Property Watch

[bunsen burner]

Some of your reasons are just laughable, but I refuse to engage with you on principle as you got personal straight off the bat.

So let's debate them. If they are so laughable then you should take advantage and show that I am wrong.

Tell me, at what age do you think it's reasonable for a person to be able to afford property?

and at what age do you think previous generations were buying?

I just don't understand why so many Gen Y think they are entitled to be able to afford a property in Hawthorn, or Floreat, or wherever they grew up. This has never been the case. So why do Gen Y think they are entitled to be able to do this?

 

[LouisCK]

I'm not sure where you're getting your leaps of logic from bunsen.

 

[bunsen burner]

It's a bit rich claiming my arguments are ridiculous whilst refusing to discuss them. Your credibility is non existent.

 

[LouisCK]

If I'm not seen as credible by you, I can live with that.

 

[Scotland]

Something the average Joe and Betty can't do working a 9 to 5 job. The Govt has provided opportunity available to average people.

At the expense of average people. There is no creation of wealth, it's just speculative hoarding.

How are 50 year old Joe and Betty any more important than 25 year old Joe and Betty?

You know these gen Y people? They actually think they should be able to afford a house in a good suburb in their early to mid 20s. Show me an era when this has been possible? And don't say North Perth in the 70s as it was slummy shit dump.

Right. So your argument is 'the best I could afford was a quarter acre 5km from the city but it was shit so you be happy with your 250sqm up Marmion Ave'. It's funny how older generations accuse Gen Y of selfishness when their prosperity is dependent upon a system that provides less to each generation which comes through.

And then if they were to get their affordable housing you can be come their mid 30s they be wanting it to go up.

Typical Gen Y. "I am entitled to an easy ride" and "I have been lucky enough to grow up in a prosperous period with an excellent standard of living but now dump all that stuff so I can get a cheap house".

Some of Gen Y will save their arses off, buy a house, and watch it and their wealth appreciate over time. They will become to appreciate our housing market and will watch the next generation come in and complain about house pricing.

The same can be said of every generation.

Then some of Gen Y have had it so easy they won't be able to do the hard yards and will whine about their lot for the rest of time (because no one blames themselves if they are in a shit predicament). I won't feel sorry for the weak.

The same can be said for every generation.

I see. So supply and demand is an 80s thing like a hypercoloured tshirt? That's a new slant on things I guess.

Rents are a factor of income, whether you like it or not. You can't just increase them forever if your costs go up.

Apples to oranges.

- cars sooner or later become un roadworthy and therefore appreciate to 0. Houses can last for 1000s of years
- There is actually a premium on new houses/units. They're worth more
- Part of the parcel of housing price is land and location. These are tied in and allow buildings to appreciate

Did you not read the bit about the Govt providing an opportunity for average Joes to build wealth?

Yeah, I read that bit. Did you miss the part about it not being wealth creation at all?

The whole point of your 'wealth creation' system is a big game of keepings off. It's like Monopoly, except you went round the board a few times before your opponents started.

It's cyclical and it's just bad luck Gen Y aren't having a massive boom. Welcome to the real world. Another one will come.

The goose is cooked. We already have some of the most expensive housing in the World and some of the highest wages in the World. These aren't going to boom again any time soon.

I couldn't give a crap about whiny Gen Ys with car loans and credit cards who 'can't' save deposits etc. I likewise couldn't give a crap about whiny Gen Ys who 'can't' get jobs despite having visible tatts & piercings and 'typin lyk dis u no'. Life's hard, get on with it.

What irks me is the constant lectures from older generations who worked no harder or smarter than I or many others do that think they are the shit because the system is stacked in their favour and they lived through the most prosperous era in recent history.

 

[LouisCK]

Scotland, you just described what its like to follow the MFC.

 

[bunsen burner]

At the expense of average people. There is no creation of wealth, it's just speculative hoarding.

How are 50 year old Joe and Betty any more important than 25 year old Joe and Betty?

They aren't. Why do you think I think they are?

25 year old Joe and Betty have more or less the same opportunity 50 year old Joe and Betty had 25 years ago.

25 year old Joe and Betty will be in more or less similar position as 50 year old Joe and Betty in 25 years if they can get the f*** over themselves.

Right. So your argument is 'the best I could afford was a quarter acre 5km from the city but it was shit so you be happy with your 250sqm up Marmion Ave'. It's funny how older generations accuse Gen Y of selfishness when their prosperity is dependent upon a system that provides less to each generation which comes through.

