House prices to keep rising for years

[sinner]

Average wages so you can re do your calculations and actually have substance to your postings instead of plain waffle.

Click to enlarge

Hi tech, as I am the one who referenced average wages I can only assume you are accusing me of being the waffler!

I take offence, as I did not just make up this number,

http://www.news.com.au/business/story/0,23636,22763090-462,00.html

this article confirms the exact number I quoted for that time period!

Using the number 40,000 as provided in your chart would indicate even those crappy 30sqm studio inner city "studio apartments" have been pushed beyond or to the high end of 3-5:1 ratio! Or is that waffle too?

 

[grace]

If you don't mind me asking, what was your personal house price:salary ratio when you bought your first house and what was the avg at the time?

If it took 3 years I assume the ratio must have been >3:1, which is below even the historical average.

Did you use deposit bonds or any similar instruments to buy the house?

It was 3.28 : 1 (property to salary). I rented 2 rooms out, so I
-ve geared 2/3 of it. This house would have been below the average at the time. I bought early 90
s. I sold it 10 years later for the same price I bought it for. It was also in a better condition when I sold it, than when I bought it too. So don't tell me that house prices can't go sideways for 10 years! The market went down through the 90s then it was only just starting to pick up when I sold. However, within 12 months of my sale, this house had doubled, and now tripled! I'm not sad, I used the sale proceeds on something else.....

Just found techs average wages, and it looks like I was 20% above the average wage at the time.

I had saved up a 24% deposit at the time of buying.

 

[numbercruncher]

Average wages so you can re do your calculations and actually have substance to your postings instead of plain waffle.

Click to enlarge

Yes things are much much worse if you use the average rather than the Median as the spruik team insist on doing, forcing the rest of us to use it as the standard measure as well ......

 

[robots]

hello,

its all waffle Sinner, from the spruik team and the money box crew

the discussion has been going strong for many years now and its been a pleasure to be part of it,

well done to all in there putting in, St Kilda up 14.8% for units 2008

thankyou
robots

 

[kincella]

too many people fixtated by the house wage ratios.......the truth is the disposable income that determines affordablity of anything other than basic living costs.........
here is a chart of house prices...median and FHB prices, with the disposable income figure....note the RH column house price to FT earnings ratio of 7, but only 5.4 ratio to disposable income...
and FHB paid on average 20,000 less for their homes

I prefer these recent times to anytime prior to the 90's, my cash goes further today with discretionary spending....all that cheap imported stuff from china....so much more competition, so much more choice for consumers
and food prices....imo its so much cheaper today....
and consumers have far more choices in how they spend their money....including the basics of food and clothing..

http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf

 

[numbercruncher]

Queensland rocking on .....

Builders throw in free air conditioning and pools for buyers

By Anooska Tucker-Evans
The Courier-Mail
January 11, 2009 08:52am

* Builders offer free pools to buyers
* Up to $50,000 in extras on offer
* Builders says business is 'miserable'

FREE pools, free airconditioning, even a free remote-controlled door mean buying a new home has never looked so good despite the tough times.

With the building industry in a slump from the economic slowdown, builders in Queensland are offering extraordinary deals to lure customers.

One building company promised home buyers a free new pool, while another was giving away almost $50,000 in added extras.

http://www.news.com.au/story/0,27574,24898018-2,00.html

Wont be long until the 50k freebies becomes 50k discounts instead .....

 

[Glen48]

As I have said before this soon to end boom has nothing to do with house prices rising, one day some one will work out how much they actually rose once the excess credit is taken out. Most likely about 3%.
It is like some kids gets a bankcard with a $20K limit and buys Fish and chips 3 times a day from the same shop, the shop owner notices business has picked up and buys a Merc. One day the bank writes to the kid and wants the money paid back, the kids stops buying food and the shop owner has to sell the Merc.
Multiply that a few billion people and that is what is happening the debt has to be repaid and bailouts won't help.
Japan looks like being the first country to go into a depression.

 

[MrBurns]

Queensland rocking on .....

Builders throw in free air conditioning and pools for buyers

By Anooska Tucker-Evans
The Courier-Mail
January 11, 2009 08:52am

* Builders offer free pools to buyers
* Up to $50,000 in extras on offer
* Builders says business is 'miserable'

FREE pools, free airconditioning, even a free remote-controlled door mean buying a new home has never looked so good despite the tough times.

With the building industry in a slump from the economic slowdown, builders in Queensland are offering extraordinary deals to lure customers.

One building company promised home buyers a free new pool, while another was giving away almost $50,000 in added extras.

http://www.news.com.au/story/0,27574,24898018-2,00.html

Wont be long until the 50k freebies becomes 50k discounts instead .....

