Australia housing bubble

[Mont5.0]

Originally Posted by leesa

That's a huge benefit that most people don't get though. 45 minutes each way would probably be a tank a week so maybe $80/week and then parking costs to park at work for the day, rego $900/year, insurance let's say $800, I won't including servicing. That's at least $6000/year you're saving that the average person isn't, not including parking costs as it's such a variable.

For every person that I ask how they managed to get into the housing market, there always seems to be one big factor or lucky break in their lifestyle. Like they got to live rent-free at home while they saved a deposit, or they got an inheritance, or they have a company car which frees up their own money.

I'm not disputing that you had to have worked hard to get your house but if you had that company car back when you first got your house... that's a massive advantage that the average person doesn't get.

You do realize a company car is part of your "package".
It used to be worth the equivalent of 15-18k per year.

Originally Posted by FairmontGS

Leesa, which part of 17.5% versus 4% interest is it that you don’t understand?

This seems like a really common comment. Have you looked at the repayments for a house price back in those days with 17% interest along with the average income, and compared it to a house price today with 4% at today's income?
The numbers quite clearly show that the ratio is far far higher than it used to be. Why are you getting hung up on the interest rate, thinking that made it so much worse?

I don't have it all that bad, I earn a decent wage and don't have a bad life. The younger generation do have it bad and they ARE victims. Seeing as you want to use that word, I will absolutely call them victims of previous generations who inflated the property market for their own personal gain. They're going to be living at home far longer than I ever was.

[GASWAGON]

Average 'Median' house price in Melbourne these days is 'AT LEAST' 600-700K...if not closer to 1 MILL!!!!

Thats not far off 3/4 of a 1 Million Dollars for your very first house???

Its just not possible........At least without a 30 years mortagage instead of the old 25 year???

And we all have to work until we're 70 now not 65 like all you older retiree's???

[.:4:.]

Originally Posted by leesa

You're brave. far braver than I. I wouldn't risk that size of a mortgage.

Yes it was a massive undertaking. But looking back it was the dumbest decision I had made in my life at the time, but these days when I talk to the young blokes at work and when I think to myself they're never going to get into the market anywhere closer then the blue mountains, maybe it was in hindsight one of the smarter things I have done. Unlike cars, property appreciates. Yes the market goes up and down but it doesn't dive so it always in the long run goes up. So like my situation at the time it was a massive financial killer however wages also go up. All I'm getting at is if you for example pay x amount at the time and it's a killer at the time, that initial x amount doesn't change like the market does. The value of the property will increase to a degree but what you paid for it will not. Then there is the mortgage cycle. Pay part of your property off and sell it for more then what you bought it for, that just means you can buy the equivalent property a suburb over or whatever. Use the value of your property and jump back into another mortgage to the value or whatever you had paid off with income increases then you can then buy either a better place in your current area or something of more cost somewhere else then still be tied down to the bank. There is a lot to it. My old man worked in the mortgage industry before he retired and I didn't understand most of what he said but what I did understand is buying a house to live in there is no profit. Investment properties where someone else pays the mortgage for you then that is profit. These days for a blue collar worker like myself simply buying an investment property is not something i can ever see doing

[GasoLane]

Originally Posted by leesa

Judging by your post history you've got to be around 50 years old, hardly a comparable experience to what later generations are going through in the current housing market given the income/house ratio is far worse than it was.
How can you even comment knowing that 'your time' was prior to when the housing market inflated?

I've known PB long enough to know that he spent a lot of time living on mine sites, working in shipyards and in the hard yakka side of the wine industry.

He now has a 'few' cars and a house, like he said, he didn't blow it on shiny stuff.

[Lotte]

Originally Posted by FairmontGS

Leesa, which part of 17.5% versus 4% interest is it that you don’t understand?

You’ve fallen in love with your problem. Stop being a victim.

But it's not just about the interest rates - it's about saving the deposit. People used to be able to rent (at a higher rate than a mortgage repayment too if my mums memory serves her correctly), and still be able to to save a deposit.