Nope. Not my argument. But whilst on the subject, inner city areas have gentrified and are very expensive due to supply and demand (close proximity to city, restaurants, cafes, public transport etc)

When I was a kid I went and played footy against Carine. Sand hills with some new hosuing development. Now that area is expensive and considered close to the city.

This is how shit works. Back then Carine was the sticks and young families had to move out from Subiaco to the likes of carine, Duncraig, and Kingsley.

Bit rich blaming former generations for that. Also a bit rich Gen Y thinking they should be able to pick up a house in Subiaco in their mid 20s.

The same can be said of every generation.

Yep, that's the pattern.

Yeah, I read that bit. Did you miss the part about it not being wealth creation at all?

But it is. It's creating wealth for individuals. You do know what capitalism is, yes?

The whole point of your 'wealth creation' system is a big game of keepings off. It's like Monopoly, except you went round the board a few times before your opponents started.

Welcome to life.

The goose is cooked. We already have some of the most expensive housing in the World and some of the highest wages in the World. These aren't going to boom again any time soon.

And?

What irks me is the constant lectures from older generations who worked no harder or smarter than I or many others do that think they are the shit because the system is stacked in their favour and they lived through the most prosperous era in recent history.

This is where you are wrong.

I've never claimed to be better. I have merely claimed I took my opportunity when it presented and Gen Y can too. The opportunity is for all and just because we are in a holding period isn't really an excuse for failure or to blame every previous generation who has taken their opportunity.

The opportunity will rear it's head again so it's typical early 20 Gen Y who think they are entitled to it now. Maybe they wait until they are mid 30s? Sounds pretty typical to me.

Perhaps Gen Y need their expectation realigned? That's all I am lecturing.

 

[Scotland]

They aren't. Why do you think I think they are?

25 year old Joe and Betty have more or less the same opportunity 50 year old Joe and Betty had 25 years ago.

25 year old Joe and Betty will be in more or less similar position as 50 year old Joe and Betty in 25 years if they can get the f*** over themselves.

Yeah, nah.

More or less the same opportunity? More or less similar position in 25 years? Really?

I'm sure the opportunities to climb the ladder are endless starting off in Darch.

Nope. Not my argument. But whilst on the subject, inner city areas have gentrified and are very expensive due to supply and demand (close proximity to city, restaurants, cafes, public transport etc)

When I was a kid I went and played footy against Carine. Sand hills with some new hosuing development. Now that area is expensive and considered close to the city.

This is how shit works. Back then Carine was the sticks and young families had to move out from Subiaco to the likes of carine, Duncraig, and Kingsley.

Bit rich blaming former generations for that. Also a bit rich Gen Y thinking they should be able to pick up a house in Subiaco in their mid 20s.

The whole system is based on perpetual growth. Carine was the sticks, so was Bull Creek. Etc. I'm not arguing that these places were amazing a generation ago or that each generation shouldn't start at the bottom and work their way up, but there is a big difference between the bottom being 10km from the city with a metro area population of 700,000 and the bottom being 40km out with a million more people thrown into the equation.

Yep, that's the pattern.

Why are you Gen Y bashing then? Shouldn't you be critical of every generation?

But it is. It's creating wealth for individuals. You do know what capitalism is, yes?

It's not 'creating' anything. It's hardly capitalism if the government props up the market, anyway. You want to collect houses and cover your own losses, go right ahead. That's capitalism.

Welcome to life.

The rich make the rules, the poor get what they're given? So much for the 'Great Australian Dream'.

And?

You're adamant things are cyclical and Gen Y will have their day, just like previous generations have. I maintain that previous generations got rich quick (for want of a better phrase) and what was available to them will never be available again.

This is where you are wrong.

I've never claimed to be better. I have merely claimed I took my opportunity when it presented and Gen Y can too. The opportunity is for all and just because we are in a holding period isn't really an excuse for failure or to blame every previous generation who has taken their opportunity.

It's not about being better, it's about the system and circumstances being in your favour. I know teachers and nurses in their 50s and 60s with multiple properties and minimal debt it any. Do you really think their 25-30 year old equivalents will find themselves in the same position?

It's not a case (sure, for some it is but as we've established there are 'some' in every generation) of Gen Y saying 'You're rich and old, I'm young and what you've got naow!'. It's a case of Gen Y saying 'If I work just as hard as you did when you were young by the time I get to your age I won't be in the same position. Let's have a good hard look at the system and see why that is'.

The opportunity will rear it's head again so it's typical early 20 Gen Y who think they are entitled to it now. Maybe they wait until they are mid 30s? Sounds pretty typical to me.

