So you are saying housing is not as affordable today for the 24-35 yr old bracket as it was in 2003. Or are you saying it is?
I haven't seen any data on that. I'd need to see a price/income ratio chart that focuses specifically on incomes and house prices for that demographic.
Capital gain generally isn't used as income with which to service the mortgage, because for most people, once the capital gain is realised, there is no longer any mortgage to service.
Banks don't accept capital gain as income when assessing loan serviceability. I assume you've never had a loan - you should know this stuff.
That's particularly lame even for you, Shadow.
A lender's mortgage service requirements don't define what is and isn't income, the ATO does.
That's a pretty weak response. If you think capital gain is the same as income, that's fine. I think we'll just have to agree to disagree on that one. Good luck servicing your mortgage using capital gain as income.
That's a pretty weak response. If you think capital gain is the same as income, that's fine. I think we'll just have to agree to disagree on that one. Good luck servicing your mortgage using capital gain as income.
Good luck avoiding attention from the ATO by pretending that capital gains are *not* a form of income...
I haven't seen any data on that. I'd need to see a price/income ratio chart that focuses specifically on incomes and house prices for that demographic.
Do you have that data?
Well if we stand back from the bun fight, I am sure we can all agree on some basic points.
From the chart Shadow provided :
House Price to Household Income has average around 500% from ~June 2003 to June 2014
Prior to that period, Jun 1986 - Jun 2002, the average was more like 350 %
The recent surge in house prices and lack of incomes has quite likely pushed that ratio more towards the 600% region as it was already about 550% in June 2014.
The lack of data prior to June 1986 makes it difficult to cite if this new threshold has ever been hit before, however it seems unlikely.
Household Debt has risen significantly in that same period (obviously)
Some -ve gearing, some PPOR, some loans on discretionary spending.
Australia has high household debt to income compared to many other countries
We have been told by many for years that this is not a problem for Australia because our economy is so strong.
Unemployment is still low, for now.
While unemployment remains low compared to previous peaks, headwinds are going to hamper our economies strength.
The reality that the double income household is a phenomena of the last 50-60 years. When making claims that household income is the benchmark to compare house prices to, one ignores the increased social and financial cost to the household to move from 1 income to 2. It suits the bull argument to use the household metric and it remains a valid one for the purposes of measuring ability to service. It does not suit the bear argument as they argue it demonstrates more effort in the household is required to service the current debt than previously. It is a valid observation although will not, in itself, cause any kind of house price crash.
Major factors : Unemployment Rate, Interest Rate, Tax incentives for -ve gearing and capital gains Population Household Debt which must be serviced (a complex mix of tax deductible and non- tax deductible)
Other factors:
AUD - overseas investors attracted by low AUD. Net Migration (which feeds into the population) Economy itself which drives many of the above.
Good luck avoiding attention from the ATO by pretending that capital gains are *not* a form of income...
I'd declare it as capital gain rather than income - the ATO treats them differently. But this isn't about the ATO - you've lost track of the discussion again.
You were talking about billion-dollar medians, which I said would be absurd without sufficient incomes to afford those homes. You suggested the capital gain itself would suffice. If you believe the capital gain could be used as income to service the mortgages, I'd be interested to hear how you propose that might work. Would the banks permit it?
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