Society/Culture Australian Property Prices to Crash?

[Bombermania]

Of course there's issues with it. It's a massive shift in thinking. But what we're doing currently is not sustainable.

Companies sign up knowing its free rent for a fixed term only. Once a city is established the free market will drive rents as it does currently.

Low cost accommodation for the poor? Where are thye going to build that? There's no space inner city, so it's going to need to be a ghetto out near Drouin where there's land but no jobs.

It's insane that 40% of our population lives in 2 cities in a country this big.

There is space and the government's town planners have been using it to build greater density and there is the Fisherman Bend site.

 

[Deliverance]

Let's go with this garbage estimate.
1.1 million becomes 1 million


How much more affordable is that?

On Pixel 4a (5G) using BigFooty.com mobile app

OK, you know more than SQM.

How far removed from reality are you that you think 100k is not significant to most people?

 

[iluvparis]

Ok, take the median house hold income and apply the same % of saving.

You should still be able to save 30-40k a year in which you would have a 250k Deposit in say 6 years.

it is doable.

People just don't want to sacrifice. a big reason why house hold income is so much less than the average individual income is because a lot of women choose to stay at home with their kids instead of going back to work and contributing salary. This is fine, but its also a choice they are willing to make.

if you aren't saving 50-60% of what you are making than you are living above your means.

Note that I obviously agree housing prices to income is beyond a joke, hence why i'm suggesting things need to be done to stem the housing price increases.

It staggers me how easily people are able to extrapolate their own position in the world to the rest of society and assume it is the same.

The average saving rate is generally about 5% and you want to claim with a straight face that people who aren't saving 50% of their income are living beyond their means.

It is a laughable argument all around.

 

[Ned_Flanders]

of course you make a loss. No sh*t you do.

But when properties are going year on year record growth it is worth taking the loss between repayments and rent when the property price is going up so drastically. You cover the loss on the basis that the property price continually goes up. which is forecasted to be 17% this year ALONE.

This is why it is so unfair to compare a boomers work ethic against a Gen Y or Z. The boomer doesn't work harder, they just have the benefit of Equity on their side to be able to maximize their money.

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Soooo much wrong here

Firstly not every property goes up in price. We have one that we bought 10 years ago that we would sell for a loss today. And that's before we add in the interest losses and inflation.

Secondly, you need to understand what this stat represents. It's not the value of property increases, its the value of property of SOLD. It does not include the changes in value for those properties not on the market or that are passed in.

This matters because last year a massive number of properties were withdrawn from sale. Now I'm not talking due to covid restrictions, I'm talking because the prices being bid were so low that the usual post auction reneg never happened. I was looking at some which were withdrawn from market prior to sale because the indicators were so bad.

I was personally effected by this, we wanted to sell all our investment properties but we cancelled because we couldn't get any buyers at the price we needed. So we rent, and wait to see what changes this year.

Since the gfc, if you rent and invest the savings in a basic fund you will do better over 20 years than if you bought. This is unheard of in Australia. And I will tell you right now, if renting is a better long term financial choice, investors are not making 17% pa.

 

[Suspense]

5) high speed rail link from brisbane to melbourne (via newcastle, sydney, canberra, wodonga)

Aside from the different population and immigration metrics, two reasons for Japanese flat-lining Housing prices:

1. HSR

We find that Shinkansen connections negatively affected land prices in Japanese prefectures. We regressed the log of land price on the Shinkansen variable. The results are presented in Table 6. We find that a Shinkansen connection in the previous year reduced land prices by 33% in the current year. Regressions using changes in land prices rather than log-levels show similar results (Table 7). A decentralization story would be consistent with the results we find: the Shinkansen helped Japanese cities to decentralize, which in return reduced the property prices in cities from what they otherwise might have been.

2. NIMBYs have less power

Over the past decade, Japan has consistently built almost 1 million new homes and apartments each year, according to official statistics. In the U.S., where the population is more than double Japan’s, 1.25 million new homes were built in 2018.

Unfortunately for other countries wrangling with housing affordability crises, the Japanese formula is not easily exportable. Many of the cities where demand for housing is the stiffest—New York, London, San Francisco and Stockholm, for example—impose strict rules on land use and new construction, partly due to local political pressure.

But in Japan, the responsibility of regulating urban space largely shifted to the central government in 2002 under the Urban Renaissance policy. Mr. Sorensen said it had held at bay the “not in my backyard” movements that often inhibit housing construction in the U.S. through their influence over local governments.

 

[HirdsTheWord]

It staggers me how easily people are able to extrapolate their own position in the world to the rest of society and assume it is the same.

The average saving rate is generally about 5% and you want to claim with a straight face that people who aren't saving 50% of their income are living beyond their means.

It is a laughable argument all around.

who the hell is saving 5% of what they make?

