Sydney Mortgages Higher Than London or New York
Oct 10th 2010, 9:15 pm
#31
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Posts: 484
Re: Sydney Mortgages Higher Than London or New York
This comes up a lot, I've now lived in Sydney for about 6 months so I feel a bit qualified to comment.
1) The average wage in Sydney must be way higher than the average wage in Australia as a whole.
2) Rental costs in Sydney are high, really high.
3) Property prices in relation to rental costs are even higher and can only be justified by the expectation of price rises, rental income does not cover interest. The RBA recently defined this condition as "the definition of a bubble"
So, if you're in my position you can either.
a) Buy a house using your savings
b) Buy a house using your income
c) Buy an even more expensive house using a+b
d) Rent and look on in amazement/bemusement as folk do a, or b, or c.
Despite being in a position to do a, b or c I've gone for option d, and have not even the slightest doubt that this is the right decision, I've owned houses before & will again but the Sydney market (the part I've seen, which is not all of it by any means) is IMHO a ticking time bomb and I'm happy to put away the cash I'm saving by renting. Meanwhile I'm enjoying the McMansion we're renting for a far lower outlay of the cost of servicing the interest on a loan on same.
Of course other people feel differently, maybe it really is different here, I don't think it is, neither does the IMF (among others) "you pays your money & takes your chances"
I respect ABCD's stats which he wheels out regularly, but I personally don't think I'd like to live in an averagely priced $481,000 house anywhere within commuting distance of my office in the Sydney CBD.
Wages are higher here, costs are too (maybe even more so), and (for anyone who's lived in the UK recently), Sydney is BTL mad.
And before non-Sydney folk chime in, my comments only apply to my opinion of the Sydney market, they may or may not apply elsewhere - I have no recent experience of other locations in Australia.
1) The average wage in Sydney must be way higher than the average wage in Australia as a whole.
2) Rental costs in Sydney are high, really high.
3) Property prices in relation to rental costs are even higher and can only be justified by the expectation of price rises, rental income does not cover interest. The RBA recently defined this condition as "the definition of a bubble"
So, if you're in my position you can either.
a) Buy a house using your savings
b) Buy a house using your income
c) Buy an even more expensive house using a+b
d) Rent and look on in amazement/bemusement as folk do a, or b, or c.
Despite being in a position to do a, b or c I've gone for option d, and have not even the slightest doubt that this is the right decision, I've owned houses before & will again but the Sydney market (the part I've seen, which is not all of it by any means) is IMHO a ticking time bomb and I'm happy to put away the cash I'm saving by renting. Meanwhile I'm enjoying the McMansion we're renting for a far lower outlay of the cost of servicing the interest on a loan on same.
Of course other people feel differently, maybe it really is different here, I don't think it is, neither does the IMF (among others) "you pays your money & takes your chances"
I respect ABCD's stats which he wheels out regularly, but I personally don't think I'd like to live in an averagely priced $481,000 house anywhere within commuting distance of my office in the Sydney CBD.
Wages are higher here, costs are too (maybe even more so), and (for anyone who's lived in the UK recently), Sydney is BTL mad.
And before non-Sydney folk chime in, my comments only apply to my opinion of the Sydney market, they may or may not apply elsewhere - I have no recent experience of other locations in Australia.
Oct 10th 2010, 9:27 pm
#32
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Re: Sydney Mortgages Higher Than London or New York
Good to see Sydney kicking London's and NY's arses. 
Oct 10th 2010, 9:31 pm
#33
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Posts: 1,920
Oct 10th 2010, 11:41 pm
#35
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Re: Sydney Mortgages Higher Than London or New York
Oct 11th 2010, 12:20 am
#36
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Posts: 9,316
Re: Sydney Mortgages Higher Than London or New York
I've heard all of these predictions over the last few years.
Interest rates up - economy going to crash - housing market crash.
Interest rates down - economy going to crash - housing market crash.
House sales up - house market crash.
House sales down - house market crash.
More housing approvals - house market crash.
