coolshadows

I've also found a graph from the RBA web site that looks interesting...



http://www.rba.gov.au/publications/f.../graph-51.html

ABCDiamond

But did you read this bit in that report?

pomtastic

Supply and demand and DEBT, you missed out the most important.

In the 'good old days', 3.5 was all you could get from your bank lender, now they lend much more as it is more profitable for them. Banks don't give a damn if they are lending you 1% above the poverty line, they know that you can't walk away from a loan like in the USA and they know you'll have your electric cut off, take the kids out of private school, sell the spare car all in the name of keeping the house. A house has become a badge of success and an asset class, it's no longer a shelter.

The trouble with mountinous debt is that it has to be paid back and at historically low levels of interest rates, any small rises will be felt more now than ever because of the debt being piled on by home owners.

Look at Japan, one of the most populated countries in the world whose real estate bubble has deflated by 70% over the last 20 years. I'm sure all the Japanese buyers at the top of their housing bubble said exactly the same as you, population, supply demand, etc. How about California, the 6th biggest economy in the world, they've seen prices decline by 40% over the last couple of years and of course all the same reasons you are using applied to those Californian folk. I could go on and on giving examples similar examples around the world.

coolshadows

The loan market here remains robust because the jobs market is very good currently in Australia, unlike in other countries.

In fact, in other countries it is job loses that is causing an increase in arrears. Here it appears to be affordability.

ABCDiamond

Still under half the UK rate though, so looking good

However, that has now been shown to be 4.41% for 2009 at:
http://www.cml.org.uk/cml/publicatio...commentary/109

0.8% for our worst state may not be great, but in comparison it isn't bad for the times.

hereandthere

But the full context of my posts made it clear that 128k was what they should cost today, if they had inflated at the same rate as wages. But really this is neither here nor there. Houses are three or four times more expensive today than they were 30 years ago, and this is responsible for every social problem we have in our society.

These high prices benefit absolutely no one except banks, government and people selling and not buying on. the massive bulk of the gen pop benefit in no way from higher prices. Prices must drop by about 50% or our society will just phase into a Bladerunner type scenario where permanently disenfranchised people just cannot see the point in working or obeying the law.

coolshadows

Yeah but you are comparing a weak economy with a strong economy?

The UK economy will experience an upturn at some point in the future. The Australian market may experience a downturn in the market at some point in the future.

Basically, with the economy this good in Australia, should housing arrears be increasing????

ABCDiamond

People will just have to drop back to what they can afford then.

With unemployment dropping again, both partners could get full time jobs and spend 24.6% of their income on a mortgage to afford the median home.

Alternatively buy something cheaper.

But all the time that people want something better, and can find ways to pay for it, they will do.

ABCDiamond

From 125 arrears to 127 arrears per 100,000 I think well, its not that big a deal.

Anything else, well we don't know yet, it may or may not happen.

pomtastic

Australia's loan mortgage market is doing so well that the Commonwealth Bank has freezed it's mortgage fund.

http://www.smh.com.au/business/cba-f...0113-m705.html

coolshadows

I work full time, the wife works part time. If she was to work full time, she'd have to earn a salary much higher than the median to balance out the cost of child care.

I guess your figures work out alright in a childless society.

ABCDiamond

One big difference with the USA is their ability to just walk away from houses, without any financial liability, causing massive price drops.

The same reason cannot be applied here.

asprilla

Japan and the USA are very interesting cases, Japan in particular. But I'm not sure what your point is here. If you are saying "there have been massive crashes in Japan and USA so there will be everywhere else too" - well, I'm not sure I agree.

ABCDiamond

I did quote figures for 1 full time and 1 part time, which is pretty common for families with children.

However, even with both full time, it will depend on your cost of child care.

An example in my area
28th April 2009 Working Full Time:
5 days costs $235.00 (without allowing any Child Care Benefit CCB entitlement)
This then gets reduced by the Child Care Tax Rebate of about 50%.

hereandthere

What's going down in the US and UK is a lot worse than what happened to Japan. They were able to import their problems away, and that kept them merely stagnant. That option isn't there for US/UK in a crashing economy.

Seriously, a lot of this will be cleared up when the Tories get in and open up the books. Then we'll see the real filth at the bottom of the wardrobe.