ozzieeagle

Not to sure how much money he had. He definitely had a fairly good slightly higher than average income as a Prison officer. I dont think he had to much in the way of a deposit. He did this with his new partner who was also a Prison officer. He told me that he came out of his previous marriage with about one months wages in the bank and a car, so from his point of view he was broke when he started.

History now though, doubt if people could make so much today.... although you never know. Basically it meant they paid in full the house they have now semi retired to up in Banora Point.



.

swigski

Property prices are high in the UK but compared to average earnings are not as expensive as Australia.
Meanwhile......WESTPAC has revived the wholesale funding guarantee, becoming the first bank in nearly three months to raise funds using the backing of the Federal Government's credit rating.

ABCDiamond

How do these figures compare to the UK ?

and according to the BBC, for the UK figures:

Total Annual Combined Income of two full time workers = £62,646
Average property price = £224,064
A multiple of 3.577

It appears, when looking at full time wage earners, that Sydney has a higher multiple than the UK, but Melbourne is lower.

I haven't compared London to Sydney yet.

When comparing all earners, including part timers and casual etc, Australia is worse, but most people who buy houses have, or at least should have, full time wage.

MartinLuther

I reckon that's an unsubstantiated myth made from comparing Halifax to Sydney (or such like).

Housing is high in both countries. And it's not a recent phenomenon. They were high when I bought my first house and they have been high ever since. People have been complaining about it in the who 20 years that I've owned property.

Swervo got it right in an earlier post. People see it as a right to buy whatever property they like in whatever area they like. Sorry but if people want to get on the property ladder then they'll have to start at the bottom like most of us. I had to buy my first property with a mate in what was considered a cruddy area. When I left London they just introduced a £150k stamp duty free limit to stimulate the housing market. People were complaining that you couldn't buy a house in London for that. But you could. There were loads of places not that far from the city where you could buy 1 bed and even 2 bed flats for that price. They weren't the most desirable areas (e.g. Deptford) but they were there for anyone who prepared to get on the ladder rather than whining that they couldn't afford to buy in the best parts of London.

Brisben

From personal experience, I think house prices have only been expensive in the last 8 years or so. However if you want in, you have to pay.

swigski

There is an International yearly survey done on Housing Affordability with all the multiples, averages you could wish for.....

http://www.demographia.com/dhi.pdf

It uses the Median House price divided by the Median household income for all significant markets within a country.

The multiples are graded as

Severely Unaffordable 5.1 & Over
Seriously Unaffordable 4.1 to 5.0
Moderately Unaffordable 3.1 to 4.0
Affordable 3.0 or Less

Of the 64 severely unaffordable markets in the WORLD, 24 were in AUS. Australias 3 other areas were Seriously Unaffordable.

The Sunshine Coast (Queensland) replaced Mandurah as the nation’s most unaffordable surveyed
market, with a Median Multiple of 9.3. All markets in Australia were rated as “severely unaffordable”
except Wagga Wagga (New South Wales), Bendigo and Ballarat (Victoria), which were rated
“seriously unaffordable” (Median Multiple between 4.1 and 5.0).


In the UK, 10 areas are Severely Unaffordable and 6 seriously Unaffordable with the median of 5.2

Therefore in Australia, 88.9% of houses are severely Unaffordable and 11.1% are seriously unaffordable with a median of 6.0
In the UK, 62.5% of houses are severely unaffordable and 37.5% of houses are seriously unaffordable with a median of 5.2

Wagga Wagga it is then

MartinLuther

I guess the UK house prices have crashed a lot more than some on here have lead me to believe. But even then the UK is still at 5.2 compared to Aus' 6.0. They both still sound expensive to me.

This is an interesting quote.

swigski

Quote:
United Kingdom: Government reporting of house prices has slowed by more than six months
over the past year in England and Wales, which has made it impossible to present sufficiently
accurate estimates below the regional level. As a result, a number of metropolitan markets have been
excluded from this report. Their corresponding regions, reported upon this year, are indicated in
Table 7 in the Methods and Sources section.
__________________

Probably because no houses are being sold or being put on the market. Was certainly the case in the area I lived. Prior to the GFC, rental properties were hard to come by and houses would sell quickly. From around Aug 2008 that changed and there are still houses on the market today and rental properties have shot up and now easily outnumber for sale properties. I sold my house in Dec 2008 and was very lucky to do so. It is still on the estate agents website listings as sold today! What does that tell you?

Swerv-o

Is this not the upshot of the banks tightening their lending criteria though? My brother was almost completely unable to find anybody willing to lend him money to buy his new house, despite being in a solid and dependable job, and his partner the same.

If the banks aren't lending the money, then people aren't going to be able to buy houses, which in turn means no first time buyers, and hence the entire market all grinds to a halt, as has done in the UK.

