Sydney housing crisis tv show on tonight

There should be a graph showing amount of money wasted on toys and junk.

Not that there is anything wrong with it, God knows I have my fair share of toys but I don't remember my folks buying mountains of tellies, tablets, computers, consoles and cars when I was a kid.

I "choose" to buy a certain amount of toys but if I didn't, I reckon I could front up a bunch more cash to servicing debt. If times have befallen us that hard and mortgages / house prices are now so unreasonable, I wonder how society can continue to afford these toys (and overseas holidays that so many people go on).

 

What we wish for, does not necessarily mean we will get it. Some of my old high school friends still live in the area I was raised but really with the median price being $1.3 million, it's just not a feasible option. I wouldn't say it's impossible because you can achieve this later in your life, but just not possible now.

 

Society as a whole will always be able to afford the toys... but some individuals will over-stretch themselves a bit

There are 2 extremes:
- spending every last dollar on toys/experiences and not having anything left over for investments
- spending every last dollar on investments and not enjoying any toys or new experiences

Financial intelligence pinpoints a specific point in between these 2 extremes that allows them to achieve their financial goals without foregoing the fun of life.

 

Well, turnbull solved the problem. Parents pay for kids. That I already know.

 

So against this. Let the folks enjoy their retirement instead of milking them dry to the last cent. How much freeloading can a person do to their parents?

 

I thought if she moved 15kms out she could actually buy 2 houses!

 

Well there are. Travel when they were young, return home..oh can't afford it but already in 30s... Hmmm mum and dad...I can't afford to move out...

 

I not sure why she can't buy something but she is going for the done up houses or places. kilsyth is like 30km+ out. there are other suburbs within 15-16kms like thomastown and even fawkner with 559K budget which she has and (150K in savings) would easily kick in 20% + Stamp + other expenses. Or if she wishes to forgo those suburbs go to point cook 450K easily gets you a house on a plot of land. to be honest, she is lacking the skillset to buy and needs a buyers agent. Different storey if she was aiming for 400kish properties.

 

Found this chart on one of @Shadow old post. Given such a huge run up in prices, the last peak was only 1.5 less than the current ratio of 12. Maybe everyone got used to the lower ratio so when it rises as much as it has they freak out

 

Lowest interest rates in a few thousand years of civilisation... the picture looks very different with interest rates at the historical average.

 

I'm not sure you picked up that these are graphs representations of reality based on multiple data points

You can't replace one without replacing them all for the same time period.

And you can't use an average spanning thousands of years when its relevance spans just a few hundred. That would be like producing the "average weekly hours of internet use per person" by sampling daily usage over the past few hundred years.

p.s. Highest disposable household income in thousands of years, highest household income in thousands of years etc

 

Your percentage of pay used to service mortgage is highly susceptible to interest rates, however. Currently we're in the lowest rates for the last five thousand years. So the fact that someone can have an incredibly high mortgage and still only be using 30% or so to service it hides the issue that interest rates are very far from normal.

It's a trick - hey, housing prices have rapidly increased, outpacing wages but look, it's still only X% of your take home pay so it's affordable (fine print: so long as interest rates stay at 5000-year lows).

 

I thought we were discussing housing affordability today

 

So you do acknowledge that the percentage of income to service the mortgage is highly susceptible to interest rates then?

I thought banks were doing their sums on 7-8% or so? At those rates, the percentage of take home pay required to service is substantially higher than it has ever been, right?

 

I thought only OFI debt was assessed at 7%+? Otherwise at actuals?

 

Of course. Hope that was never in question

Borrowing capacity ≠ housing affordability.

 

My work was doing an event last night, the security guard (venue provided, same age as me maybe slightly older) and I were talking (didn't get into property discussion). However he says that he likes the employment there as he can take leave whenever he wants to all he has to do is give two weeks notice. He likes it as he travels internationally 3-4 times a year.

We both have different priorities but I would be very annoyed if he said homes are unaffordable and changes need to be made so he can buy a house when I have gone without travelling overseas 3-4x a year, last trip I made overseas was nearly 3 years ago.

1. For 99.99% of people there will not be enough money in the world to do what YOU want to do. It is about finding a balance and also delaying some of your plans.

2. Things compound - You take 5x $20,000 between 20-25 to go on a trip there is an opportunity cost for this which lets just make an assumption you bought a property that doubled every 10 years. That 100k leveraged out would buy you a 500k property by the time you are 55 (30 years) this property would be worth 4M (3.6M equity if you did IO). However if after 10 years you bought a second property for 1M (as the 500k property has doubled) you would have about 6.5M in equity and even if you bought a property 10 years after the 2nd property you would have about 8.5M in equity.

If you really want to extrapolate this say the properties doubled every 10 years but after 5 years they had done 1/2 that growth (e.g. 500k -> 750k -> 1M -> 1.5M -> 2M -> 3M - 4M) and every 5 years you withdrew out a 20% deposit to buy the same house quality again (e.g. 5 years another 750k) and put the rest you kept for equity come 55 years and after the purchases of aged 45 you didn't buy any more. With this assumption you would have a total equity of $29,250,000 (see attached spreadsheet of my workings).

Again this is assuming that the properties are CF neutral all the way through the life of the properties as I am not working out CF-/+ and the tax implications and ongoing repairs/renovations into the equation, I am trying to paint a picture with BROAD strokes. If you want those finer details do it yourself...

This is delayed gratification and how things compound - so those trips when you were 20-25 actually ended up costing you a lot more depending on how aggressive you go.

 

Playing a broadview devil's advocate, you will get more out of those trips when you are 20-25 vs when you are 40-45. The numerical benefit of compounding is irrefutable but life is not about numbers. Life is about maximising the highest sustainable average enjoyment throughout all ages of adulthood.

e.g. in my case, I'm a car nut and I love to race on track. My reflexes now are measurably slower than they were when I was in my 20s, and in my 40s will be worse than they are now. Therefore right now I am prioritising motorsport above other hobbies (e.g. archery) that I know won't be as affected by age.

 

Whining is not a valid strategy for an adult in any domain, especially property. It is not a participation sport!