Isnt this sort of stuff that got us into trouble in the first place ? We're just going round in circles, ever decreasing.........

 

[Beej]

Average wages so you can re do your calculations and actually have substance to your postings instead of plain waffle.

Click to enlarge

Good post! I'll tell my FHB story:

First house bought in 1992, Sydney northern region (Mt Colah) for $182k, with a $30k deposit. At the time I was 23, a couple of years out of uni and earning $35k when I bought the house. Interest rates were over 10%pa.

So, house price to average wage ($22.9k according to previous post) multiple was 7.8.

SYDNEY median house price (1992 = $180k) to average multiple at that time was also 7.8.

House price to my salary multiple was 5.2. Remember I'll say it again as well - interest rates were OVER 10% pa at this time!! Today a higher personal wage/price multiple is available and sensible due to a lower (long term) interest rate and inflation environment, plus as mentioned by Kincella the significant increases in household disposable income less housing costs that have occurred since then.

I paid that mortgage off in 7 years - helped by falling interest rates, rising personal income and also had flatmates at various times that "helped" pay my mortgage off for me

Financially, the best thing I ever did was buy that house at a young age - set me up for life! Most of my friends took off overseas and wasted all their money at that time. I still traveled heaps and did all that as well, but I waited a couple of years until I was comfortably on the way to paying off that house.

Cheers,

Beej

 

[Bill M]

Financially, the best thing I ever did was buy that house at a young age - set me up for life! Most of my friends took off overseas and wasted all their money at that time. I still traveled heaps and did all that as well, but I waited a couple of years until I was comfortably on the way to paying off that house.

Cheers,

Beej

Excellent post, I did pretty much the same thing. You know what, some of my mates are now in their 50's and are still paying rent and blowing their weekly wage. Things really don't change and the same old excuses keep coming up.

 

[kincella]

some good sensible posts....
now if any were like myself in the early years, decided to buy a house, internet not invented at that stage.....none of my friends or no- one I knew ever mentioned any ratios, the only thing of interest was 'interest rates'.

Our goal was to buy the house...after looking for 6 months, we just got tired of looking and bought, forget about interest rates, nothing we could do about it.
Sure some will say the house was cheap compared to today, but the cost of living in those days was higher, no cheap imports from china for competition ....and it was as hard as could be on our wages. We bought out in the sticks, it was all we could afford , and then paid the extra in petrol to travel to work etc...
it was not a dream home, waited years and then upgraded closer to the city,

home buying is like a forced saving plan, you do the time, but unlike a bank, years later when you cash it in....you get a nice big tax free bonus
cheers

 

[Julia]

Julia.....sloppy ??? ......is it research or reporting...its probably in the reporting.

the group that did the research have over 500 mortgage brokers and support staff in AUS and NZ......
you doubt their numbers, yet it would be quite easy to do a poll with all the clients of the mortgage brokers....

Yes, agree it was probably in the reporting.
I made it clear that I wasn't necessarily questioning the claim.
I read Bill's post with the extract, then used the link to read the full article.
Nowhere did it quote the numbers involved, making the article fairly meaningless.
For all we know someone asked a couple of dozen people, in which case the results would not be statistically valid.

in fact if you go to their website they are conducting a poll on use of the govt handout.....
so it would have been just as easy to do a poll regarding investing in either the property or the stockmarket.....

That's fine. Doesn't alter my point.

from a personal point of view, self being a baby boomer, most people I know are either out of the stockmarket never to return, or may return but not for a very long time......they no longer trust the stockmarket, and being a conservative lot....have far more faith in the property market....

I'm also a baby boomer and have benefited from both property and stock market. I don't have any bias towards one or the other.
"Trust the stockmarket"? What does that mean? The market is the market, it doesn't make promises to anyone. Up to individuals to make their own judgements according to market conditions both in shares and property, surely?
I've been out of shares for the last year, but will happily re-enter when there is some clear return of confidence.

Some people are just more comfortable with property than shares and vice versa. Doesn't make either right or wrong.

however if you are much younger, with 30 or more years to retirement, meaning plenty of time to recover your losses....than you may have the opposite view.....probably picking up 'bargains' now, and or active in the stockmarket....

Yes, agree completely. The time frame makes all the difference.

maybe that group could provide more details regarding the poll, including the age bracket of the respondents....
the stockmarket has cost investors between 50-80% of value...depending on the stock held............that in itself is a huge deterrent to any investor..

..
Sorry, I don't mean to be having a go at you, but the market itself hasn't cost investors anything. If we've lost money, on the whole (barring non-disclosure etc) it's our own judgement that has cost us.

