Australia housing bubble

[zilo]

Originally Posted by Yellow_Festiva

Same people can be found on dating sites - semi attractive low 40's single women who want to meet a guy:

* That lives within 5km of the CBD
* That has these specific degree(s) / qualification(s) / certificate(s)
* That makes $xxx,xxx income based on their employment expectations
* That must have this body type, hair type, eye colour etc
* That must be this minimum height
* That must have a car
* Than must be of a certain religion and ethnicity
* That must be totally single, not separated, divorced, no kids
* That must be older than me and also want kid(s)

But... it's certainly not their fault they are single - they just haven't met the 'right' guy yet

Now you've done it...I'll break into a song now...

[b0son]

Originally Posted by zilo

Prolly cause we never had spas...theatre rooms..landscaping done on day one...double garage..workplaces with gyms and childcare at work...smashed avocado...smart phones on breathtakingly expensive handset plans...and an expectation that a degree entitled one to a job...

Before covid-19, we were looking for an investment property (long term aim to sell on the cheap to my daughter one day when she's ready to settle down) in the various new estates in SW Sydney. 3-4br on the smallest block you can get away with. None had spas or theatre rooms, landscaping was little more than lawn and a couple shrubs (its a council requirement, builder cant hand over bare dirt), single garage, barely enough yard to hang up washing (probably couldnt even fit a hills hoist in many of them). The most significant mod cons were a decent kitchen/bathroom and aircon. They'd add at most $30-50k to the total cost.... $550-650k. That's the entry point to the Sydney market for most FHB's ... $550-650k.

On a casual job. With no long term security. And you want to blame young people for that? If you've taken advantage of the generous capital gains tax treatment property investors receive, then you are the one who is squarely to blame. Investors alone have driven the property booms of the last 20 years. FHB are hardly to blame for the types of new homes on offer. The vast majority of established homes are not on the outskirts, they're on bigger blocks, they're way out of most young peoples budgets.

Hell ,we had 100 sq metre houses with one lounge room and one bathroom...and had sheets on the windows till we could afford curtains...air conditioning?...nope....two cars? nahhhhh

You left out the most important thing. You could build that home on 2-3x your annual income. You cant even get a block of land for that now. It was viable to have one car then because it was viable for the wife to stay home full time. Those days are long gone.

[Polyal]

Come on, lets not label everyone, millennial lives matter

[Polyal]

Originally Posted by b0son

Before covid-19, we were looking for an investment property (long term aim to sell on the cheap to my daughter one day when she's ready to settle down) in the various new estates in SW Sydney. 3-4br on the smallest block you can get away with. None had spas or theatre rooms, landscaping was little more than lawn and a couple shrubs (its a council requirement, builder cant hand over bare dirt), single garage, barely enough yard to hang up washing (probably couldnt even fit a hills hoist in many of them). The most significant mod cons were a decent kitchen/bathroom and aircon. They'd add at most $30-50k to the total cost.... $550-650k. That's the entry point to the Sydney market for most FHB's ... $550-650k.

On a casual job. With no long term security. And you want to blame young people for that? If you've taken advantage of the generous capital gains tax treatment property investors receive, then you are the one who is squarely to blame. Investors alone have driven the property booms of the last 20 years. FHB are hardly to blame for the types of new homes on offer. The vast majority of established homes are not on the outskirts, they're on bigger blocks, they're way out of most young peoples budgets.



You left out the most important thing. You could build that home on 2-3x your annual income. You cant even get a block of land for that now. It was viable to have one car then because it was viable for the wife to stay home full time. Those days are long gone.

100%

Its like people trying to compare generations of sports players to other in different era's. On basic stats you can, but the reality and other external factors are completely different. Its not apples and apples.

[zilo]

Originally Posted by b0son

You left out the most important thing. You could build that home on 2-3x your annual income. You cant even get a block of land for that now. It was viable to have one car then because it was viable for the wife to stay home full time. Those days are long gone.

17.5% versus 2.5% takes care of that.

also...My taxes paying for someone's child care? Seriously?

[b0son]

Originally Posted by zilo

17.5% versus 2.5% takes care of that.

It was less than half that within 2 years. If you took out a 25yr loan in 1990, you would have had an average rate of around 7.5% or less.

