51 years of median house prices - 5 capitals

Discussion in 'Where to Buy' started by maxcree, 12th Apr, 2021.

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  1. maxcree

    maxcree Member

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    Some data from various places.

    Median House Price (ABS/REIA)

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    Median House Price (ABS/REIA) - Log scale
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    Median House Price (ABS/REIA) - relative to Sydney

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    Lending Rates (RBA)

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    Interest Payments (80% * median price * lending rate)

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    Interest Payments as % of Average Full-time Total Earnings (ABS)
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    Median Price to Average Earnings Ratio
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    Median Price to Average Earnings Ratio - relative to Sydney
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  2. Beano

    Beano Well-Known Member

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    I remember buying a house on two years salary :-:)oops:
     
  3. Traveller99

    Traveller99 Well-Known Member

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    It looks that Sydney medians pulled away from the other capital cities in the early noughts with them making ground steadily over the next decade. The same appears to be happening again.

    What do people think about a similar scenario playing out again? Affordability?
     
  4. spoon

    spoon Well-Known Member

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    In 2009/2010, Perth people should have sold their Perth IPs and buy in Sydney. They would be laughing now. If... there is always If's....:(
     
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  5. Ruby Tuesday

    Ruby Tuesday Well-Known Member

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    I remember working as cartman in the late 70's, for 5 Greeks who Bought 5 houses in Adelaide in 5 years with cash, working 3 months a year picking grapes. Literally handed over cash to buy them didnt believe in borrowing. Probably take 6 months now for the 5 Greeks to buy a better house in Adelaide so still affordable.
     
    Last edited: 12th Apr, 2021
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  6. Beano

    Beano Well-Known Member

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    Interest rate was 10% for 1st mortgage and 12% for second mortgage then
     
  7. Liquidity

    Liquidity Well-Known Member

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    @maxcree - thanks for sharing. Great data.

    Looks like the lending rate data is still showing rates just under 5%. Presume the 2021 dataset will push the number down even further.
     
  8. Rex

    Rex Well-Known Member

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    Nice. Shows what people who watch the Perth market closely see - affordability, mean reversion upside and huge headroom for growth.

    @maxcree I'd love to see one of these charts for total loan repayments (P&I) at 80% vs median household incomes or wages to get a succinct picture of what affordability looks like relative to previous periods.
     
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  9. boganfromlogan

    boganfromlogan Well-Known Member

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    Where are the charts that plot:

    1.FOMO?

    2. Moving to the country;

    3. Climate change;

    4. Virus

    There must be a spreadsheet somewhere.
     
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  10. Frenchie

    Frenchie Well-Known Member

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    Wage growth index was well North of 10% back then, now it is below 2%
     
  11. spludgey

    spludgey Well-Known Member

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    Very interesting.
    One small thing though, it would be more meaningful to have median earnings. :)
     
  12. BB5

    BB5 Well-Known Member

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    Meant house prices were lower and deposit savings were growing at 10 percent.

    Much easier to get in the market.
     
  13. Treehouse

    Treehouse Member

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    What is the relative % when compared to price, wage and interest rate? I think the Sydney Housing Price is going to peak but remains unsustainable if wages remain stagnant. I think affordability will kick in when the housing dominos fall. As it stands, only those with enough cash can afford to ride the housing perfect storm engulfing the Sydney landscape.

    If you're purchasing a property overvalued at 20% with a wage at a steady rate of 2-5% increase or none at all and you have price increases in other sectors e.g. utilities, foods, etc. and government inflation target rate of 2-3% then top that up with the NSW government introducing land tax charges on all principal place of residence, you wont be able to keep up with repayments if the interest rates goes 3-5 times with your 0% wage increase.
     
  14. Blueskies

    Blueskies Well-Known Member

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    Thanks for sharing these. For me I find the 3rd chart really interesting, state capital medians relative to Sydney. Says that over the last 50 years Brisbane has hovered between 50-75%. Currently at 55%, good sign!
     
  15. Beano

    Beano Well-Known Member

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    When we first brought a house in 1972 a semi detached 3 bedroom house was $7k my salary as a accounts clerk was $3k
     
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  16. Treehouse

    Treehouse Member

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    You have meteoric rise of billion dollar tech companies employing and outsourcing overseas/labour, earning one's keeps would be harder than ever let alone think about wage rises. Given the underemployment, unemployment, underutilisation of labour force, participation rate, etc.in the covid era, it is safe to presume that it is on or about 2% but slightly more in Mining Sector. Top that up with little to less than job security, you're a very lucky person to have earned your keeps in the 70s.

    If you are about under 30s one can safely anticipate wage rise but over 50s would find it harder to expect any at all or keep a job at all.

    The silver lining comes when the government actually delivers strong economic policy that would allow labour and productivity to evolve through the pandemic and get us on top of the pandemic because Covid will be with us for a long long time. One can only hope.
     
  17. craigc

    craigc Well-Known Member

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    Always wary responding to a new member permabears in an economic thread, but you’ll be pleased to know your hopes have come true!

    Employment and unemployment
    160,000 new jobs in the last 2 months,
    employment numbers are now higher than pre-COVID,
    unemployment rate is down to 5.6% and only reason it’s not even lower is due to the record participation rate.

    Good luck as you now join the market!
     
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  18. mickyyyy

    mickyyyy Well-Known Member

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    @maxcree the graph with Median price to average income ratio would be showing Sydney at over 12 times right now if it had 1/1/2021
     
  19. maxcree

    maxcree Member

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    ABS has Sydney median house price for December 2020 at $1,000,000
    and Australia full-time adult average weekly total earnings at $1,770.
    Sydney average income is about 10% higher than country average.
    So 1000000/(1770*52*1.1) = 9.88.

    Core Logic has Sydney median for March 2021 at $1,112,671 verses $1,015,354 in December 2020. So about 11 times now.
     
  20. maxcree

    maxcree Member

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    Couldn't find a good 50 year data series for median earnings.
    Census has median household income but it's only every 5 years.
    Easier to use average weekly earnings which goes back many decades.

    As most would know, average income has been growing more quickly than median income (rich getting richer). Low-income households tend to rent while high-income households are the ones buying homes and investment property.

    While rents tracks fairly closely to median income, could argue that average income is a better indication for price.
     
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