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Sydney House Price and Mortgage Repayment to Income Ratio 2002-2013
Topic Started: 3 Nov 2013, 07:00 PM (11,479 Views)
mango66
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mel
8 Nov 2013, 09:50 AM
low maintenance 1100sqm with stupidly high ceilings at a fair price.. you gotta love that.
The RE agent in that example looks about 15 yo
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skamy
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Don't Buy Now
7 Nov 2013, 11:23 PM
The people I see being hurt are the negative gearers and anyone buying into this market. If they are excited by the rise in Sydney, they need to get a life.

Government bulldozers egged on by a cheering lynch mob of righteous homeowners insist the young must sacrifice two decades for a plot of land.

I can just see the tv news story and angry spittle voxpops.

Prices will revert to mean. Avoid being a casualty. Do something else.

Don’t Buy Now!
Silly duffer -- house prices don't drop in markets like Sydney other than a few times in most peoples working lives (usually caused by some significant global event) and we are just emerging from one such period.

Don't listen to gloomer eejits like this guy, they have been spouting their silly nonsense throughout my life. Sydney prices are actually quite reasonable by International comparisons, that is why we are attracting global investment. It is much much more likely that prices will rise than fall at this stage, if history is any guide. Take the advice of older people in your own life and walk away from these cheap-house-fantasy peddlers.

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.
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Shadow
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Evil Mouzealot Specufestor

Interesting charts here showing the UK house price to income ratio is also currently where it was in 2003, though with some variation between regions (same as Australia)...

http://www.neweconomics.org/blog/entry/what-you-need-to-know-about-the-housing-market

Posted Image

Posted Image
Edited by Shadow, 11 Nov 2013, 12:29 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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So Sydney median prices have hit $700K!

At the current rate, they will surpass $1 million in just 3 years.

I really don’t understand how its possible to pay off such mortgages! We’re looking at an entire median paycheck for minimum repayments! Rents seem to be rising now according to a recent article in The Age about sky-rocketing evictions.

I wonder what the physical limit is. Perhaps 1.5 median incomes would be it. This would pretty much leave the average DINKs without disposable income. However, many people want to have kids, and there needs to be some level of disposable income left to support the retail economy. So perhaps the limit is the current prices? or something like $800K?
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stinkbug
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11 Nov 2013, 04:39 PM
So Sydney median prices have hit $700K!

At the current rate, they will surpass $1 million in just 3 years.

I really don’t understand how its possible to pay off such mortgages! We’re looking at an entire median paycheck for minimum repayments! Rents seem to be rising now according to a recent article in The Age about sky-rocketing evictions.

I wonder what the physical limit is. Perhaps 1.5 median incomes would be it. This would pretty much leave the average DINKs without disposable income. However, many people want to have kids, and there needs to be some level of disposable income left to support the retail economy. So perhaps the limit is the current prices? or something like $800K?
People who buy homes that price are often on higher than median incomes. When I first bought my house cost about 7.5 times my income, but when I moved out I was earning almost that much per year.

Incomes grow, and upgraders have a shitload more capacity than FHBs.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Admin
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Quote:
 
The Truth about House Price and Income Growth

By Martin North | November 21, 2013 | Economics and Banking

Data is often cited to show that on average, the ratio of debt to disposable income verses house prices track quite closely and so we are not in a house price bubble. However, the problem with averaging data is that in can mask important differences. DFA has completed analysis in the NSW market looking directly at the rise over time of house prices and comparing this with average disposable income growth across income bands. The net conclusion is that house prices are rising faster than average incomes. It shows that lower income groups have not enjoyed such strong growth when compared with the higher earning groups. Actually, the average disposable income in NSW since 2008 has only grown a little. This leads to the conclusion that the price income ratio have deteriorated. This in my mind suggests we should be concerned about the current house price momentum.

Posted Image

Now, the debate has been on about whether we are in a house price bubble or not. Often a bubble is not recognized until price deflation corrects it. The classic bubble shape of the South Sea Bubble is often cited and is an interesting case study.

Posted Image

We do not have the same rapid rise in house prices, so technically we may not be in a bubble. Actually what we have is worse, as it is long term systematic issue, with property absorbing an ever greater proportion of household income. This is both people saving for property and servicing debt. My earlier posts references the recent ABS study on this.

As the drive to own property in Australia remains strong, households will do what they can to get into the market, and this means directing more income to acquiring property, leaving less for other activities. High and rising house prices are a bad thing for the broader economy as it blots up otherwise discretionary spending. Retail and other sectors are being negatively impacted by this need to spend.

But my main point is we need to move away from averaging statements, and dive into the detail to see what is really going on.

Read more: http://www.digitalfinanceanalytics.com/blog/the-truth-about-house-price-and-income-growth/
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miw
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peter fraser
8 Nov 2013, 07:40 AM
Bob is correct. He is also correct in his later statements where he encouraged people to buy acreage in the country and build unauthorised dwellings to save money. A huge number of structures used as dwellings in country NSW are not council approved dwellings. They are converted sheds and the council allows people to live there because there are so many of them and it's just too hard to sort the problem out.

It's the same in Qld and I'll wager it's the same in Victoria.
My brother can tell you a bit about the consequences of building unauthorised structures on acreage in the country. The councils have discovered google earth and are following up quite vigorously. Old stuff is currently grandfathered, but they sure get shitty about new stuff.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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goldbug
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mango66
7 Nov 2013, 10:50 PM
Im going to laugh like fuck when you get your arse bored out by the banks. Your bank manager is going to turn you into a spit roast when you miss payments on your houses worth less than you paid for.
Another shadow post based on meaningless income statistics. If household income includes the parents and children's incomes combined, that tells you nothing about housing affordability. All it really says is that if 4 or 5 people all combine their incomes they can easily afford the repayments on a medium house. Traditional couples on the other hand will struggle or be shut out of the market.

Government statistics are nothing more than a pack of lies designed to make themselves look good in the eyes of the voting public. Imagine if when they gave the unemployment stats they also stated the percentage of Australians of working age that are on centerlink payments. All of them, carers, sole parents, etc. I think the public might have a very different view of the stats then.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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CSI
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What does the next 20 years hold then? Investors won't be happy for prices to stay where they are, they will be expecting them to continue rising faster than inflation, which will further increase the price to wage ratio. So in 20 years looking forward to 15:1 or more?
Edited by CSI, 4 Dec 2013, 07:39 AM.
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Shadow
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Evil Mouzealot Specufestor

goldbug
4 Dec 2013, 07:10 AM
Another shadow post based on meaningless income statistics. If household income includes the parents and children's incomes combined blah blah blah
The chart shows house price to adult single wage. You can go back to sleep now.


CSI
4 Dec 2013, 07:38 AM
What does the next 20 years hold then? Investors won't be happy for prices to stay where they are, they will be expecting them to continue rising faster than inflation, which will further increase the price to wage ratio. So in 20 years looking forward to 15:1 or more?
Wages rise faster than general inflation, and have done since the dawn of civilisation (otherwise we'd still be living in caves).

Investors will be happy with house prices continuing to track income growth over the medium-long term, as has been the case for over a decade.

Plus they get the ever-increasing rental income stream of course, which makes the investment worthwhile even if there was no capital growth.
Edited by Shadow, 4 Dec 2013, 08:01 AM.
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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