Housing bubble in Australia
Feb 15th 2010, 12:11 am
#376
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Re: Housing bubble in Australia
I must admit it passed me by the 1st time but the 101 is a net salary rather than a gross. I think we need to find out how the net was calculated. Was it a published figure or was it calculated from average gross?
For me the figures are not adding up. And I know we're talking averages here so it could all be meaningless but...
given an average couple on the following nets
Male $1,353.00 pw
Female $1,103.60 pw
and a mortgage of $3530 per month (which seems to be calculated on a mortgage rate of 8.something) then the mortgage represents roughly 3530/4*(1353+1103) = 36% of net income
Is this mortgage stress? To be honest it's hard to work out whether the 30% level relates to net or gross income. Most articles don't seem to make this clear. Some explicitly say gross.
For me the figures are not adding up. And I know we're talking averages here so it could all be meaningless but...
given an average couple on the following nets
Male $1,353.00 pw
Female $1,103.60 pw
and a mortgage of $3530 per month (which seems to be calculated on a mortgage rate of 8.something) then the mortgage represents roughly 3530/4*(1353+1103) = 36% of net income
Is this mortgage stress? To be honest it's hard to work out whether the 30% level relates to net or gross income. Most articles don't seem to make this clear. Some explicitly say gross.
Once Net was brought in to the equation I did foresee some confusion
I could do but don't see the point. It's an Australian board and as the majority of posters live here, they are interested in what affects them here not others in the UK or Canada. I only did this calculation to make it more real. I know it is done on gross wages worldwide but don't see the point in that. I'm not trying to make it look worse.
Feb 15th 2010, 12:15 am
#377
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Posts: 9,316
Re: Housing bubble in Australia
Added in is the complication of disposable and discretionary, someone on 160k does not have twice the disposable as someone on 80k but they probably do have more discretionary.
Feb 15th 2010, 12:23 am
#378
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Joined: Apr 2005
Location: Melbourne
Posts: 4,553
Re: Housing bubble in Australia
I know. The world tends to talk in gross. Which is not perfect but as you suggest you have to choose one or the other as it gets complicated and confusing.
Added in is the complication of disposable and discretionary, someone on 160k does not have twice the disposable as someone on 80k but they probably do have more discretionary.
Added in is the complication of disposable and discretionary, someone on 160k does not have twice the disposable as someone on 80k but they probably do have more discretionary.
Feb 15th 2010, 12:44 am
#379
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Posts: 9,316
Re: Housing bubble in Australia
Now if only we could find out why."Further deterioration is expected." Not exactly screaming up the market eh?
Feb 15th 2010, 12:50 am
#380
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Posts: 672
Re: Housing bubble in Australia
Leading property analyst Michael Matusik says Gold Coast is going to stagnate for 2 years - shocker!!!
Well, I'd never thought I'd hear this from an property analyst! Perhaps the tide is turning, eh? Everyone is finally realisng that all good things have to come to an end.
Michael Matusik is saying exactly what I've been saying on this forum although I feel this could be Australia wide generally and not just the GC. Of course, they'll be pockets of housing that do well, regardless.
http://www.goldcoast.com.au/article/...al-estate.html
Well, I'd never thought I'd hear this from an property analyst! Perhaps the tide is turning, eh? Everyone is finally realisng that all good things have to come to an end.
Michael Matusik is saying exactly what I've been saying on this forum although I feel this could be Australia wide generally and not just the GC. Of course, they'll be pockets of housing that do well, regardless.
http://www.goldcoast.com.au/article/...al-estate.html
Right time to renovate, Gold Coast
Travis Lye, Commercial Property Editor | February 14th, 2010
WITH house prices tipped to stagnate in the next two years, now is the right time for Gold Coast homeowners to 'stay put and renovate', says a leading property analyst.
Matusik Property Insights director Michael Matusik said housing was no longer affordable for the average Queenslander and rising interest rates were slowing the market down.
"The next couple of years look somewhat uncertain," he said.
"Investor interest is already waning and many second and subsequent buyers are unlikely to trade up unless employment improves dramatically, which is unlikely given rising interest rates.
Speaking at an Urban Development Institute of Australia function in Surfers Paradise yesterday, Mr Matusik gave a conservative perspective of housing price increases across the Coast.
He said that at a time when many analysts were predicting hefty rises of up to 15 per cent, homeowners could expect an increase of about 5 per cent in the next two years.
"We are probably going to see prices stagnate ... they may rise a little bit but certainly not the 10 per cent to 15 per cent many are saying," he said.
