House prices to keep rising for years

[robots]

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



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.

hello,

same here Tech, no different today

sideways, upwards, downwards who knows but with principle and interest getting paid off life is just rolling on man,

2039 is just around the corner and I hope people are thinking about it

what a great day

thankyou
robots

 

[roofa]

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.")

I think it might also depend on age groups etc, but I would think that only two mates out of my nearest ten would be on less than 60k. Just to add another perspective on it.

 

[knocker]

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.")

I think it might also depend on age groups etc, but I would think that only two mates out of my nearest ten would be on less than 60k. Just to add another perspective on it.

Sounds rather elitist given you live in Camberwell.

 

[Beej]

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?

$85k combined income would leave about $69.5k after tax, assuming equal proportions (from ATO tax calculator FY2008). Based on my own experience and budgets etc, a couple can live comfortably with an annual spend of $40k-$45k pa (not counting housing/investment etc related expenditure). That's of course if they don't waste money, have say one car (2nd hand owned outright), no credit card debts etc etc.

So your $85k couple could actually have a good $25k-$30k pa disposable income to put towards a mortgage if they so choose, which could fund a $350k-$400k mortgage comfortably with some margin and without too many worries. Add a deposit saved over a few years and that couple should be able to spend up to $400-$450k-ish for a first house, which would buy something reasonable in any AU capital city.

And that's without even getting into the whole is the average wage really the average wage argument? Which by the way of course it is! I love how everyone here seems to think they have more statistical expertise than the teams of people that produce this data at the ABS!

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.

You are looking at it the wrong way! A 30 year loan only really exists for the time it takes to pay off! I have had several "30 year loans" and paid them off so they weren't really 30 year loans were they?? Get it?

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

Well that's a very sensible plan and I have no doubt will set you up on the road to true financial freedom in the long run!

Cheers,

Beej

 

[roofa]

Sounds rather elitist given you live in Camberwell.

I wasn't adding myself in, most of my mates live outer suburbs.
BTW. I bought in here at the bottom of the last recession-more an opportunist than elitist.

 

[Go Nuke]

$85k combined income would leave about $69.5k after tax, assuming equal proportions (from ATO tax calculator FY2008). Based on my own experience and budgets etc, a couple can live comfortably with an annual spend of $40k-$45k pa (not counting housing/investment etc related expenditure). That's of course if they don't waste money, have say one car (2nd hand owned outright), no credit card debts etc etc.

So your $85k couple could actually have a good $25k-$30k pa disposable income to put towards a mortgage if they so choose, which could fund a $350k-$400k mortgage comfortably with some margin and without too many worries. Add a deposit saved over a few years and that couple should be able to spend up to $400-$450k-ish for a first house, which would buy something reasonable in any AU capital city.

And that's without even getting into the whole is the average wage really the average wage argument? Which by the way of course it is! I love how everyone here seems to think they have more statistical expertise than the teams of people that produce this data at the ABS!



You are looking at it the wrong way! A 30 year loan only really exists for the time it takes to pay off! I have had several "30 year loans" and paid them off so they weren't really 30 year loans were they?? Get it?



Well that's a very sensible plan and I have no doubt will set you up on the road to true financial freedom in the long run!

Cheers,

Beej

Wow are you kidding?
A couple on 85k a year could afford the repayments on a $400k property? Easily?

Im not near a morgage calculator but im sure that would be what $650+ per week in repayments?
Thats a huge chunk of the take home income.

Id be happy to eat baked beans on toast but not sure about the girlfriend

Just turned 30 so need to do my bit and think about supporting the aging generation with kids after the house :/

 

[Go Nuke]

Keep in mind Beej, those trying to save for a deposit on thier own home have been forking out increasing rents..which of course wont come down now.
Robots could remind us of that

 

[roofa]

Wow are you kidding?
A couple on 85k a year could afford the repayments on a $400k property? Easily?

Im not near a morgage calculator but im sure that would be what $650+ per week in repayments?
Thats a huge chunk of the take home income.

Id be happy to eat baked beans on toast but not sure about the girlfriend

Just turned 30 so need to do my bit and think about supporting the aging generation with kids after the house :/

$2400 per month repayment @ 6% for 400K over 30 Years.
Or $555 per week.

 

[Glen48]

Rents will come down because the true believers thinking that house prices double every 7 yrs ( no evidence anywhere) will want to hang on their homes and wait for the next boom so they will move out and live back with parents etc and rent out their property.

 

[theasxgorilla]

You are looking at it the wrong way! A 30 year loan only really exists for the time it takes to pay off! I have had several "30 year loans" and paid them off so they weren't really 30 year loans were they?? Get it?

