Sydney's housing affordability crisis for low income earners is spreading, Anglicare finds Read mor

Do you think it cannot happen again - with lower rates? Wait a few years and you will see it.

 

Tasmania is not an option. It's to cold.

 

Thanks for the tip. Interesting guy. I will read his works.

 

Do you call a chance to have a 900k mortgage a missed opportunity? Don't make me laugh. )) A credit card debt of a thousand bucks will make my life uncomfortable. (I forgot - I don't have a credit card for the same reason - no debt - ever).

 

no, you're making me laugh.

 

How could a pyramid collapse!

 

So what your saying is you don't actually want fix a problem, you just want to make it easier for you? Makes sense now

 

It appears there is a consensus among the intelligentsia on this forum:

• (x% of $A > y% of $2A where x>2y, x and y : Interest rates and A: median price) is the metric for housing affordability. That in turn means that (even hypothetically) as long as x>2y @barnes is a troll who does not know maths. Convincing and respectful (Ad hominem) arguments indeed. Never mind his experience in investing in extremely high interest rate environment.
  
• There is a direct (even linear) relationship between the interest rates and the house median prices. Hence interest rates of 18% = 50 % price viz a viz current prices and interest rates of 4-5%.
• Other factors are inconsequential for housing affordability. Favorable taxation for property, holding structures, deductions, marginal tax rates, planning laws, cost of renting vs owning, yields, maintenance ratios, risk premiums, foreign investments in property, asset class comparisons, population densities are all insignificant.
• 95 % LVR on 1 Million house with yield < 2 % when the RBA rates are at 2% is the way to home ownership / acquiring property. E.g Low interest rates have only improved affordability in Tokyo, so it should be the same here. How (un)affordable is it to buy a home in Japan? - Blog.

Additional benefits/considerations (where is the sarcastic font ?):

• The economy is boosted when .3-.5 of the household expenditure goes towards the mortgage.
  
• Leads to a cohesive society, when a whole generation/section of society cannot afford a house.
  
• Home ownership is much quicker because the property prices as a multiple of household incomes is much higher.
• The risk rating of the banks and the country is improved when the extremely leveraged property sector predominantly trading in existing stock becomes the biggest contributor to GDP. It gets additional strength when the private debt to GDP ratio is the highest in the world.
  
• It leads to scientific method of investment (speculation) when the (reliable and predictable) CG is the sole purpose and yields are insignificant. Current market medians represent the intrinsic value of the houses.
  
• Quality of life is enhanced by the daily 2-3 hour commute.
• Earns foreign investment especially when the empty inner city apartments (constructed by and for foreigners) are used to stash foreign wealth (never mind the legality of the source).
  
• Tax-payer is well remunerated via effective NG and CGT exemption, especially when there is a budgetary surplus.
• RBA rates of 2% have not lead to property inflation and increase by APRA or RBA will not result in deflation of property prices.In addition the low interest rates, improve the retirement income of the retirees who have invested in term deposits.

Low interest rates and consequently inflated property prices supported by the tax payer (NG, CGT) and high indebtedness, with profound economic and social consequences is the way to invest.

 

Unaffordability IS a problem on a macro level.

If you're on a low income or welfare you'll have to go regional. If you've got a good job, you'll need to go metro.

This means regional unemployment will continue to rise at the expense of property prices in the metros.

It's a cycle and I'm not sure if it's in the country's best interest.

 

say what...? obviusly im not amongst the 'intelligentsia' on this forum

 

Specific numeric examples of the above generic mathematical expression, wherein the interest rates have been almost quadrupled with a halving of prices, to show affordability is better under low interests, high price conditions:

 

Dude you need to simplify when writing. Otherwise slower people like me fall asleep when reading.

 

Point accepted. It could/should have been made simpler.
Thanks for pointing it out and to @JDP1 as well.

 

People rent where it is really affordable to buy. Why don't they buy there? I can point at places with $90,000 houses in them and people will rent them for $180 a week. They don't buy because they can't save up a deposit. That fellow with $500k in cash is ludicrously well off considering your average Joe is lucky to have $3.50 left at the end of the pay fortnight. My housemate is on a median job paying median rent with a median credit card debt and he doesn't save a cent so he has a snowball's chance in hell of buying a median apartment (or house) to live in.

This is why you get pockets of completely entrenched welfare dependence, and why in general some areas get extremely homogenous. I have no idea how you would break these kind of cycles without major effort to get employment into the flat spots.

 

I'm pretty sure I never said that interest rates are the only consideration in affordability, however given most people entering the property market for the first time are leveraging at 80% minimum, then interest rates play a more significant role on affordability than the actual price as expressed by your formula:

(x% of $A > y% of $2A where x>2y, x and y : Interest rates and A: median price) is the metric for housing affordability. That in turn means that (even hypothetically) as long as x>2y @Skilled_Migrant is a troll who likes long posts.

The other very significant factor which is a function of price is the required deposit and how long it takes to save up.

 

I want to point out that in places where there is entrenched welfare dependency, the population may be "unemployable" due to mental health issues and "attitude". Those born into these enclaves who have any 'get up and go" have "gotten up and gone" somewhere else to find employment and to pull themselves out of poverty.