"The number of first home buyers are falling and investors are not stepping in to fill the gap."
Mr Matusik said the reasons for the market stagnating were rising interest rates and banks asking for higher deposits.
"Interest rates will continue to rise ... by how much and fast is questionable and that is an issue for investors," he said.
"They (investors) are not buying because of uncertain growth and it is expensive -- they don't have the large deposits needed by the banks.
"Many investors also look at rental growth and they are shocked by the price (of a house) and disappointed by the yield."
Mr Matusik said the rental market was not as 'tight as the real estate industry would have us believe'.
"Price and rental growth will be minimal for the year ahead," he said.
Travis Lye, Commercial Property Editor | February 14th, 2010
WITH house prices tipped to stagnate in the next two years, now is the right time for Gold Coast homeowners to 'stay put and renovate', says a leading property analyst.
Matusik Property Insights director Michael Matusik said housing was no longer affordable for the average Queenslander and rising interest rates were slowing the market down.
"The next couple of years look somewhat uncertain," he said.
"Investor interest is already waning and many second and subsequent buyers are unlikely to trade up unless employment improves dramatically, which is unlikely given rising interest rates.
Speaking at an Urban Development Institute of Australia function in Surfers Paradise yesterday, Mr Matusik gave a conservative perspective of housing price increases across the Coast.
He said that at a time when many analysts were predicting hefty rises of up to 15 per cent, homeowners could expect an increase of about 5 per cent in the next two years.
"We are probably going to see prices stagnate ... they may rise a little bit but certainly not the 10 per cent to 15 per cent many are saying," he said.
"The number of first home buyers are falling and investors are not stepping in to fill the gap."
Mr Matusik said the reasons for the market stagnating were rising interest rates and banks asking for higher deposits.
"Interest rates will continue to rise ... by how much and fast is questionable and that is an issue for investors," he said.
"They (investors) are not buying because of uncertain growth and it is expensive -- they don't have the large deposits needed by the banks.
"Many investors also look at rental growth and they are shocked by the price (of a house) and disappointed by the yield."
Mr Matusik said the rental market was not as 'tight as the real estate industry would have us believe'.
"Price and rental growth will be minimal for the year ahead," he said.
Feb 15th 2010, 1:21 am
#381
Guest
Posts: n/a
Re: Housing bubble in Australia
The substance.... the proportion of arrears rose by 0.02 per cent to 1.23 per cent
Feb 15th 2010, 1:24 am
#382
Account Closed
Joined: Jun 2005
Posts: 9,316
Re: Housing bubble in Australia
Leading property analyst Michael Matusik says Gold Coast is going to stagnate for 2 years - shocker!!!
Well, I'd never thought I'd hear this from an property analyst! Perhaps the tide is turning, eh? Everyone is finally realisng that all good things have to come to an end.
Michael Matusik is saying exactly what I've been saying on this forum although I feel this could be Australia wide generally and not just the GC. Of course, they'll be pockets of housing that do well, regardless.
http://www.goldcoast.com.au/article/...al-estate.html
Well, I'd never thought I'd hear this from an property analyst! Perhaps the tide is turning, eh? Everyone is finally realisng that all good things have to come to an end.
Michael Matusik is saying exactly what I've been saying on this forum although I feel this could be Australia wide generally and not just the GC. Of course, they'll be pockets of housing that do well, regardless.
http://www.goldcoast.com.au/article/...al-estate.html
Feb 15th 2010, 1:27 am
#383
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Joined: May 2003
Location: Alloha snack bar
Posts: 24,246
Re: Housing bubble in Australia
Hubbly Bubbly.
Feb 15th 2010, 1:35 am
#384
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Joined: Nov 2009
Location: Dullsville
Posts: 672
Re: Housing bubble in Australia
In the last couple of weeks the property spruiking that I'd normally expect in The West and other online newspapers has been abnormally quiet. Strange,... and bearish articles like this have started appearing more often in the last 3 weeks or so. Weird,...... perhaps it DOES looks like TSHF anytime soon?!!
Feb 15th 2010, 1:57 am
#385
Banned
Joined: May 2007
Location: Sydney
Posts: 564
Re: Housing bubble in Australia
I must admit it passed me by the 1st time but the 101 is a net salary rather than a gross. I think we need to find out how the net was calculated. Was it a published figure or was it calculated from average gross?
For me the figures are not adding up. And I know we're talking averages here so it could all be meaningless but...
given an average couple on the following nets
Male $1,353.00 pw
Female $1,103.60 pw
and a mortgage of $3530 per month (which seems to be calculated on a mortgage rate of 8.something) then the mortgage represents roughly 3530/4*(1353+1103) = 36% of net income
Is this mortgage stress? To be honest it's hard to work out whether the 30% level relates to net or gross income. Most articles don't seem to make this clear. Some explicitly say gross.
