Society/Culture Australian Property Prices to Crash?

_Swoon

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Why do these comparisons always come back to 'not everyone'?

If you find the point in the last 100 years where the ratio between median house price and median income was at its lowest, I'll find you someone who couldn't afford to buy a house then.

https://mccrindle.com.au/insights/blog/40-years-of-change-1975-to-today/



Repayments on an $680,000 loan (assuming you can find a $170,000 20% deposit) with a low low interest rate of 3.5% would be about $3000 a month, or $36k per year - which is nearly 2/3 of the net salary of your median $72k income earner. Sure that person could afford to move out to Mt Druitt or something (where the median is still high and the average person living there earns much less than the median wage) but where does that leave the below median/average income earners? People seem to think it's fine if everyone gets shunted down a rung on the pecking order.
A big driver in the change is how much the banks have been willing to lend and how they've been willing to do it, ie. 20% deposits are basically no more than a suggestion these days and you could buy that median priced house with 10% or 5% with a surety from your parents. It's just so incredibly easy to get finance these days, even after the royal commission.
 

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Espe

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Interests rates were approx. 15% during the 80's and the average wage around $400 per week. Not everyone could even buy a house for $80k - in Adelaide suburbia.

Main issue today is that we spend more in entertainment and luxuries than necessary, specifically living within our means.
I said in the post, even when you account for interest rate differentiation, it's still far worse of these days.

Not at all
I know youd like to simplify that purely based on income to price ratio.
There are numerous other factors to consider.

One of the points in that post you conveniently ignored is that you can still buy a house for 200k

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Show me a house within an hour or hour and a half to Melbourne CBD (where generally the work is) that is 200k. Or is that a lifestyle choice? Do younger people just have to 'suck it up', get a shit kicker job somhwhere in the middle of no where to find this lucrative 200k house?
 

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I said in the post, even when you account for interest rate differentiation, it's still far worse of these days.



Show me a house within an hour or hour and a half to Melbourne CBD (where generally the work is) that is 200k. Or is that a lifestyle choice? Do younger people just have to 'suck it up', get a shit kicker job somhwhere in the middle of no where to find this lucrative 200k house?
I saw a young bloke at the casino put the equivalent of a 20% median Melbourne house deposit on the roulette table over a 15 minute period.


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evo

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Why do these comparisons always come back to 'not everyone'?

If you find the point in the last 100 years where the ratio between median house price and median income was at its lowest, I'll find you someone who couldn't afford to buy a house then.

https://mccrindle.com.au/insights/blog/40-years-of-change-1975-to-today/



Repayments on an $680,000 loan (assuming you can find a $170,000 20% deposit) with a low low interest rate of 3.5% would be about $3000 a month, or $36k per year - which is nearly 2/3 of the net salary of your median $72k income earner. Sure that person could afford to move out to Mt Druitt or something (where the median is still high and the average person living there earns much less than the median wage) but where does that leave the below median/average income earners? People seem to think it's fine if everyone gets shunted down a rung on the pecking order.
the difference is four decades ago there werent two people paying the mortgage, there was only one.
 

evo

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Isn’t the comparison done on household income though?
yes, but household income 4 decades ago was one income earner now its two.

Scotland was making the argument that now on the oaverage income( 72k) its harder to sustain the average mortgage. Thats true. But most people are buying houses the days on two incomes. Thats one of the main reasons houses have risen so much since then.

The other reasons are inflation (which is always underreported by government agencies), and immigration to the larger cities.
 

Scotland

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the difference is four decades ago there werent two people paying the mortgage, there was only one.
I don't accept this is simply the case now and that's that. There are still plenty single income households, so I don't think a blanket 'well every household has two incomes' approach is accurate. No doubt two income households has had an effect on prices but the biggest spike in un-affordability (not sure that's a word) has been in the last 10-15 years and women have been working a lot longer than that.

That being said, if you accept that the dynamic is now both parents working instead of dad works mum stays home and looks after the kids then you also need to factor in childcare which AFAIK isn't cheap.
 

evo

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I don't accept this is simply the case now and that's that. There are still plenty single income households, so I don't think a blanket 'well every household has two incomes' approach is accurate. No doubt two income households has had an effect on prices but the biggest spike in un-affordability (not sure that's a word) has been in the last 10-15 years and women have been working a lot longer than that.

That being said, if you accept that the dynamic is now both parents working instead of dad works mum stays home and looks after the kids then you also need to factor in childcare which AFAIK isn't cheap.
What do u think has caused this un-affordability then? Seems to me it is primarily inflation, followed by 1 income families becoming 2 and immigration concentrated in larger cities
 

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Scotland

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What do u think has caused this un-affordability then? Seems to me it is primarily inflation, followed by 1 income families becoming 2 and immigration concentrated in larger cities
A number of factors.

Two income families, foreign investment, cheap credit, lax lending practices, an unhealthy cultural obsession with real estate wealth, negative gearing, sustained economic prosperity, high immigration.
 

