Interest Rates, where will they stop?
#31
Re: Interest Rates, where will they stop?
Thanks to cheap labour in China and Asia and evolving technology, goods are ALL relatively cheaper than even 10 years ago.
My Dad had to save up a whole weeks wage to buy me a bike back in the 70's, now you can buy one in Kmart for a couple of hours of labour.
We were the only one's in our street with wall to wall carpeting at one stage, now people change their carpets every few years because they can and it's cheap.
People have more stuff because it's cheaper. If it gets even cheaper then we'll have even more stuff. If Iphones get down to $20 a piece then perhaps I'll even get one.
My Dad had to save up a whole weeks wage to buy me a bike back in the 70's, now you can buy one in Kmart for a couple of hours of labour.
We were the only one's in our street with wall to wall carpeting at one stage, now people change their carpets every few years because they can and it's cheap.
People have more stuff because it's cheaper. If it gets even cheaper then we'll have even more stuff. If Iphones get down to $20 a piece then perhaps I'll even get one.
There were many people MUCH worse off than us, we were middle class graduates. After I got my masters I worked in public housing with truly desperate people and I know first hand, that we were very fortunate. Many of those people I worked with have never been able to buy a house. In fact, I worked with many families who lost their homes and all their life savings due to those 17% interest rates. I would imagine many of them faced very difficult lives after that and possibly never recovered.
Last edited by Fly Away; Apr 9th 2010 at 4:03 am.
#32
Re: Interest Rates, where will they stop?
Sounds like your old house was like this one...
£37,500 3 bedroom terraced house for sale
Question is could you find a 3 bedroom unit in Australia for say $80,000 for comparison??
Last edited by coolshadows; Apr 9th 2010 at 4:07 am.
#33
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Re: Interest Rates, where will they stop?
No it was 16k pounds not dollars... so whatever the exchange rate was in 1990 would give you the salary in dollars. Houses were MUCH cheaper in Aus than the UK in 1990. By just doubling the wage to get an approximate figure of $32K.
The house was a tiny terrace with no front garden (right onto the road) and a back yard big enough for the bins. It had an outside toilet and we put a bathroom in. Don't tell me this sort of house would be expensive in Aus.. it's the cheapest thing you get and we struggled. My husband had been working for a few years to get a salary of 16K and it was above average as he is a graduate and yet we struggled. I am not saying youngsters don't struggle, just that we struggled too, you can't look at house prices being less and say oh that's cheap because it's all relative to the conditions at the time. My parents paid £300 - about $600 dollars for their house in 1960. That's laughable now but they struggled to pay their mortgage.
The house was a tiny terrace with no front garden (right onto the road) and a back yard big enough for the bins. It had an outside toilet and we put a bathroom in. Don't tell me this sort of house would be expensive in Aus.. it's the cheapest thing you get and we struggled. My husband had been working for a few years to get a salary of 16K and it was above average as he is a graduate and yet we struggled. I am not saying youngsters don't struggle, just that we struggled too, you can't look at house prices being less and say oh that's cheap because it's all relative to the conditions at the time. My parents paid £300 - about $600 dollars for their house in 1960. That's laughable now but they struggled to pay their mortgage.
I'm not doing exchange rates. The fact that you had to pay 2.5 times your annual salary for a mortgage is relevent. If you were paid in french francs, us dollars or whatever, it doesn't matter, it's ONLY 2.5 TIMES YOUR ANNUAL SALARY. It is affordable to pay back the loan. People are getting 5+ times their salary these days to buy the most basic dwelling. Do you not understand or summat?
2.5 times an average salary in Aus gives you a borrowing capacity of $162K. Even ABCDiamond would struggle to find anything liveable within a couple hours of commute to a city for that price.
Last edited by pomtastic; Apr 9th 2010 at 4:22 am.
#34
Re: Interest Rates, where will they stop?
Most house in Australia have toilets (I thought most housing in the UK did too ) so it's hard to compare.
Sounds like your old house was like this one...
£37,500 3 bedroom terraced house for sale
Question is could you find a 3 bedroom unit in Australia for say $80,000 for comparison??
Sounds like your old house was like this one...
£37,500 3 bedroom terraced house for sale
Question is could you find a 3 bedroom unit in Australia for say $80,000 for comparison??
We were unlucky in that we lived in an expensive city but it was about half the price as London and we lived in a very cheap area...
#35
Re: Interest Rates, where will they stop?
Are you sure those houses are still selling for £180k? That kind of money would by a nice detached house on a good lot where I came from.
Are we saying that say Brisbane or Melbourne is more like London than Manchester, Liverpool or Glasgow?
(and are people in Australia generally earning the equivalent of London wages? )
Last edited by coolshadows; Apr 9th 2010 at 4:23 am.
#36
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Posts: 672
Re: Interest Rates, where will they stop?
The sad fact today is that many educated graduates can't even afford any kind of housing in Australia, so even an education doesn't give you the key or right to a basic home these days. We've gone backwards.
In fact, I'm going to tell my kids to forget about education and just buy the biggest house they can as soon as possible and with prices rising 10%+ every year they won't even have to work in a few years time, they'll be able to redraw on the ever increasing equity and live a life of luxury without even sitting an exam. See, it's so easy isn't it and house prices are going to keep on going up and up until the next wave of first home buyers are going to have to stump up 20 times their annual salary and pay 99.9% of their income on mortages.
