OZ BOOM is over?...house prices falling & rates might drop
Jul 5th 2010, 4:28 am
#481
Forum Regular
Joined: May 2009
Location: Brisbane
Posts: 192
Re: OZ BOOM is over?...house prices falling & rates might drop
House prices here are way over valued and are inevitably in for a drop and there will always be different sides to this argument. One side from people who brought a long time ago and dont give a shit and people who brought in the last few years and are praying they dont reach negative equity, then investors who see all thier greed and bragging at dinner table going wrong. Even the ozzies i talk to now are accepting that a drop is on the cards. The housing market simply cannot be sustained. Something will or wont happen just because you dont want it to. Basic maths.
Jul 5th 2010, 4:59 am
#482
Pie Eater
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Joined: Sep 2007
Location: South Australia
Posts: 770
Re: OZ BOOM is over?...house prices falling & rates might drop
It depends if you are a man or woman...
Average full-time male wage (National): $69,206
Average full-time male wage (SA) : $62,405
Average full-time female wage (National): $56,794
Average full-time female wage (SA) : $52,478
AVERAGE WEEKLY EARNINGS
Average full-time male wage (National): $69,206
Average full-time male wage (SA) : $62,405
Average full-time female wage (National): $56,794
Average full-time female wage (SA) : $52,478
AVERAGE WEEKLY EARNINGS
Jul 5th 2010, 5:04 am
#483
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Joined: Sep 2007
Location: South Australia
Posts: 770
Re: OZ BOOM is over?...house prices falling & rates might drop
"Total outstanding mortgage debt in Australia was about $1.1 trillion in April"
Jul 5th 2010, 5:37 am
#484
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Location: Chippendale, Sydney
Posts: 8,735
Jul 5th 2010, 5:38 am
#485
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Re: OZ BOOM is over?...house prices falling & rates might drop
Good question, I have the figure somewhere, I'll have a look.... 
But in the meantime, in April 2010, there were 46,342 new mortgages totalling $13,293,543,000 which gives an average new mortgage of $286,857 each.
The breakdown of these figures is:
$255,308 Construction of New Dwelling
$300,215 Purchase of New Dwelling (completed)
$290,279 Purchase of Established Dwelling
and as a separate item:
$241,672 Refinancing of established dwellings (12,323)
But in the meantime, in April 2010, there were 46,342 new mortgages totalling $13,293,543,000 which gives an average new mortgage of $286,857 each.
The breakdown of these figures is:
$255,308 Construction of New Dwelling
$300,215 Purchase of New Dwelling (completed)
$290,279 Purchase of Established Dwelling
and as a separate item:
$241,672 Refinancing of established dwellings (12,323)
Jul 5th 2010, 6:04 am
#486
BE Forum Addict
Joined: Feb 2008
Location: Hope Island, Gold Coast
Posts: 1,920
Re: OZ BOOM is over?...house prices falling & rates might drop
Good question, I have the figure somewhere, I'll have a look....
But in the meantime, in April 2010, there were 46,342 new mortgages totalling $13,293,543,000 which gives an average new mortgage of $286,857 each.
The breakdown of these figures is:
$255,308 Construction of New Dwelling
$300,215 Purchase of New Dwelling (completed)
$290,279 Purchase of Established Dwelling
and as a separate item:
$241,672 Refinancing of established dwellings (12,323)
But in the meantime, in April 2010, there were 46,342 new mortgages totalling $13,293,543,000 which gives an average new mortgage of $286,857 each.
The breakdown of these figures is:
$255,308 Construction of New Dwelling
$300,215 Purchase of New Dwelling (completed)
$290,279 Purchase of Established Dwelling
and as a separate item:
$241,672 Refinancing of established dwellings (12,323)
Jul 5th 2010, 6:05 am
#487
Guest
Posts: n/a
Re: OZ BOOM is over?...house prices falling & rates might drop
Jul 6th 2010, 4:25 pm
#488
Banned
Joined: Feb 2008
Posts: 421
THE Australian and British housing markets are the last two bubbles...........
http://www.theaustralian.com.au/busi...-1225880119320
QUOTE"He said yesterday that Australia had an unmistakable housing bubble and that prices would need to come down by 42 per cent to return to the long-term trend.
"You cannot possibly miss it," he said.
"The price of housing typically trades about 3.5 times of family income and in bubble it goes to 6 or . . . 7.5 (times).
"Australia is having one now. You are at near 7.5 times family income . . . which suggests you are twice the size that you should be." "
Are they in a bubble or are we in a completely new era?
For me in the UK, austerity is the key to it bubbling over, and POP? Unemployment, is just starting to pick up, lots of benefit cheats taking pay cuts, sorry public sector employee's?
In Ausland, house prices never fall, never, they only fell 5% in the 80's SO NOWT TO WORRY ABOUT THERE.
Ummmmmmmmmmm, maybe the only thing to knock the price of a house off a cliff in Australia will be funding probelms, rollin over debt, who know's, who, who, who..........but i could not afford to live in Australia, and have the same standard of living i enjoy here in the UK.
Au Revoir.
QUOTE"He said yesterday that Australia had an unmistakable housing bubble and that prices would need to come down by 42 per cent to return to the long-term trend.
"You cannot possibly miss it," he said.