For me the figures are not adding up. And I know we're talking averages here so it could all be meaningless but...
given an average couple on the following nets
Male $1,353.00 pw
Female $1,103.60 pw
and a mortgage of $3530 per month (which seems to be calculated on a mortgage rate of 8.something) then the mortgage represents roughly 3530/4*(1353+1103) = 36% of net income
Is this mortgage stress? To be honest it's hard to work out whether the 30% level relates to net or gross income. Most articles don't seem to make this clear. Some explicitly say gross.
To get the NET income, I applied normal Tax rates to both wages to leave a NET wage. The combined NET wage = $101,000
The figure of $3530 is based on a mortgage for $510,000 at a rate of 6.76 over 25 years.
With a combined NET wage of $101,000, take home pay per month for this couple would be = $8417 (101,000 / 12)
Therefore, % of NET income paid as mortgage = 41.9%
Work out for yourself whether you think this is mortgage stress. Remember, this is based on 2 FULL time Sydney wages and a mortgage (capital and interest repayments) over 25 years.
Feb 15th 2010, 2:00 am
#386
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Posts: 708
Re: Housing bubble in Australia
Personally I thought this 'article' was a pile of poorly written crap. A sad mixture of numbers, dates, and mortgage classes which did little to justify the writers fee.
If this 'report' had landed on my desk, the writer would find themselves invited to a 'one on one' session.
Though I did enjoy the last paragraph.....
"A rebound in property prices in the second half of calendar 2009 drove an improvement in arrears beyond 90 days as lenders' ability to sell properties improved, Fitch said."
So from the 'evidence' ........ arrears beyond 90 days have been reduced, because the lenders have foreclosed on the 90 day delinquent borrowers.
Nothing to see here folks...........move along
If this 'report' had landed on my desk, the writer would find themselves invited to a 'one on one' session.
Though I did enjoy the last paragraph.....
"A rebound in property prices in the second half of calendar 2009 drove an improvement in arrears beyond 90 days as lenders' ability to sell properties improved, Fitch said."
So from the 'evidence' ........ arrears beyond 90 days have been reduced, because the lenders have foreclosed on the 90 day delinquent borrowers.
Nothing to see here folks...........move along
Feb 15th 2010, 2:14 am
#387
Account Closed
Joined: Jun 2005
Posts: 9,316
Re: Housing bubble in Australia
When I did this calculation, I did say it was a comparison to ABC's figures which use the normal GROSS figures in their calculation. I was just interested to see what the % of NET income would be needed.
To get the NET income, I applied normal Tax rates to both wages to leave a NET wage. The combined NET wage = $101,000
The figure of $3530 is based on a mortgage for $510,000 at a rate of 6.76 over 25 years.
With a combined NET wage of $101,000, take home pay per month for this couple would be = $8417 (101,000 / 12)
Therefore, % of NET income paid as mortgage = 41.9%
Work out for yourself whether you think this is mortgage stress. Remember, this is based on 2 FULL time Sydney wages and a mortgage (capital and interest repayments) over 25 years.
To get the NET income, I applied normal Tax rates to both wages to leave a NET wage. The combined NET wage = $101,000
The figure of $3530 is based on a mortgage for $510,000 at a rate of 6.76 over 25 years.
With a combined NET wage of $101,000, take home pay per month for this couple would be = $8417 (101,000 / 12)
Therefore, % of NET income paid as mortgage = 41.9%
Work out for yourself whether you think this is mortgage stress. Remember, this is based on 2 FULL time Sydney wages and a mortgage (capital and interest repayments) over 25 years.
At that sort of net income the tax rate would be just under 25% is that what you used?
I'm still not sure how the $101 relates to the average weekly figures you gave later.
Male $1,353.00 pw
Female $1,103.60 pw
That adds up to $10,642 per calendar month.
I'm aware that we're talking averages here. And I'm not entirely convinced that they are relevant to anything.
Last edited by MartinLuther; Feb 15th 2010 at 2:29 am.
Feb 15th 2010, 2:29 am
#388
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Joined: Apr 2005
Location: Melbourne
Posts: 4,553
Re: Housing bubble in Australia
Actually I haven't.
In the last couple of weeks the property spruiking that I'd normally expect in The West and other online newspapers has been abnormally quiet. Strange,... and bearish articles like this have started appearing more often in the last 3 weeks or so. Weird,...... perhaps it DOES looks like TSHF anytime soon?!!
