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Housing is unaffordable; Can't keep up
Topic Started: 3 Aug 2014, 12:30 PM (3,940 Views)
Foxy
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Zero is coming...

I think this says it all.

http://www.zerohedge.com/news/2014-08-02/economic-theory-vs-practice-1-cartoon

Peter
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Count du Monet
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Best remembered the word "house" might mean the construction. In real terms today the buyer gets more bang for buck in their relative purchase power, but the land is something else. A block was going for 20k when my suburb was built in the mid 80's. When I moved in back in the mid 90's they were 80k. These days they are more like 300k and more.
The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
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Foxy
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Zero is coming...

Count du Monet
3 Aug 2014, 01:14 PM
Best remembered the word "house" might mean the construction. In real terms today the buyer gets more bang for buck in their relative purchase power, but the land is something else. A block was going for 20k when my suburb was built in the mid 80's. When I moved in back in the mid 90's they were 80k. These days they are more like 300k and more.
My Grandfather said when he was a little boy he could get a whole bag of lollies for the smallest unit of currency.
Today that unit does not exist.
The money goes down in value continuously.
Sometimes property types can fall when hope is lost.
Residential property still contains hope.
Peter
Mustapha Mond
3 Aug 2014, 01:23 PM
My Grandfather said when he was a little boy he could get a whole bag of lollies for the smallest unit of currency.
Today that unit does not exist.
The money goes down in value continuously.
Sometimes property types can fall when hope is lost.
Residential property still contains hope.
Peter
http://goldestates.com.au/developments/past-developments/mt-lawleymaylands/

Less then a $ per acre when first divided.

Now maybe $3 to $8 million per acre.

Where is my bag of lollies.

Peter
Edited by Foxy, 3 Aug 2014, 01:29 PM.
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Jimbo
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Mustapha Mond
3 Aug 2014, 01:23 PM
My Grandfather said when he was a little boy he could get a whole bag of lollies for the smallest unit of currency.
Today that unit does not exist.
The money goes down in value continuously.
Sometimes property types can fall when hope is lost.
Residential property still contains hope.
Peter

http://goldestates.com.au/developments/past-developments/mt-lawleymaylands/

Less then a $ per acre when first divided.

Now maybe $3 to $4 million per acre.

Where is my bag of lollies.

Peter
Affordability in obviously related to income. The more you earn, the more you can borrow, the more you can pay.
Australia has one of the highest wage bills on the planet. The UK minimum wage equates to $11.54 against Australias $18.70.
There will be a sea change in coming years as it is obvious that Australia cannot afford to carry on paying the wage rates it does.
We are losing manufacturing jobs daily as we simply can't compete with others in labour intensive industries.
Our property market affordability scale is already high compared to other developed nations and is even higher if you start averaging out the pay rates between those other nations in the comparisons.
Going forward I see flat or negative wage increases over CPI producing an even higher ratio of prices to earnings in our property market.

Mustapha Mond
3 Aug 2014, 01:23 PM
Less then a $ per acre when first divided.

Now maybe $3 to $8 million per acre.

Which is the very reason why people are attracted to property and where the money will be made.
Identify a bit of worthless bush now that people will want to live on in twenty years time.
Most investors don't think that way though. They buy an existing house in an established suburb where the big capital growth is already built into the price they paid for it.
I made a lot of money in the 80's by buying a fibro on 1/4 acre block to live in. I didn't intend to make money. It was all I could afford to buy. All my mates were buying blocks and building.
Fast forward two years and I demolished the fibro, split the block, sold one side and built on the other. I had a free house after three years with no mortgage to pay and my mates still had 22 years of mortgage slavery left.
There is still potential to do this but the returns just aren't there like they used to be. Once the cat got out of the bag, every man and his dog wanted a fibro on 1000m2 to subdivide and make a profit on.
My local real estate is even spruiking subdivision as the new NG.
You know that when real estate agents hold seminars, you really shouldn't go. The bus has already departed that station and it is time to look somewhere else.
Edited by Jimbo, 3 Aug 2014, 02:01 PM.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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Foxy
Member Avatar
Zero is coming...

Jimbo
3 Aug 2014, 01:42 PM
Affordability in obviously related to income. The more you earn, the more you can borrow, the more you can pay.
Australia has one of the highest wage bills on the planet. The UK minimum wage equates to $11.54 against Australias $18.70.
There will be a sea change in coming years as it is obvious that Australia cannot afford to carry on paying the wage rates it does.
We are losing manufacturing jobs daily as we simply can't compete with others in labour intensive industries.
Our property market affordability scale is already high compared to other developed nations and is even higher if you start averaging out the pay rates between those other nations in the comparisons.
Going forward I see flat or negative wage increases over CPI producing an even higher ratio of prices to earnings in our property market.


Which is the very reason why people are attracted to property and where the money will be made.
Identify a bit of worthless bush now that people will want to live on in twenty years time.
Most investors don't think that way though. They buy an existing house in an established suburb where the big capital growth is already built into the price they paid for it.
I made a lot of money in the 80's by buying a fibro on 1/4 acre block to live in. I didn't intend to make money. It was all I could afford to buy. All my mates were buying blocks and building.
Fast forward two years and I demolished the fibro, split the block, sold one side and built on the other. I had a free house after three years with no mortgage to pay and my mates still had 22 years of mortgage slavery left.
There is still potential to do this but the returns just aren't there like they used to be. Once the cat got out of the bag, every man and his dog wanted a fibro on 1000m2 to subdivide and make a profit on.
My local real estate is even spruiking subdivision as the new NG.
You know that when real estate agents hold seminars, you really shouldn't go. The bus has already departed that station and it is time to look somewhere else.
No truer words have ever been spoken.
Well done on the house.
Peter
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Blondie girl
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Times have changed
Some good some bad..