"The price of housing typically trades about 3.5 times of family income and in bubble it goes to 6 or . . . 7.5 (times).
"Australia is having one now. You are at near 7.5 times family income . . . which suggests you are twice the size that you should be." "
Are they in a bubble or are we in a completely new era?
For me in the UK, austerity is the key to it bubbling over, and POP? Unemployment, is just starting to pick up, lots of benefit cheats taking pay cuts, sorry public sector employee's?
In Ausland, house prices never fall, never, they only fell 5% in the 80's SO NOWT TO WORRY ABOUT THERE.
Ummmmmmmmmmm, maybe the only thing to knock the price of a house off a cliff in Australia will be funding probelms, rollin over debt, who know's, who, who, who..........but i could not afford to live in Australia, and have the same standard of living i enjoy here in the UK.
Au Revoir.
Last edited by brendarover; Jul 6th 2010 at 4:27 pm.
Jul 6th 2010, 4:36 pm
#489
Banned
Joined: Feb 2008
Posts: 421
Re: OZ BOOM is over?...house prices falling & rates might drop
Well if you assume that the median Australian household income is $65k, but lets be charitable and call it $70k. Assume that the average house median cost is around $420k then you have seriously more than the 4 times at most you suggest and more toward the 7.5
Clearly I'm talking median terms across all states and there are some variations, but really there is no disguising the fact the situation we have is far removed from the 2.5 - 4 times household income that housing should be priced at.
There are differences between the US and Australian lending and banking systems but this still doesn't detract from the basic sums of where we are headed in the short term.
Clearly I'm talking median terms across all states and there are some variations, but really there is no disguising the fact the situation we have is far removed from the 2.5 - 4 times household income that housing should be priced at.
There are differences between the US and Australian lending and banking systems but this still doesn't detract from the basic sums of where we are headed in the short term.
Jul 7th 2010, 2:34 am
#490
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Re: OZ BOOM is over?...house prices falling & rates might drop
http://www.theaustralian.com.au/busi...-1225887273909
It all comes down to what people can afford.
The average Australian First Home buyers mortgage in March 2010 was $284,322 calculated from 8,720 of these Mortgages being taken out in Australia.
Assuming each New property buyer has one Male family member working full time, earning the average wage of about $70,000, then the average Australian First Home Mortgage would be 4.06 times the income.
Obviously some will be higher values and higher incomes, others will be lower values and lower incomes.
But what is "normal" for movements in Australian house prices after the boom has peaked? My graph shows what happened to house prices following the collapse of the bubble of the late 1980s.
Despite housing interest rates of 17 per cent, the median house price did not fall away sharply. Moreover, even with the marked fall in interest rates that followed, the earlier excesses were worked off slowly.
Looking back on earlier housing bubbles, such as those of 1960, the early and late 1970s, the experience was broadly similar: house prices corrected mainly by remaining flat for a half dozen or more years.
In international comparisons of whether house prices here are excessive, account needs to be taken of the high proportion of Australians who live in the main cities. Even over the long term, average house prices will be higher than if the population was spread over many cities and towns.
Despite housing interest rates of 17 per cent, the median house price did not fall away sharply. Moreover, even with the marked fall in interest rates that followed, the earlier excesses were worked off slowly.
Looking back on earlier housing bubbles, such as those of 1960, the early and late 1970s, the experience was broadly similar: house prices corrected mainly by remaining flat for a half dozen or more years.
In international comparisons of whether house prices here are excessive, account needs to be taken of the high proportion of Australians who live in the main cities. Even over the long term, average house prices will be higher than if the population was spread over many cities and towns.
The average Australian First Home buyers mortgage in March 2010 was $284,322 calculated from 8,720 of these Mortgages being taken out in Australia.
Assuming each New property buyer has one Male family member working full time, earning the average wage of about $70,000, then the average Australian First Home Mortgage would be 4.06 times the income.
Obviously some will be higher values and higher incomes, others will be lower values and lower incomes.
Jul 7th 2010, 3:17 am
#491
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Location: Melbourne
Posts: 10,994
Re: OZ BOOM is over?...house prices falling & rates might drop
Also, home price income multiples are generally calcualted based on home prices not mortgage size. I understand why you would do this but it makes comparisons difficult with other & historical data.
Jul 7th 2010, 5:32 am
#492
Joined: Jan 2005
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Re: OZ BOOM is over?...house prices falling & rates might drop
Jul 7th 2010, 7:17 am
#493
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Re: OZ BOOM is over?...house prices falling & rates might drop
Using the home value as a figure for multiples does tend to make the whole multiple figures meaningless then.
If you buy a house for $700,000, on an income of $50,000, then the ratio is 14 to 1. However, if you only needed a mortgage for $200,000 then the 14:1 means nothing whatsoever to affordability.
This becomes very relevant when we see that the average first home buyers new mortgage in NSW is $304,400, yet the average house price is often quoted at double that.
As long as the house price to income is never related to mortgage affordability then that is OK, but if talking about Mortgage affordability, which many people do relate this to, then the mortgage figure must be related to the income figure.
Jul 7th 2010, 7:37 am
#494
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Re: OZ BOOM is over?...house prices falling & rates might drop
No wonder the average first home buyers have a joint income.
Jul 7th 2010, 8:55 am
#495
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Re: OZ BOOM is over?...house prices falling & rates might drop