AMP Bank pulls out of all investment lending

I doubt the average Vietnam person was able to buy a house using cash or gold 20 years ago. More likely, a dozen people shared a family home that was passed down through the generations. Maybe the houses that did sell were purchased using cash/gold by a minority of wealthy people, but it's unlikely they were being bought by the average person.

An average single person (anywhere) simply cannot afford to purchase something that it takes many men to labour for a long time to build. Not without saving for a long time - after which you're no longer an average person, but part of a wealthy minority with a lot of savings.

It makes sense... if the fruits of a dozen men's labour over many months (to build a house), plus the land, was only worth what the average single person can easily save (after all other expenses), then nobody would ever build a house - they'd all be doing whatever the average single person was doing to earn such a great income.

 

I'd be extremely surprised if the average person could do it - I'd need to see some stats on income levels, house prices and savings ratios before I would believe it.

Obviously some people like your parents and their (probably wealthier than average?) friends could do it - and that's no different to today.

 

2 big points though:
houses as a multiple of yearly income have increased. houses are now more expensive which requires more savings.
bank loans were harder to get back then.

 

That's all true, but the average person still didn't have enough money to buy a house outright.

If the average person could buy a house outright then nobody would ever build houses, because the sale price would be so low - they would put all this time, effort and materials, into building a home, but then they could only sell it for the small amount of money that an average person can easily save after all their other living expenses.

 

My Mum bought a house in Geelong in the 60s before getting married, she was a physical education teacher at the time, she lived at home with her parents.

After getting married, they lived in a caravan and then rented for a while whilst they saved money. They bought a small house and some commercial land outside of Ballarat for cash in the early 70s. My Dad was a bee keeper. He made better money than some, but not excessively so.

They sold Mum's house in Geelong and then bought some more rural land nearby in the late 70s. In the early 80s they took two years to build their dream home to lockup stage. When we moved in there was no carpet or doors inside and we had to turn the taps on using a wrench. The house was built by Dads tradie friends, whenever they had some money they built, and stopped when the money ran out.

The only time they ever borrowed money was for an investment unit in the 90s (which turned out to be a dud).

My parents did get a little help from their parents from time to time, but not excessively so, and that was mostly later in life. Mum never really worked which I was a kid, Dad worked very hard. Sometimes he made very good money, but sometimes they made almost nothing (1985 was particularly brutal after a major drought).

They were very hard savers, little went to waste and they did a lot of things to supplement cash flow or reduce outgoings. The small farm had a few cows which turned a modest profit and an endless supply of beef.

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My family has some immigrant friends who had a terrible work ethic, but he was a carpenter. They saved what they could and bought some land outside of Daylesford. He literally cleared the site and built quite a nice house there himself. They didn't have much of a work ethic, but he was good with his hands.

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I don't disagree that it's difficult to buy a house with cash these days, but even today you do see a lot of migrant families doing this. In many ways it was banking deregulation in the 90s that gave rise to higher levels of borrowing, higher prices which in turn forced higher levels of borrowing.

 

It was just how properties were purchased then. I didn't say it could be easily saved, it may have taken years to be able to afford a home but that was how everyone was buying property (average or wealthy).

 

Probably mostly the wealthy.

 

yep paycheck to paycheck, people don't change.

 

My father has purchased 5 properties with cash in Melbourne from 1978 to the latest 1998. You wouldn't be able to do that now!

 

I'm sure the wealthy bought more and better properties obviously, but the average person was also buying properties. Not sure what we're arguing about, you asked if there was any point in time where an average person has been able to buy property without a loan and the answer is yes there has been and I gave an example that was asked for.

 

She bought it outright, with no assistance from her parents?

If true, then she may have earned more than average, or the house may have been a lot cheaper than average.

I still maintain that the average person could never buy an average house outright, because the cost of labour and materials required to build an average house (plus the land) is more than an average person can save in a reasonable time.

 

Some people are still able to do that now.

 

If fully approved it would still settle. I have loan docs for a top up which will still go ahead once they I send them back today.

 

You gave an example of somebody being able to do it, but that doesn't mean it was typical or normal for the average person to do it.

People today can buy property without a loan. People could also do it in the past.

But it has never been normal or typical for the average person to buy a home outright, anywhere in the world.

Sure, we can find examples of people doing it - but those people weren't the average homebuyer at the time - they were not typical of homebuyers at the time.

Let me reword my initial statement from...

'Has it ever been the case, anywhere in the world, that the average person could buy a home without borrowing money?'

to...

'Has it ever been the case, anywhere in the world, that the average person bought their home without borrowing money?'

And by 'average person' I mean a typical person with average wealth and average income for the country.

Before finance became readily available, the typical person rented, or lived in a home with extended family that was passed down through the generations.

Only the wealthy bought homes until finance became readily available allowing the average person to borrow the necessary funds.

 

I didn't give you an example of 1 person doing it. I gave you an example of an economy where that was the main way of doing it, including plenty of "average" people.

 

Sorry, I thought I was replying to Peter.

OK, in your case, why did anyone build homes in Vietnam if there was no profit in it?

To build a home takes multiple people many months to do, plus they need to purchase the land and materials. So they put in all this time, money and effort, and then the average person comes along and can just afford to buy it with their savings?

So an average person in Vietnam 20 years ago had savings equivalent to the man hours of many men working for many months, plus all the materials, and the land, plus some profit? I find that highly unlikely.

It's more likely that wealthy people bought houses, and the average person either rented, or lived in a large family group in a house that was passed down through the generations.

 

As I said before, an average person would have just saved over many years to be able to afford to purchase their own home and if they had to live in multi-generations household to do so then that's what happened. I'm not sure what it is that is so hard to understand or why there's this stubborn refusal to acknowledge that there have been economies in the past which didn't involve leveraging for home ownership.

 

There have been economies in the past that didn't involve leveraging for home ownership.

In those economies, only the wealthy owned homes, and the average person rented or shared with extended family in a home that was passed down through the generations.

It was only with the advent of readily available finance that home ownership became a real possibility for the masses - i.e. for the average person.

Home ownership rates in capitalist countries have surged with the advent of finance for the masses... from 10% home ownership in the 1800s to around 60-70% in most western countries today

Without going into the history of Vietnam in too much detail, it has a socialist background where the government has mandated a certain level of subsidised shelter for the masses, so it's not really comparable.

 

So AMP...

 

So AMP pulls out of Vietnam lending...