They probably aren't. The question is how much extra people can pay as they reduce their discretionary spend.
I'm sure there is a lower bound to that reduction, although I could probably lose a few pounds, but not eating for the next 7 years will really take some willpower.
I guess I just don't see why one would so severely downgrade lifestyle, just to become part of the bank's wealth program. I like the idea of 'owning' a house, but I don't need to own a house. And forking out >60% of my disposable income doesn't really appeal either.
Hmmm ... this obviously requires more thought.
What do you include in 'discretionary spend' , btw?
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works". -- John Stuart Mill
I'm sure there is a lower bound to that reduction, although I could probably lose a few pounds, but not eating for the next 7 years will really take some willpower.
I guess I just don't see why one would so severely downgrade lifestyle, just to become part of the bank's wealth program. I like the idea of 'owning' a house, but I don't need to own a house. And forking out >60% of my disposable income doesn't really appeal either.
Hmmm ... this obviously requires more thought.
What do you include in 'discretionary spend' , btw?
For some people, it's a questions of lifestyle versus time. Some of the newer developments in the big cities are just too far away (time-wise) to be viable for people working in the city or the other side of town. As such, the better locations start to attract a significant premium.
I don't bellieeve most owner-occupiers buy because they think they will make money, they buy to get stability so they can plan their lives.
Oh, and everyone's discretionary spend is different. I know people who think that cafe coffees and foxtel are 'essentials'.
I'm sure there is a lower bound to that reduction, although I could probably lose a few pounds, but not eating for the next 7 years will really take some willpower.
I guess I just don't see why one would so severely downgrade lifestyle, just to become part of the bank's wealth program. I like the idea of 'owning' a house, but I don't need to own a house. And forking out >60% of my disposable income doesn't really appeal either.
Hmmm ... this obviously requires more thought.
What do you include in 'discretionary spend' , btw?
Lol, I'm sure you spend a bit more in life than food and shelter.
I downgraded my lifestyle for a few years (before kids came) for an upgraded lifestyle after kids were born (stability of raising kids in a paid off house) We chose to spend 60% of our disposable income paying off our house while we were DINKs so we could spend very little on shelter when kids came along and we dropped down to single income.
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
Lol, I'm sure you spend a bit more in life than food and shelter.
Not for years. There are school fees of course, and birthday presents. We haven't been on a holiday away for nearly 5 years now. We borrow weeklies from the DVD store, books from the library. Most of the coffee I drink comes out of the machine in the office. I still buy my lunch, I guess I could reduce discretionary spend by 1% by making lunch at home and bringing it in. I have a pre-paid mobile that is 3 years old now. I purchased it outright for $50.
If you are so sure I can reduce discretionary spend, by all means give me some examples.
Trojan
I downgraded my lifestyle for a few years (before kids came) for an upgraded lifestyle after kids were born (stability of raising kids in a paid off house) We chose to spend 60% of our disposable income paying off our house while we were DINKs so we could spend very little on shelter when kids came along and we dropped down to single income.
Good planning. I don't have that option now. I guess once the youngest is through high school, and the choice of suburb doesn't matter I can revisit. I will need to pay cash though, as I won't get financing at that age.
stinkbug
21 Oct 2012, 12:51 AM
Oh, and everyone's discretionary spend is different. I know people who think that cafe coffees and foxtel are 'essentials'.
Looking at my current discretionary spend, the things that are discretionary are just so cheap that eliminating them entirely would reduce my discretionary spend by about 1.5%, whereas I really need a 15-20% saving. On the flip side, I could spend more time working on a second income. If I can boost my gross income by 20-30% then I am already there.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works". -- John Stuart Mill
Debate over the Australian housing sector never dies down for long. Many international experts are convinced local house prices are grossly overvalued, yet local economists point to our high degree of urbanisation, relatively strong economy, and supply-side constraints in explaining the resilience of house prices.
In this past week, the Reserve Bank of Australia has again weighed in on the issue, with a speech by its head of economic analysis, Jonathan Kearns. Kearns’ main point was to note an apparent puzzle in the housing sector over recent years. While the rate of population growth has accelerated, the growth rate of the dwelling stock has not. Indeed, Kearns notes, “for a few years the population was even growing faster than the dwelling stock”.
As a share of the economy, moreover, housing construction has endured a relatively long slide over recent years to now be around the low point of previous cyclical bottoms. And yet, despite this apparent supply tightness, house-price growth has remained relatively modest. It means the sector seems well placed to expand should demand for housing start to pick up – as it may with lower interest rates.
That said, both negative supply and demand factors explain the housing downturn to date and suggest any recovery in home building may well be relatively modest by historical standards.
To my mind, that means the sector may struggle to provide the “growth offset” needed as and when the mining investment boom fades. And it adds to the case the RBA may need to deliver relatively deep interest rate cuts to get the housing sector moving again over the coming year.
Kearns says the home-building slump seems to reflect the interaction of two factors: added cost pressures and a dampening down in our previous debt-fuelled escalation in established house prices – both of which have conspired to undercut the profitability of building new homes.
On the cost side, Kearns notes developers are now being asked to pay for a lot of the required infrastructure – such as roads, water and electricity – that were once supplied free by governments to new housing developments. Developers have also told the RBA the planning approvals process has also become much more complex in recent years, which has added to building costs.
The dickhead convieniently left a couple of things out his bs graph .
Mainly the number of buisiness collapsing and also the number of job loses .
Does this braindead moron really think prices will go up 10-15% like he stated not long ago when jobs and buisiness are disappearing by the day , did he think property can grow while the economy is collapsing at breaknsck speed . Does he not think that when people keep losing there jobs there will be less and less money .
Just another expert with not a clue in the world .
I think you started this thread Peter , another fuzzy story for you , was it . Sad Peter , can I ask , CAN YOU NOT SEE THE WRITING ON THE WALL BY NOW PETER ?
The first home buyer boost was a factor, but a minor one. Most buyers were not even eligible for this grant.
Interest rate cuts were the primary driver, and they affected everyone, not just the minority first home buyer sector
The surge in prices is more closely correlated with the grants
the correlation of property prices to credit growth is weak but the correlation of property prices to the acceleration in credit growth is strong and the last time I looked this wasn't favourable for the bulls
Wisebear, your position over the past couple of years was that the 2009 boom was caused by FHB grants, and in the absence of those grants interest rates wouldn't be sufficient to spark a new house price growth cycle this time around. Have you changed your position on this?
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