Sydney Mortgages Higher Than London or New York

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Oct 12th 2010, 5:09 am

#91

MartinLuther

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Re: Sydney Mortgages Higher Than London or New York

Quote:

Originally Posted by Amazulu

Most are privately owned, or more precisely: owned by rich Germans!

And irrational rich Germans at that! Apparently.

I wonder what sort of return they're getting. Poor loves must be losing billions in lost opportunity.

Transfer taxes and costs in Germany are high and I think there is a tax you if you sell within a certain amount of time. These create drag on a market (which is not always a bad thing - especially in times of exuberance).

Oct 12th 2010, 5:09 am

#92

littda01

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Re: Sydney Mortgages Higher Than London or New York

Quote:

Originally Posted by Evelin

no, they are not more rational, they don't like to take risks and they are worried to death that they lose their property in case they loose their job. Germans are very grounded people, they tend to buy ONE property in their life and they like to stick with the same job/company until they retire. But that is changing. I'm original from Germany, although I owned my own property, as you say, the majority of people rents. Germans have few children, like to spend their money on themselves, eg car (Merc, BMW, Audi) and holidays. The pension system is differently too which is part of their calculation. Properties are very much cheaper than in OZ and mortgage rates are very much lower too.

So they ARE more rational then?

At least thats how I would generically describe people who do not depend on spectacular appreciation in property values for their financial security.

Oct 12th 2010, 5:18 am

#93

Steve2009

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Re: Sydney Mortgages Higher Than London or New York

Quote:

Originally Posted by MartinLuther

And irrational rich Germans at that! Apparently.

I wonder what sort of return they're getting. Poor loves must be losing billions in lost opportunity.

How are they irrational? They are low risk investments based on good yields and steady capital appreciation in line with inflation.

How's that breakeven for rental versus mortgage going for you?

Oct 12th 2010, 5:26 am

#94

MartinLuther

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Re: Sydney Mortgages Higher Than London or New York

Quote:

Originally Posted by Steve2009

How are they irrational? They are low risk investments based on good yields and steady capital appreciation in line with inflation.

How's that breakeven for rental versus mortgage going for you?

I don't know. You suggested that German renters were rational. That would make German non-renters non-rational. Unless everyone is rational. In which case why did you use that qualifier?

Fantastic. I retired 4 years before my planned retirement date and I have no mortgages or debts any more. How's it going for you?

Oct 12th 2010, 5:28 am

#95

Steve2009

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Re: Sydney Mortgages Higher Than London or New York

Quote:

Originally Posted by MartinLuther

I don't know. You suggested that German renters were rational. That would make German non-renters non-rational. Unless everyone is rational. In which case why did you use that qualifier?

That's quite a deductive leap you've made there. Why do German homeowners have to be irrational if renters are rational?

It's going great for me. I have a large pot of capital and high disposable income. Freedom is great.

Last edited by Steve2009; Oct 12th 2010 at 5:30 am.

Oct 12th 2010, 5:30 am

#96

MartinLuther

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Re: Sydney Mortgages Higher Than London or New York

Quote:

Originally Posted by Steve2009

That's quite a deductive leap you've made there. Why do German homeowners have to be irrational if renters are rational?

How's your 7 year breakeven for rent vs mortgage going?

And I allowed for the possibility that you meant something else. I sort of expected you'd take that opening to explain but I guess not.

Great. How's it going for you?

Oct 12th 2010, 5:31 am

#97

littda01

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Re: Sydney Mortgages Higher Than London or New York

Quote:

Originally Posted by MartinLuther

You got in at the right time then

Good luck to you! I suspect future generations may not be so fortunate...

Oct 12th 2010, 5:32 am

#98

Steve2009

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Re: Sydney Mortgages Higher Than London or New York

Quote:

Originally Posted by MartinLuther

And I allowed for the possibility that you meant something else. I sort of expected you'd take that opening to explain but I guess not.

The yields offered by German housing make them an attractive low risk investment. The gap between the cost of renting and buying is probably not as pronounced and people can make the choice based on their own circumstances.

Oct 12th 2010, 5:38 am

#99

MartinLuther

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Re: Sydney Mortgages Higher Than London or New York

Quote:

Originally Posted by littda01

You got in at the right time then

Good luck to you! I suspect future generations may not be so fortunate...

Actually my first home (and I mean home) was bought in 1989. Probably one of the worst times to buy a house in the UK market. So not particularly fortunate there.

It brings up an interesting point in that rents were lower than mortgages then. So was it rational to buy at that time? The other interesting thing about that time was that although the house prices crashed by something like 30% rents continued to rise.

Oct 12th 2010, 5:40 am

#100

Steve2009

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Re: Sydney Mortgages Higher Than London or New York

Quote:

Originally Posted by MartinLuther

The other interesting thing about that time was that although the house prices crashed by something like 30% rents continued to rise.

And interest rates were what then?

Oct 12th 2010, 5:41 am

#101

MartinLuther

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Re: Sydney Mortgages Higher Than London or New York

Quote:

Originally Posted by Steve2009

Quote:

Originally Posted by Steve2009

Because markets are irrational. In Germany plenty of people do rent. Maybe the Germans are more rational.

I'll let you work it out.

Oct 12th 2010, 5:41 am

#102

MartinLuther

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Re: Sydney Mortgages Higher Than London or New York

Quote:

Originally Posted by Steve2009

And interest rates were what then?

Around 7% IIRC.

Oct 12th 2010, 5:47 am

#103

Steve2009

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Re: Sydney Mortgages Higher Than London or New York

Quote:

Originally Posted by MartinLuther

I'll let you work it out.

I'll help you out maybe.

People do not rent when it's hugely cheaper in Australia because the market is irrational. Lots of people rent in Germany and there is not such an irrational attachment to ownership. Germany is perhaps therefore a more rational market.

This does not in any way suggest that German home owners or investors are irrational.

How does your 7 year breakeven apply to current market prices? I'd love to see your model.