Housing bubble in Australia
Feb 10th 2010, 12:11 am
#271
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Re: Housing bubble in Australia
Feb 10th 2010, 12:25 am
#272
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Re: Housing bubble in Australia
There are several people who I've spoken to, who bought in the last quarter of 2009, who said "If we don't buy now we won't afford it when the rates go up cause the amount we can borrow will drop". Do you think these same people are also planning for any chance of the cost of living increasing?
Again, I'm only throwing it in the air, but to think that any government has FULL control of its economy is ridiculous.
Feb 10th 2010, 12:36 am
#273
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Re: Housing bubble in Australia
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%.
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%.
Younger couples without children had the highest mean equivalised disposable household income of $1,155 (Table 12) per week, with an average of 1.8 employed persons in the household. For couples with dependent children only, and with the eldest child being under five, mean equivalised disposable household income was $871 per week (25% lower than for the young couples without children) (Table 12). This lower income principally reflects the lower average number of employed persons in these households (1.5) and the larger average number of persons in these households (3.4) over which incomes are shared.
Feb 10th 2010, 12:43 am
#274
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Re: Housing bubble in Australia
Looks like the demand which everyone keeps using as a reason for rising house prices is starting to drop off:
http://www.smh.com.au/business/home-...0210-nqww.html
http://www.smh.com.au/business/home-...0210-nqww.html
Feb 10th 2010, 1:08 am
#275
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Re: Housing bubble in Australia
Looks like the demand which everyone keeps using as a reason for rising house prices is starting to drop off:
http://www.smh.com.au/business/home-...0210-nqww.html
http://www.smh.com.au/business/home-...0210-nqww.html
RBA are going to lift rates to 'ward off' asset bubbles - hmm?
Feb 10th 2010, 1:20 am
#276
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Re: Housing bubble in Australia
Well I'll throw my two pence worth in. The bubble is not about to burst, as long as people can afford to continue making repayments.
Lets imagine that variable interest rates reach 10%+ for any significant time e.g. 12months plus. This would be a disaster for the economy in many ways. One of the side effects would be plummeting house prices, perhaps 30% or so in a very short space of time, as homeowners and investors would no longer be able to pay off large loans.
The government does not want a high interest rate environment, for many reasons. I think that it is highly unlikely that rates will go over 10%, and as such I think that the "bursting housing bubble" is highly unlikely.
What is much more likely is a slow decline in prices over a number of years, or a stagnation in prices.....As wages climb, housing gradually becomes more affordable.
There are lots of discussion forums on the web predicting e.g. huge crashes in house prices. Sadly there appears to be a lot of people clinging to the hope that this might happen. In reality, the chances of it happening are very slim - and even in those places where it has happened, do you see people rushing out to buy houses now that they are cheap?
Lets imagine that variable interest rates reach 10%+ for any significant time e.g. 12months plus. This would be a disaster for the economy in many ways. One of the side effects would be plummeting house prices, perhaps 30% or so in a very short space of time, as homeowners and investors would no longer be able to pay off large loans.
The government does not want a high interest rate environment, for many reasons. I think that it is highly unlikely that rates will go over 10%, and as such I think that the "bursting housing bubble" is highly unlikely.
What is much more likely is a slow decline in prices over a number of years, or a stagnation in prices.....As wages climb, housing gradually becomes more affordable.
There are lots of discussion forums on the web predicting e.g. huge crashes in house prices. Sadly there appears to be a lot of people clinging to the hope that this might happen. In reality, the chances of it happening are very slim - and even in those places where it has happened, do you see people rushing out to buy houses now that they are cheap?
More generally, one wonders when this greed will burn itself out, as it must do eventually. If a house costing $350,000 grows at just 1% a month, it's going to be over $1 million in 2020. At 1% a month growth the average house is going to cost nearly $4 million in 2030. As house prices are going up several times faster than wages, all this is very bad news.
When will the greed burn itself out?
