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Anyone on minimum wage can afford to buy or rent a home in Australia
Topic Started: 29 Jan 2013, 03:53 PM (22,062 Views)
Aussiehouseprices
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Shadow
30 Jan 2013, 11:15 AM
AHURI
 
This is in general agreement with our assertion that almost anyone with a job could become a home owner during this period if they wished.
Nice find.

Also interesting how the bears start to call me a 'troll' just because I post some facts that they don't like. Very reminiscent of GHPC and Credit Crunch before their downfall, as the bears became increasingly frustrated at the lack of a property crash and started directing their anger towards the bulls, who they finally realised had been correct all along. Housing in Australia is perfectly affordable. This fact angers the bears because it makes them realise how unlikely a crash really is, and how they have wasted so many years of their life waiting for a crash.
So what? In America, anyone with a pulse could become a home owner before the bubble burst. Does that mean that home ownership was affordable or that a crash was unlikely?
Edited by Aussiehouseprices, 30 Jan 2013, 02:50 PM.
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Veritas
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Strindberg
30 Jan 2013, 01:21 PM
Veritas
30 Jan 2013, 12:27 PM
Almost anyone.

So, some couldnt.

If everyone could- like someone on the minimum wage for example- then they would have said "anyone" n'est pas?

Perhaps the best way to asnwer this question ultimately is to try and find out how many people on the minimum wage are homeowners.

Doing your usual wriggle when faced with facts you'd rather didn't exist.
I suspect the "almost anyone" is there to cover those who might be people with long prison records or other factors which limit them.
We know that people on minimum wage CAN afford to buy a dwelling. There is no reason to limit the dwelling to major city metro areas.


The stats for ownership amongst the bottom income quintile of households are in the ABS Housing Costs Report 2009/10 table 10.

Number of owner households in bottom 20% income group = 1,266,400

Number of renter households in bottom 20% income group = 715,700

So, 64% of the bottom 20% of households by income are homeowners. Not much different to the overall figure..



Im not wriggling at all.

Almost all. Does not mean all. Fact.

As for he homeownership stats, broad enough spectrum there, plus it doesnt speak to inheritance and the like.

The debate in quesion is covered in the opening post and has been largely dead as debate since mid way through the second page when Miles pointed out the absolutely ludicrous nature of Shadows assertion that minimum wage earners can afford to buy properties.
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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miw
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Aussiehouseprices
30 Jan 2013, 02:46 PM
So what? In America, anyone with a pulse could buy before the bubble burst. Does that mean that home ownership was affordable or that a crash was unlikely?
So what? The reason anyone with a pulse could buy a house in the US (as long as they had a certain level of credit score, BTW) was that some lenders were quite happy to write loans when they knew absolutely that the borrower could not afford even the first payment.

Now, if you can show an example of that happening in Australia, I will consider the comment relevant. :-)
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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nipa hut
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miw
30 Jan 2013, 02:38 PM
But I think I have saved at least 1/3 of my after-tax income towards housing investment my entire working life. It just became a habit. It has to disappear from your cash before you see it.
At what income level, relative to a minimum wage at the time?

It is entirely unsurprising that such savings rates are possible after graduation from uni, or after any substantial trade qualification--either of these delivers a starting salary/wage bump well beyond the minimum, with a promise of more to come.

And I don't doubt that a middle-class person's experience of comparative "privation" during the uni / trade-apprentice experience may seem formative, and somehow comparable to those on a more sustained minimum-wage path. But it ain't so, over any sustained post-graduate comparison.
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Aussiehouseprices
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miw
30 Jan 2013, 02:50 PM
Aussiehouseprices
30 Jan 2013, 02:46 PM
So what? In America, anyone with a pulse could buy before the bubble burst. Does that mean that home ownership was affordable or that a crash was unlikely?
So what? The reason anyone with a pulse could buy a house in the US (as long as they had a certain level of credit score, BTW) was that some lenders were quite happy to write loans when they knew absolutely that the borrower could not afford even the first payment.

Now, if you can show an example of that happening in Australia, I will consider the comment relevant. :-)
I'm not suggesting it's as bad here as it was in America in that regard. The post I was replying to (and this entire thread) seems to suggest that because people can buy, it must be affordable and a crash must be unlikely. My American example proves that it's not necessarily the case.
Edited by Aussiehouseprices, 30 Jan 2013, 03:01 PM.
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Poontang
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miw
30 Jan 2013, 02:50 PM
So what? The reason anyone with a pulse could buy a house in the US (as long as they had a certain level of credit score, BTW) was that some lenders were quite happy to write loans when they knew absolutely that the borrower could not afford even the first payment.

