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Growing wealth inequality in Australia fuelled by rising property prices
Topic Started: 6 Aug 2014, 08:12 AM (1,985 Views)
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Growing wealth inequality in Australia fuelled by rising property prices: ME Bank

Jennifer Duke | 5 August 2014

There is a growing disparity in financial comfort between households described as ‘asset-rich’ and other households, particularly between age groups, according to ME Bank’s latest biannual Household Financial Comfort survey conducted in June.

ME Bank’s consulting economist, Jeff Oughton, noted that the survey sees this distance between the two groups growing due to a rise in property prices.

“Asset-rich households (including self-funded retirees and home owners) have benefited from a sustained rise in global and local equity prices as well as significant gains in residential prices, especially in Sydney, Melbourne and Perth,” said Oughton.

“In contrast, limited household income gains and rising concerns about cash savings among most other households have seen their financial comfort falling,” he said.

Those aged 65 plus saw their financial comfort increase by 9% over the six months to June to the highest number since the survey began, according to the survey, while all other life stage groups fell significantly. In particular, Gen X fell by 4% to its lowest level since the survey commenced.

Looking at households, retirees were the most comfortable. Self-funded retirees' financial comfort was up 8%, while government-funded retirees fell 15%.

All other main household groups’ comfort fell in the six month period.

In total, 54% of households reported being unable to save each month, the highest in three years, with overall financial comfort falling 3%. This is reversing the gains recorded in 2013.

Those breaking even numbered 42%, while 12% were drawing on savings, loans or home equity to get by.

Financial comfort is expected to drop even further over the next 12 months.

“Household income has been negatively impacted by relatively low average wage growth, moderate job gains, rising unemployment and corresponding falls in job security over the period, as well as an anticipated tightening in government income assistance and tax benefits announced in the Federal Budget,” said Oughton.

“About the same proportion of Australians (30%) reported income gains as income falls during 2013/14, compared with the corresponding outcomes of 39% and 28% respectively during the previous financial year.”

In New South Wales and Western Australia, comfort fell by 5%. In Victoria, a 2% drop was seen, while South Australia fell by 6%. Queensland remained unchanged, and Tasmania rose 10%, while the ACT fell by over a third. ME Bank notes that these smaller sample sizes make for more volatile results.

Read more: http://www.propertyobserver.com.au/forward-planning/investment-strategy/economy-and-demographics/34135-growing-wealth-inequality-in-australia-fuelled-by-rising-property-prices-me-bank.html
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Jimbo
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Rising property prices are a wealth transfer mechanism from those who are yet to buy to those who already own.
If your investment property goes up by $100k, a future buyer will have to pay an extra $100k for the same thing.
It is as simple as that.
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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goldbug
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They will only be "asset rich" when they own them. Most home owners are actually debt impoverished but the banks allow them to own new cars and project the image of being well off.

Got equity? Here, have an Audi and an overseas holiday and we'll just add 4 years to your loan repayments. Don't you even give it another thought, you deserve it, you're a winner and in 7 years house prices will have doubled and you'll be in the clear.

The over leveraged bulls in perth have seen 7 years of basically zero gain in house prices. I wonder is any of them are waking up yet?
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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ThePauk
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Jimbo
6 Aug 2014, 08:40 AM
Rising property prices are a wealth transfer mechanism from those who are yet to buy to those who already own.
If your investment property goes up by $100k, a future buyer will have to pay an extra $100k for the same thing.
It is as simple as that.
So essentially a transfer of wealth the the aged from the young. Mmmmmm........ Then all assets are the same?
Edited by ThePauk, 6 Aug 2014, 10:10 AM.
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Black Panther
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goldbug
6 Aug 2014, 09:44 AM
They will only be "asset rich" when they own them. Most home owners are actually debt impoverished but the banks allow them to own new cars and project the image of being well off.

Got equity? Here, have an Audi and an overseas holiday and we'll just add 4 years to your loan repayments. Don't you even give it another thought, you deserve it, you're a winner and in 7 years house prices will have doubled and you'll be in the clear.

The over leveraged bulls in perth have seen 7 years of basically zero gain in house prices. I wonder is any of them are waking up yet?
You are dreaming Goldstein. The Transmutation is ON.
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Jimbo
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goldbug
6 Aug 2014, 09:44 AM
The over leveraged bulls in perth have seen 7 years of basically zero gain in house prices. I wonder is any of them are waking up yet?
And they believe that 7 years of zero growth will equal another boom in the coming few years. Some will stubbornly hold waiting for their capital gain whilst others who bought earlier will see the top now and get out.
The only reason Perth didn't hit the floor after the GFC was the handy prop of the mining infrastructure boom.
Price rises are all about confidence in the future and that is pretty low at the moment.


ThePauk
6 Aug 2014, 10:10 AM
So essentially a transfer of wealth the the aged from the young. Mmmmmm........ Then all assets are the same?
If you buy shares in a company you provide it with finance enabling it to value add and create jobs and wealth. If you sell for a profit it is to another investor.
If you buy Gold, you buy Gold. Nobody needs to buy the Gold in future so any wealth transfer is purely from one investor to another out of choice.
If you buy property as a speculative investment, you take a property off the market and reduce supply for people who wish to buy a house to live in. That forces up prices and the person wishing to buy a house to live is forced to pay more (or pay rent to you).
Edited by Jimbo, 6 Aug 2014, 11:36 AM.
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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zaph
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Jimbo
6 Aug 2014, 11:27 AM
If you buy shares in a company you provide it with finance enabling it to value add and create jobs and wealth. If you sell for a profit it is to another investor.
In the vast majority of cases share sales are from one investor to another, there is no providing the company with finance to enable it to anything.
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Frank Castle
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Business As Usual

Jimbo
6 Aug 2014, 11:27 AM

If you buy Gold, you buy Gold. Nobody needs to buy the Gold in future so any wealth transfer is purely from one investor greater fool to another out of choice.
corrected for you
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If you buy property as a speculative income generating investment, you take a property off the market and reduce supply for people who wish to buy a house to live in.

Bullshit
They had the same opportunity to buy as me or anyone else
and it doesn't reduce supply for people who want a property to live in
Quote:
 
That forces up prices and the person wishing to buy a house to live is forced to pay more (or pay rent to you).

Yep, hence the word INVESTMENT
Aint life grand :tu:
Ignore posts by The Whole Truth · View Post · End Ignoring
The forum fuckwit goes RRRAAARRRGGHHhhh - But not a fuck was given..................by anyone.
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Jimbo
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Frank Castle
6 Aug 2014, 12:20 PM
Yep, hence the word SPECULATION
Aint life grand :tu:
Favour returned.
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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stinkbug
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Jimbo
6 Aug 2014, 01:50 PM
Favour returned.
Buying, holding and using the rent is not speculation, by definition. Buying gold to sell at a later point is speculation.


spec·u·la·tion
[spek-yuh-ley-shuhn] Show IPA
noun
1.
the contemplation or consideration of some subject: to engage in speculation on humanity's ultimate destiny.
2.
a single instance or process of consideration.
3.
a conclusion or opinion reached by such contemplation: These speculations are impossible to verify.
4.
conjectural consideration of a matter; conjecture or surmise: a report based on speculation rather than facts.
5.
engagement in business transactions involving considerable risk but offering the chance of large gains, especially trading in commodities, stocks, etc., in the hope of profit from changes in the market price.

The 5th point is the one that applies.
---------------------------------------------------------------

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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