Perhaps Gen Y need their expectation realigned? That's all I am lecturing.

And in the interim? We're not talking about shares and savings interest rates here, we're talking about housing. Everyone has to live somewhere. If you're independent then you either buy or rent, and typically that involves income transfer from Gen Y to Gen X/boomers.

Plenty of Gen Y could do with a reality check, but they're far from the only generation in that basket.

 

[bunsen burner]

Yeah, nah.

More or less the same opportunity? More or less similar position in 25 years? Really?

I'm sure the opportunities to climb the ladder are endless starting off in Darch.

That's how it's been for every other generation. Seems like you're expecting waaay too much.

The whole system is based on perpetual growth. Carine was the sticks, so was Bull Creek. Etc. I'm not arguing that these places were amazing a generation ago or that each generation shouldn't start at the bottom and work their way up, but there is a big difference between the bottom being 10km from the city with a metro area population of 700,000 and the bottom being 40km out with a million more people thrown into the equation.

So the problem seems to be population growth and urban sprawl rather than negative gearing?

Everyone wants to live in a Subiaco, North Perth, Maylands, Vic park etc because it's close to the city (and most likely work), close to public transport, close to ammenities etc.

What makes you think these areas should be affordable to people in their 20s? Surely it's all about supply and demand and if 25 year old "Cooper" grew up in Canning Vale and works for Australia Post on $53k per year then maybe he needs to accept that Darch is an ok option?

Why are you Gen Y bashing then? Shouldn't you be critical of every generation?

Because we are talking about property and all I see is Gen Y whining that it's so unfair that they can't afford a trendy townhouse in Leederville.

The rich make the rules, the poor get what they're given? So much for the 'Great Australian Dream'.

Not in this case. The opportunity is there for everyone. 30 years people thought buying out in Carine was too far out. In that respect nothing has changed. Perth is so big that the next generation will make money from high density units and the demands to live close to the CBD.

The truth is not everybody will be able to take advantage of the opportunity but that doesn't mean we should not have it available. Better the gap between have and have nots widen rather none of us have these opportunities.

You're adamant things are cyclical and Gen Y will have their day, just like previous generations have. I maintain that previous generations got rich quick (for want of a better phrase) and what was available to them will never be available again.

Well you are wrong.

I was in my 20s in the 1990s. 17% interest rates, recession, shit housing market. People bang on about unaffordability not but try by a house at 17%. My time came in my 30s. it will come for Gen Y too. I don't think we'll have another boom like that for a long time but the opportunities to build wealth through property and shares will be there.

Not sure why you think Gen Y must have their day in the sun now? I remember the Brisbane property market was flat for 15 years. Nothing has changed except we are in a different part of the cycle.

It's not about being better, it's about the system and circumstances being in your favour. I know teachers and nurses in their 50s and 60s with multiple properties and minimal debt it any. Do you really think their 25-30 year old equivalents will find themselves in the same position?

I almost guarantee it.

I can't believe how short sighted you are. These people probably bought in their 30s so have owned for 20 - 30 years. That's a lot of compounding over cycles. I'm 100% sure if "Cooper" bought a $500k unit in Embleton today, then in 30 years time they would probably have no debt and the unit would be worth $2.5m.

It's not a case (sure, for some it is but as we've established there are 'some' in every generation) of Gen Y saying 'You're rich and old, I'm young and what you've got naow!'. It's a case of Gen Y saying 'If I work just as hard as you did when you were young by the time I get to your age I won't be in the same position. Let's have a good hard look at the system and see why that is'.

It's easy to say in hindsight because the results are on the board. But do you think Dave and Carol who bought property in 1983 for $100k thought it was cheap? Back then there were naysayers like you saying "OMG, $100k, that's crazy, it won't still be going up!"

The more things change the more they stay the same.

And in the interim? We're not talking about shares and savings interest rates here, we're talking about housing. Everyone has to live somewhere.

Rent. Work hard. Save money. Dump your foxtel, stop buying consumer goods, stop racking up credit card debt, take your lunch to work. Save deposit. Buy house mid 30s.

I'm not seeing the problem. I'm just seeing incessant Gen Y whining.

 

[Scotland]

That's how it's been for every other generation. Seems like you're expecting waaay too much.

Yes, unreasonable to expect that for the same level of hard work and sacrifice that one generation shouldn't be worse than the previous...

So the problem seems to be population growth and urban sprawl rather than negative gearing?

The system is founded on perpetual growth. Negative gearing is a mechanism to keep it going.

Everyone wants to live in a Subiaco, North Perth, Maylands, Vic park etc because it's close to the city (and most likely work), close to public transport, close to ammenities etc.