In Australia, the banks have not tightened lending criteria as much as the UK, so there is still a background level of credit available to first time buyers, providing they are able to demonstrate that they can afford the loans that they are asking for.

The whole GFC was/is based upon a crisis of credit, not of confidence as most recessions of the past have been. Sure enough, confidence will, and has, played a part in the duration and the recovery characteristics, but was not at the root cause of the problem in the first place.


S

BadgeIsBack

I still think the UK is expensive too.

Wagga is a nice town - I was there back in the early autumn.

hmmm. me too. But I still think there was a sweet spot for people in the 90s who hadn't been shafted in the late 80s. I recall blokes buying 60k houses in desirable locations of SW London (they were desirable back then too) after getting 17k jobs after their 'A' levels, c. 1991.

I realise that as we were coming out of recession that there were less jobs, but there were also people I knew in around 1995-1999 who bought houses on incomes of GBP20-40k quite easily.

I even recall being told by a pub mate in 1998 to get into property as they were about to sky-rocket. The advice did not cost me a penny but I did not take it, preferring to get a car instead!! Big mistake..

There were people I knew in 1999 in their 20s, on say 30-40k who were doing very well and sort of got the last cheap bus out of the depot...eg. there was one young girl working in the City who bought a nice flat for 70k near Canary Wharf in 1999....

If I had done the same, there is a chance I would be living in the UK now but I got delayed overseas and did not buy until 2000 and yes - it was in a poor area. Yes - I complained, and yes, I had friends who gloated. (They'd been going up, but prices rocketed the first bit of 2000 to start that frantic double-digit annual growth we saw until well into 2003/4). So when I sold in 2004 I still did very well.

Missed it by this much!

swigski

Tighter lending is part of the problem and so it should be. To say Australia have not tightened their lending criteria as much is not good in my view but I suppose they have to be a bit lax otherwise nobody would be able to afford the inflated prices!!! Is this not what the GFC was about?
From experience, people in the UK myself included were simply stunned by the drastic fall in their property values in a matter of a couple of months and had it not been for me being committed to my move to Aus, I would not have put my house on the market and sold it for 20% less than it was valued at 3 months before! A lot of others are now just sitting on their properties paying their super cheap mortgages. Others are just renting their properties out and biding their time. I know lots of people who want to sell at this time but due to the lack of quality housing on the market are stuck.
Do you not think that has anything to do with confidence?

Swerv-o

Maybe, maybe not, but if the banks aren't lending to anybody, as in my brother's case, then an inevitability of that is that houses will not sell, or will sell for peanuts to the limited number of people who have managed to get somebody to lend to them. If the number of people who are able to get a mortgage drastically decreases overnight, then the available market of people to sell to also decreases.

If the market was awash with people funded up to their ears, then your acquaintances would be able to sell their houses. But they can't, because the banks are still being overly cautions about who they lend to. The knock on effect is that there is essentially a very small or limited market, but if you have to sell, then you have to sell, and accept a smaller value for your house.

As the banks become less cautious, then they will start to lend to more people, and the market will gather momentum. Confidence will have its role to play in this, but much will still depend on the banks and their tight lending policies.

Because this didn't happen in Australia, I don't think that the same grinding halt is likely to occur here. Banks had their opportunity to cut lending this time last year, but they didn't do it to the same extent as the UK banks. Granted they tightened up, and killed off luxuries like 120% loans etc, but fundamentally, they kept a line of credit available to those who could afford it, which kept the market ticking over during the down time, allowing folk to take advantage of the low interest rates driven by the RBA.


S

BadgeIsBack

I think he said that confidence was not the root cause but implies that confidence is certainly a factor now. The credit issue became one of confidence.

Catch

Its different in Australia,dont know why people keep saying it

swigski

Posted by Swerv-O

As the banks become less cautious, then they will start to lend to more people, and the market will gather momentum. Confidence will have its role to play in this, but much will still depend on the banks and their tight lending policies.

Because this didn't happen in Australia, I don't think that the same grinding halt is likely to occur here. Banks had their opportunity to cut lending this time last year, but they didn't do it to the same extent as the UK banks. Granted they tightened up, and killed off luxuries like 120% loans etc, but fundamentally, they kept a line of credit available to those who could afford it, which kept the market ticking over during the down time, allowing folk to take advantage of the low interest rates driven by the RBA.


Local bank yesterday offered me a mortgage 6x combined household income which at todays interest rates would mean me paying 60% of my income or repayments. Frightening, but that is obviously how property prices are being sustained in Australia. They also tried to get me to take on a personal loan and credit cards on top of the mortgage offer!
Could quite easily have been taken away with the excitement and be out house and furniture hunting today.
If this is tightening up, would hate to think what was on offer before!