That's is ******* laughable and no wonder a lot of people are struggling.

Barefoot investor recommends saving at least 40% for instance. Very good read.

 

[Royal Flush]

OK, you know more than SQM.

How far removed from reality are you that you think 100k is not significant to most people?

now you are deliberately being annoying for the sake of it.
NG and CG Discount have been discussed ad nauseam.
Most of your points have been proven inacurate at the least.

100k is a lot.
100k is not a lot in regards to a 1 million property. People normally have a range, That range is based on their deposit
and how much the bank is willing to lend. in this example 900k-1.15 mil with a 200k deposit.

the difference between a property thats 1.1 mill or 1 mill is usually a few streets away.

EXPLAIN TO US HOW THIS HAS MADE HOUSING MORE AFFORDABLE?

 

[Deliverance]

now you are deliberately being annoying for the sake of it.
NG and CG Discount have been discussed ad nauseam.
Most of your points have been proven inacurate at the least.

100k is a lot.
100k is not a lot in regards to a 1 million property. People normally have a range, That range is based on their deposit
and how much the bank is willing to lend. in this example 900k-1.15 mil with a 200k deposit.

the difference between a property thats 1.1 mill or 1 mill is usually a few streets away.

EXPLAIN TO US HOW THIS HAS MADE HOUSING MORE AFFORDABLE?

You. "A property is 100k cheaper"
Also you. "How is that making hosing more affordable?"

Trolling surely.

 

[FRUMPY]

Then they are doing something wrong. We saved just over 50k a year between us for 5 years to get our deposit, if you average it out. We were 23 when we started saving. We obviously started out on less money after Graduating Uni but we steadily increased.

The Average Income in Australia is 88k. As a couple that's circa 180K.

Saving 50k of this is easily achievable. Yes you need need to make sacrifices along the way but really, its not that hard.

but what about the 2 daily coffees i buy from a cafe
but what about buying my lunch every day
but what about buying a new car
but what about going overseas annually
i cant work out why i cant afford a house deposit

 

[HirdsTheWord]

but what about the 2 daily coffees i buy from a cafe
but what about buying my lunch every day
but what about buying a new car
but what about going overseas annually
i cant work out why i cant afford a house deposit

Hard to give up the coffees but we defiantly didn't do the rest of it haha. maybe a good thing I don't like avocados.

Now that we are on very good incomes and have our house we have splurged on a car.

 

[FRUMPY]

who the hell is saving 5% of what they make?

That's is ******* laughable and no wonder a lot of people are struggling.

Barefoot investor recommends saving at least 40% for instance. Very good read.

You'd be amazed at the number of people who actually live beyond their means and then cry foul - i even brought up budgeting whether to have kids/more kids and people of BF couldnt believe people work out if they can afford kids before having any/more.

 

[HirdsTheWord]

You'd be amazed at the number of people who actually live beyond their means and then cry foul - i even brought up budgeting whether to have kids/more kids and people of BF couldnt believe people work out if they can afford kids before having any/more.

We read and follow the barefoot investor who recommends you save 40% of income and live off 60%. We increased our savings yo 60% and we still do pretty well. Obviously a bit of an outlier as our household income is significant.

works well for us.

Those only saving 5% as someone quoted previously seriously need to re look at their budget.

 

[Royal Flush]

You. "A property is 100k cheaper"
Also you. "How is that making hosing more affordable?"

Trolling surely.

Here we go again The looney merrygo round.
Why do you persist in doing this to yourself? Youve made enough foolish statements as it is.

Housing affordaility, is an issue at the lower end of the scale.
Not the high income earners.

 

[FRUMPY]

Here we go again The looney merrygo round.
Why do you persist in doing this to yourself? Youve made enough foolish statements as it is.

Housing affordaility, is an issue at the lower end of the scale.
Not the high income earners.

Agree, not sure there are many out there complaining about having to rent and not being able to buy a house because they can only get a loan for $900k and not the million required for their property of choice

 

[HirdsTheWord]

Here we go again The looney merrygo round.
Why do you persist in doing this to yourself? Youve made enough foolish statements as it is.

Housing affordaility, is an issue at the lower end of the scale.
Not the high income earners.

what do you define as high income earners?

 

[Royal Flush]

what do you define as high income earners?

200k plus

 

[HirdsTheWord]

200k plus

well I cant speak for everyone but our household income is 300K plus (if we hit our bonuses etc) and we certainly care about 100,000 lol

 

[Suspense]

Then they are doing something wrong. We saved just over 50k a year between us for 5 years to get our deposit, if you average it out. We were 23 when we started saving. We obviously started out on less money after Graduating Uni but we steadily increased.

The Average Income in Australia is 88k. As a couple that's circa 180K.