Yes.

What makes you think these areas should be affordable to people in their 20s? Surely it's all about supply and demand and if 25 year old "Cooper" grew up in Canning Vale and works for Australia Post on $53k per year then maybe he needs to accept that Darch is an ok option?

I'm sure "Cooper's" boss who worked the same job at Australia Post 25 years ago and bought a house on a 500 sqm block 10km from the city shares your view.

Because we are talking about property and all I see is Gen Y whining that it's so unfair that they can't afford a trendy townhouse in Leederville.

No, that's what you're hearing. I don't have a 5 storey mansion on the river, it's a constant niggle. You can call it Gen Y envy if you want, but it's not about 'you have - I want', it's about 'you had, I can't have - why is that?'. Why blindly accept a system which makes it harder for each generation coming through to benefit the previous?

Not in this case. The opportunity is there for everyone. 30 years people thought buying out in Carine was too far out. In that respect nothing has changed. Perth is so big that the next generation will make money from high density units and the demands to live close to the CBD.

Time will tell. Right now higher density development in established areas is held up by red tape. Allowing more subdivision, higher density etc. would promote construction of new dwellings and provide houses for people to live in, yet we don't do it. Funny that. Not many people in desirable areas that are keen on higher density going up in their street, either. Again, funny that.

The truth is not everybody will be able to take advantage of the opportunity but that doesn't mean we should not have it available. Better the gap between have and have nots widen rather none of us have these opportunities.

Would you support the govt subsidising you to buy all the food and water in Australia to sell it back to the population?

Well you are wrong.

I was in my 20s in the 1990s. 17% interest rates, recession, shit housing market. People bang on about unaffordability not but try by a house at 17%. My time came in my 30s. it will come for Gen Y too. I don't think we'll have another boom like that for a long time but the opportunities to build wealth through property and shares will be there.

Find me a comparable house that is 2-3 times my salary and I'll buy it at 17% interest rates tomorrow. Interest rates go up and down, loan principals do not. Nevermind 'it was expensive in my day too', the interest on a loan against an average unit at 17% is more than the average Joe takes home. Must've been some high income earners back when interest rates were 17%!

We won't see the same prosperity of recent decades again. Ever. As I said, the goose is cooked. It's not chicken little stuff, it's reality. My house will not be worth millions in a decade or two.

I almost guarantee it.

I can't believe how short sighted you are. These people probably bought in their 30s so have owned for 20 - 30 years. That's a lot of compounding over cycles. I'm 100% sure if "Cooper" bought a $500k unit in Embleton today, then in 30 years time they would probably have no debt and the unit would be worth $2.5m.

It's easy to say in hindsight because the results are on the board. But do you think Dave and Carol who bought property in 1983 for $100k thought it was cheap? Back then there were naysayers like you saying "OMG, $100k, that's crazy, it won't still be going up!"

The more things change the more they stay the same.

Your last quote sums it up. Your argument is founded on 'well it happened in the past, so it will happen again in the future'. It doesn't work like that.

How much were Dave and Carol earning in 1983? How did that compare to other developed nations? What did our currency look like? What economic conditions did we have at the time? Etc.

Right now we have low unemployment, high wages, low interest rates, high immigration, high property values and a high property value to wage ratio. It's hardly a recipe that says growth is around the corner. These factors (and others) drive the market.

A $500k unit in Embleton today has already doubled, perhaps even tripled in value in the last decade. In order to be worth $2.5m in 30 years it has to increase in value roughly 5.5% each year for the next 3 decades on top of that.

Why will it increase 5 fold in 30 years? Who will buy it when it does? A guy on a good wage of $100k might buy the $500k unit in 2013, but in 2043 he'll be up for 5 times the interest. Will his salary be 5 times as much? I doubt it. Either wages continue to grow or the multiplier does. The factors driving the former just aren't there, and there is a logical limit to the latter.

Brush it off as 'short sighted' if you want, but 'history repeats' is not an argument worth acknowledging. History may well repeat, but it will be driven by something.

Rent. Work hard. Save money. Dump your foxtel, stop buying consumer goods, stop racking up credit card debt, take your lunch to work. Save deposit. Buy house mid 30s.

Preaching to the converted. I'm critical of the system, but that doesn't mean I'm not making the best of it as is possible.

I'm not seeing the problem. I'm just seeing incessant Gen Y whining.

That's quite evident.

 

[bunsen burner]

Yes, unreasonable to expect that for the same level of hard work and sacrifice that one generation shouldn't be worse than the previous...