 

[Glen48]

Buying a house in the 50-70 was ok because you couldn't buy a Plasma TV, Spa, AC, pool, carpets, SUV. PC's etc and get deeper in to debt this is what we have to come back to before things return to normal.
Tell me just suppose house prices were going drop to say $20K instead of 200K and you knew it was going to happen what would you do?????

 

[Go Nuke]

Hi tech, as I am the one who referenced average wages I can only assume you are accusing me of being the waffler!

I take offence, as I did not just make up this number,

http://www.news.com.au/business/story/0,23636,22763090-462,00.html

this article confirms the exact number I quoted for that time period!

Using the number 40,000 as provided in your chart would indicate even those crappy 30sqm studio inner city "studio apartments" have been pushed beyond or to the high end of 3-5:1 ratio! Or is that waffle too?

Ah the good old "average income of $57K rubbish...gota love that one

This bit is so true though.. ("The average pay packet might be $57,000, but very few people are actually earning that. it is skewed because of the massive pay packets of the upper end of the scale which hide the fact that most people are earning between $35,000 to $40,000.")


Honestly, I can only think of about 2 or 3 people who earn more than that. My dad and my g/f's dad rofl
Maybe it says somthing about my social circles, but thats reality.

Im a tradie (boilermaker, now maintenace co ordinator) working in Brisbane and I earn under $55K. And have been informed that we wont be getting a wage review for 2008!

Now I'd say that between myself and my partner we will be looking at spending about nearly 50% of our income in order to buy a house this year just to live in the outer suburbs of Brisbane.

But there has been some really great reading on this thread and its good to hear and learn how others have done it in the past.

As Grace said, the property market can go sideways for years, but I think it will have to drop a bit before it can continue up

 

[So_Cynical]

Which people? Where in Melbourne? If we take graces example of buying at 21, indicating most likely single income around average and using the Nov 2007 avg salary calculation of $57,000

There is a lot lot of "average" people in Melbourne not making anywhere near 60K

 

[Nyden]

There is a lot lot of "average" people in Melbourne not making anywhere near 60K

I second that. I know quite a few people (a couple are nearly 30) earning something in the low 40s ...

Average wages aren't actually average wages Someone should calculate the average wages of ordinary folk ... and not include the 100k+ salaries. We would see some real figures then.

 

[tech/a]

Things are no different to when I bought my first home 32 yrs ago.

Then I wasnt on the "Average wage"
Then as most younger people these days I combined my wage with my partners to buy my first home.

My daughter did exactly this 18 mths ago.

and this happened/is happening

helped by falling interest rates, rising personal income and also had flatmates at various times that "helped" pay my mortgage off for me

Right at "The so called Top"
House bought for $270K houses in the suburb now $320K
So has a lower mortgage than those buying there NOW.

 

[numbercruncher]

TROTT PARK$260,000-$280,000 Bedrooms3 Bathrooms1 Car Spaces2

http://www.realestate.com.au/cgi-bin/rsearch?id=trott+park&a=qfp&cu=fn-rea&t=res

 

[theasxgorilla]

I second that. I know quite a few people (a couple are nearly 30) earning something in the low 40s ...

Average wages aren't actually average wages Someone should calculate the average wages of ordinary folk ... and not include the 100k+ salaries. We would see some real figures then.

A couple both earning in the low 40s becomes almost 100k. Account for the fact that two people living together live much more cheaply than one and you have a growing case for not assuming that "ordinary" people are going out and buying "median" houses on "average" incomes.

 

[Nyden]

A couple both earning in the low 40s becomes almost 100k. Account for the fact that two people living together live much more cheaply than one and you have a growing case for not assuming that "ordinary" people are going out and buying "median" houses on "average" incomes.

Ah, no. I should have been more clear - I meant a couple of people, not a couple. One of them is in a relationship, but their partner is a uni student - and the other is single I believe.

However, for arguments sake - let's assume a couple is earning $85,000 together (where do you get 100 from? I said low 40s, not mid 40s) ... after tax, just how much are they actually earning - and what's disposable?

Lest we forget, that money (after tax) has to feed 2 (potentially 3 or more, if children are also involved) people, clothe 2 people, transport 2 people, and well - you get the point.

Is it a requirement that one be in a couple in order to secure financial freedom? Do people need a partner in order to have a happy retirement, and to keep a roof over their heads? Either way, I would never take out a 30 year loan. That's insanity, and frankly I have no intent on being a debt slave for the rest of my life.

Oh, and I do intend on purchasing a home. It will be a small house though, and if all goes to plan; it will be paid off before I turn 26. It'll be raman noodles for tea though