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An answer to housing affordability

Discussion in 'Investor Psychology' started by Bargain Hunter, 5th Aug, 2015.

  1. Bargain Hunter

    Bargain Hunter Well-Known Member

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  2. neK

    neK Well-Known Member

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    Did you have these conversations with your kids?
    Did it go the same way?

    I'm looking at the amount of toys in my daughter's play pen and I'm thinking... this is going to be why she won't save any money :( I buy too much and give in too easily. :(
     
  3. jaybean

    jaybean Well-Known Member

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    Alternative answer: 140 year intergenerational loans. Serviceability calculator includes ability to withstand a savage beat down.
     
  4. Hanison

    Hanison Well-Known Member

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    Lost count how many times I've explained this is concept to friends and family.

    As soon as you start talking the mathematics of it all. The eyes glaze over and you just know the battle has been lost.

    Only place I talk property is on here now.
     
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  5. WattleIdo

    WattleIdo renovating Premium Member

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    He likes Adelaide. If you lived and worked there it would be a great time to b e a fhb.
     
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  6. barnes

    barnes Well-Known Member

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    The daughter is right and dad is wrong.
     
  7. Hanison

    Hanison Well-Known Member

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    Sydney isn't the only city to live in Australia.
    I can't speak for other cities because I don't know average incomes etc.

    Here's my example.

    Old man bought first house in stafford, Brisbane.
    $7k- average wage at the time he says was 2k
    Actual fact he earnt $1800
    3.5 x ratio

    Brisbane today. Average home 490k
    Average wage 70k
    7 x ratio
    Double income household 140k
    3.5 x ratio

    50 years of rise and fall and the numbers still work out the same.
     
  8. Simon Hampel

    Simon Hampel Founder Staff Member

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    Is that based on some evidence you feel you didn't need to provide - or are you just trolling?
     
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  9. Darren A

    Darren A Well-Known Member

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    Don't you have anything better to do! You disagree and find fault without everything on this forum. Why not go somewhere else and be among your own kind. I think you might have a very sad life.
     
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  10. C-mac

    C-mac Well-Known Member

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    There's a number of flaws to both the father and the daughters arguments in this regard.

    Things like changes in income tax levels/brackets between the two generations, for one. Then, added costs of living beyond just the p&i repayments on house mortgage. For instance; private health insurance is now pretty much vital for 30+ aged Australians. Childcare costs have also skyrocketed well beyond acceptable inflationary based levels.

    Whilst the upfront cost of 'buying' a new car today is much cheaper, 'running' said car is proportionally not cheaper now.

    Back in the dad's day; a tafe course or trade apprenticeship was all that was required to get your 'job for life'. Fast forward to today and the only fields that pay better than average salary levels are university-necessity educational requirement. Said uni degree now costs a bucket load more. Sadly, starting salaries for almost all uni-qualifed career trajectories (outside of medicine and law, pretty much), are horribly modest. Ex-students take years to then work their way up (and in the process work 50+ hour weeks) in these new "i-promise-your-degree-will-pay-off-in-maybe-3-more-years-of-hard-yakka" jobs, all the while trying to pay down that horrid uni debt.

    On the positive though (and in the dad's corner, I guess) people are generally pushing out babies later which saves more money before the expense of 'running' said baby really affects house buying power. Also, the DINK household emergence helps maximise income and keep costs down.

    Also, share-housing for singles (and even young couples with friends etc.) Is a normative social practice these days and not a cultural 'scarlet letter' above your name in gossip circles like it may have been back then.

    Also, people put up with more these days because they mostly live freer, happier lives in this awesome country. The gays are out of the repressive closet and (hopefully) marrying soon; single parent households can and often do thrive and are a normative, people worship (or don't worship) how they please and either/or is OK for everyone.

    These freedoms have helped compensate for the harder work and income conditions that we are facing and will continue to face in this age of 'race to the bottom global human labour force' phenomena I believe we will continue to see more of, in our lifetimes...
     
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  11. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    It's worth considering, too, the fact that broadly speaking (housing excluded) what one dollar "gets us" is so incredibly much more than it has been at any point in the past.