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What do u think has caused this un-affordability then? Seems to me it is primarily inflation, followed by 1 income families becoming 2 and immigration concentrated in larger cities
A number of factors.

Two income families, foreign investment, cheap credit, lax lending practices, an unhealthy cultural obsession with real estate wealth, negative gearing, sustained economic prosperity, high immigration.
Can't discount the influence of NIMBYism / corrupt councils either.
 

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A big driver in the change is how much the banks have been willing to lend and how they've been willing to do it, ie. 20% deposits are basically no more than a suggestion these days and you could buy that median priced house with 10% or 5% with a surety from your parents. It's just so incredibly easy to get finance these days, even after the royal commission.
So finance is still easy, why has the bubble burst?

OR

A number of factors.

Two income families, foreign investment, cheap credit, lax lending practices, an unhealthy cultural obsession with real estate wealth, negative gearing, sustained economic prosperity, high immigration.
 

Royal Flush

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A number of factors.
lax lending practices, an unhealthy cultural obsession with real estate wealth, negative gearing, .
Why do you insist on perpetuating garbage.

What the hell is an unhealthy cultural obsession with real estate wealth?
Is this something you read or something you just made up.




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Scotland

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Why do you insist on perpetuating garbage.

What the hell is an unhealthy cultural obsession with real estate wealth?
Is this something you read or something you just made up.
Irony alert.

Ever turned on a TV? Every single real estate, home renovation etc. show (and there are many) is about "adding value". People are obsessed with how much their houses are worth, even if it adds nothing to their quality of life. People think that if they live in a $1m house they are somehow better off.

We also have tens of thousands of property "investors" because we culturally and practically tax people who actually contribute to the economy. Earn more money, pay more tax. Start a business and employ people, pay more tax. Earn a fat corporate wage and people are put off. So instead you invest in real estate and create "wealth" through hoarding and speculation. It's a govt endorsed ponzi scheme that adds zero societal benefit.
 

Kwality

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Irony alert.

Ever turned on a TV? Every single real estate, home renovation etc. show (and there are many) is about "adding value". People are obsessed with how much their houses are worth, even if it adds nothing to their quality of life. People think that if they live in a $1m house they are somehow better off.

We also have tens of thousands of property "investors" because we culturally and practically tax people who actually contribute to the economy. Earn more money, pay more tax. Start a business and employ people, pay more tax. Earn a fat corporate wage and people are put off. So instead you invest in real estate and create "wealth" through hoarding and speculation. It's a govt endorsed ponzi scheme that adds zero societal benefit.
Damn important if you are selling or buying. I'm selling & the back yard is being returfed.:eek:

Baby boomer wealth on inflation that started galloping under Gough.
 

Scotland

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Damn important if you are selling or buying. I'm selling & the back yard is being returfed.:eek:

Baby boomer wealth on inflation that started galloping under Gough.
Zero sum game for the most part.

My house is worth more than I paid for it, but if I went to buy the place next door it wouldn't be worth what it was when I bought mine. That's how inflation works.
 

Kwality

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Zero sum game for the most part.

My house is worth more than I paid for it, but if I went to buy the place next door it wouldn't be worth what it was when I bought mine. That's how inflation works.
Hope you are right, I'm about to test selling & buying in a depressed (prices) market here in Melbourne.
 

Maggie5

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Hope you are right, I'm about to test selling & buying in a depressed (prices) market here in Melbourne.
That is what I am in the middle of. Pretty disappointing but when I think that I am also buying, might not be so bad. Swings and merry-go-round. I am in the Northern suburbs, close to transport, schools, shops. One buyer wanted for investment but block 2.5m short in frontage.

Agents came around yesterday and said the market is really bad, house that would have easily sold for over a million in October last year have dropped 150-200K.
 

Royal Flush

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Irony alert.

Ever turned on a TV? Every single real estate, home renovation etc. show (and there are many) is about "adding value". People are obsessed with how much their houses are worth, even if it adds nothing to their quality of life. People think that if they live in a $1m house they are somehow better off.

We also have tens of thousands of property "investors" because we culturally and practically tax people who actually contribute to the economy. Earn more money, pay more tax. Start a business and employ people, pay more tax. Earn a fat corporate wage and people are put off. So instead you invest in real estate and create "wealth" through hoarding and speculation. It's a govt endorsed ponzi scheme that adds zero societal benefit.
Three long paragraphs to describe some sort of "government indorsed ponzi " scheme and DIY TV.

Look out gardening Australia, you're to blame for our "housing crisis"

And you actually believe your bullshit

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Property prices always go up. They double every 7 to 10 years. Forever!
(For Melbourne) Every 10 years they should double although if you bought in the early 90s that window may not have doubled but would have balanced out by now.

Your salary and house should double every 10 years making the value of your home relatively the same.
 
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