It's not different. It's round about the same. You just don't want to accept it.

In my 20s the property market was flat and there were 17% interest rates. I had to wait until my 30s until things started moving. Yet Gen Y are crying on want an easier deal now?

The system is founded on perpetual growth. Negative gearing is a mechanism to keep it going.

If there was no growth there would be no investors. Net result would be about the same. The weak links wouldn't be able to afford housing still.

Yes.

But why do you think Gen Y have some sort of right to be able to afford to buy in Subiaco in their early 20s? Previous generations couldn't. Why should Gen Y?

The last Generation had to buy out at Joondalup, the one before Duncraig, the one before Karinyup and so on. It's all relative - as population has grown each next generation average affordability moves further out. And now you think Gen Y should be parachuted in to the top of the tree.

You arrogance and delusion is simply astounding.

I'm sure "Cooper's" boss who worked the same job at Australia Post 25 years ago and bought a house on a 500 sqm block 10km from the city shares your view.

And Copper's Cooper's boss bought a house 5 km from the CBD 25 years before that.

There are now 2m people in Perth. Land close to the city is in high demand. People on average wages in their 20s can't expect to be able to afford that land.

Again, your arrogance and delusion is simply astounding.

No, that's what you're hearing. I don't have a 5 storey mansion on the river, it's a constant niggle. You can call it Gen Y envy if you want, but it's not about 'you have - I want', it's about 'you had, I can't have - why is that?'. Why blindly accept a system which makes it harder for each generation coming through to benefit the previous?

I've told you why it is. Population growth and supply and demand. You just can't accept it because you have delusions of entitlement.

Do you think I went and bought my first house in the suburb I grew up in? I couldn't afford it. I am not entitled to go and buy premium property in my 20s or 30s.

We won't see the same prosperity of recent decades again. Ever. As I said, the goose is cooked. It's not chicken little stuff, it's reality. My house will not be worth millions in a decade or two.

Sure it will.

How much were Dave and Carol earning in 1983? How did that compare to other developed nations? What did our currency look like? What economic conditions did we have at the time? Etc.

They had kids. Carol was stay at home Mum, Dave earnt $14k pa. They didn't have Foxtel, mobile phone contracts, all the latest mod cons, dave took his lunch to work and they were skint for the first 10 years of paying off their loan.

That was the relity then and the reality is similar today.

Right now we have low unemployment, high wages, low interest rates, high immigration, high property values and a high property value to wage ratio. It's hardly a recipe that says growth is around the corner. These factors (and others) drive the market.

Firstly, Sydney market is moving as I type. It will be a short lived little spurt. This pattern will likely continue for next 10 years. Mostly flat, with a few short spurts. It will grow slowly. And if it's flat for 10 years then there will be a boom. Either way, result is more or less same.

A $500k unit in Embleton today has already doubled, perhaps even tripled in value in the last decade. In order to be worth $2.5m in 30 years it has to increase in value roughly 5.5% each year for the next 3 decades on top of that.

On top of that? At 5.5% it will be worth $2.5 in 30 years. Inflation runs at 4%. An average of 5.5% is not unreasonable.



Didn't bother reading the rest of your shit. When you finally get proven wrong, make sure you remember me.

 

[Scotland]

It's not different. It's round about the same. You just don't want to accept it.

In my 20s the property market was flat and there were 17% interest rates. I had to wait until my 30s until things started moving. Yet Gen Y are crying on want an easier deal now?

What was it, delusion and arrogance?

You had 17% interest rates, oh noes. Remind me again how long they lasted...

If there was no growth there would be no investors. Net result would be about the same. The weak links wouldn't be able to afford housing still.

A system not based on perpetual growth favours the productive. Work hard, save, buy a house. Pay it off, save, buy a better house. Etc.

But why do you think Gen Y have some sort of right to be able to afford to buy in Subiaco in their early 20s? Previous generations couldn't. Why should Gen Y?

The last Generation had to buy out at Joondalup, the one before Duncraig, the one before Karinyup and so on. It's all relative - as population has grown each next generation average affordability moves further out. And now you think Gen Y should be parachuted in to the top of the tree.

You arrogance and delusion is simply astounding.

Irony in your last statement.

Like I've been saying, you advocate a system where the 'bottom' gets worse for each generation coming through. That is the basis for your 'wealth creation'. In your game of Monopoly not only do you go around the board a few times before your opponents, you change the rules so they work in your favour.

Do you deny that the system encourages concentration of wealth per generation? It's not rich vs poor or haves vs have nots, it's whoever is born first wins.