I'm an engineer, I was fortunate enough to graduate before a lot of companies stopped hiring grads. It's still hard even though I have a well paying job, and denying that it's not more difficult than it was to save a deposit in prior decades is just plain ignorance. When places like Kilmore and Wallan are fast becoming non-options for average single incomers, you know it's bad. I mean, a one bedroom apt in Bundoora is over 450k - that's beyond a joke.

Wage inflation hasn't risen at the same rate as housing inflation. I mean hell - housing has doubled in price in Melbourne and Sydney (at least) in the last 10 years, if not less. Wages haven't doubled to keep up with that demand.

There's a lot of factors at play here - investors, foreign buyers, population growth, less secure jobs, low wage inflation when compared to housing, actual median wage being 55k per year (where average is about 78k per year, but only 25% of the pop earn that or more, but this is the figure that's touted like it's gold), two incomes in families instead of the "traditional" one (so they have more money to win that house they want), etc etc etc.

Literally no person in their 30's or lower is saying it wasn't hard for people in the 60's, 70's and 80's, but there's a problem with housing. And it's ignorant to say there isn't.

[Beastie]

Originally Posted by leesa

You're brave. far braver than I. I wouldn't risk that size of a mortgage.

I thought the same when I borrowed $40K at 17.5%

If you want to own / buy your own home, you will find a way...

Do you want to own / buy your own home?

[Beastie]

Originally Posted by leesa

That's a huge benefit that most people don't get though. 45 minutes each way would probably be a tank a week so maybe $80/week and then parking costs to park at work for the day, rego $900/year, insurance let's say $800, I won't including servicing. That's at least $6000/year you're saving that the average person isn't, not including parking costs as it's such a variable.

For every person that I ask how they managed to get into the housing market, there always seems to be one big factor or lucky break in their lifestyle. Like they got to live rent-free at home while they saved a deposit, or they got an inheritance, or they have a company car which frees up their own money.

I'm not disputing that you had to have worked hard to get your house but if you had that company car back when you first got your house... that's a massive advantage that the average person doesn't get.

This also resonates with me, as I was lucky enough to have a company car from a young age. However, the company car came after my decision to buy a property, so it was a bonus...

[BENT_8]

Originally Posted by GasOLane

I've known PB long enough to know that he spent a lot of time living on mine sites, working in shipyards and in the hard yakka side of the wine industry.

He now has a 'few' cars and a house, like he said, he didn't blow it on shiny stuff.

Yeah, in Adelaides northern suburbs like my good self, not that theres anything wrong with that, where mcmansions can be had for bottle tops..

For someone working in Sydney to recieve the same benefit of cheap housing they'd need to commute from Wagga daily.

[BENT_8]

Originally Posted by FTE217

The niece and boyfriend now hubby have been together for 8yrs, their choice I guess before marriage, were living at home prior, then were out renting for a few years both times saving - they still had their entertainment times but thats all varying how some take entertaining/going out.

You didnt mention kids, they got kids mate?

[pottery beige]

Originally Posted by BENT_8

Yeah, in Adelaides northern suburbs like my good self, not that theres anything wrong with that, where mcmansions can be had for bottle tops..

For someone working in Sydney to recieve the same benefit of cheap housing they'd need to commute from Wagga daily.

im loaded

i live in the rich part

[BENT_8]

Originally Posted by pottery beige

im loaded

i live in the rich part

Burton?

Or the parks they chopped up on Diment..

[pottery beige]

Originally Posted by BENT_8

Burton?

correct

rich part of paralowie

[b0son]

Originally Posted by FairmontGS

I bought in Footscray in 1985 on one wage. I was a clerk. I grew up in Balwyn but I really wanted to own my own home. So I went where I had to.

While I can see your point about buying in a less attractive suburb to get your foot in the door of the property market, you've conveniently ignored the obvious.... the median house price in Melbourne in 1985 was $75k, its now $900k. It was 3.6x average income, its now 11x average income.