    Our level of expendable income has increased, but more importantly, the value and significance of what each dollar can return us has grown exponentially.

    I'm not talking about staples (fuel, bread, housing) etc. I'm talking about the significant stuff–new stuff. The outputs of humanity building upon its creations.

    e.g.

    • Half of one week of median salary gets you a device that has access to the sum of human knowledge (internet), can communicate near the speed of light with video and audio, is millions of times smaller and faster than a supercomputer of a few decades ago, gives you better communication than the US president had 30 years ago, can transfer money internationally instantly...etc.

    • You can have your DNA genotyped for a day's earnings and discover amazing insights into your health and ancestry.

    • Content on demand entertainment and information–videos, books, albums, games; instantly, for one hour of earnings.

      Or free.

    I could go on.

    Point is, seeing the wider scene, we may actually have more of our incomes available to go toward housing costs anyway, due to the fact that technology and the advancement of our ideas is causing costs of many things to plummet, while their value, convenience, speed, effectiveness, entertainment, utility etc all skyrocket.

    Today, we don't need to spend as much money or time in many other areas to get the same benefit/value/happiness/impact etc.


    Food for thought.
     
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  12. barnes

    barnes Well-Known Member

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    This is my opinion. You have a problem with that?
     
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  13. barnes

    barnes Well-Known Member

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    I am among my own kind. And I don't understand why a different point of view to yours is such a big problem for you. You don't like my point of view, don't notice it. It's your choice. Stop picking on me for nothing.
     
  14. Bullion Baron

    Bullion Baron Well-Known Member

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    In 1985 benefits from the First Home Owners Scheme could have equaled around 10% of the homes value (up to $7,000).

    In 1985 building societies were providing 95% LVR loans.

    In 1985 (and for several years following) the inflation rate was much higher than we have today, which would have quickly reduced the real value of the loan.

    Basically the entire article is based on a lie and I have caught the writer fudging property figures in the past e.g. https://twitter.com/PeterKoulizos/status/506609835199049728

    Even if we ignored the important facts I've highlighted above and assumed the article represented reality, does being able to borrow a larger % of the purchase price really mean that property is as affordable as in the past?

    So if in 30 years time we can get a mortgage rate of 1% and borrow 100% of the property value and only have to save a few months wages to cover the legals/fees, does that mean property is still as affordable even if prices have quintupled again in the meantime?
     
    Last edited: 5th Aug, 2015
  15. Bullion Baron

    Bullion Baron Well-Known Member

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    I agree there are financial changes that have allowed us to spend more on housing... more disposable income, lower interest rates, increase in dual income households, etc. Don't think anyone is denying there are reasons... but that doesn't mean it's financially healthy for a country to just spend whatever money they save or make from elsewhere on borrowing more and bidding up house prices further. How does that really benefit us as a society? Imagine how much more Australia could contribute to furthering the technological advances you speak of if we weren't so burdened with the cost of shelter. What a waste. What a tragedy.
     
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  16. barnes

    barnes Well-Known Member

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    Spot on. I feel the same. How can a standard 3 bedroom house on a 300 m2 block cost a million and still grow in value? To me it's artificial and not healthy. I saw prices like that in other places of the world and it ended very bad for those countries. :(
     
  17. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Everything is vertical in Hong Kong and a 300sq foot flat can even cost millions...Families will live in that space. 300 sq foot is just 28sqm.... prices have quadrupled since 2003...
     
  18. sash

    sash Well-Known Member

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    Hey Barnsey.....me thinks a cop out.:rolleyes:.....in Adelaide you can still buy homes within 15klms of city for 250k?;)

    So what exactly are you saying...maybe you are on the wrong forum holmes...this one is full of property investors...they eat people like you for lunch?? :eek: Any meat on you?? ;)

     
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  19. barnes

    barnes Well-Known Member

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    For 250k? Nah, only close to Elizabeth you can find these prices and that is 30+ k's from the city. It's hard to eat me for lunch. I have experienced property crashes when the prices fell 50% in a year overseas and survived. But I know how it feels. It can happen in OZ too. All the fundamentals are in place. :(
     
  20. barnes

    barnes Well-Known Member

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    I'm not talking about Hong Kong. There is lack of space there.