Australia, you’ve officially jumped the shark

Too true.

 

I agree, but there are certain demographics and areas of the workforce where it is way more prevalent.

Hospitality and kitchen, and many tradies, "check-out" chicks/dudes and so on.

It depends where you live and what industries you are surrounded by what you will observe.

Generally; better educated, professional career, higher income folks are less likely to smoke now. They eat better, they exercise more, their whole life is more "in order" and they make better life decisions than their lower-paid, lower educated counterparts....as a demographic they smoke way less.

Many Asian cultures are heavy smokers despite their career/education etc, which I find strange. No doubt this is on decline as well of course (thankfully).

What is amazing to me is how currently we have zero cigarette ads, and on every cig packet there are graphic pics of grotesque diseases and injuries as a result of smoking, and yet I see loads of school kids wandering around after school (and before school) choofing away.

Even my own family; my Mother died a horrible death a couple of years ago from lung cancer (from smoking).

A large number of my family at all ages are smokers, and all were at the funeral, many visited her in the last few weeks of life, and saw the horrible way she suffered....and yet they all still smoke!!?

And of course; none of these folks are as rich as Donald Trump, and a pack of 50's is now what; $30 per pack? My Bil and Sil (not the ones in Bali) are always broke. He's a wage earning plumber on about $60k per year, she works part-time at the local Coles and the local TAB, they have 2 teenage daughters.

Between them, we estimated they smoke approx 3 packs of 50 each per week....almost $200 per week.

It's mindless.

 

I like this one:
“People need a roof over their heads. Modest growth in home lending is to be expected as the economy grows, the population continues to grow — that’s a key driver — and interest rates are low.”
http://www.news.com.au/finance/real...-home-loans-fall/story-fndbarft-1227474820222

By the way, last time I saw kitchen-hands (mostly couples) jumped into housing market is around 1998/99. Now, their kids have graduated from Uni, and their apartment value has.....
Today I see similar phenomenon happening (because the rate is so low!).
Whether it is a precursor for house value to double (in next 15 years?) or for a crash is up to individuals guess......

 

Wage pressures were NOT the reason GMH decided to move to Korea - wages in Australia for General Motors are around 30% cheaper than the Korean equivalent.

 

The Sydney/Melbourne model of pumping residential property simply isn't working outside of those cities any longer. Of all the factors you mention, super-low interest rates are the main factor that should be continuing to push prices into the stratosphere but outside of our two major cities prices/rents are in the doledrums or actually falling.

IN your own city of Adelaide, median prices have barely moved since 2008 and in some parts of SA prices have actually fallen. SA continues to have the highest unemployment in Australia so I guess there's no increase in employed people to pump the bubble there.

Other parts of the country that previously had their residential property prices inflated by resource wages are now in trouble. Rents have fallen by around 10% in Perth in the last 12 months and WA has experienced more people leaving than moving there for the first time in decades. Clearly residential property is not the safe investment that many expect it to be... at least away from NSW and Victoria.

 

Are Korean wages 30% higher than here? That's surprising...

What was the reason?

The drop in the dollar might have been an issue?

 

Perhaps South Korean is not a good example to compare.
I heard last week the foreign investment there is at a record low.

 

''In a statement, Holden said there was no single factor behind the decision to cease production in Australia.

"A raft of economic drivers have worked against retaining manufacturing in Australia: the sustained strength of the Australian dollar, a small and highly fragmented domestic car market and the high cost of manufacturing in Australia," the company said.
http://www.abc.net.au/news/2014-01-15/gm-set-to-shift-holden-production-to-korea-under-fta/5201264

I can't find any data that show GM wages in Australia were 30% cheaper than South Korea. I can only find from 2013 about South Korean rising labour costs this quote:
''Korea has an edge in cost compared with the likes of Australia and Germany,"
http://www.businessinsider.com/labor-costs-drive-gm-out-of-south-korea-2013-8#ixzz3iNDANdyk

 

http://www.abc.net.au/news/2015-08-...uld-hit-9pc-after-bhp-job-cuts-expert/6684414

More good news for the SA economy

 

If you purchase in an area that relies almost entirely on a single industry then yes you are going to get hurt if that industry suffers a massive downturn. That says nothing to whether overall property is a safe investment or not.

 

A comparison of labour costs between South Korea and Australia, South Korea is rising very recently and Australia has dropped very recently..
http://www.tradingeconomics.com/emb...alse&url2=/australia/labour-costs&h=300&w=600

Some further information (click start)
https://www.bcgperspectives.com/con...bal_manufacturing_cost_competitiveness_index/

Australia rates 45.5 above the US as the base index vs 15.5 for South Korea. In fact the graph shows Australia has the highest cost index rating for manufacturing in the world.

 

More people laid off just after RBA said unemployment rate is peaked last week.

More good news for the SA economy[/QUOTE]

 

There are properties that are low risk and properties that are higher risk.

An established, well located, good condition and floorplan property, below or at the median price for that suburb, in every suburb - will always attract folks needing a roof over their head.

Properties such as OTP's, regional towns with small populations, mining towns (we have an IP in Kalgoorlie) are in the higher risk category.

Just on the Kalgoorlie IP we own as an example; it is as above for criteria - floorplan, location etc.

It has been tenanted continuously since we bought it in 2002 (except for a period where it was vacant until we completed necessary repairs). Even now, with the end of the resource boom, we are still able to get tenants. The demand has dropped off, but the town is big enough and our property is nice enough to attract folks.

So, whilst it falls into the higher risk category of mining town properties; it is still relatively low risk.

There is risk in any vehicle of investment, but with property, a lot of it can be mitigated.

 

Now we can't find brick layers apparently.
http://www.smh.com.au/nsw/labour-shortfall-could-halt-nsw-economy-industry-20150809-giuwlm.html

 

Apparently, we need robotic brick layers.
Abbott may consider to get a big order from Japan....

 

But, we should be getting them built in Adelaide; 1 robot for the price of 3.

 

Australia. Commodities. Enough said?

 

That's what happens when we price ourselves out of being competitive with high wages and conditions leaving us with what we dig up.

 

So 500-700k mortgage means at $625,000 - $875,000 purchase at 80% LVR - if an average bloke is trying to purchase his first house at $700k on 80k per year he probably needs to have his head check as the repayments would be $22.5k-31.5k pa at 4.5% which his pay after tax is about $61k however if rates went up to 7% it would be $35k-49k.

As $875k is close to the median if a person on $80k is purchasing the median house price as a first home buyer who is buying all the stuff less than the median? As surely a person on their second home should be higher than a FHB?

I would say the $80k FHB would be purchasing a house in the 400-500k mark with 80%LVR being a loan of $320-400k mark a fair bit off the 500-700k loan amount.

 

If you are not doing it for capital gains then that's a different ball game but there's a lot of people out there (from lurking on Somersoft for a long time) who are only in it for that reason - and I think there's some paradigm-shifting winds in the air about to spoil the game.

Also, Kalgoorlie is fairly diversified as far as mining towns go so I think you chose fairly well there. However if you had chosen the Bowen Basin or Karratha you could have potentially found yourself with an asset very much under water now (depending on when you bought in) - I believe that contagion may spread to our smaller capital cities in the next few years.