Property Watch

[Scotland]

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

You're being too rational.

People got paid $5k pa in 1970 and get paid $88k pa now. 7.4% a year over 43 years happened before, it will happen again. That's how it works. Apparently.

 

[Lyyynnnchy]

Back in the 70s and 80s house prices may have been 2, 3 or at the very most 4 times people's wage. Now it's 7, 8 or 9 times. If property prices and wages follow that same trojectory, in 30 years time property prices will be 20 times the average wage. It's not going to happen, property would be unaffordable.

You nay say people will start to by within there means a little mire but the thing that has fuelled the large increase in property prices over the last 20 years is because of the exact opposite, people spending more than they should. It's not stable

 

[bunsen burner]

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

Let's wait and see. I agree on your 5 year forecast, but 30 years is a long long time.

 

[bunsen burner]

No shit, who says otherwise?

You are contending property will rise more than inflation.



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



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...

Why you being a massive ****? Again, you exploiting generalisations I have made and have tried to say I have made absolutes. I have never claimed the exact same increases over last 43% would be repeated. I actually took a rough estimation with some buffer built in taking into consideration today's inflated economy.

But if building straw arguments is your thing, go for your life.

You know, in every era there are people like you who say "no way, it can't keep going up! It's so expensive right now! But guess what over the long term it does keep going up. Wages, prices etc.

How bout you stop grandstanding and wait and see what happens. Everything I have said in the last 10 yaears on this very board has been accurate. Can't say the same for you.

 

[Dinner Plate]

Why you being a massive ****?

Wow. I thought West Coast fans were unpleasant when watching the footy, but this takes the cake.

 

[bunsen burner]

Wow. I thought West Coast fans were unpleasant when watching the footy, but this takes the cake.

Building straw arguments is **** behaviour.

 

[Scotland]

Why you being a massive ****? Again, you exploiting generalisations I have made and have tried to say I have made absolutes. I have never claimed the exact same increases over last 43% would be repeated. I actually took a rough estimation with some buffer built in taking into consideration today's inflated economy.

Given it's your MO it seems the appropriate way of engaging you. Your rough estimation is built on flawed logic. Regardless of where the extrapolation starts, the end result is the same. Interesting that even with a buffer to account for an inflated position today you think 6.5% growth a year for 30 years is likely, but that's an aside...

But if building straw arguments is your thing, go for your life.

You know, in every era there are people like you who say "no way, it can't keep going up! It's so expensive right now! But guess what over the long term it does keep going up. Wages, prices etc.

So I think wages and prices won't keep going up - cool. What was that word again, strawman?

How bout you stop grandstanding and wait and see what happens. Everything I have said in the last 10 yaears on this very board has been accurate. Can't say the same for you.

Everything? OK.

It's not difficult. You contend that house prices have historically increased greater than the rate of inflation (on average) and this can and will continue into the future.

Pick a starting house price. Pick a starting wage. Pick an inflation rate. Pick a growth rate for housing. Whatever your values, if the growth rate is higher than the inflation rate eventually you reach a point where the price:wage is so high that no one can afford to buy. How is it that people don't see this?

 

[Scotland]

Back in the 70s and 80s house prices may have been 2, 3 or at the very most 4 times people's wage. Now it's 7, 8 or 9 times. If property prices and wages follow that same trojectory, in 30 years time property prices will be 20 times the average wage. It's not going to happen, property would be unaffordable.

Yep. Factors such as increased two income households explain the increase, but they don't provide a justification for the trajectory to continue into the future. There is a practical limit and without turnover there is no realised growth.

You nay say people will start to by within there means a little mire but the thing that has fuelled the large increase in property prices over the last 20 years is because of the exact opposite, people spending more than they should. It's not stable

Prices have been driven up by speculation and the expectation that capital growth will provide equity which will allow for greater borrowing etc. Eventually an equilibrium has to be reached with income levels which are not rising exponentially. Mortgage interest has to be serviced one way or another.

 

[Power Raid]

Australia's house pricing is some of the most expensive in the world. Much of this is a result of favourable tax policy on property.

As the world continues its harmonisation of tax, will the world become more generous with property tax and gearing or will Australia tighten its provisions?

My guess is property tax will increase, rates will increase and negative gearing will be isolated and off set against capital gains rather than income.


Short term property will be tough, medium term property will be good and long term property could be quite painful.

 

[Smell The Glove]

Governments have to find tax revenues somewhere. Anyone who thinks that the impending retirements of scores of boomers, together with a large scale and unsustainable feminist welfare state and thousands of unemployable youths isn't going to have a major impact on house prices in this courty is totally deluded (ie. bunsen burner).

Not unless productivity in this country gets a rocket underneath it, and the standard of politics in this country suggests that's a long shot at best.

 

[JohnW]

I actually took a rough estimation with some buffer built in taking into consideration today's inflated economy.

Inflated economy? Overpriced? Continue going up? Not more difficult to buy?

If buying today caries the same difficulties that is did 30 years ago how is todays economy over inflated?

 

[Smell The Glove]

Inflated economy? Overpriced? Continue going up? Not more difficult to buy?

