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A Storm is Brewing for the Australian Economy and Housing Bubble; Ignore the thunder, get washed away in the rain. Troubling combination of factors that cannot be ignored.
Topic Started: 23 Jan 2013, 05:47 AM (23,235 Views)
Timo
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Simon
13 Feb 2013, 12:04 PM
Cool rant bro, nice one :tu:
You'll live, I'm sure its not the first time you've been made to look like an idiot x
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
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Veritas
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Timo
13 Feb 2013, 11:36 AM
Simon
12 Feb 2013, 08:13 AM
Cheers buddy, your link proves timmy and me were 100 percent right, shot yourself in the foot there
My link proves my point and my suspicion that your a brainless shit smear.

Buying is still still vastly more expensive then renting, in every state and territory.

The Australian Property market is still a Ponzi

And you've been caught with shit in your mouth.

You know, it would be nice is someone did some up to date calcualtions on that.

Here is one example. I can rent this house in Mt. Lawley. Very leafy suburb close to everything for 580 per week.

http://www.realestate.com.au/property-house-wa-mount+lawley-404436371

Here is a similar house in the same neigbourhood for sale at $885,000

http://www.realestate.com.au/property-house-wa-mount+lawley-112921483

Lets assume a 10% deposit. So Im going to borrow, Ill keep it simple and round it off to $800,000.

Comm bank calucaltor says that would cost me $5,016 per Month in mortgage payments. or $1254 per week.

Therefore, the cost of buying a house in Mt. Lawley is more than twice what it costs to rent a similar house.

Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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Trojan
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Veritas
15 Feb 2013, 12:39 PM

You know, it would be nice is someone did some up to date calcualtions on that.

Here is one example. I can rent this house in Mt. Lawley. Very leafy suburb close to everything for 580 per week.

http://www.realestate.com.au/property-house-wa-mount+lawley-404436371

Here is a similar house in the same neigbourhood for sale at $885,000

http://www.realestate.com.au/property-house-wa-mount+lawley-112921483

Lets assume a 10% deposit. So Im going to borrow, Ill keep it simple and round it off to $800,000.

Comm bank calucaltor says that would cost me $5,016 per Month in mortgage payments. or $1254 per week.

Therefore, the cost of buying a house in Mt. Lawley is more than twice what it costs to rent a similar house.
I'm sure there are certain houses/suburbs where it is a lot more expensive to buy than to rent ... this is whats know a low rental yield properties.
In fact, the higher up the price scale you go, the greater the difference between buying and renting.
On the other end of the scale, the difference is a lot smaller (percentage wise) and there are even suburbs where it is cheaper to buy than to rent.
Its nothing new ....
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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barns
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Veritas
15 Feb 2013, 12:39 PM

You know, it would be nice is someone did some up to date calcualtions on that.

Here is one example. I can rent this house in Mt. Lawley. Very leafy suburb close to everything for 580 per week.

http://www.realestate.com.au/property-house-wa-mount+lawley-404436371

Here is a similar house in the same neigbourhood for sale at $885,000

http://www.realestate.com.au/property-house-wa-mount+lawley-112921483

Lets assume a 10% deposit. So Im going to borrow, Ill keep it simple and round it off to $800,000.

Comm bank calucaltor says that would cost me $5,016 per Month in mortgage payments. or $1254 per week.

Therefore, the cost of buying a house in Mt. Lawley is more than twice what it costs to rent a similar house.
From a quick look at the houses I'd say that the house for sale is better than the rental. Looks nicer, 2 bathrooms not 1.

Anyway, let's not quibble.

First year buying is always more than renting, however, the gap is much less than your numbers. You should disregard principal payments when comparing to rent. If you do that you get (at 5.5% interest rate) $580 rent vs $846 buy. This is only a $266 difference. Next year, if rents go up by 5%, there will only be a $237 difference, the year after after another 5% rent hike the difference is down to $206 per week.

Even if the owner never pays off a dollar of the house it won't be long until the interest of the loan is less than the rental payments.



“You Keep Using That Word, I Do Not Think It Means What You Think It Means” - Inigo Montoya
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miw
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Veritas
15 Feb 2013, 12:39 PM

You know, it would be nice is someone did some up to date calcualtions on that.

