Australia, you’ve officially jumped the shark

Are you referring to Shadow? I'm not sure he's actually done anything here except disagree with the assertions under the article.

I like reading contrary views on the forums. However, I'm not sure if asking people to comment without rhetorics and opinions to an article filled with rhetorics and opinions is really worthwhile.

 

Who?

I was just asking people to try and avoid the usual clichés, not suggesting people don't share an opinion...

 

Yet the article is full of the usual cliches re property being unaffordable and in a bubble.

In any case, like with what you said about rhetorics, just because something is the usual cliches doesn't make it not true.

 

I noticed the bubble comment too. I am yet to see any convincing evidence that Sydney is in a bubble and not a boom. I doubt most of the people calling it a bubble know the difference between a housing bubble and a housing boom. How come the last Sydney property market boom was not a bubble? I remember it at the time. Commentators at the time referred to it as the mother of all booms. The market went crazy. I'm not there, so I don't know how this boom compares.

 

My first post was deleted and it certainly doesn't measure up to the article that you breathlessly describe as

"A magnificent read on the Australian economy and property market."

Which the author describes as

"I’m not even going to aim for a pretence to quality ‘journalism’ by citing sources, evidence and facts"

 

Magnificent writing doesn't have to correspond with quality 'journalism'.

 

Personally I don't find it 'magnificent writing', unless it is satire. If it is satire, then it's brilliant!

 

Hi BB

I find that aspect of the ignore feature annoying .

On somersoft I used the ignore feature more as a reminder , eg , that guys a dick head , don't react / reply , but I'd still usually look at what they'd said and occasionally unignore some one .

Here , the Ignore button removes all trace of someone , even when they're being quoted , which means some replies don't make a lot of sense . I'm using it more sparingly here mainly for trolls .

Cliff

 

To Kill a Mockingbird is magnificent writing. This article is simply an overly long gen Y ranting and raving.

 

I've read many magnificent/well written articles where I don't agree with the authors view.

So am I. I can't see myself adding anyone else in the foreseeable future.

 

@barnes Is that a true story in those countries that you mentioned above ?
USA, Russia and China is not crashing or end up in disastrous economy nowadays.

 

Parts of USA suffered a lot in the last crisis. There were towns where prices fell almost to zero. Russia (Moscow market) fell 60% in 98, it falls 50% NOW (compared to July 2014), it's ugly. Haven't lived in China, so didn't have a chance to experience their problems first hand, but know a few who invested there and got burned. You think Australia is immune? Look at some mining towns, it may spread elsewhere...

 

All it paints is a more complex picture over the next 2 years,and as you have maybe only have 4 asset classes ,cash fixed term below 3%,income assets ,equities ,property, and for anyone that has invested through several downtrends they see the warning signs ,that's why when I paid for investment data up too a few years ago pre 2008 80% was useless,reading back over those forecasts at various stages of the economic cycle as I like to do the only standout items are the keys that forecast growth interest rates and inflation,once that changes the next cycle comes along..

 

Unemployment is rearing its ugly head again- over 800,000 Australias are now unemployed

Underemployment is continuing on it's upwards trend, which helps explain why 38,000 jobs were created this month, yet total hours worked fell by 0.2%.

The following graph plots the history of underemployment in Australia since February 1978 to the May-quarter 2015.

 

I don't know where your types always get this notion that folks are going to be either renters for life, or mortgage slaves for life.

The solution today for buying a home is the same as it was back when I bought my first home in 1985 - and no doubt for decades previously;

Work really hard, save really hard and get enough of a deposit together to buy a cheaper-end and modest first home. It could be a unit, a doer- upper, a Jennings house and land package out on the edge of civilisation...but cheap.

Key word there being MODEST - well within your ability to repay the loan.

You are not expected to start off at PPoR no.1 being the Taj Mahal, or expected to be able to buy a decent house in a high demand suburb near the cool stuff.

Then, what you do is make extra payments on your loan for your modest home, and after a good number of years, a few pay increases etc; you can trade up to a better Taj Mahal,

And possibly have a mortgage less than the first PPoR due to your debt reduction and some CG.

Or did I miss something?

 

Sure I agree many people in Australia can do that. The falling home ownership rate suggests a few less than in years past, but nothing too substantial.

But they will need to give up more to do so, for a smaller piece of land, at far greater risk to their financial livelihood and for far less "reward" than those buying in 1985... unless you think the indebtedness trend can repeat the last 30 years.

 

From my understanding, the home ownership rate hasn't decreased; just the investor rate has increased - mostly due to current very low rates of all time, I suspect.

The level of indebtedness is totally up to the individual. It is true that the Banks have allowed them to borrow more as a percentage of their gross income than say; 1985 - back then you needed a 20% cash deposit and a savings history, and a P&I loan....

But, rates were circa 10% back then too.

The "reward" you speak of? If you are referring to the CG, then all one needs to do is look at the last whatever timeframe of records for house prices to see what the longer term average is. There will always be "reward".

But, not everyone looks at their PPoR as an investment vehicle either; many folks just buy a house to live in, so your mindset about housing is not shared by the vast majority....

Most folks are not waiting around for decades for the house prices to become good value before they take the plunge like you are.

 

I think he means the size of the property / value for money.

 

To quote Joseph Healy, then head of business banking at the NAB:

"Housing confers minimal economic benefits yet it [is] allocated a massive amount of capital... a banking system which allocate capital away from the most productive areas of the economy - business - is ultimately bad for growth, bad for competition, bad for jobs, bad for business and in the end, bad for Australia."

Our bidding up of house prices is why we can't invest in creating jobs.
Australia really is the Master of Boganomics.
But what do the banks care!

 

The home ownership rate has already decreased as evidenced by ABS statistics (to the last census in 2011). Furthermore with investor share of finance at historical highs (relative to that of OOs) we can bet that it's getting worse. How can the share of investors increase without the home ownership rate changing? You don't seem to grasp that there is a relationship there.

Past performance is no guarantee of future result.