Yes, you can buy a property for $300k in Melbourne (3.6x today's average income), but while it might have been a 3br house back then, its a 1br unit now. Apples and not even oranges. Are you seriously suggesting your 'struggle' is even remotely comparable to someone having to look as far afield as Warragul for a 3-bedder?

[b0son]

Originally Posted by FairmontGS

Leesa, which part of 17.5% versus 4% interest is it that you don’t understand?

Which part of high rates came down (and fairly quickly) don't you understand? Which part of struggling to afford at RECORD LOW interest rates = recipe for disaster when they go up, don't you understand? Which part of houses being multiples more as a proportion of income requiring a far greater deposit don't you understand?

[BENT_8]

Originally Posted by b0son

Which part of high rates came down (and fairly quickly) don't you understand? Which part of struggling to afford at RECORD LOW interest rates = recipe for disaster when they go up, don't you understand? Which part of houses being multiples more as a proportion of income requiring a far greater deposit don't you understand?

The common sense part...clearly

[Charliewool]

Originally Posted by leesa

You're brave. far braver than I. I wouldn't risk that size of a mortgage.

There IS another answer!!
Sell everything you own, Up tents and away camels...
and move 14,225 kms to the land of ”Pura Vida” where everyday is paradise!
(And heaps “braver” than taking on a simple bloody mortgage!)

[asagaai]

I still think that Leesa you should lay it all out to get into the market-if in Sydney out far to get your toe in the door- eat baked beans for a while.

But saying that I really do feel for younger people now-it is hard.

And the Government has/is blowing the Australian bankcard to keep standards of living up so they can keep in power- and the next generations will pay the interest tab by having lower living standards.

Something is wrong with politics and the quick 3 year quickfire policies-but I digress- I feel for younger people now who are not into housing.

[Charliewool]

Decades of disgraceful snouts in trough governance, OH&S policies destroying small business, big brother ruling, and knowing every detail of our existence, along with today’s ridiculous Political Correctness were some of the motives behind me deciding “enoughs enough” and doing something about it!
A bit like ripping a bandaid off.. It stings for a while, but heals quick with fresh air!

[Mercury Bullet]

Originally Posted by leesa

You're brave. far braver than I. I wouldn't risk that size of a mortgage.

It's not bravery, it's doing what is required.

I had nights, many of them, scratching my head wondering how I was going to put fuel in the car in the morning to get to work. Wondering how I was going to put dinner on the table.

I went 6 years without a holiday and used the holiday pay to clear bills while I kept working.

It ain't easy, then all of a sudden it gets easier.

If you don't get brave and do something about it you will go nowhere.

It's not about investment properties, I know a lot of people who have been burnt doing that. A few get lucky.

[jmack]

it makes me laugh when people start talking about house prices.its about sacrifices ,i had a plan to be semi retired by 50(working when i want ,not have to)that meant no sunday brunches,annual pilgrimige to bali etc or the latest phone etc.those hard years are paying off now ,45yo own my own home(est 1.3m)plus all my toys (cars,bikes,boats)its not bragging its what you have to do

[FTE217]

Originally Posted by BENT_8

You didnt mention kids, they got kids mate?

Sorry mate, NO kids to date.
but they did have a active social life prior to knuckling down so that expense was like having kids in a way.
Having had 3 kids, at the young stage they don't cost you alot, whereas getting out socialising costs more thats for sure.
Mate, they just saved and made of life what it is, stop looking for holes or outlets on outcomes.

leesa, yes some of us are mature
I'm in 50's as well, like I said mortgaging even back then seemed like millions to all of us.
I couldn't afford to buy in my local area or 5k radius, prior to the inner city boom, and still those semis etc were dumps, you shouldn't have paid even half what they asked even back then but I still had to pay more than I would have wanted, had planes flying over us, I grew up on a 1/4 acre now I was in crim city with a backyard the size of bathroom, on street parking, druggy house on the corner for eg...my wife and I saved for our deposit, come the crunch the last hurdle to get to the finish line we lived with my parents for 1yr to save paying rent, it was suck it up and do your best.
I/we had no toys like you have whilst paying rent. You can't have it all, you have no chance in your current situation.
I had a mate get his girl friend pregnant @ 18yrs, he stood by her married her, couldn't afford in Sydney at all even way back then, had to buy up the central coast !
There are more similar stories, nothing is bloody easy otherwise we'd all be loling.....

