Steven Keen is back - so everything is going to be okay

From memory, I think around 29%, but I didn't have one back then.

 

I remember buying a second-hand BMW 520 from a guy who was leasing it at 24% through Ford Finance.

I handed over a bank cheque for $50,000 (fair market value of the car) and he handed over a cheque for $20,000 to complete the sale.

I felt sorry for him. Fancy handing over $20,000 when you are the selling an asset .

 

And you can also disagree all you want, but I'd rather the economic situation of high interest rates than what we are experiencing today.
Today's housing crisis is worse than the 17pc home loans of the 1980s
The article is ~18 months old, but talks to what we are experiencing now.

High interest rates (and inflation) also have the awesome effect of eroding your mortgage automagically.

Cheers,
Inertia.

 

Yawn! I stopped reading when I came across this line.

Another entitled Gen X or Y or whatever the next one is. Blaming everyone else because they can't buy a home in the suburb they want at the price they want.

NEWSFLASH! I didn't want to buy a cruddy home in need of a huge reno, an hour from work. But that's what I bought because that's what I could afford. I didn't blame the rest of the world because I couldn't afford the house I wanted, I just got on with life & bought what I could afford.

 

Stop it, you're making too much sense.

 

Every forum has a few

 

Actually it's currently the most affordable the Perth property market has been relative to income since early 2000s, so your statement is correct in parts of australia and definitely wrong in others.

As a general overview I'd definitely agree it's harder this decade than say that 80s or 90s (particularly for that first property), that's pretty clear from the numbers and most unbiased people would find it hard to refute

Im glad Sydney is coming bqck, for its sake i hope it's not to drastic as the panic and sudden change can do a lot of damage to people caught out

In my opinion though things had gotten so far out of step with incomes that a long term continuation of that trend without correction would have been bad for the city and many people

 

While there are always exceptions to general trends/rules (and as investors we all seek to find the exceptions and outperform the geberal market), individual examples do not nullify what the overall stats clearly show. Let's not forget that even in the past there would have been individual examples of better buying than what was easily shown in general price data


Ultimately I'd still rather be living now than in the 80s or 90s, at this age (36). Sure housing is generally significantly more expensive but many other things are cheaper, we all have many more options than people back then had and in this informationa ageit is much easier to learn about and act on those options

I think some people who lament prices back in the day also don't consider things like the fact that of you happened to be female it was a lot harder to get finance as well as to get a high paying job, that if you didn't like your job you couldn't just move jobs or industries orncities or countries like we do now, that the idea of travelling was a real luxury and not something pretty much expected etc

I think it's such a silly argument when this inevitably rears its head every few months because it's at it's very basis downright silly when facts are facts and it shouldn't be arguable when data is available

The subjective pros and cons around then Vs now and whether the trade offs are worth it is a far more inyeresting and less explored topic imo

 

To be fair an overly entitled and often thoroughly misinformed approach to money is a great Australia tradition going back genetwtions and isn't specifically something that popped up with Gen X and gen y.

I don't think people like yourself should be used as a comparison with the general current market whinged because you clearly have outperformed most people regardless of age/generation and so of course you would have been making the right sacrifices etc

The same disconnect and your same argument would likely have been just as valid for many people back around when you were buying too because let's not forget that around 90% of boomers will retire on the govt teat to some extent so clearly the vast majority made as many bad financial decisions as the current crazy kids

 

Not true at all in Perth

Cheers
PG

 

Just lol @ all the people who keep saying “those who listened to Keen missed out on all that capital gain”. Life is not black and white. You could have listened to Steve Keen in 2010 then disregarded his views and started investing in 2011 when he had to climb the mountain. It was obvious at that point he got it wrong. Who are all these people that still followed Keen after he became a national embarrassment?

 

I remembered when I was Perth for 3 months worked for my scholarship in the naval base back in 2005. The property market was as going crazy just like Sydney was a year or two ago. Everyone at work was talking about during their morning tea. I remembered one of my colleague brought a townhouse in Rockingham for close to somethink like 350k. He was ofcourse ecstatic about it since he got a foot on the property ladder... Fast forward 13 years. That same property, might now be worth 250k, or 300k if he is lucky. Poor fella.

 

18% would’ve been pretty high inflation which equals massive wage growth

 

Gen Y laugh at comments like these, all anecdotal and completely ignoring analysis based on statistics, which has been provided above. My comment about unaffordability was to do with Melbourne and Sydney

 

Okay - let's do some realism stats.

Average income = $83,000/yr
Two people working x 2 = $165,000/yr
Multiple of income x 4 for maximum house purchase = $660,000

Search for houses/unit in Sydney's west (didn't do inner, north or south or Central Coast and Wollongong) - 1,566 available

Real Estate for Sale in Western Sydney, NSW - realestate.com.au

There were even 230 under $425,000 (take out the half dozen retirement places)

Real Estate for Sale in Western Sydney, NSW - realestate.com.au

Sure, they're not glam and near the beach with a massive backyard and without excellent public transport link - but neither were the first houses of any generation proceeding

So - please explain again exactly what this affordability issue is?

 

Wow - new and sparkling and under $300k for a 5 minute walk to the train station ...

10/56 Park Avenue, Kingswood, NSW 2747

 

If, as a couple, you absolutely HAD to live close to the CBD - asides from the bathroom tiles - I really like this little cutie for under $530,000 - still under the 4x income

2/17 Mitchell Road, Mosman, NSW 2088

 

Haha, not really new & sparkly, but a good price and nicely reno'd. It's right near the one we sold in Kingswood a couple of years ago for $310k, but it's nicer than ours was.

 

I think it's a more complicated to work out if it's harder now or before.

You can use multiples of income as one factor.
But you also need to compare cost of living

Now we have net flix, foxtel, mobile, as an example as an option

Some would say net flix is a luxury, some would even say a mobile phone is a want not a need (I'd die without a phone)

Some would say not travelling overseas once every 2 years is not living life.

Some would say not going out to your favourite restauant for a smashed arvo weekly is unreasonable

Some would say living a house that doesn't have 3 bdrs and a back yard and a media room is unacceptable

I think it's harder to buy a house now.

On my average income, if I cut out what I cAll luxuries. And I wanted to buy a free standing home in a average area, my % repayments on income would be very high. And I doubt 30 yrs ago, you'd have to go throguh that extent of sacrifice

 

Well, that's where you'd be wrong. Around 35 years ago we bought our first home. It was the cruddiest place you've ever seen, but that was all we could afford. In order to afford the house, we didn't go on holidays, we rarely ate out. We couldn't afford to buy in Sydney, so bought the cheapest available in the far northern suburbs of Wollongong.

It was an old weatherboard home, that had chicken wire put on & then cement clad. The two front windows (I kid you not) were old bus windows. They did not open & there were holes in them where the hinges used to be. There was a hole on the inside, not visible at the inspection, that was clear when you closed a door. We had a bird make it's way inside through this hole. We had a bathroom that was dark blue, red & wood paneling. There are just no words to describe how awful it was. I could go on & on & on & on about all the things that were wrong with this home, but the truth was that we loved it, because it was ours & we would sacrifice whatever it took to hold onto it because 'rent money is dead money'. You gotta live somewhere, so as far as I was concerned buying something, anything, was better than renting.