Less housing approvals - house market crash.
Resources boom - economy going to crash.
Resources flattening - economy going to crash.
Debt rising - economy going to crash - housing market crash.
Debt falling - economy going to crash - housing market crash.
Stimulus - economy going to crash - housing market crash.
End of stimulus - economy going to crash - housing market crash.
The list goes on. Something will crash sometime and all the doom mongers will say they predicted it because basically they predicted a crash for every conceivable measure and direction.
Why are the Aussies strange?
Oct 11th 2010, 4:49 am
#39
Joined: May 2006
Location: in the Sydney asylum
Posts: 20,690
Re: Sydney Mortgages Higher Than London or New York
been here in Sydney a few years now, this stuff about the price crash has been doing the rounds since i got here.
However it hasn't happened for the main reason that Sydney has few new houses being built and demand is outstripping supply so not going to happen for a good long time until everyone gets it into their heads to go to melbourne instead
However it hasn't happened for the main reason that Sydney has few new houses being built and demand is outstripping supply so not going to happen for a good long time until everyone gets it into their heads to go to melbourne instead
Oct 11th 2010, 8:51 am
#40
Joined: Jun 2006
Posts: 4,555
Re: Sydney Mortgages Higher Than London or New York
Australian govt owns $16billion worth of mortgages and the small players are going cap in hand back to the government for more. And they say the GFC is over!
Oct 11th 2010, 9:09 am
#41
Forum Regular
Joined: Apr 2009
Posts: 252
Re: Sydney Mortgages Higher Than London or New York
NY state outside of Manhattan and Westchester County is pretty working class, in fact downright poor in some places. In the vast majority of the state 250k will buy you a 5-bed house on 2+ acres. But the average wage would be relatively low, though 44600 must be after tax, is my guess.
OTOH, average wages in NY City must be pushing 100k, as they are at that level or above in the wealthier towns around the tri-state. But the cost of housing is high so 600+ in NY City would not surprise me.
So my expectation is that the average house cost in both NYC and NY state would be something like 4-5 times average wages at present (average, not median), and in some areas will be pushing 3. NYC could be a touch above that, but then again it is a massive economic engine (my guess is its GDP would have to be a decent % of Australias).
Sydney property OTOH in many places is touching 10x (as is Melbourne BTW).
And its not really worth bringing other wage-earners etc into it, because you could adjust the figures for other countries to include that also, and obviously everywhere would look a lot more affordable.
Oct 11th 2010, 9:10 am
#42
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Posts: 252
Re: Sydney Mortgages Higher Than London or New York
Oct 11th 2010, 9:19 am
#43
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Posts: 252
Re: Sydney Mortgages Higher Than London or New York
been here in Sydney a few years now, this stuff about the price crash has been doing the rounds since i got here.
However it hasn't happened for the main reason that Sydney has few new houses being built and demand is outstripping supply so not going to happen for a good long time until everyone gets it into their heads to go to melbourne instead
However it hasn't happened for the main reason that Sydney has few new houses being built and demand is outstripping supply so not going to happen for a good long time until everyone gets it into their heads to go to melbourne instead
1) Cost and availability of finance i.e. bank decides
2) Prices - if they're going up, demand rises, as it does for any appreciating asset; if they're going down, it falls.
For example, if the bank is offering 0% interest mortgages with unlimited LTVs, and house prices are rising, then the entire city will want to own 10 2million dollar houses. Who wouldnt, you cant lose. So regardless of land availability etc, demand will always outstrip supply.
But as you adjust from that end of the spectrum to the other - 10% interest rates, max 80% LTV and falling prices, how good do you think demand will look? And what will happen to supply? It will explode.
This 180 is exactly what happened in the US, for example.
Now obviously the bank doesnt really decide - its investors, creditors and the RBA decide much of it, and the bank gets to play around the edges.
So in other words, Joe Bloggs doesnt really determine demand at all. So its pretty meaningless to talk about supply and demand in the housing market, at least without taking this into consideration.