Interest rate risk for the under-40's

From the SMH.

If, for this cohort, the average debt level has doubled from $170,000 to $340,000 and ownership in this group has declined by about 50% too, is there a net zero effect ie same total indebtedness.

 

Poor young people! My youngest sister and her husband plan to put a self contained dwelling at the rear of their house so their kids can live in it when they grow up because they reckon property prices will be too high to buy in (note: they live in North Shore Sydney, totally FHB territory.... not.)

 

I'm bang on in that age group and have a 400k debt....

Er...It's fine? About the same as renting?

 

IMHO I think $400k mortgage at 5%, is quite manageable for an average income earner, and the repayment is going to be easier down the track

 

Such a defeatist attitude that I see in a lot of friends and family too. "Let's assume our kids won't be able to achieve anything" then they'll live up to their low expectations, live at home till they're 40 and count down the days with glee until that sweet sweet inheritance hits, while their parents complain about why their kids don't seem to have any drive. Sigh.

Just two words: Self. Inflicted.

(Not a swipe at you Gockie, just irritates me to see people thinking like this!!!)

 

Actually, looking into the study a bit more..the real story is the percentage of people who own their own home.

There's been a dramatic drop over the last few years.

This is great for investors..but might come home to roost in the future...

Home ownership falling, debts rising – it's looking grim for the under 40s

 

You can sense it brewing. You just have to read the comments on social media every time a property story comes up. The have nots are really starting to out number the haves and if it gets louder politicians will see it as some cheap votes and really start to sink the boot into home owners.

 

Young Australians getting poorer as wages flatline, house prices surge

Real median annual household disposable income is now less than 2009.
Wage growth has fallen since 2012 and is currently stuck at a paltry 2% and is failing to keep up with CPI.
Home ownership has deteriorated to 25% for people <40.
University graduates are now getting paid less than previous cohorts all while university fees have increased- That's if you even get the opportunity to actually work in the field you studied...

 

This will likely get a bit worse than better - in the next 2-3 years.
The wage problem is mostly a factor of uncompetitiveness..not just for the young mist salaried age groups ..something that has been brewing for at least a decade and no one did anything yo address it..too busy pimping commodities to China and picking up the receipt...nothing wrong per se with that...just that issues like wage growth flailing were kicked down the road for someone else to solve. This could be argued as poor leadership.
Regarding increasing house prices - a lot has already been said in various threads..I'll just add that it's partly internal (especially supply side) and also external (demand side more).
Neither will change direction in 2-3 years to any big degree.. Maybe a bit but not clear and significant changes.

 

Glad they can dig up figures from 2014... Like 3 years ago or are they just rerunning an article from 3 years ago?

I am surprised it is 340k as it seems low and I fit into their age bracket and boy I wish my debt was that high (340k) *cough low*.

 

$340,000 does seem low, but the article isn't clear on if that's a national figure/combined capital cities?
If it's combined capitals median price is $585,000 so national LVR 58%
That sounds high.
Would be interesting to see Sydney figures alone...

 

Household finances in reverse as job prospects worsen

 

What's with all the pessimism?

Think outside the box... Luxury cars double their numbers in a decade

 

They can always buy elsewhere, where it is cheaper, even in other states, just to get in the door, then eventually progress...
My children are in similar situation, could not afford to buy in LNS, but could afford to buy in QLD, perhaps suggest that idea to them?
I think we need a mindset change, where perhaps investing elsewhere may be the way to go first...?

 

Obviously! Btw, their oldest isn't even 1 yo yet.... he only just learnt to sit up... And kid 2 is at this moment, still non existant... So there's still plenty of time for their aunty to educate them and their parents

 

Aunty Linda has it all worked out for her sister.

On the other hand, Hubby and I have been considering a granny flat for our first-born ever since his disability diagnosis at age 5. He is currently getting ready to move into a three bedroom house in a shared arrangement with his best friend from primary school who has the same disability, and his brother. None of this waiting on the Housing Commission queue any longer. This will happen later this year, years before these men can access anything from the NDIS.

The only housing these men will ever own is what they inherit after their parents die. When you are born with a disability, owning a house in a nice leafy suburb of Sydney or Melbourne isn't on the radar.

 

Time for the rabble raisers to get on the republic bandwagon - out with 200 years of capitalism to be replaced by a Democratic Socialist Republic all paid for by retaking every property from their current owners (the banks) and redistributing the wealth to the unengaged, disinterested and detritus of society.

Willy Shorten hasn't declared the type of republic he wants but it would be vastly different from Turnbull's.

 

I agree with you but it would be unrealistic to expect anything else (not to be rude).

If 'Person A' works for 40 years (20-60) in full time employment earning a decent wage as they have no disability they will have more money to spend so might be able to afford that leafy suburb compared to 'Person B' who doesn't have the ability to work in full time or are not as able as 'Person A'.

'Person B' however will be in a better position than 'Person C' who does nothing but claim welfare for their whole life.

 

Current CPI is under 2%.
Current is 1.9% trimmed mean annual CPI (June 17 1/4).

New headline - "real wages are growing - beware inflation is coming, interest rates will increase so don't buy now"

 

I don't see your comments as being rude, Big Will. I'm musing about how home ownership isn't the be-all-and-end-all for everybody, precisely how it can be unrealistic for those 25 to 30 percent who rent.