[chrisandsharon]

Went back to where I grew up (I’m 41) 5 months ago - 350 size blocks $700000, dog box units starting at $990000. That was a working class suburb. Sorry but I just hope that prices go as stupid as they’ve gone in reverse over the next few years for the younger generation - I hope the market absolutely does in the rear. I couldn’t believe the prices. To the younger generation, if you can do it I’d say put on your adventure hat and get the hell outa Sydney/Melbourne etc where prices have gone stupid. Australia’s a big place and there are some awesome areas to live where you can start off.

[FairmontGS]

Originally Posted by leesa

This seems like a really common comment. Have you looked at the repayments for a house price back in those days with 17% interest along with the average income, and compared it to a house price today with 4% at today's income?
The numbers quite clearly show that the ratio is far far higher than it used to be. Why are you getting hung up on the interest rate, thinking that made it so much worse?

I don't have it all that bad, I earn a decent wage and don't have a bad life. The younger generation do have it bad and they ARE victims. Seeing as you want to use that word, I will absolutely call them victims of previous generations who inflated the property market for their own personal gain. They're going to be living at home far longer than I ever was.

Originally Posted by Lotte

But it's not just about the interest rates - it's about saving the deposit. People used to be able to rent (at a higher rate than a mortgage repayment too if my mums memory serves her correctly), and still be able to to save a deposit.

I'm an engineer, I was fortunate enough to graduate before a lot of companies stopped hiring grads. It's still hard even though I have a well paying job, and denying that it's not more difficult than it was to save a deposit in prior decades is just plain ignorance. When places like Kilmore and Wallan are fast becoming non-options for average single incomers, you know it's bad. I mean, a one bedroom apt in Bundoora is over 450k - that's beyond a joke.

Wage inflation hasn't risen at the same rate as housing inflation. I mean hell - housing has doubled in price in Melbourne and Sydney (at least) in the last 10 years, if not less. Wages haven't doubled to keep up with that demand.

There's a lot of factors at play here - investors, foreign buyers, population growth, less secure jobs, low wage inflation when compared to housing, actual median wage being 55k per year (where average is about 78k per year, but only 25% of the pop earn that or more, but this is the figure that's touted like it's gold), two incomes in families instead of the "traditional" one (so they have more money to win that house they want), etc etc etc.

Literally no person in their 30's or lower is saying it wasn't hard for people in the 60's, 70's and 80's, but there's a problem with housing. And it's ignorant to say there isn't.

Originally Posted by b0son

While I can see your point about buying in a less attractive suburb to get your foot in the door of the property market, you've conveniently ignored the obvious.... the median house price in Melbourne in 1985 was $75k, its now $900k. It was 3.6x average income, its now 11x average income.

Yes, you can buy a property for $300k in Melbourne (3.6x today's average income), but while it might have been a 3br house back then, its a 1br unit now. Apples and not even oranges. Are you seriously suggesting your 'struggle' is even remotely comparable to someone having to look as far afield as Warragul for a 3-bedder?

Originally Posted by b0son

Which part of high rates came down (and fairly quickly) don't you understand? Which part of struggling to afford at RECORD LOW interest rates = recipe for disaster when they go up, don't you understand? Which part of houses being multiples more as a proportion of income requiring a far greater deposit don't you understand?

Well there's you lot, who can't seem to do it...

Originally Posted by Mercury Bullet

It's not bravery, it's doing what is required.

