No long-term wealth from housing boom

[Jay-684]

are you talking of the property crash in the early 1990's, or over the last 3 years?

From what I've seen/read prestige properties havent suffered nearly as much as more common properties in the recent slump. With many many houses in Mosman selling for $10m+ the past 18 months, something must be keeping demand for those properties high.

 

[Smurf1976]

I was referring to the crash of the early 1990's.

This time around it only seems to be the middle of the market that's falling. The bottom seems to still be holding up and the top seems to still be rising, thus holding up the price of an "average" house despite differences in price movements at different levels of the market.

For this reason I prefer to track the price of "similar" houses rather than "average" houses as the latter is misleading unless all price brackets are moving in the same direction at the same rate.

 

[Mofra]

Mofra,

I'm astonished at the above. So are you saying that if a person's sole income is, e.g. a disability pension, or old age pension, a bank will lend to them? What sort of % deposit are they required to have?

Julia

Julia,

Absolutely no difference to any PAYE employee. There are a few single mums out there with 3 or 4 kids and the same number of properties.

You'd also be surprised how many people own a property or two but still receive rental assistance. Due to the privacy laws, bank staff are not allowed to report them to Centrelink. I used to ask for evidence that Centrelink was aware of their asset situation, but many lenders don't.

Your taxes at work.

 

[Julia]

Julia,

Absolutely no difference to any PAYE employee. There are a few single mums out there with 3 or 4 kids and the same number of properties.

You'd also be surprised how many people own a property or two but still receive rental assistance. Due to the privacy laws, bank staff are not allowed to report them to Centrelink. I used to ask for evidence that Centrelink was aware of their asset situation, but many lenders don't.

Your taxes at work.

My initial response to this, Mofra, was "bloody hell"! But perhaps such a situation is better than said social security recipients not trying to "better themselves". I was under the impression that Centrelink have fairly impressing cross-matching facilities and any undeclared income or assets will fairly quickly become apparent.

When you mention single mothers with three or four kids, then it does make some sense. I see these young women all the time, and their fortnightly income from Centrelink, plus the $600 per child payment every year, amounts to more than many working one income families, plus they get rent assistance as you point out. So they probably are indeed in a position to service a mortgage. Though then they would not be eligible for rent assistance. (One of the silly anomalies of the social security system - you can get government assistance if you pay rent but if you are paying off your home at the same level per week, no government assistance is available.)

To return to my original question, would a mortgage also be available to someone on, e.g. disability or age pension (around $500 per fortnight before rent assistance)? That is substantially less than a single mother with several children who can be receiving more than $1000 p.w. in social security.

Julia