Feb 10th 2010, 1:48 am
#277
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Re: Housing bubble in Australia
It's more likely the EA's will 'encourage' prices to drop a little more to increase sales. Like in the UK, they'll tell you that your house has dropped by $20k, and so has the house you want to buy - so 'you wont lose out'.
Feb 10th 2010, 2:16 am
#278
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Re: Housing bubble in Australia
The housing boom began with easy credit...... and that's what will end it!
Westpac dropped thier LVR from 92% to 87% a couple of weeks back, I expect other banks will eventually follow.
Westpac dropped thier LVR from 92% to 87% a couple of weeks back, I expect other banks will eventually follow.
Feb 10th 2010, 2:52 am
#279
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Re: Housing bubble in Australia
Feb 10th 2010, 3:13 am
#280
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Re: Housing bubble in Australia
I agree with part of this, but there is another force acting on house prices and that is the fact that no FTBs can afford to buy anymore. With no one buying houses at the bottom of the ladder, the rest of the ladder is screwed.
More generally, one wonders when this greed will burn itself out, as it must do eventually. If a house costing $350,000 grows at just 1% a month, it's going to be over $1 million in 2020. At 1% a month growth the average house is going to cost nearly $4 million in 2030. As house prices are going up several times faster than wages, all this is very bad news.
When will the greed burn itself out?
More generally, one wonders when this greed will burn itself out, as it must do eventually. If a house costing $350,000 grows at just 1% a month, it's going to be over $1 million in 2020. At 1% a month growth the average house is going to cost nearly $4 million in 2030. As house prices are going up several times faster than wages, all this is very bad news.
When will the greed burn itself out?
Jan-80 $56,500
Jan-90 $186,472
Jan-00 $615,429
Jan-10 $2,031,155 (more than 4 times the actual)
The actual average rise has been more like 0.58% per month.
However, if you only look from 1990 to 2010 the actual average rise has been more like 0.495% per month.
Over time, large fluctuations are balanced by lower ones.
Feb 10th 2010, 3:24 am
#281
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Re: Housing bubble in Australia
I used Net income because that's what people actually HAVE in their pocket. No point telling someone the bank they earn $1500 a week when they actually have $1175 deposited in their bank a week.
The people living in the UK reading this are interested in the situation in Australia. They know what's happening in the UK. Why would figures using NET income give them a false impression? It's the real world. I suggest your figures using gross income gives them a false impression.
$610,000 is from rpData Dec 2009. Your figures from ABS are Mar 2009!
The people living in the UK reading this are interested in the situation in Australia. They know what's happening in the UK. Why would figures using NET income give them a false impression? It's the real world. I suggest your figures using gross income gives them a false impression.
$610,000 is from rpData Dec 2009. Your figures from ABS are Mar 2009!
They are not prepared to use those figures unlike the Real Estate industry.
I recall a while ago you laughed at figures provided by either Residex or RpData, due to their outlandish figures.
You also ask why would Net figures confuse.
Possibly because in the UK, and almost all other countries, they quote figures like 30% (or their local figure) of gross income as being a safe mortgage repayment figure.
I worked out the Australian one at about 35%, but you changed that to over 40% by using the Net income instead. And you can't see why...
Do you know why they all use the one system ?
Feb 10th 2010, 4:01 am
#282
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Re: Housing bubble in Australia
The ABS only quote up to Mar 2009, as they say "Estimates for the two most recent quarters of the HPI series are preliminary and subject to revision"
They are not prepared to use those figures unlike the Real Estate industry.
I recall a while ago you laughed at figures provided by either Residex or RpData, due to their outlandish figures.
You also ask why would Net figures confuse.
Possibly because in the UK, and almost all other countries, they quote figures like 30% (or their local figure) of gross income as being a safe mortgage repayment figure.
I worked out the Australian one at about 35%, but you changed that to over 40% by using the Net income instead. And you can't see why...
Do you know why they all use the one system ?
They are not prepared to use those figures unlike the Real Estate industry.