And Copper's Cooper's boss bought a house 5 km from the CBD 25 years before that.

There are now 2m people in Perth. Land close to the city is in high demand. People on average wages in their 20s can't expect to be able to afford that land.

Again, your arrogance and delusion is simply astounding.

More irony.

You carry on like it's rich vs poor envy, but it's merely a case of wealth concentration.

Cooper can't buy a house 10km from the city because his boss's generation already bought them all. OK, but you missed the part about Cooper competing with his boss's generation for his house in Darch, because they are all 'astute investors' who are subsidised by the government to compete with him. Cooper decides to save and rent, but those 'astute investors' charge rents so high that he's no better off. Cooper and Coopette decide if they're going to be out a lot of money then location is key and decide to look closer to the city at an old 1950s dump they can demolish and subdivide to give them a smaller block than Cooper's boss had, and another they can sell to cover some of the costs. Conveniently, they can't do that because Cooper's boss's generation don't want their inner city area changing from how it was in the 1960s... So Cooper goes back to buying in Darch, and in 25 years time his house increases in value (though not nearly as much as he'd hoped) and he joins in on the 'wealth creation' scheme. He is now the supervisor at Australia Post and his 25 year old Cooper Jr is looking for a house. All the 'good' areas like Darch are now too expensive, so Cooper Jr is looking at somewhere between Bindoon and Gingin. Sure, due to poor planning by previous generations he has to spend 3-4 hours commuting every day, but back in the day of Cooper Sr Sr Sr houses in Nedlands were expensive too, and that 10 minute drive down Stirling Hwy with the 7 other cars on the road wasn't easy. So Cooper Jr is competing with Cooper who has become an 'astute investor', and Cooper's boss is still in the game too. Sure, Cooper's boss is well into retirement now and not long from the grave, but he'll just pass down his wealth to the next generation of his family who will keep the cycle going... do you see where the system is leading? at all?

Your 'weath creation' is driven by making each generation that comes through poorer.

I've told you why it is. Population growth and supply and demand. You just can't accept it because you have delusions of entitlement.

Do you think I went and bought my first house in the suburb I grew up in? I couldn't afford it. I am not entitled to go and buy premium property in my 20s or 30s.

Yawn. It's not about 'premium' property. It's about starting out getting shitter and more expensive with time.

Sure it will.

Yeah, nah. If prices keep rapidly outstripping wage growth we'll end up in a scenario where no one can afford to buy anything. It will be great if my house is 'worth' $5m, but who will I sell it to? Remember that new demand is stimulated by those that don't own anything to start with.

They had kids. Carol was stay at home Mum, Dave earnt $14k pa. They didn't have Foxtel, mobile phone contracts, all the latest mod cons, dave took his lunch to work and they were skint for the first 10 years of paying off their loan.

That was the relity then and the reality is similar today.

They mustn't have been as good with money as you are making out. Wages more than doubled in the decade following 1983, and it was a fairly steady increase over time.

House prices can do whatever the hell they want if my salary is going to go up 8% a year for the next decade. Can't see it myself, but if I dismiss all economic factors and tell myself 'it happened in the past' then it will come true.

Firstly, Sydney market is moving as I type. It will be a short lived little spurt. This pattern will likely continue for next 10 years. Mostly flat, with a few short spurts. It will grow slowly. And if it's flat for 10 years then there will be a boom. Either way, result is more or less same.

OK.

On top of that? At 5.5% it will be worth $2.5 in 30 years. Inflation runs at 4%. An average of 5.5% is not unreasonable.

House prices will outstrip inflation forever. How is it that people don't see this?

Prices going up with inflation year on year isn't unreasonable at all. Prices going up well above inflation for a period then continuing to rise above inflation for decades? Optimistic.

Didn't bother reading the rest of your shit. When you finally get proven wrong, make sure you remember me.

If you're still around in 30 years time I'll be sure to bump this thread.

Actually as a wealthy land owner I'll get one of my 25 year old peasant workers to do it for me.

 

[Lyyynnnchy]

I'm with Scotland on this one, just cant see Australian property prices continuing to rise above wage growth, just not going to happen. There comes a time when it has to stop and that time will come soon.

US property for me at the moment, although that is rising ridiculously quickly at the moment

 

[Lyyynnnchy]

So that 2 bedroom unit in Embleton goes to $2.5 million in 30 years. At 6.5% interest, thats $13,000 payable per month or $156,000pa. With inflation, for a bank to be comfortable with that, imo you will need to be earning in excess of $250,000pa.