I had nights, many of them, scratching my head wondering how I was going to put fuel in the car in the morning to get to work. Wondering how I was going to put dinner on the table.

I went 6 years without a holiday and used the holiday pay to clear bills while I kept working.

It ain't easy, then all of a sudden it gets easier.

If you don't get brave and do something about it you will go nowhere.

It's not about investment properties, I know a lot of people who have been burnt doing that. A few get lucky.

Originally Posted by jmack

it makes me laugh when people start talking about house prices.its about sacrifices ,i had a plan to be semi retired by 50(working when i want ,not have to)that meant no sunday brunches,annual pilgrimige to bali etc or the latest phone etc.those hard years are paying off now ,45yo own my own home(est 1.3m)plus all my toys (cars,bikes,boats)its not bragging its what you have to do

Originally Posted by FTE217

Sorry mate, NO kids to date.
but they did have a active social life prior to knuckling down so that expense was like having kids in a way.
Having had 3 kids, at the young stage they don't cost you alot, whereas getting out socialising costs more thats for sure.
Mate, they just saved and made of life what it is, stop looking for holes or outlets on outcomes.

leesa, yes some of us are mature
I'm in 50's as well, like I said mortgaging even back then seemed like millions to all of us.
I couldn't afford to buy in my local area or 5k radius, prior to the inner city boom, and still those semis etc were dumps, you shouldn't have paid even half what they asked even back then but I still had to pay more than I would have wanted, had planes flying over us, I grew up on a 1/4 acre now I was in crim city with a backyard the size of bathroom, on street parking, druggy house on the corner for eg...my wife and I saved for our deposit, come the crunch the last hurdle to get to the finish line we lived with my parents for 1yr to save paying rent, it was suck it up and do your best.
I/we had no toys like you have whilst paying rent. You can't have it all, you have no chance in your current situation.
I had a mate get his girl friend pregnant @ 18yrs, he stood by her married her, couldn't afford in Sydney at all even way back then, had to buy up the central coast !
There are more similar stories, nothing is bloody easy otherwise we'd all be loling.....

Then there's the rest of us who are doing it or have done it.

I could relate on how difficult it was for me to obtain my first mortgage on one wage and how my wife and I slept on a mattress with no bed and lived out of an Eski because we couldn't afford a fridge because we placed the mortgage payments over things like that. Or how my parents had to live with my grandparents for a few years with us kids until they had a deposit. Or how my Dad worked a day job, then went out again overnight when we were all asleep and cleaned offices to save the money for the deposit.

But that's all in the past, heh? Must just be the rantings of the older generation, yeah? Because we all know it was easier back then, right?

It's easier when it's someone else's fault for your predicament isn't it..

[chrisandsharon]

Everyone has their own story. Irrespective of how hard you think you have done it, there are areas in this country that no matter how hard a young couple work and go without they’ll never ever be able to own their own house. That’s why I said if they can get out of Sydney etc then go for it. For the ones that can’t for various reasons I do feel for.
Workers conditions are going down the drain fast in this country too which make it harder. All big business want is a disposable contract work force.

[asagaai]

Originally Posted by chrisandsharon

Everyone has their own story. Irrespective of how hard you think you have done it, there are areas in this country that no matter how hard a young couple work and go without they’ll never ever be able to own their own house. That’s why I said if they can get out of Sydney etc then go for it. For the ones that can’t for various reasons I do feel for.
Workers conditions are going down the drain fast in this country too which make it harder. All big business want is a disposable contract work force.

I have lived in many places in Australia- Melbourne, Sydney, Hobart, Mt Arapiles outside Natimuk, Darwin, Katherine, and Newcastle.

I lived and worked in governor phillip tower at circular quay in Sydney on the 28th floor-and looking out my office window over the Sydney pollution I felt like a trapped polar bear in a zoo swinging his head going mad.

Personally my favourite places have been Hobart, Katherine and Newcastle. People might laugh about Katherine but there was a beauty about the place and a socially rich society where people valued each other.