Here is one example. I can rent this house in Mt. Lawley. Very leafy suburb close to everything for 580 per week.

http://www.realestate.com.au/property-house-wa-mount+lawley-404436371

Here is a similar house in the same neigbourhood for sale at $885,000

http://www.realestate.com.au/property-house-wa-mount+lawley-112921483

Lets assume a 10% deposit. So Im going to borrow, Ill keep it simple and round it off to $800,000.

Comm bank calucaltor says that would cost me $5,016 per Month in mortgage payments. or $1254 per week.

Therefore, the cost of buying a house in Mt. Lawley is more than twice what it costs to rent a similar house.
Good example of why PIs tend to stay at the lower end of the spectrum. $580/wk for an $885 house just doesn't cut it as an investment for me. Upgraders will pay well over the odds for a house, whereas people at the bottom of the property ladder will not.

Then again yields in Melbourne always seem to be poor compared to Sydney and Brisbane....
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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barns
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miw
15 Feb 2013, 03:04 PM
Good example of why PIs tend to stay at the lower end of the spectrum. $580/wk for an $885 house just doesn't cut it as an investment for me. Upgraders will pay well over the odds for a house, whereas people at the bottom of the property ladder will not.

Then again yields in Melbourne always seem to be poor compared to Sydney and Brisbane....
If you actually look at the pictures of the 2 houses Veritas provides you'll see they are quite different - I know which one I'd pay more to rent.
“You Keep Using That Word, I Do Not Think It Means What You Think It Means” - Inigo Montoya
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Veritas
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barns
15 Feb 2013, 03:06 PM
miw
15 Feb 2013, 03:04 PM
Good example of why PIs tend to stay at the lower end of the spectrum. $580/wk for an $885 house just doesn't cut it as an investment for me. Upgraders will pay well over the odds for a house, whereas people at the bottom of the property ladder will not.

Then again yields in Melbourne always seem to be poor compared to Sydney and Brisbane....
If you actually look at the pictures of the 2 houses Veritas provides you'll see they are quite different - I know which one I'd pay more to rent.
Theyre diffrent but not chalk and cheese.

But yeah, it was a quick internet scan, so I just tried to find something that fitted like with like.

Feel free to find a better match if you have time.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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barns
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Veritas
15 Feb 2013, 03:09 PM
Theyre diffrent but not chalk and cheese.

But yeah, it was a quick internet scan, so I just tried to find something that fitted like with like.

Feel free to find a better match if you have time.
Depends whether you like a modern kitchen and bathroom (plus a second bathroom). They might not be chalk and cheese, they might be cheese and cheese (Coon v King Island).
“You Keep Using That Word, I Do Not Think It Means What You Think It Means” - Inigo Montoya
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miw
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barns
15 Feb 2013, 03:12 PM
Depends whether you like a modern kitchen and bathroom (plus a second bathroom). They might not be chalk and cheese, they might be cheese and cheese (Coon v King Island).
OK. I didn't actually look at the houses. A different number of bathrooms in particular is chalk and cheese.

In the markets where I am familar (units in the inner west in BNE) 2B2B is worth *at least* $50k more than 2B1B and at least $50/wk more in rent. If you look at current askings it is more like $70k.

To tell the truth it's got me buggered. You can only crap in one place at a time. I'd rather have one good bathroom and a bit more space in the living room.

A good kitchen vs. bad kitchen should be no more than $20k in a low-end property and maybe $40k in a high-end property.


Even so, $780k for a place you can rent out for $550 still sounds like a bad deal to me.
Edited by miw, 15 Feb 2013, 04:26 PM.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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Timo
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Veritas
15 Feb 2013, 12:39 PM

You know, it would be nice is someone did some up to date calcualtions on that.

Here is one example. I can rent this house in Mt. Lawley. Very leafy suburb close to everything for 580 per week.

http://www.realestate.com.au/property-house-wa-mount+lawley-404436371

Here is a similar house in the same neigbourhood for sale at $885,000

http://www.realestate.com.au/property-house-wa-mount+lawley-112921483

Lets assume a 10% deposit. So Im going to borrow, Ill keep it simple and round it off to $800,000.

Comm bank calucaltor says that would cost me $5,016 per Month in mortgage payments. or $1254 per week.

Therefore, the cost of buying a house in Mt. Lawley is more than twice what it costs to rent a similar house.
This is the case in MOST suburbs, where is it actually cheaper to buy then rent anyway?
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
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