I'm assuming a 2 bed apartment in Embleton will be considered an "average" dwelling by then so if thats the average dwelling, the average wage will need to be around the $250,000 mark.

It's fanciful thinking the average wage will go from $60k to $250k over the next 30 years. It's just not going to happen

 

[sabre_ac]

It's fanciful thinking the average wage will go from $60k to $250k over the next 30 years. It's just not going to happen

So that 2 bedroom unit in Embleton goes to $2.5 million in 30 years. At 6.5% interest, thats $13,000 payable per month or $156,000pa. With inflation, for a bank to be comfortable with that, imo you will need to be earning in excess of $250,000pa.

I'm assuming a 2 bed apartment in Embleton will be considered an "average" dwelling by then so if thats the average dwelling, the average wage will need to be around the $250,000 mark.

It's fanciful thinking the average wage will go from $60k to $250k over the next 30 years. It's just not going to happen

That's 5% growth per year and inflation is historically around 3%, so you probably have a point.

You probably need to take into account that areas considered middle class in 30 years will be quite different to now.

I don't think your taking into account the fact that in 30 years areas considered middle class are going to be different. The beauty of property is that things that make it valuable (Public transport, proximity to schools/hospitals, high end shops, density) build with time. Hence middle class locations for one generations can become up middle class for another.

 

[Lyyynnnchy]

That's 5% growth per year and inflation is historically around 3%, so you probably have a point.

You probably need to take into account that areas considered middle class in 30 years will be quite different to now.

I don't think your taking into account the fact that in 30 years areas considered middle class are going to be different. The beauty of property is that things that make it valuable (Public transport, proximity to schools/hospitals, high end shops, density) build with time. Hence middle class locations for one generations can become up middle class for another.

I dont think a 2 bedroom apartment in Embleton is going to ever be consider anything more than an average property.

 

[Scotland]

To the bunsen burner's of the world factors like wage growth don't matter. Property went up faster than inflation in the past therefore it will do so forever. End of story. Australian wages are astronomical by world standards now. We must be planning to devalue the shit out of our currency if we intend on bumping them up 500% over the next few decades...

I don't think your taking into account the fact that in 30 years areas considered middle class are going to be different. The beauty of property is that things that make it valuable (Public transport, proximity to schools/hospitals, high end shops, density) build with time. Hence middle class locations for one generations can become up middle class for another.

The 'beauty' of property is skewed by the 'need' for perpetual growth. If Perth stabilised at 1m or 1.5m people or whatever then areas like Maylands, Subiaco etc. which were not previously desirable would still become so through gentrification. Some people want space, others want to live near the ocean, others want to live near the city etc. I would dispute that all valuable areas necessarily build with time. The Western suburbs of Perth are pretty valuable and are about as resistant to change/development as anywhere on Earth. They like many areas in Perth and Australia are desirable by exclusivity.

The idea that you start small & build equity, trade-up & build equity (once, twice, a dozen times - doesn't matter) then trade-down as you get older went out the window years ago.

Start small, the value of your property will rise faster than inflation, use artifical equity to buy again and rent out, the value of that property will rise faster than inflation, use that artificual equity to buy again and rent out... and the cycle repeats - to a point.

The system is designed so that with every generation the overall population increases and there are more generations competing for the same property. It allows 'astute investors' to 'create wealth'. The problem is, it has a practical end which many (ie those that have got rich off it) refuse to acknowledge.

Without wage growth keeping up with asset growth, the system eventually falls down. That won't necessarily be tomorrow or 5 years time or 20 years time but it will happen. You can bring in 10,000 people a week, but if none of them can afford to buy/rent houses then what happens? There is no realised capital growth if there is no turnover, and there is no turnover without first homebuyers joining the bottom end of the market. People dismiss concerns over the house price to wage multiplier constantly rising as Gen Y whinging, but it's actually vitally important to the market.

I'd love to know what percentage of Perth home owners could not afford to buy their own home again today compared to 10, 20, 30 years ago.

 

[bunsen burner]

I'm with Scotland on this one, just cant see Australian property prices continuing to rise above wage growth, just not going to happen. There comes a time when it has to stop and that time will come soon.

Not sure where I said that? Care to find it and quote it?

 

[bunsen burner]

So that 2 bedroom unit in Embleton goes to $2.5 million in 30 years. At 6.5% interest, thats $13,000 payable per month or $156,000pa. With inflation, for a bank to be comfortable with that, imo you will need to be earning in excess of $250,000pa.

30 years ago people were earning $15k pa. What's so hard about believing people will earn $250 in 30 years time? And that's if you figures are correct.