If buying today caries the same difficulties that is did 30 years ago how is todays economy over inflated?

BB's argument is like Swiss cheese mate- you could spend a month poking through all the holes. Scotland above has already tried.

 

[bunsen burner]

10 years ago people on the board were saying the same rubbish. They were wrong, I was right. In 10 years time you will disappear and some other arse hat will be telling me I'm wrong.

Yawn.

 

[Smell The Glove]

10 years ago people on the board were saying the same rubbish. They were wrong, I was right. In 10 years time you will disappear and some other arse hat will be telling me I'm wrong.

Yawn.

Nah, its more that your principal argument has been demonstrated to be illogically conceived at best.

At best, that is.

Yawn.

 

[bunsen burner]

Nah, its more that your principal argument has been demonstrated to be illogically conceived at best.

At best, that is.

Yawn.

So what's your claim to fame? Old enough to experience the cycles? Property investor? Degree in economics? Finance? Or none of the above?

 

[Smell The Glove]

So what's your claim to fame? Old enough to experience the cycles? Property investor? Degree in economics? Finance? Or none of the above?

Degree in economics.

And "old enough to experience the cycles" is merely a variation on "Back in my day sonny jim.......". In other words, an arrogrant old tool who has nothing to back up his argument in his CV except "life experiences".

 

[bunsen burner]

Degree in economics.

So you work at McDonalds?

And "old enough to experience the cycles" is merely a variation on "Back in my day sonny jim.......". In other words, an arrogrant old tool who has nothing to back up his argument in his CV except "life experiences".

It's nothing to do with "back in my day" but everything about experience and noticing patterns. If you're half smart you grow wiser as you grow older because you notice the patterns.

 

[Smell The Glove]

So you work at McDonalds?

I'd type a response here, but it doesn't seem worth it.

It's nothing to do with "back in my day" but everything about experience and noticing patterns. If you're half smart you grow wiser as you grow older because you notice the patterns.

Yeah, its not like I dont have the intelligence, education and wherewithal to research the Internet for housing data and trends.

No, apparently I have to go out an buy a shitty, overpriced house for that.

But I would definitely call you half-smart- I'll give you that.

 

[bunsen burner]

No, apparently I have to go out an buy a shitty, overpriced house for that.

Typical Gen Y. "Why can't I afford a nice house in an inner suburb in my 20s"

Any chance you could use your initiative? Go out and buy a house that gives you income as well as a place to live? It's easy to say previous generations had it given to them on a plate in hindsight now that we know the markets have moved but back then people took pretty much the same risks and there was naysayers like you back then saying property just couldn't keep going up.

I find a lot of economists think like you. One day you might just get it right.

 

[Scotland]

Nah, its more that your principal argument has been demonstrated to be illogically conceived at best.

At best, that is.

Yawn.

It happened in the past, it will happen in the future.

That is the 'property prices always go up more than inflation' argument.

It's a bit like arguing with a creationist.

 

[Smell The Glove]

Typical Gen Y. "Why can't I afford a nice house in an inner suburb in my 20s"

You've used quotation marks. Ergo, please quote the post in which I said this.

Otherwise your argument is void.

 

[Smell The Glove]

It happened in the past, it will happen in the future.

That is the 'property prices always go up more than inflation' argument.

It's a bit like arguing with a creationist.

Hammer. Nail. ****head.

 

[Taylor]

House prices can continue this trajectory if couples are allowed to marry other couples and all four continue to work. Or a similar set up consisting of four adult working to pay off one home that they all live in, perhaps their two children are the extra two adults who pay the mortgage but that will it's own issues.

 

[sabre_ac]

It's been discussed a few times on this board that immigration is fueling property prices, the article below suggests that even this is starting to slow.

​

Report dismisses boom-and-bust property theory​

But the investment bank's report warns that middle-class Chinese immigrants were now increasingly looking at New Zealand, Canada, the UK and US as desirable places to relocate.

Read more: http://www.news.com.au/realestate/investing/report-dismisses-boomandbust-property-theory/story-fndbarft-1226670015483#ixzz2a3xH0l4O
http://www.news.com.au/realestate/i...-property-theory/story-fndbarft-1226670015483

I'm not sure I buy entirely into the theory that immigration is a major driver of property prices, I still think the market is mainly driven baby boomers and those who have the capital and continue to borrow against it.

If you take into account immigrants starting to view Australia as too expensive ("Not enough bang for your buck") and those who hold the majority of the wealthy looking to downgrade in large numbers, the stagnate property market definitely makes sense.

 

[Smell The Glove]

What single women are doing that single men aren't

http://www.dailylife.com.au/news-and-views/dl-opinion/what-single-women-are-doing-that-single-men-arent-20130726-2qot1.html

Anyone else noticed this? I think it has been a clear trend for some time now. Most of the open houses I have ventured through had a number of young women there, often with mum and dad in tow (would think that many of these girls are probably getting a leg up from the parentals). Certainly my female peers who have bought have certainly done so with serious cash injections from family.

Can only think this will be part of a larger, ongoing trend, as young women continue to out earn young men.