The question is...
Have some people carried too much debt for their own good with few signs that they're serious in alleviating it?

Life gives some lemons or lemonade, we all cop both, we can love debt but it's whether we can master it & not let it rule us forever.




Edited by Blondie girl, 4 Aug 2014, 06:20 PM.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$
It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged
Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do.
Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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van
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All I can say is renting is dead money, it really is not an option.

I already mentioned my friend who bought a unit for $550 a year ago off the plan and it is now worth $650.

In less than a year he has increased his net worth by 100k. His repayments if it was interest only is $2200 month which is the same as how much the rent would have been which is $550-$600 a week.

Basically every week from this time last year, the $700 per week he pays off his place, he got $2,000 in capital gains increasing his net worth. The person renting for $550-$600 just spent the money for a roof over their head and got nothing else out of it.

People have to understand house prices will continue to increase faster than the official inflation rate. That is why property always go up, and those who are invested in property are always doing better than those who are not.

For the life of me, I can not understand why people think holding cash is smart, it just falls and falls in value in relation to property. The 15% increase in Melbourne and Sydney prices for the year..

CPI was 3% for the year until now.....

The bears biggest mistake is assigning too much value to cash, cash is used for transactions, it should not be used as a store of value.

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Jimbo
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Blondie girl
4 Aug 2014, 06:16 PM
Times have changed
Some good some bad..

The question is...
Have some people carried too much debt for their own good with few signs that they're serious in alleviating it?

Life gives some lemons or lemonade, we all cop both, we can love debt but it's whether we can master it & not let it rule us forever.




One worrying thing is the amount of debt that young FIFO workers take on. Some of the older ones are just as bad. I do a mix of city based and on site work and when I am on site I earn over double my normal wages. I also have zero living expenses on site as well.
I treat the additional money as a bonus and not as part of my normal pay. I know that FIFO can be short lived so I don't rely on it.
But there are others who think that they will earn the big bucks forever and they plan their finances that way.
They all seem to have a Thermomix in their kitchens, an expensive boat, Bali three or four times a year and of course the $50k souped up ute. One bloke told me last week that him and his wife spend at least $200 a week just on meat and fish?
One of my mates has just had to give up site work after falling sick. He has been FIFO since 1998 and he was telling me he is worried about how he will manage his mortgage on Perth wages. His house is a bog standard median priced 4x2. How he still has a mortgage after 16 years of high paid FIFO is beyond me but he does have two near new Tritons (his and hers) in the driveway. Probably got those on finance as well.
I think it is the case that the more people earn, the more they can borrow and the more trouble they can get themselves in.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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Trojan
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van
4 Aug 2014, 10:20 PM
All I can say is renting is dead money, it really is not an option.

I already mentioned my friend who bought a unit for $550 a year ago off the plan and it is now worth $650.

In less than a year he has increased his net worth by 100k. His repayments if it was interest only is $2200 month which is the same as how much the rent would have been which is $550-$600 a week.

Basically every week from this time last year, the $700 per week he pays off his place, he got $2,000 in capital gains increasing his net worth. The person renting for $550-$600 just spent the money for a roof over their head and got nothing else out of it.
If he is paying $700pw, I assume he is paying principle and interest. It will also means he has $150pw paid off his loan (equity) in addition to the $2k capital gains.
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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Jimbo
Member Avatar


van
4 Aug 2014, 10:20 PM
All I can say is renting is dead money, it really is not an option.

I already mentioned my friend who bought a unit for $550 a year ago off the plan and it is now worth $650.

In less than a year he has increased his net worth by 100k. His repayments if it was interest only is $2200 month which is the same as how much the rent would have been which is $550-$600 a week.

Basically every week from this time last year, the $700 per week he pays off his place, he got $2,000 in capital gains increasing his net worth. The person renting for $550-$600 just spent the money for a roof over their head and got nothing else out of it.

People have to understand house prices will continue to increase faster than the official inflation rate. That is why property always go up, and those who are invested in property are always doing better than those who are not.

For the life of me, I can not understand why people think holding cash is smart, it just falls and falls in value in relation to property. The 15% increase in Melbourne and Sydney prices for the year..

CPI was 3% for the year until now.....

The bears biggest mistake is assigning too much value to cash, cash is used for transactions, it should not be used as a store of value.

Your friend hasn't increased his net worth by 100k unless he sells now and realises that gain.
Property does not always go up in value. Over the long term it will, but like any market, it will experience falls and those falls can and have wiped people out.
Look at the Celtic Tiger economy if you want a prime example. Look at Britain in 1988.
People were rushing to invest in property and they talked exactly the same way you are talking now.
I am not saying that Aussie property is about to crash, but you should never work on the assumption that it never will.
If you perceive that there is no risk in a market, if you expect it to always pay big returns and never make a loss, then you are not a wise investor.
If too many people think the same way, they will borrow more to get a piece of the action, force prices higher and worsen the impact of any correction.
There is no such thing as a guaranteed winner in any market because if there was, everybody would be in it.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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