Actually your figures are incorrect. Assuming 20% down, at 6.5% it's $130k per annum. Not that big a stretch. Remember we're pulling figures out of arses.

 

[bunsen burner]

I dont think a 2 bedroom apartment in Embleton is going to ever be consider anything more than an average property.

Let's not get literal. I plucked Embleton out of my arse. Been there once.

 

[bunsen burner]

To the bunsen burner's of the world factors like wage growth don't matter. Property went up faster than inflation in the past therefore it will do so forever. End of story. Australian wages are astronomical by world standards now. We must be planning to devalue the shit out of our currency if we intend on bumping them up 500% over the next few decades...

Let's not start making things up.

 

[Scotland]

Let's not start making things up.

You're the one suggesting that your (made up) $500k unit in Embleton is going to be worth $2.5m.

Who is going to buy it and how much will they earn to do so? Either you think the multiplier will continue to grow and a 2 bedroom unit in Embleton will be domain of the rich, or you think wages will rise a lot. Surely you can build a case why you think either of these might happen.

I'm with Scotland on this one, just cant see Australian property prices continuing to rise above wage growth, just not going to happen. There comes a time when it has to stop and that time will come soon.

Not sure where I said that? Care to find it and quote it?

On top of that? At 5.5% it will be worth $2.5m in 30 years. Inflation runs at 4%. An average of 5.5% is not unreasonable.

Unless you're somehow expecting wage growth to outstrip inflation then it looks like you think another 30 years of prices rising above inflation is in order.

 

[bunsen burner]

You're the one suggesting that your (made up) $500k unit in Embleton is going to be worth $2.5m.

A very loose example not meant to be taken literally. We both know that my point is property will continue to rise over the long term as will wages.

Who is going to buy it and how much will they earn to do so? Either you think the multiplier will continue to grow and a 2 bedroom unit in Embleton will be domain of the rich, or you think wages will rise a lot. Surely you can build a case why you think either of these might happen.

Patterns. it's roughly on par for what has been happening for the last 100 years.

Unless you're somehow expecting wage growth to outstrip inflation then it looks like you think another 30 years of prices rising above inflation is in order.

Over the long term, yes. That doesn't mean I'm saying it will do it every year.

 

[Lyyynnnchy]

30 years ago people were earning $15k pa. What's so hard about believing people will earn $250 in 30 years time? And that's if you figures are correct.

Actually your figures are incorrect. Assuming 20% down, at 6.5% it's $130k per annum. Not that big a stretch. Remember we're pulling figures out of arses.

I think you'll find the majority are putting down a 5 to 10% deposit these days. I based the $150,000 off a 10% deposit. No chance in 30 years the average wage is going to be 250k. It's only going to flatline or even decrease over the next 5

 

[Scotland]

A very loose example not meant to be taken literally. We both know that my point is property will continue to rise over the long term as will wages.

No shit, who says otherwise?

You are contending property will rise more than inflation.

Patterns. it's roughly on par for what has been happening for the last 100 years.

Real estate values have outpaced wages for 100 years and this won't stop? OK.

Over the long term, yes. That doesn't mean I'm saying it will do it every year.

No one is expecting it to grow an exact x% every single year, but you think that on average rising more than wages is the norm and will remain the norm? OK...

I can go back to 1970 with year by year data for my city.

Perth median house price 1970: $17,500
Perth median house price 2013: $510,000
43 years = 8.2% per year.

I could extrapolate back 57 years previous which would give a house price of $200. Yeah, nah.

Perth average weekly earnings 1970: $79.20
Perth average weekly earnings 2013: $1692.40
43 years = 7.4% per year.

Let's assume this happens for the next 30 years.

Perth median house price 2043: $5.4m
Perth average weekly earnings 2043: $14.4k

Following a historical trend of 43 years we will have houses increasing 10.5 fold in 30 years. Cool. Wages will increase 8.5 fold in the same time. Cool.

$750k average wage.

Let's instead apply your (made up) 4% inflation to wages and 5.5% growth to housing which might be closer to a longer term trend.

Perth median house price 2043: $2.54m
Perth average weekly earnings 2043: $5.49k

As stated, 6.5% interest on 80% of $2.54m (good luck saving $500k, but anyway...) is about $132k. If you earn $285k p.a. you see $179k. So Joe Average apparently gets a loan to spend 73% of his after tax earnings on mortgage interest (no principal, house prices always go up...), and has $900 a week to live off - or about $270 in today's money. Sounds plausible...

I'm staggered that even people with vested interests actually believe property values can increase higher than the rate of inflation forever...