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Christopher Joye turns bear - Australian housing bubble is now here; House prices have inflated at a 9.5% annualised pace (triple wages growth)
Topic Started: 19 Jul 2014, 01:12 PM (21,427 Views)
ThePauk
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zaph
21 Jul 2014, 03:28 PM
I'm forced to insure my home for 'like for like' rebuild. But in a new house I wouldn't require a hard wood frame, or hardwood floors. I'd be happy with the modern equivalent four bed house that would be a lot cheaper to rebuild.
Zaph
Good advice.

My point was that if a mortgaged home is uninsured and burns down, they the 'owner' will quickly find out who actually 'owns' the property.
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stinkbug
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b_b
21 Jul 2014, 03:10 PM
Insurance fraud is a crime - probably the main reason it does not happen.

FWIW, I believe most houses are substantially under insured for improvements. I find the replacement cost models for most insurers are inadequate - which is anther way of keeping their premiums competitive. I asked my insurer to increase the $ coverage every 5 years or so (as replacement costs rise another 15% or so).

I would encourage every homeowner to talk to a builder about the true cost of replacement of their home - including all of the hidden costs such as site clean, residual demolition, rubbish removal access / site costs, DA fees, consultants, fixtures & fittings etc.
Agreed.

I also increase values every few years to ensure I am completely covered. Some policies include the concept of 'self insurance', whereby if you insure your house structure for, say, 50% of it's replacement cost, that you are deemed by the insurance company to be accepting 50% of the risk yourself (and thus self insuring). In such a case, insurance will only pay out 50% of the cost of any damage or problems, as you are deemed to have accepted the risk of insuring the rest yourself.

Not good to find out if you have a genuine problem.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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b_b
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zaph
21 Jul 2014, 03:28 PM
I'm forced to insure my home for 'like for like' rebuild. But in a new house I wouldn't require a hard wood frame, or hardwood floors. I'd be happy with the modern equivalent four bed house that would be a lot cheaper to rebuild.
Have you built before?

If you haven't built before, you may be surprised at the cost of replacement

If you have built before.....I sympathise

(S – I) + (T - G) + (M - X) = 0
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Shadow
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ThePauk
21 Jul 2014, 05:51 PM
My point was that if a mortgaged home is uninsured and burns down, they the 'owner' will quickly find out who actually 'owns' the property.
The owner would still be the person whose name is on the title.

Most of the value is in the land anyway, which would be unaffected by the fire.

And who doesn't have home insurance?
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Sydneyite
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Sydneyite
21 Jul 2014, 01:40 PM
So Pauk - if I have a house (title in my name), and also have a mortgage of say $300k, BUT also have $300k cash sitting in an offset account linked to that mortgage, am I an "owner" or a "buyer" in your books??? Also do you think I count in that 31% stat you are quoting? Should I be in it?
*Bump* of this post for Pauk??? Any response?
Edited by Sydneyite, 21 Jul 2014, 06:42 PM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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MMM
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Shadow
21 Jul 2014, 06:34 PM
The owner would still be the person whose name is on the title.

Most of the value is in the land anyway, which would be unaffected by the fire.

And who doesn't have home insurance?
I thought it was a mortgage requirement to have the property insured.

I know my commercial has to be insured under the conditions, I noticed it on my statement only a week or so ago.

You must also remember the the title may be in some bodies name, but they don't hold the title and are unable to do much without it.

As for who does not have house insurance. Speak to frank castle.
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Chris
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Sydneyite
21 Jul 2014, 10:24 AM
:lol @ Shadow doing all the work for Chris!
What work has he done for me???

I still haven't been given black and white for the decade, shit I haven't even been given 2013 yet.



For 2013 ABS are stating a median house price of around 570k and an average gross earnings of $1500, or $78kpa before tax and stake home of around $60k. That is black and white figures that suggests the wage price ratios are around 9-10 times, not the 4-4.5 times Shadow states so either he is lying or he is suggesting every household in Australia has dual incomes for the life of the loan??!

For 2003 the median price was around 295k and the gross median wage pw was $960, or approx $50kpa with a take home of $40k. That's closer to 7 times net earnings for an individual, which is still unaffordable but more affordable than it is today.

It appears that prices have been unaffordable for more than a decade.
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Shadow
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Chris
20 Jul 2014, 09:58 PM
How's this for simplicity, if the median house price in Sydney is roughly $800k, you are stating that the average wage (or household income) net is $200k plus. That's 4 times isn't it???

Or is this wrong?? The maths is pretty basic and the fact you can't get it means you're right, we are on a completely different level!!!
OK Chris, just for you I took the time to compile all the Sydney data into a nice black and white table, as well as a chart.

Note that in all cases I have divided the dwelling price by NSW wage as I can't find Sydney specific wages on the ABS site.

Also, obviously since this is single person wage the ratios to household income would be lower.

Enjoy...

Posted Image

Posted Image

Source data (ABS dwelling prices)... http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0
Source data (ABS adult single earnings)... http://www.abs.gov.au/ausstats/abs@.nsf/mf/6302.0
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Sydneyite
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Chris
21 Jul 2014, 06:56 PM
What work has he done for me???
Everything, basically! What work have you done to produce the stats that you are looking for? You snipe Shadow's efforts but provide nothing yourself? Makes it look like you are just clutching at straws after losing the argument.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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Shadow
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Evil Mouzealot Specufestor

Chris
21 Jul 2014, 06:56 PM
ABS are stating a median house price of around 570k and an average gross earnings of $1500, or $78kpa before tax and stake home of around $60k. That is black and white figures that suggests the wage price ratios are around 9-10 times, not the 4-4.5 times Shadow states so either he is lying or blah blah blah
Also, I never claimed the average house price to after-tax single earnings ratio is 4x. You made that up.
Edited by Shadow, 21 Jul 2014, 07:50 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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