I recall a while ago you laughed at figures provided by either Residex or RpData, due to their outlandish figures.
You also ask why would Net figures confuse.
Possibly because in the UK, and almost all other countries, they quote figures like 30% (or their local figure) of gross income as being a safe mortgage repayment figure.
I worked out the Australian one at about 35%, but you changed that to over 40% by using the Net income instead. And you can't see why...
Do you know why they all use the one system ?
I did say that I'd only done it as a comparison using NET income because that is more real to people. I agree it is easier to use GROSS income as a worldwide standard due to differing taxes, N.I., pension contributions from or extra to wages etc. Using NET income obviously increases the % but I did make it clear that is was a comparison to your GROSS figures. Can't see the problem with that.
Still, if you read the article I've posted from Yahoo, you see that to buy a median priced city house in any other the 5 major cities with the median income, you would need 1.8 full time earners in Sydney, 1.7 in Melbourne, 1.5 in Brisbane, 1.4 in Adelaide and 1.4 in Perth.
Considering 50% of people in Australia earn less than the median income, it is obvious to see why so many people cannot afford to get on the ladder at any level due to unaffordability.
Feb 10th 2010, 4:08 am
#283
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Posts: 32
Re: Housing bubble in Australia
simple; less new arrivals -> less house demand -> less prices
Last edited by oz2canada; Feb 10th 2010 at 4:13 am.
Feb 10th 2010, 5:00 am
#284
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Re: Housing bubble in Australia
Looking back from 1980 when Sydney was $56,500, if prices had gone up by 1.0% per month, these would have been the prices.
Jan-80 $56,500
Jan-90 $186,472
Jan-00 $615,429
Jan-10 $2,031,155 (more than 4 times the actual)
The actual average rise has been more like 0.58% per month.
However, if you only look from 1990 to 2010 the actual average rise has been more like 0.495% per month.
Over time, large fluctuations are balanced by lower ones.
Jan-80 $56,500
Jan-90 $186,472
Jan-00 $615,429
Jan-10 $2,031,155 (more than 4 times the actual)
The actual average rise has been more like 0.58% per month.
However, if you only look from 1990 to 2010 the actual average rise has been more like 0.495% per month.
Over time, large fluctuations are balanced by lower ones.
Take my landlord baby boomer for instance. His house I rent is fully paid off and is worth about $620K. He charges me $400 a week rent. Well, if the dumbass sold this house then he'd earn at least double what i'm paying him in a basic Ubank account earning 5.60% interest! Some people haven't a clue.
You are so right ABCDiamond!! Over time large fluctuations are balanced by lower ones. Seeing we've had one almighty housing boom over the last 6 years in Perth then common sense tells me the time for a correction is due.
Feb 10th 2010, 5:13 am
#285
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Joined: Dec 2006
Location: Randwick
Posts: 208
Re: Housing bubble in Australia
From what I can remember, house prices need to rise 7.6% every year for 10 years to eventually double in price. You can get a term deposit of 8% thesedays and without the hassle and cost of maintaining a home - food for thought, eh?
Take my landlord baby boomer for instance. His house I rent is fully paid off and is worth about $620K. He charges me $400 a week rent. Well, if the dumbass sold this house then he'd earn at least double what i'm paying him in a basic Ubank account earning 5.60% interest! Some people haven't a clue.
You are so right ABCDiamond!! Over time large fluctuations are balanced by lower ones. Seeing we've had one almighty housing boom over the last 6 years in Perth then common sense tells me the time for a correction is due.
Take my landlord baby boomer for instance. His house I rent is fully paid off and is worth about $620K. He charges me $400 a week rent. Well, if the dumbass sold this house then he'd earn at least double what i'm paying him in a basic Ubank account earning 5.60% interest! Some people haven't a clue.
You are so right ABCDiamond!! Over time large fluctuations are balanced by lower ones. Seeing we've had one almighty housing boom over the last 6 years in Perth then common sense tells me the time for a correction is due.