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Who Benefits from High House Prices?
Topic Started: 24 Aug 2015, 06:52 PM (6,601 Views)
Shadow
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Evil Mouzealot Specufestor

Chris
26 Aug 2015, 04:01 PM
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.

Do you have that data?
Edited by Shadow, 26 Aug 2015, 04:04 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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stubby
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Shadow
26 Aug 2015, 03:57 PM
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.
:lol :lol :lol

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.
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Shadow
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stubby
26 Aug 2015, 04:06 PM
That's particularly lame even for you, Shadow
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.
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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stubby
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Shadow
26 Aug 2015, 04:10 PM
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...

:lol :lol :lol
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Rastus2
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Shadow
26 Aug 2015, 04:02 PM
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 :

Posted Image


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)

Posted Image


Some -ve gearing, some PPOR, some loans on discretionary spending.


Australia has high household debt to income compared to many other countries

Posted Image

Posted Image



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.

Posted Image


While unemployment remains low compared to previous peaks, headwinds are going to hamper our economies strength.

When we look at UK and USA, our current rate is similar ( http://www.oecd.org/australia/EMO-AUS-EN.pdf )

Posted Image

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.

Edited by Rastus2, 26 Aug 2015, 05:03 PM.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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Chris
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Not sure about you Rastus. You come across as bullish with your data picks, sick is a bit much but hard to decipher you're stance.
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Shadow
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stubby
26 Aug 2015, 04:14 PM
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?
Edited by Shadow, 26 Aug 2015, 06:49 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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Rastus2
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Chris
26 Aug 2015, 05:43 PM
Not sure about you Rastus. You come across as bullish with your data picks, sick is a bit much but hard to decipher you're stance.
Not sure what you mewn by data pics.or sick.

I comsidered it a balanced post.


I am somehwat bullish these days.. have been for a bit of a while now...
Edited by Rastus2, 26 Aug 2015, 06:42 PM.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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herbie
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Rastus2
26 Aug 2015, 06:41 PM
Not sure what you mewn by data pics.or sick.

I comsidered it a balanced post.


I am somehwat bullish these days.. have been for a bit of a while now...
The typos in that post make it look like you're a bit pissed actually?

And Good Luck to you I say.

All us failed bears have every right ti got possed - Reguly and ofan I allso say! LOL

A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Rastus2
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goneaway
26 Aug 2015, 08:05 PM
The typos in that post make it look like you're a bit pissed actually?

And Good Luck to you I say.

All us failed bears have every right ti got possed - Reguly and ofan I allso say! LOL
Never had much luck with tablet touch keyhoards or autocorrect ... rarely drink these days ..

Anyway, perhaps you can explain your post ... in particupar the 'sick' bit ??? Typo ? Also, you're is not the same as your.

Quote:
 
You come across as bullish with your data picks, sick is a bit much but hard to decipher you're stance.
Edited by Rastus2, 26 Aug 2015, 08:12 PM.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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