Whether it's a right or wrong way of looking at it depends of course on your circumstance. I have an interest only loan for 50 years. In spite of recent projections for deflation in the short to medium term, anybody want to bet on what inflation does to the relative value of my mortgage in two decades, let alone five.

I rent the money to control the asset...on terms that satisfy me. Nothing more, nothing less. I have insurances to protect my earned income stream, so I have no pressing need to pay it off. And if I did amortise then the amount that I can claim a tax deduction against is reduced each month.

 

[theasxgorilla]

$2400 per month repayment @ 6% for 400K over 30 Years.
Or $555 per week.

Or interest only on a 400K property, with a 360K mortgage, assuming our model couple did the "right" thing and saved a 10% deposit...you're looking at $1,800 per month.

A little over $200 per person per month, or 25% of each person's gross income. Unreasonable??

 

[GumbyLearner]

In spite of recent projections for deflation in the short to medium term, anybody want to bet on what inflation does to the relative value of my mortgage in two decades, let alone five.

What are your projections for inflation long-term asx?

 

[theasxgorilla]

What are your projections for inflation long-term asx?

It will progressively erode away the relative level of any 2009 debt.

IMO it behoves one to factor in 3% average inflation over the next 35 years. You can use Excel to calculate the positive effect it will have on your debt levels. The wrap up is that that adjusted for inflation what most people owe on their houses in 2009 will become the least of their worries in the coming decades.

Alas what inflation giveth it also taketh away, and so you must factor the same inflation rates into your retirement saving projections. Most people will have a lot less in retirement savings than they need because they're not thinking in 2045 dollars.

 

[tech/a]

It will progressively erode away the relative level of any 2009 debt.

IMO it behoves one to factor in 3% average inflation over the next 35 years. You can use Excel to calculate the positive effect it will have on your debt levels. The wrap up is that that adjusted for inflation what most people owe on their houses in 2009 will become the least of their worries in the coming decades.

Alas what inflation giveth it also taketh away, and so you must factor the same inflation rates into your retirement saving projections. Most people will have a lot less in retirement savings than they need because they're not thinking in 2045 dollars.

There is much to be gained by investigating ASX's comments above.

 

[roofa]

Whether it's a right or wrong way of looking at it depends of course on your circumstance. I have an interest only loan for 50 years. In spite of recent projections for deflation in the short to medium term, anybody want to bet on what inflation does to the relative value of my mortgage in two decades, let alone five.

I rent the money to control the asset...on terms that satisfy me. Nothing more, nothing less. I have insurances to protect my earned income stream, so I have no pressing need to pay it off. And if I did amortise then the amount that I can claim a tax deduction against is reduced each month.

The Bank would love you, 50 Years @ interest only.

 

[theasxgorilla]

The Bank would love you, 50 Years @ interest only.

I think they've got more pressing issues right now. They're one of the ones that found themselves in dire straits last year. Maybe they were too generous to customers like me? And now the tax payer must come to their (my) rescue.

One can presume all kinds of things. Many of the things you might presume are incidental though. Financing is a means to an end, it's not the end.

 

[numbercruncher]

Speaking of generous banks, there is now a chance in the UK that some mortgages will PAY interest !! confused ?? read on .....

The latest fall in interest rates, and its knock-on effect on mortgage rates, has raised the interesting possibility that some lenders may soon have to start paying interest to some of their mortgage customers.

These are the ones who, in the course of 2007 and even into last year, took out tracker deals that specified the interest rate would be at a margin below the Bank of England's base rate.

http://news.bbc.co.uk/2/hi/business/7819647.stm

Brings a new meaning to positively geared !!

 

[Beej]

$2400 per month repayment @ 6% for 400K over 30 Years.
Or $555 per week.

And that's principle and interest. Interest component of that is $460/week, or about 28% of their take home income. Many of the people you are talking about would already be paying close to that or more in rent each week.

Or interest only on a 400K property, with a 360K mortgage, assuming our model couple did the "right" thing and saved a 10% deposit...you're looking at $1,800 per month.

A little over $200 per person per month, or 25% of each person's gross income. Unreasonable??

You see - asxgorilla get's it! Although I think he meant $200/WEEK per person there Still totally doable, and that's about 24% of their weekly take home.

I also second asx's comments re having a good think about inflation and how it relates to borrowing money for a house vs paying rent in the long term.

Cheers,

Beej

 

[numbercruncher]

Nice to see some legit debate coming from the permas ....

Yes low interest rates are wonderful, will you all survive if they double ?

But it sure does seem like we will Eventually get Inflation ....

Not to mention loads of unemployment and other interesting things ....

 

[theasxgorilla]

You see - asxgorilla get's it! Although I think he meant $200/WEEK per person there Still totally doable, and that's about 24% of their weekly take home.

Indeed I did, sorry about that.