#37
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Posts: 672
Re: Interest Rates, where will they stop?
So now you're saying that yes things are cheaper to buy now. Don't you see what I was saying about things being relative to the conditions of the time?
There were many people MUCH worse off than us, we were middle class graduates. After I got my masters I worked in public housing with truly desperate people and I know first hand, that we were very fortunate. Many of those people I worked with have never been able to buy a house. In fact, I worked with many families who lost their homes and all their life savings due to those 17% interest rates. I would imagine many of them faced very difficult lives after that and possibly never recovered.
There were many people MUCH worse off than us, we were middle class graduates. After I got my masters I worked in public housing with truly desperate people and I know first hand, that we were very fortunate. Many of those people I worked with have never been able to buy a house. In fact, I worked with many families who lost their homes and all their life savings due to those 17% interest rates. I would imagine many of them faced very difficult lives after that and possibly never recovered.
#38
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Joined: Nov 2009
Location: Dullsville
Posts: 672
Re: Interest Rates, where will they stop?
Most houses in Australia have toilets (I thought most housing in the UK did too ) so it's hard to compare.
Sounds like your old house was like this one...
£37,500 3 bedroom terraced house for sale
Question is could you find a 3 bedroom unit in Australia for say $80,000 for comparison??
Sounds like your old house was like this one...
£37,500 3 bedroom terraced house for sale
Question is could you find a 3 bedroom unit in Australia for say $80,000 for comparison??
#39
Re: Interest Rates, where will they stop?
Yes, i know £16K salary, £40K mortgage. Sterling
I'm not doing exchange rates. The fact that you had to pay 2.5 times your annual salary for a mortgage is relevent. If you were paid in french francs, us dollars or whatever, it doesn't matter, it's ONLY 2.5 TIMES YOUR ANNUAL SALARY. It is affordable to pay back the loan. People are getting 5+ times their salary these days to buy the most basic dwelling. Do you not understand or summat?
2.5 times an average salary in Aus gives you a borrowing capacity of $162. Even ABCDiamond would struggle to find anything liveable within a couple hours of commute to a city for that price.
I'm not doing exchange rates. The fact that you had to pay 2.5 times your annual salary for a mortgage is relevent. If you were paid in french francs, us dollars or whatever, it doesn't matter, it's ONLY 2.5 TIMES YOUR ANNUAL SALARY. It is affordable to pay back the loan. People are getting 5+ times their salary these days to buy the most basic dwelling. Do you not understand or summat?
2.5 times an average salary in Aus gives you a borrowing capacity of $162. Even ABCDiamond would struggle to find anything liveable within a couple hours of commute to a city for that price.
I just dread to think what would happen to people who buy a house at 5 times salary and then the rates go up to a level they can't repay.
As I stated in one of my previous posts, I worked with some of the people who suffered in the housing crash of the 90s. That's what colours my view. I hate these these groups who try to create these conditions again. Putting homeless families who have lost their homes and every penny they have saved into hostels or emergency accommodation is is something which will stay with me forever.
Personally for housing prices to come down in Australia would suit us well as we are currently in rented. However I wouldn't wish a housing crash on my worst enemy.
#40
Re: Interest Rates, where will they stop?
Some pod on the radio this morning said that after the rate rise to 4%, 40% of FHBs in the previous 18 months were in financial difficulty and were strugglying to make payments.
#42
Re: Interest Rates, where will they stop?
I agree. What we don't want however is for prices to come down dramatically as many people will then be in negative equity and unable to sell. The very best that could happen (IMO) is for the market to stabilise and for salaries to slowly catch up with property prices. However I am sure that this pleasant scenario won't happen
#44
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Posts: 672
Re: Interest Rates, where will they stop?
I'm sorry we seem to be winding each other. I do understand that it's hard to get a mortgage on a reasonable salary multiple as property is expensive. I am trying to say that even in the days when it was possible to get a house for 2.5 x salary (and it was usually 3 x salary even in those days) it wasn't an easy ride and the conditions of the time were hard in a different way. Youngsters have ALWAYS had it tough but recently there have been groups deliberately trying to sabotage the housing market and misleading people into thinking that it was a land of milk and honey when houses were cheaper.
I just dread to think what would happen to people who buy a house at 5 times salary and then the rates go up to a level they can't repay.
As I stated in one of my previous posts, I worked with some of the people who suffered in the housing crash of the 90s. That's what colours my view. I hate these these groups who try to create these conditions again. Putting homeless families who have lost their homes and every penny they have saved into hostels or emergency accommodation is is something which will stay with me forever.
Personally for housing prices to come down in Australia would suit us well as we are currently in rented. However I wouldn't wish a housing crash on my worst enemy.
I just dread to think what would happen to people who buy a house at 5 times salary and then the rates go up to a level they can't repay.
As I stated in one of my previous posts, I worked with some of the people who suffered in the housing crash of the 90s. That's what colours my view. I hate these these groups who try to create these conditions again. Putting homeless families who have lost their homes and every penny they have saved into hostels or emergency accommodation is is something which will stay with me forever.
Personally for housing prices to come down in Australia would suit us well as we are currently in rented. However I wouldn't wish a housing crash on my worst enemy.