Another house prices to collapse article....

Horror graph shows why Australia is screwed

Assuming that graph is real and isnt deliberately skewed, it is convincing..

Any experts care to comment?

 

unreliable chart. the 1st chart from Mack et al. (2011) but data is up to 2017.

 

Its a little silly to pick and choose countries. But the main issue was it has based all index as 1 from 1975. The state of economy and different between countries in that year and so were the property cycles. imagine if If we are going to base the index base in 2017, Sydney will look very bad indeed for the next 5 to 10 years as it has gone though a huge boom. Cities like Perth and Brisbane will probably be doing very well since one has bottomed out and are ripe for recovery.

 

to illustrate the issue, if they pick 1990 as the starting point with index 1, Australia might not be so special at all.

 

Income increases (from Wages) & Prices increases (Real estate) needs to go hand in hand.
An IT guy earning 100K in 2006 = Price of a median Sydney House was 550K.
(where this IT guy could stay & afford, say in Kellyville)

The same IT guy is now earning 145k
(keeping in sync with the wage inflation of 2.5% per annum in average).

The same Kellyville property is now 1.2M

Could this be called an affordability crisis? Yes in my humble opinion.
Sydney/Melbourne is unaffordable in today's wage scenario.
This is Sydney 35 kilometers away with 60 minute commute each way to a place of work.

 

Australia has a more important affordability crisis - cars.

To purchase the new version of my car locally it is $181K
https://www.carsales.com.au/bnc/details/Mercedes-Benz-C63-2018/SHRM-AD-5899824/?Cr=21

However in the US it is only $75K US (or around $103K AUD)
2018 AMG C63 S Coupe | Mercedes-Benz

Even the face cream that I am using to help reduce the stress of all this media talk is in an affordability crisis. $41.99 on sale at Chemist Warehouse down from $48.99.
Buy Neutrogena Rapid Wrinkle Repair Regenerating Cream 48G Online at Chemist Warehouse®

Way too expensive. In the US it is only $24.97 or about $34 AUD.
https://www.walmart.com/ip/Neutroge...hguid=904fe142-2bb-1671e248b08bb8&athena=true

Given the car market is 70%+ overvalued and moisturizer market 40% overvalued I am looking forward to seeing the correction in prices for these items.

 

Because an entry level journalist read a graph and now we are all doomed...
Great comparison to Ireland as well, the graphs look real similar...said no one ever.

 

To be fair, the article is by an economist, who has worked Australian Treasury and the Australian Financial Review...

 

Here was the calcuation I made Australia vs US at the beginning of this year. Using upnto date CoreLogic & Zillow data. aushousing ርዪልነዘ on Twitter
Long term graph best starting point would be beginning 1988 when the Basel Accord allowed banks to write twice the amount of residential mortgage loans for the same amount of capital ( Hence the 89-90 housing bubble) International convergence of capital measurement and capital standards

 

Im more intrigued by your username!

 

Serious question. You think you got 180k value out of that car.

I drive the worst car, worse than everyone who works for me because outside super car or classics I don’t get it. Plus people keep hitting it in the car park!

What about it do you enjoy? (I’m not being condescending or making fun btw, in generally interested on why people spend more than 50k on a car).

 

Exactly. It all comes down to affordability. Gross rental yields are at 3.57% in Sydney. Unless people are taking a middle-long term view with their properties they'll be looking at flat / negative capital growth with an asset that is taking money out of their pockets each month. It could be 3+ years before capital growth starts occurring in Sydney again, and that's assuming that interest rates and unemployment remain low.

 

Everyone is different.
I know many foodies who will drive miles for a good meal.
While i know some who say its going to come out the same colour, why spend more than you have to

 

That's an awesome Merc!

I wish it was parked in my garage next to mi Commodore.

 

Mt Druuitt a VN Commodore to fit in?

 

Movin' up in the world are youse...I thought it was still the trustie....Torana.....???

 

I want to see a pic of the Commodore. There's one that gets around with the plate "Last 1" or something similar.

 

It’s a great point! Where does one draw the line?
Their is almost always a cheaper way.
But what is the point of Wealth creation if it never gets used to make one happy.

That’s why I personally will never cut expenses that make my life more enjoyable...

For example I love coffee, I love holidays, I love eating out a couple days a week, I love a big screen TV...I could go on.
Could I do a cheaper alternative to all of these? Absolutely! Would I be further in front financially? Absolutely!

Would I be more miserable at the unknown possibility of being happier when I’m older. Absolutely!

It’s not to say that everyone should blow all their money! It’s all about being smart with your money. Reduce fixed expenses, get good advice, invest wisely and most of all invest in yourself. It’s much easier to invest in yourself when your happy and motivated.

 

This is true, but interest rates are much lower

 

As ive said many times the most boring people ive met are those who are frugal to the point of insanity but have lots of cash. Some of the most interesting are those with enough but could have had way more except they had a wild time living life. The later may not have as much cash but man what experiences they have to share. Only get one life. You want it to be boring ? Your choice.

In 100 years time noone will think of you or care about you. As a reality check how often do you talk about your great great grandparents and talk about them. Never. So why worry about it now. Life live as you want and how you want.

I have wasted hundreds of thousands of dollars over my lifetime. But you know what ive had some wild experiences along the way. Far from boring.