You are saying any young people who can't afford a house but could of comparitively 10 years ago are all wingers? You never have facts to back up your statements?
Are people who want a starter home in a suburb within 1/2 hour of city without paying 40-50% of there weekly income on a mortgage spoilt brats? How so?
How is land 4-5 times the average wage a bargain or cheap? This land would cost 60k in Texas? Why is this? show me some facts? No one is saying they necesary want to live there. They fact is they have a recipe for cheap land and therefore houses which refutes your facts and shows it can be done.
Why if we point out facts are we whinging? You have still not answered why in cities like Houston which have grown, houses have not increased like here? Why they are largely less than half the price while people are only earning 10-20% less there?
We are not keen to pay off investors mortgages, people cannot afford homes they have no choice but to rent off investors? If houses we affordable people would not be doing this but buying their own its a no brainer.
But of couse you think anyone can afford a house and we are all spoilt and wingers and it is our own fault.
Aww come on mate you are putting all kinds of word into my mouth. I have not seen one fact from you and I have provided you with a bucketful of easily verifiable data.
What I am saying is that yes of course there are issues for folk on low incomes in cities like Sydney, and these need to be addressed.
However, what you are asking for is clearly too much, you want to be within 1/2 hr of the city. Well sorry mate but you will have to pay what other people pay to live there that is just a fact of life. There are many more people wanting to live within 1/2hr of the city than there was even a decade ago and the folk willing to pay for this luxury will get these homes not those who cry about the price. Try buying within 1/2hr of London, Paris, Tokyo, Rome, Madrid, Moscow, san Fransisco, New York etc etc they are all way more expensive than Sydney. Would you feel sorry for a British first home buyer who works in the centre of London if they whined like a baby that they could not afford to buy within 1/2 hr of the city, or would you laugh your socks off at the cheek and greed of them.
My uncle could have bought in Centennial park but there is no way I could afford to buy there and we are on much higher relative wages than he was on. If I had cried about that I would never have bought in daggy Coogee and I would have missed out on lotsa good price growth. This is the risk people will run if they are led to believe that there will be such a turmoil of unheard of before changes to the market that this new generation can suddenly get to buy the last generations homes.
In the US it was not young people who bought at the lowly crash time prices,it was rich cash buyers, who are now enjoying massive capital gains. Young people are always the most disadvantaged by such turmoil look at youth unemployment figures in those countries which have suffered so much from this GFC crisis. Why on earth would you wish that fate on our much more egalitarian Australia?
I do not know when it became so acceptable to whine like babies about the fact that the city has prospered beyond the reach of first home buyers to buy inner city property. However, when prices rise another 10% it will certainly become laughable again. Make your escape from the gloomer's camp before then if you have any sense. I have watched this whole thing play out a few times, the talk is always the same and those who hang on too long to the doom and gloom get left behind rapidly.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
Skamy's thoughts are to our minds what oil spills are to coral reef.
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
Yes that is true. But why not a slow melt. It is frustrating and depressing for a lot of people to see their life time of saving for a deposit disappear as houses rise by more than their savings in 1 or 2 years. Do you buy a crappy house in a shit suburb send your kids to shit school in the middle of nowhere to hang out with dodgy people with a big commute to work just to get on the housing ladder? You watch your 20% deposit disappear and then have to pay mortgage insurance. Thats what a lot of young people face and they are thinking it is just not worth it, will quality of life ever catch up with a decision like that.
No the area will improve as more folk like you buy there. Look at the inner west, even Coogee was considered crime ridden when we moved there in 2001. Where you can afford to buy is where everyone of your income can afford to buy so it will soon be overwhelmingly owned by your kinda people. then businesses will move to service you guys and developers with think hey this is getting to be a nice suburb and invest there and before your kids are 5 years older you will be much happier with your choice. At least that is what I have always found.
Alexandria was a shit hole, sorry but it was, and now it is a young trendy hub where all the successful young folk want to buy a pad close to the city.
Look back through years of housing data and you will see that by far and away the majority of folk bought in a rising market,this is not an unusual thing for your generation of buyers.
The real problem is the larger deposits you guys have to save, but do we want to change this and run higher risks and maybe just inflate the market more. What do you think of the solution that the British government are offering?
A slow melt will only occur if the prosperity and population of the city stagnates ie see Japan with shrinking population and GDP. Is this what you really want? I prefer being part of a growing vibrant city myself, and if you are in Sydney and living within 1/2 hr of your workplace and good free schooling is high on your agenda, you would not go far wrong moving to Perth where all this is still available, together with high incomes.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
Yes but there is also no reason why we couldn't have the San Francisco situation here as well. If we want to cherry pick we could have anything, but what we have is what we have and no amount of dreaming will change that.
It's nice to be idealistic, but the question for people who want to buy now is do the goverments at all three levels of federal, state, and local have the will and fortitude to make radical changes that will create a housing crash that will hurt most of their constituents and threaten their own income streams or not, and my guess would be - probably not.
That's the cold hard reality of life beating at your door. You mightn't like it but somehow you have to make it work for you because it's not going to go away anytime soon. So what is your best tactic - it might be renting and investing in something else, or you might do what you don't want to do and buy a house. Whatever you do don't be tempted into blowing your savings, make sure they are directed into a productive asset, which could be almost anything. There are many investments out there - some good some bad.
Yes that is true. But why not a slow melt. It is frustrating and depressing for a lot of people to see their life time of saving for a deposit disappear as houses rise by more than their savings in 1 or 2 years. Do you buy a crappy house in a shit suburb send your kids to shit school in the middle of nowhere to hang out with dodgy people with a big commute to work just to get on the housing ladder? You watch your 20% deposit disappear and then have to pay mortgage insurance. Thats what a lot of young people face and they are thinking it is just not worth it, will quality of life ever catch up with a decision like that.