I agree with chrisandsharon- if you have never looked outside the big 2 cities you might find a much richer lifestyle elsewhere in terms of things that matter other than empty equity materialism.

[b0son]

Originally Posted by FairmontGS

Well there's you lot, who can't seem to do it...

What makes you think I haven't got a house? It amazes me the self-satisfied smugness and condescension these threads bring out.

I have a house, it will be paid off next year. Unlike you however, I also have empathy. And apparently, a decent grasp of some pretty basic maths.

By my estimates, having entered the property market in 2004, I am around $300,00 worse off than if I had bought in 2000, simply due to the extra capital growth and interest I have to pay to the bank. Add another $400-500,000 if I was buying now. How many years does it take to save that much? How many EXTRA years of work does it take to pay a bank to do the same thing you did 30-40 years ago?

Wages were going up, rates were coming down. You had the capacity to plough extra money into the mortgage. We've had no meaningful wage growth for years in Australia, we're at record low rates right now. Where will this extra money come from? How many decades do our kids need to skrimp, save and sacrifice just to buy a dog box nowadays?

What's right about people having to work for 10-20 years longer to buy the same thing their parents bought at the same stage in life?

Originally Posted by FairmontGS

Well there's you lot, who can't seem to do it...


Then there's the rest of us who are doing it or have done it.

Yeah and they're all old enough to have missed the market inflation, they all bought when the house/income ratio was still reasonable. The market went bad AFTER you bought. If you thought it was bad when you bought... it's now even worse and out of reach for a great many people. Can you understand that??

You're just being wilfully ignorant.

[asagaai]

Originally Posted by b0son

What's right about people having to work for 10-20 years longer to buy the same thing their parents bought at the same stage in life?

In essence I agree with you - the young entering the markets -especially in the big 2 cities- will do it very tough.

But using your definition- What's right about people nowadays living to average age of some 85 odd whereas back in 1950 it was some 67 odd.

Life and things change- fair or not. Why can a healthy human now live to 90 but 200 years ago they could only live to 50 odd- that's not fair.

As humans we have adaptability - and it needs to be used.

So the young have a tough lot to enter the market. Agreed.

But they need to be adaptable and think outside the square.

Life has never been easy on many levels- wealth acquisition, property acquisition, health, wars- and it never will be- the only constant will be the challenges will always be there and never be the same.

So what should the young do- rise to the challenge and be adaptable or simply roll over belly up and give up?

[BENT_8]

Originally Posted by FTE217

Sorry mate, NO kids to date.
but they did have a active social life prior to knuckling down so that expense was like having kids in a way.
Having had 3 kids, at the young stage they don't cost you alot, whereas getting out socialising costs more thats for sure.
Mate, they just saved and made of life what it is, stop looking for holes or outlets on outcomes.

Lol, did you say that with a straight face, the truth is the current housing situation is in many circumstances forcing people to make decisions between having kids or a house of their own and that is a tragic situation.
It might not suit you're narrative, and people will refrain from exposing it as its a terrible thought, but it is reality unfortunately.
I took on a mortgage on 1 labourers wage of $450pw with 2 kids when i was 25, 17 years ago when housing was affordable, there is no way, i repeat no way a 25yr old on comparable money with 3 dependants could do that in todays climate.

Originally Posted by FTE217

leesa, yes some of us are mature
I'm in 50's as well, like I said mortgaging even back then seemed like millions to all of us.

Seemed like...thats what you dont get im afraid, it is a reality for the current generation.
Theres not too many houses within 2hrs of Sydney that wont have cost you $1-2m by the time you've paid 30yrs of interest and if you've worked your guts out for the first 10 years post schooling, gone without to save the required deposit, missed the joy of having kids that will produce grandkids whilst your still young enough to enjoy them and at age 60 have finally paid down that debt, you havent lived, you've simply existed to service that debt and missed out on many of lifes joys along the way which for those who make that decision may never realise and be ignorant to the fact.