussie banks have no Govt back up guarantee, therefore rate rises in the pipeline.

http://www.businessweek.com/news/201...-update1-.html

pomtastic

Average wages, gross or net?

So are we suggesting that all home owners have to rely on two, full time incomes?

Do you have to have a partner, husband or wife in order to purchase an average home?

What if your single? A house in woop woop only?

ABCDiamond

I did wonder about the price but in the post I replied to, you did say....

coolshadows

So the average family in Sydney has 2 full time workers both earning average wages?

I would have thought there'd be a lot of families with 1 full time and 1 part time. Therefore the average household income would be a lot less.

Would you agree?

ABCDiamond

All wages are always quoted gross, as peoples deductions etc can cause a difference in net wages, and the ABS does not get to see net figures for a long time.

It is the same as other countries.

The ATO quote final figures about 5 years after the end of each tax year

asprilla

Ok, sorry mate. I'm probably getting a bit worked up now and sounding very ridiculous. Please ignore my last few posts.

Yes, I agree there are significant issues for first home buyers going forwards. They simply will not be able to own the homes they want, in the areas they want. However I am not sure that this position will ever be rectified. I do not see the logic in the argument that "the ratio has always been 3.5 so it must return to that". Why should this be the case? There are too many other important variables that have also changed in the same time period.

Of course you are right that exponential growth cannot carry on forever (unless perhaps you are living in zimbabwe). But I think that there is a fundamental flaw in the idea that growth must always revert to a linear profile.

Prices are simply a function of supply and demand. The world population has doubled in (I think) the past 40years. I hate to break this to everyone, but there will be no return to the good old days and the 3.5 ratio. The future will be smaller homes, units, duplexes, longer commutes. Look at the housing trends in the most populous cities in the world for a glimpse of the future.

ABCDiamond

I agree completely, in just the same way that there are a lot of much higher paid people

If the family had only one full time at $1,353 per week, the % for the median house would be 44.6%, so assume half way between the two, and you get 34.6% for one full time and one half time.

One obvious problem is when people take on mortgages that they do not have the income for, and they get into trouble. However, the RBA released figures recently showing that arrears are very low and getting lower, so it can't be too bad.

coolshadows

"HIGHER interest rates and a rollback of financial stimulus measures have led to the first rise in home-loan arrears in eight months."

http://www.theaustralian.com.au/article

http://www.brokernews.com.au/article

"Arrears are expected to surge in the coming months as the Reserve Bank continues to tighten rates, a new report has found."

http://www.mortgagebusiness.com.au/article

asprilla

Some people don't factor in any margin for interest rate rises.... unfortunately they get into trouble easily. The majority are more conservative and factor in possible rate rises of 1% to 4%.

If variable rates go past 10% then we will be entering into a very different environment. Currency markets are only predicting an extra 1.25% on the base rate over the next 18 months.

ABCDiamond

That's a fair comment, with this quote from your links:

The interest rate rises and dropping of the stimulus have changed things.
Up 0.02% for normal loans
Up 0.14% for Low Doc Loans

However still very low in the scheme of things.
Up from 125 in every 10,000 to 127 in every 10,000.

How does this compare worldwide ?