Yep that's a fair point of view and you ask fair questions.
here are my thoughts. You mentioned slow melt, so I'll assume that you read at Macrobusiness and are familiar with their "slow melt" theory. I agree with the theory, but I don't agree with what many seem to think it stands for.
Here is how Leith defined it just two days ago on the ABS House Price thread.
Quote:
Unconventional Economist says: August 6, 2013 at 12:38 pm The “slow melt” refers to prices gradually deflating relative to incomes and GDP (not nominally). It will happen as the headwinds of the ageing population and the mining unwind bites, but it could take a long time. Nothing moves in a straight line.
What he is saying is that the Real Price could fall over time even though the value in nominal terms may be rising. All we need to achieve that is house price growth that is less than the rate of inflation over a period of many years. Or we might see 1970"s rates of inflation over a few years. Either way the house price still grows from the current price. It doesn't mean a house price crash, although in an extreme case that would also achieve the same result. Neither a house price crash nor extreme rates of inflation are likely IMHO.
Most people will read Leiths words and think that it means a crash, and the crash is imminent - that's not my interpretation, and I don't believe it's Leiths as well, although clearly you would need to ask him directly on this point to clarify that. If we agree then you may be faced with a wait anywhere from 5 to 25 years. I would not put my life on hold that long to buy an asset which will still be priced higher in the future, I would make whatever sacrifices I needed to, to get what I wanted to achieve - but perhaps that's just me.
Further on that point, I have thought several times what I might do if I was looking to buy my first house at the moment. It would depend on where I lived. I can buy quite nice first homes in Brisbane for $350K and for most working couples that is manageable. If your at the higher end in Sydney then I don't know, perhaps I would buy in a currently undervalued area that might be outside Sydney and rent that out, whilst renting in a suburb that gives you access to the schools and other infrastructure that you need to be near.
Perhaps I would look to buy shares and give houses away completely, or maybe I would buy a couple of offices to rent out, or maybe a unit at Byron Bay, Hervey Bay, who knows where buying opportunities can be found.
Owning the home that you live in is not necessarily the goal, accumulating quality assets should be your primary focus. It's nice to live in a place of your own, but it's not always the best investment. Many smart property investors choose to rent their accomodation even though they could buy.
I feel for you, but analysing why we are where we are won't help unless you can see a reversal of fortune in the near future. Otherwise you need to make plans to counter what you see now as a problem. People the world over face greater difficulties than this every day, some overcome them, some don't.
Best of luck..
Any expressed market opinion is my own and is not to be taken as financial advice
Skamy's thoughts are to our minds what oil spills are to coral reef.
Frosty, I am sure you can read Veritas quite clearly from this post. He is a head in the sand, crash wisher and cheap home dreamer.
He is also quite quite rude. I really feel sorry for the older people in his life.
Veritas, my thoughts are like clean fresh water washing away all the shit from your doom and gloom glasses. The truth is that I care more about you and other young folk like you and their future than your doomer mates over at Macrobusiness who take you money for their silly fairy tales of cheap houses, while they watch you getting locked out of your own time in the sun for property,equities and a zillion other opportunities that are available to you young uns as we emerge from this global crisis. Bloody charlatans that's what your so called mates are, bloody charlatans. Break free from them Veritas open your eyes and see the sunshine and get your head outta the manure for long enough to smell the roses.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
A slow melt will only occur if the prosperity and population of the city stagnates ie see Japan with shrinking population and GDP. Is this what you really want? I prefer being part of a growing vibrant city myself, and if you are in Sydney and living within 1/2 hr of your workplace and good free schooling is high on your agenda, you would not go far wrong moving to Perth where all this is still available, together with high incomes.
You might want to go find a bigger platform if jawboning's your thing
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness. "Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
Most people will read Leiths words and think that it means a crash, and the crash is imminent - that's not my interpretation, and I don't believe it's Leiths as well
Here's what Leith van Onselen said in 2010...
"In my opinion, an Australian house price crash is inevitable and cannot be avoided."
Of course now that the ABS index has risen to a new all time high in 2013, he is rapidly backtracking.
In mid-2012 he predicted a 6% decline in Melbourne house prices. Prices rose 6% instead.
What about all those bears who believed him in 2010 or even 2012 and delayed buying (or sold!) on the basis of his overpriced advice?
I get stuff wrong too, but I'm just an anonymous commenter on a forum... I don't run my own blog promoting my predictions, or charge people for my crappy advice.
The sense of self entitlement is staggering. If someone wants to pay money for something that you are not willing to pay money for, its theft?
No, my point was the goal posts are always being shifted to satisfy those who already own OR are paying the bank until they do own (the majority) at the expense of those who don't. Imagine how you would feel as a 25 year old with land and housing policy the way it is now?
A lot of younger people are giving up on home ownership completely, and will wait to inherit. The FHB market is in trouble as a result and will continue to be until government planners provide more supply in inner city areas. Otherwise, young people will just keep renting as lifestyle is the important thing for them.
No, my point was the goal posts are always being shifted to satisfy those who already own OR are paying the bank until they do own (the majority) at the expense of those who don't. Imagine how you would feel as a 25 year old with land and housing policy the way it is now?
You mean things like FHOG? Or stamp duty exemptions for first time buyers? Or First Home Savers account?
Government policy always changes ... sometimes in your favour and sometimes not. Deal with it.
No, my point was the goal posts are always being shifted to satisfy those who already own OR are paying the bank until they do own (the majority) at the expense of those who don't. Imagine how you would feel as a 25 year old with land and housing policy the way it is now?
They are, and sometimes it really does suck (someone mentioned not being able to keep up while saving for a deposit) but there are dips along the way..
I would prefer it to be more stable but that's not the world we live in
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