A lot of discussion out there about renting or buying so I thought I'd share a true story. 23 years ago a good mate of mine said "Bill it's so expensive here in Manly, I will never be able to afford a house here." I said, take it easy start cheap, right now you can buy a bedsitter for 130k, buy it, pay it off and then move on to something bigger. He ignored me as they usually do, guess what? 23 years later he is still renting and is now paying $700 per week for a crappy house in a bad location. Had he have bought back then he would own that property by now. Buying will always pay off eventually. Paying rent when you are an old man is a mugs game.
Yes it does, but only in the same sense that your calculation assumes that the house price decline of 25% remains as a permanent feature and the is never a recovery or any inflation.
In one very real aspect, the interest rate decline is producing real bankable savings, that will make permanent reductions in the loan amount.
The decline of prices may quite well be shorterm in nature and produce no long term change in situation.
And a 5.7%interest rate is not really an emergency low, when compared to say the Usa home loan rates of 2%.
A lot of discussion out there about renting or buying so I thought I'd share a true story. 23 years ago a good mate of mine said "Bill it's so expensive here in Manly, I will never be able to afford a house here." I said, take it easy start cheap, right now you can buy a bedsitter for 130k, buy it, pay it off and then move on to something bigger. He ignored me as they usually do, guess what? 23 years later he is still renting and is now paying $700 per week for a crappy house in a bad location. Had he have bought back then he would own that property by now. Buying will always pay off eventually. Paying rent when you are an old man is a mugs game.
.I earn ~80k a year with a hecs debt is take home of about $2200 a fortnight
I've done the sums over and over again and I can't afford to purchase what they call an affordable home.
.There is just no way I can service 6-700 a week for either a terrible 2 bedroom unit or a house which is 40-50kms away from the CBD
.there is no way of winning
A lot of discussion out there about renting or buying so I thought I'd share a true story. 23 years ago a good mate of mine said "Bill it's so expensive here in Manly, I will never be able to afford a house here." I said, take it easy start cheap, right now you can buy a bedsitter for 130k, buy it, pay it off and then move on to something bigger. He ignored me as they usually do, guess what? 23 years later he is still renting and is now paying $700 per week for a crappy house in a bad location. Had he have bought back then he would own that property by now. Buying will always pay off eventually. Paying rent when you are an old man is a mugs game.
For me, I can't see much justification (or mathmatical possibility) for house prices to continue as they are for ever. Aus house pricing trend for the last 60 years has been a friend to many but the bigger the trend the bigger the bend at the end.
How and when it unwinds are my question - As I don't have those answers my exposure to Aus Real estate is limited to meeting housing needs. Equities offer a far better risk/reward for investment purposes.
Just so I can understand that chart a bit better,
Is it saying that excluding inflation, over the 70years or so since 1942 property values have become 9 times higher.
If that is what it is saying I think most of that growth would be actual fair growth in value, I mean look at the difference in population of the cities between those times, Obviously population growth can be expected to cause a significant upward presure on land values.
Also look at the difference in what was considered a medium home in 1900, flushing toilets were a luxuary, running hot water wouldn't have been a feature. forget about 90% of the plumbing, electrical wiring, landscaping, bathrooms, appliances etc that are common place today,
And the size of homes on average was much smaller.
So if we allow for the change due to population growth and changes in what your getting for your money, How much exactly of the price is froth, Do you expect we will hit parity with 1900 prices again.
Just so I can understand that chart a bit better,
Is it saying that excluding inflation, over the 70years or so since 1942 property values have become 9 times higher.
If that is what it is saying I think most of that growth would be actual fair growth in value, I mean look at the difference in population of the cities between those times, Obviously population growth can be expected to cause a significant upward presure on land values.
Also look at the difference in what was considered a medium home in 1900, flushing toilets were a luxuary, running hot water wouldn't have been a feature. forget about 90% of the plumbing, electrical wiring, landscaping, bathrooms, appliances etc that are common place today,
And the size of homes on average was much smaller.
So if we allow for the change due to population growth and changes in what your getting for your money, How much exactly of the price is froth, Do you expect we will hit parity with 1900 prices again.
Today it is about $325.000 cheapest I could find23 years ago a bedsit in Manly cost $130k?
Do you have to live in a capital city?I earn ~80k a year with a hecs debt is take home of about $2200 a fortnight. I've done the sums over and over again and I can't afford to purchase what they call an affordable home.
House prices were high in 05, but instead of waiting for wages to catch up, they went even higher.
There is just no way I can service 6-700 a week for either a terrible 2 bedroom unit or a house which is 40-50kms away from the CBD.
The government really is against us on both sides so there is no way of winning.
If those prices continue to rise then that is a net loss to society.
This chart probably belongs here. Gives a good long term perspective.
Most people's opinion are based on the limited observed history.
View attachment 49364
For me, I can't see much justification (or mathmatical possibility) for house prices to continue as they are for ever. Aus house pricing trend for the last 60 years has been a friend to many but the bigger the trend the bigger the bend at the end.
How and when it unwinds are my question - As I don't have those answers my exposure to Aus Real estate is limited to meeting housing needs. Equities offer a far better risk/reward for investment purposes.
The thing I find interesting about that chart is that except for a small period around 1950 our houses prices since then have always been high relative to other places and yet Australia has always been known for high home ownership rates where the average person could afford to own their own home. Why would this be if our house prices have been higher than elsewhere? Why were not people in other countires buying houses too? I always thought it was because our houses were cheaper than in other places(or am I misinterpreting the graph somehow )
As craft said, the graph is CPI adjusted, not wage adjusted. You'd need to know what real wages did over the period to get the full picture...
So I gather then that you are from the future ? (so they did invent time travel !)
As craft said, the graph is CPI adjusted, not wage adjusted. You'd need to know what real wages did over the period to get the full picture...
23 years ago a bedsit in Manly cost $130k?
Today it is about $325.000 cheapest I could find
http://www.domain.com.au/Property/For-Sale/Apartment-Unit-Flat/NSW/Manly/?adid=2009958702
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