In the last couple of weeks the property spruiking that I'd normally expect in The West and other online newspapers has been abnormally quiet. Strange,... and bearish articles like this have started appearing more often in the last 3 weeks or so. Weird,...... perhaps it DOES looks like TSHF anytime soon?!!
It is not difficult to see just how crazy house prices are in Melbourne at the moment. I have absolutely no problem renting in the meantime and I don't consider it "dead-money" or "money-down-the-drain" as some people would like to think.
Feb 15th 2010, 2:31 am
#389
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Joined: May 2007
Location: Sydney
Posts: 564
Re: Housing bubble in Australia
I doubt that you would be able to get one anyway
A couple with $80,000 income could only get a $320,000 mortgage at St George the other week.
So $101k would probably get a maximum of $404k at that rate.
This couples monthly figures were:
$6,667 Gross Joint Income
$5,404 Net Joint Income
$2,097 Mortgage repayment (31.4% of gross wage)
$3,307 Balance, left after mortgage, for the monthThe average Male NSW, Full time wage is $1,353.00 or $70,356 per year.
Not sure about Sydney itself, but some old ATO figures show:
2003-04 fiscal year,
$88,658 Mosman (more than double the national average $38,719)
$70,765 Woollahra
$69,000 Hunters Hill
Working on the same multiples, I calculate those areas to be, in May 2009, about:
$109,841 Mosman
$87,673 Woollahra
$85,486 Hunters Hill
And remember these are averages of all workers wages, including 15 year old part-timers.
My estimate of Male full time only would be:
$160,373 Mosman
$128,007 Woollahra
$124,814 Hunters Hill
A couple with $80,000 income could only get a $320,000 mortgage at St George the other week.
So $101k would probably get a maximum of $404k at that rate.
This couples monthly figures were:
$6,667 Gross Joint Income
$5,404 Net Joint Income
$2,097 Mortgage repayment (31.4% of gross wage)
$3,307 Balance, left after mortgage, for the month
Not sure about Sydney itself, but some old ATO figures show:
2003-04 fiscal year,
$88,658 Mosman (more than double the national average $38,719)
$70,765 Woollahra
$69,000 Hunters Hill
Working on the same multiples, I calculate those areas to be, in May 2009, about:
$109,841 Mosman
$87,673 Woollahra
$85,486 Hunters Hill
And remember these are averages of all workers wages, including 15 year old part-timers.
My estimate of Male full time only would be:
$160,373 Mosman
$128,007 Woollahra
$124,814 Hunters Hill
Based on the NET Household income of $101,000 with 2 dependents.
Westpac : Ask for monthly income after tax. Willing to borrow $703,893 over 25 years.
Based on the GROSS Household income of $127,000 with 2 dependents.
Commonwealth bank : Ask for annual gross wages. Willing to borrow $466,825 over 25 years
ANZ : Ask for gross wages. Willing to borrow $513,000 over 25 years. This is with $4000 a month living expenses. Figure quoted would increase or decrease depending on your situation.
NAB : Ask for gross wages. Willing to borrow $488,100 over 25 years. $4000 a month living expenses entered.
These figures increase quite a bit if you choose to pay over 30 years.
Last edited by swigski; Feb 15th 2010 at 2:33 am. Reason: x
Feb 15th 2010, 2:33 am
#390
Account Closed
Joined: Jun 2005
Posts: 9,316
Re: Housing bubble in Australia
Personally I thought this 'article' was a pile of poorly written crap. A sad mixture of numbers, dates, and mortgage classes which did little to justify the writers fee.
If this 'report' had landed on my desk, the writer would find themselves invited to a 'one on one' session.
Though I did enjoy the last paragraph.....
"A rebound in property prices in the second half of calendar 2009 drove an improvement in arrears beyond 90 days as lenders' ability to sell properties improved, Fitch said."
So from the 'evidence' ........ arrears beyond 90 days have been reduced, because the lenders have foreclosed on the 90 day delinquent borrowers.
Nothing to see here folks...........move along
If this 'report' had landed on my desk, the writer would find themselves invited to a 'one on one' session.
Though I did enjoy the last paragraph.....
"A rebound in property prices in the second half of calendar 2009 drove an improvement in arrears beyond 90 days as lenders' ability to sell properties improved, Fitch said."
So from the 'evidence' ........ arrears beyond 90 days have been reduced, because the lenders have foreclosed on the 90 day delinquent borrowers.
Nothing to see here folks...........move along