Saving 50k of this is easily achievable. Yes, you need need to make sacrifices along the way but really, its not that hard.

Pre-COVID, the median pre-tax wage was $61,025 (males) and $47,768 (females) for 24-34 year-olds.
That is $48,509 + $40,024 after tax ($88,533 household - nowhere near 180K).

A couple with no kids on a basic budget COL is around $43,160 - so yes, in that circumstance, it is possible to save a deposit over four to five years (earning next to nothing on your savings).

However:

• Add kids ("clock's ticking, Sarah") and it significantly starts to impact the ability to save. Even if the mother decides to go back to work, the cost of childcare is about $4-5k per year per child (accounting for govt subsidy)
• These are median wages - which means that half of the people in that age group don't have the same capacity to save for a deposit - even if they live on a budget.

 

[FRUMPY]

Pre-COVID, the median pre-tax wage was $61,025 (males) and $47,768 (females) for 24-34 year-olds.
That is $48,509 + $40,024 after tax ($88,533 household - nowhere near 180K).

A couple with no kids on a basic budget COL is around $43,160 - so yes, in that circumstance, it is possible to save a deposit over four to five years (earning next to nothing on your savings).

However:

• Add kids ("clock's ticking, Sarah") and it significantly starts to impact the ability to save. Even if the mother decides to go back to work, the cost of childcare is about $4-5k per year per child (accounting for govt subsidy)
• These are median wages - which means that half of the people in that age group don't have the same capacity to save for a deposit - even if they live on a budget.

No house, renting, living right up to or beyond their means.....and they decide to have kids......and then complain about not being able to afford anything....

thats got nothing to do with negative gearing im afraid.

 

[HirdsTheWord]

Pre-COVID, the median pre-tax wage was $61,025 (males) and $47,768 (females) for 24-34 year-olds.
That is $48,509 + $40,024 after tax ($88,533 household - nowhere near 180K).

A couple with no kids on a basic budget COL is around $43,160 - so yes, in that circumstance, it is possible to save a deposit over four to five years (earning next to nothing on your savings).

However:

• Add kids ("clock's ticking, Sarah") and it significantly starts to impact the ability to save. Even if the mother decides to go back to work, the cost of childcare is about $4-5k per year per child (accounting for govt subsidy)
• These are median wages - which means that half of the people in that age group don't have the same capacity to save for a deposit - even if they live on a budget.

Having Kids is a choice. If you choose to do it than you cannot turn around in the same breath and sook about housing prices. Everyone knows having kids is just about the most expensive thing you can do, outside of buying a house. Having kids is not an excuse to not being able to save for a house deposit.

If you want to own a house and you cant afford kids then don't have them.

Me and my wife deliberately waited until after we bought a house before we had our daughter, so we cam maximize our savings for a deposit. that's a choice we made.

 

[FRUMPY]

what do you define as high income earners?

I would class anyone earning over $100k as high earner tbh (or earning enough to be doing well) - then add to that if their is wife/husband has a job as well. Obviously there are different ranges of high earners as well, $200k+, $300k+ and so on.

 

[HirdsTheWord]

I would class anyone earning over $100k as high earner tbh (or earning enough to be doing well) - then add to that if their is wife/husband has a job as well. Obviously there are different ranges of high earners as well, $200k+, $300k+ and so on.

im in the 300k bracket and i certainly care about 100,000 movement on housing prices.

 

[Suspense]

No house, renting, living right up to or beyond their means.....and they decide to have kids......and then complain about not being able to afford anything....

thats got nothing to do with negative gearing im afraid.

The figures I gave were based on a household budget of $830 p.w (all costs incl.). Is that unreasonable?

 

[FRUMPY]

We read and follow the barefoot investor who recommends you save 40% of income and live off 60%. We increased our savings yo 60% and we still do pretty well. Obviously a bit of an outlier as our household income is significant.

works well for us.

Those only saving 5% as someone quoted previously seriously need to re look at their budget.

Ive never actually worked out how much we save as a % but i reckon it would be around 20-25% and always has been around that mark i reckon. My missus didnt work while she raised the kids (did some side work but bugger all) and we saved about the same %. Now she works full time (kids old enough to look after themselves to a degree) we can now afford the things we may have been going without and savings up maybe a fraction, but also paying off more of the home loan etc.

The plan is to buy a new home and rent this one out. The new home will be newer (dont think we'll build), bit bigger (two bathrooms and two toilets for starters) but in the same area. We just got a new caravan and planning for a wedding, so we hope to have enough for a decent deposit within 2-3 years - give or take.

 

[Deliverance]

well I cant speak for everyone but our household income is 300K plus (if we hit our bonuses etc) and we certainly care about 100,000 lol

I'd assume low income earners would care about 50k as well, but the guy can't see beyond himself.