Now, if you can show an example of that happening in Australia, I will consider the comment relevant. :-)
Was there not the Mortgage Broker whom confessed to loan applications being "embellished" to make it throught he loans departments of finance institutions so people whom otherwise would not have got the loan could. Numbers in the thousands if I recall.?
There are some people who seem angry and continuously look for conflict.
Walk away, the battle they are fighting isn't with you, it's with themselves.

The first lesson of economics is scarcity: There is not enough of anything to satisfy all who want it.
The first lesson of politics is to disregard the first lesson of economics. ~ Thomas Sowell.

Who was the fool, who the wise man, who the beggar or the Emperor? Whether rich or poor, all are equal in death.
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Veritas
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miw
30 Jan 2013, 02:50 PM
Aussiehouseprices
30 Jan 2013, 02:46 PM
So what? In America, anyone with a pulse could buy before the bubble burst. Does that mean that home ownership was affordable or that a crash was unlikely?
So what? The reason anyone with a pulse could buy a house in the US (as long as they had a certain level of credit score, BTW) was that some lenders were quite happy to write loans when they knew absolutely that the borrower could not afford even the first payment.

Now, if you can show an example of that happening in Australia, I will consider the comment relevant. :-)
Like everywhere else, we wont know how many dodgy mortgages were given out in Australia until the macro changes.

First comes unemployment and economic slowdown, then come the defaults.

In the case of American this was predicted by Dr. Elizabeth Warren in 2007 and she was just talking about mainstream lending practices- not the sharp end of subprime.

Its a really good lecture if you havent seen it, check it out.

The coming collapse of the middle classes.



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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Ex BP Golly
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Shadow
30 Jan 2013, 01:41 PM
The proposition is that anyone on minimum wage CAN afford to buy or rent a home in Australia. It's not about how many people have done it - it's about what people are able to do if they put their mind to it and make the necessary sacrifices. The fact that not many people are willing to make the necessary sacrifices is irrelevant to the proposition. Some people have other priorities - for example Mile's priorities include drinking, smoking, buying expensive gifts and running up large phone and internet bills - and that's fine... I'm sure he gets a lot of enjoyment from those activites. But the fact still stands that anyone on minimum wage CAN afford buy or rent a home in Australia. They just need to make it a priority and it can be done. AHURI agrees.
You say "necessary sacrifices" a lot.

Home ownership has taken on biblical qualities in Australia :lol



WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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miw
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nipa hut
30 Jan 2013, 02:56 PM
At what income level, relative to a minimum wage at the time?

It is entirely unsurprising that such savings rates are possible after graduation from uni, or after any substantial trade qualification--either of these delivers a starting salary/wage bump well beyond the minimum, with a promise of more to come.

And I don't doubt that a middle-class person's experience of comparative "privation" during the uni / trade-apprentice experience may seem formative, and somehow comparable to those on a more sustained minimum-wage path. But it ain't so, over any sustained post-graduate comparison.
Irrelevant.

What we have is examples of people living on less than 2/3 of the minimum wage, which proves that it is possible for someone on minimum wage to save 1/3 of their income.

To say someone on a minimum wage cannot save money is specious. What you are saying is that someone on a minimum wage is unlikely to save money, which may be true, but it is irrelevant. If you cut people slack for being undisciplined or stupid, all you do is encourage them to be undisciplined or stupid.

Mind you, I have seen people on minimum wage or less do heroic feats of saving in order to buy a car or go to Europe.

The other thing I have noticed is that people who are focused on financial matters rarely stay on minimum wage for long.

Aussiehouseprices
30 Jan 2013, 02:58 PM
I'm not suggesting it's as bad here as it was in America in that regard. The post I was replying to (and this entire thread) seems to suggest that because people can buy, it must be affordable and a crash must be unlikely. My American example proves that it's not necessarily the case.
Actually, I think the thread is about affordability rather then the likelihood of a crash.

But in any case the level of pathology in the subprime loan-writing market in the US in 2004-5 is so totally outside the Australian experience that it says nothing about what is and isn't likely to happen in Australia.
Edited by miw, 30 Jan 2013, 03:28 PM.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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nipa hut
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Strindberg
30 Jan 2013, 01:59 PM
As wiki would say:

[Straw Man fallacy]
Once again, how, Strindberg, does my question to the board about their life experience, differ from the premise that Shadow set out for affordability of purchased housing on minimum wage?

Remember, all of the conditions need to have applied over the multi-year period:
- minimum-wage income
- living on their own [without parental or other subsidy of any kind]
- actually saved a full 1/3 of their income towards a down payment on a house

You have pretended that the above is a "straw man", in relation to Shadow's premise. In what respect, exactly?

I do note that the two individuals who have responded thus far about their uni-years' experience actually had lower-than-min-wage incomes during that period, and (presumably) higher ones afterwards. I.e. their income and real-estate ownership-affordability experiences were completely unrepresentative of Shadow's model of min-wage housing affordability, both during and after uni.
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