Lol, they might have been a good buy for the last buyer but the chumps who bought in 2007 and 2008 are not so happy I would guess. Peter likes to ignore those who lose serious money.
Stan
16 Sep 2014, 01:21 PM
I said it to Pauk and I will ask you the same question - where's the contrarian in you?
I'm well aware the GC took a beating. Do you really expect it to go the way of Detroit?
Master Stan The real falls have not happened yet as the GFC never ended. When it does and property is actually affordable again, then maybe I will or maybe I won't.
The measure they use has been discredited several times on here and recently by the RBA.
They do not use actual values, they compare prices with historical values. They use data that goes back quite some time, I think 30 years. This is why long established high population centres score affordable even if they have double the price to income or price to rent of Australia. The measurement completely fails to account for the vast population growth witnessed by Australia over the past 30 years increasing competition for well positioned housing. If you believe these measures you are believing that Cities like Sydney will return to a time when lower income people could buy big homes in Centennial Park, Australia has changed over 30 years and I cannot see everyone packing up and leaving cities like Sydney so prices can return to where they stood against median incomes 30 years ago.
Sorry bears Australian prices in real terms are actually less than many many other countries, go do some research of your own it is not hard to find data
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
Lol, they might have been a good buy for the last buyer but the chumps who bought in 2007 and 2008 are not so happy I would guess. Peter likes to ignore those who lose serious money. Master Stan The real falls have not happened yet as the GFC never ended. When it does and property is actually affordable again, then maybe I will or maybe I won't.
I think you underestimate the role interest rates, as well as the value of the AUD play in your area.
The measure they use has been discredited several times on here and recently by the RBA.
They do not use actual values, they compare prices with historical values. They use data that goes back quite some time, I think 30 years. This is why long established high population centres score affordable even if they have double the price to income or price to rent of Australia. The measurement completely fails to account for the vast population growth witnessed by Australia over the past 30 years increasing competition for well positioned housing. If you believe these measures you are believing that Cities like Sydney will return to a time when lower income people could buy big homes in Centennial Park, Australia has changed over 30 years and I cannot see everyone packing up and leaving cities like Sydney so prices can return to where they stood against median incomes 30 years ago.
Sorry bears Australian prices in real terms are actually less than many many other countries, go do some research of your own it is not hard to find data
Or bank lending is forced to go back to sensible levels, like 2x combined or 3x a single wage? Its possible and may well happen after Aus falls into real recession and the Chinese speculators are all arrested and executed back in the homeland. Yes and Iron ore etc is not flavour of the month any more and AUS$ has to put up interest rates on account of the devalued Aus$ imports massive inflation that the narrow remit of the RBA has to use its one lever on. It may be worth spending 25% more than previous eras for a house if your comfy with it but 200% more is madness by any standards of reasoning and accountability.
Or bank lending is forced to go back to sensible levels, like 2x combined or 3x a single wage? Its possible and may well happen after Aus falls into real recession and the Chinese speculators are all arrested and executed back in the homeland. Yes and Iron ore etc is not flavour of the month any more and AUS$ has to put up interest rates on account of the devalued Aus$ imports massive inflation that the narrow remit of the RBA has to use its one lever on. It may be worth spending 25% more than previous eras for a house if your comfy with it but 200% more is madness by any standards of reasoning and accountability.
Consider this simple exercise steve.
You are earning $150,000 per annum You have $300K in savings
You buy a house for $1.2M, put down 20% deposit of $240K and borrow $960,000 which is more than 6 times your income. Interest cost on the loan is $48K per annum.
But you rent the house out for $1,100 per week $57K per annum approx., so you have covered your interest cost and a good part of your rates and insurance costs.
There will be a small cost to be met out of your wage, lets call it $12K per annum.
Can you afford to live on $138,000 per annum even though you are paying a loan that is over 6 times your salary? Because that's roughly the argument that was put to me recently by a guy named dennis over at MB who claimed that was reckless bank lending.
Viewed from an investors eyes, that is something that he would like to do. From a banks POV they won't see it as risky, but a housing bear apparently does. What is your view?
Any expressed market opinion is my own and is not to be taken as financial advice
You are earning $150,000 per annum You have $300K in savings
You buy a house for $1.2M, put down 20% deposit of $240K and borrow $960,000 which is more than 6 times your income. Interest cost on the loan is $48K per annum.
But you rent the house out for $1,100 per week $57K per annum approx., so you have covered your interest cost and a good part of your rates and insurance costs.
There will be a small cost to be met out of your wage, lets call it $12K per annum.
Can you afford to live on $138,000 per annum even though you are paying a loan that is over 6 times your salary? Because that's roughly the argument that was put to me recently by a guy named dennis over at MB who claimed that was reckless bank lending.
Viewed from an investors eyes, that is something that he would like to do. From a banks POV they won't see it as risky, but a housing bear apparently does. What is your view?
But... you still have not factored in the additional $48K in stamp duty, 2% annual upkeep, 7% agents fees, vacant periods and lost income from the $300K you have had to put down. I figure you will be an ADDITIONAL $15K per year down... But hey... don't let that get in the way of your spruiking, debt peddling view. Also, I can show you a house being bought for $1.2m that has just been rented for $990 per week. Good luck getting $1100 per week.
You go one step further and you take the $12K from the earned $150K (less than 10%) when you are clearly not showing that it is actually $12K from $150K, less 35% tax, so $97K... Meaning that they are actually only seeing $85K from their income, but before you add in my EXTRA $15K per year. Your numbers are bullshit Debt Peddler Pete. These people would be PRAYING for price appreciation to just break even, never mind make a profit. What would you say, +- 10 years before they break even?
But... you still have not factored in the additional $48K in stamp duty, 2% annual upkeep, 7% agents fees, vacant periods and lost income from the $300K you have had to put down. I figure you will be an ADDITIONAL $15K per year down... But hey... don't let that get in the way of your spruiking, debt peddling view. Also, I can show you a house being bought for $1.2m that has just been rented for $990 per week. Good luck getting $1100 per week.
and I can show you a $1.2 house that gets better than $1200 per week, so what. You will believe whatever you want to. you're sure you can't and I know that you can.
Quote:
You go one step further and you take the $12K from the earned $150K (less than 10%) when you are clearly not showing that it is actually $12K from $150K, less 35% tax, so $97K... Meaning that they are actually only seeing $85K from their income, but before you add in my EXTRA $15K per year. Your numbers are bullshit Debt Peddler Pete. These people would be PRAYING for price appreciation to just break even, never mind make a profit. What would you say, +- 10 years before they break even?
well I didn't factor in the tax advantage of being able to claim the net loss against taxable income either. These were rough figures.
My point was more to do with the income/price relationship at these low interest rates, but I guess that point went over your head.
At higher rates it's an issue, but with yields at or near interest costs it's attractive to investors. The costs for owning an IP are nearly covered from rents without much reliance on using salaried income to top up the cashflow. Not sure why you couldn't follow that.
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