Median Sydney price 1990 - $155k ($27k avg wage)
Median Sydney price 2020 - $1.1m ($67k avg wage)

A 7.5% average lifetime rate would take 48% of your average income. A 2.5% lifetime rate starting today would take 78% of your average income. Rates dont really have anywhere to go but up right now.... and with a recession coming, what do you suppose the prospects are for your typical FHB today?

A lot worse than yours were....

[zilo]

Originally Posted by b0son

It was less than half that within 2 years. If you took out a 25yr loan in 1990, you would have had an average rate of around 7.5% or less.

Median Sydney price 1990 - $155k ($27k avg wage)
Median Sydney price 2020 - $1.1m ($67k avg wage)

A 7.5% average lifetime rate would take 48% of your average income. A 2.5% lifetime rate starting today would take 78% of your average income. Rates dont really have anywhere to go but up right now.... and with a recession coming, what do you suppose the prospects are for your typical FHB today?

A lot worse than yours were....

Hmmm..

What's this average lifetime rate?
Which bank offers it?
When is the recession coming...actual date please?
The rates are going up?....when?

My post was based on actual data not crystal ball gazing mate.

[b0son]

Originally Posted by zilo

What's this average lifetime rate?

It's the average rate paid over the life of the loan. People always trot out 17.5% like that's what they paid for the life of the loan. It's laughable.

When is the recession coming...actual date please?

https://www.news.com.au/finance/econ...b5974651e2a5cb

the Australian economy shrunk by 0.3 per cent over the first three months of the year according to today’s national accounts...

The definition of a recession is two consecutive quarters of the negative growth, a requirement that is certain to be met in the June quarter which will include the economy wide shutdowns ordered to save lives and protect the community from COVID-19.

Is 3 and a bit weeks near enough for you?

The rates are going up?....when?

The cash rate is 0.25%, the next move will be to zero, after that, the only way is up.

My post was based on actual data not crystal ball gazing mate.

Cherry-picking a single data point is not using data. Don't kid yourself.

[guzzis3]

Originally Posted by b0son

It was less than half that within 2 years. If you took out a 25yr loan in 1990, you would have had an average rate of around 7.5% or less.

Median Sydney price 1990 - $155k ($27k avg wage)
Median Sydney price 2020 - $1.1m ($67k avg wage)

A 7.5% average lifetime rate would take 48% of your average income. A 2.5% lifetime rate starting today would take 78% of your average income. Rates dont really have anywhere to go but up right now.... and with a recession coming, what do you suppose the prospects are for your typical FHB today?

A lot worse than yours were....

Comparing averages is fair enough, but I would point out you could look at what that "average" house in sydney was back then. I come from a family of 5, 3 boys. We grew up in a 2 bed 8 sq fibro house in condell park (bankstown). 2 beds were as common as 4 beds in those days.

And in the old days no bank would finance you unless you had 20% down. So you and your missus who had been living with mum and dad for years after they were married had saved every possible penny turned up at the bank with 20% deposit.

They bought a renovators delight but people back then knew how to do things. He'd be fixing the plumbing, frame and cladding while she was painting everything.

I sold a boat last week. I had 2 lots of young people come to look but when they saw the trailer needed some welding no deal. Then a 70yo bloke came along and bought it without hesitation.

Young people don't have it easy, but I think if you really looked hard you would find it ain't that much harder overall.

And seriously don't get me started on single women's wish lists. I made myself so popular with them when I was younger pointing out the flaws in the plan.

Originally Posted by zilo

also...My taxes paying for someone's child care? Seriously?

Like my taxes paying for previous generations' pension, despite them receiving their full wage and not setting aside any money for their future while I also get deductions from mine to pay for my own superannuation?

It's almost as much of a joke as me getting access to hundreds of thousands of dollars in super when I'm 70 and probably only a year or two away from death while today I can't buy a house for my own shelter. A lot of good that'll do me then.

[b0son]

Originally Posted by guzzis3

Comparing averages is fair enough, but I would point out you could look at what that "average" house in sydney was back then. I come from a family of 5, 3 boys. We grew up in a 2 bed 8 sq fibro house in condell park (bankstown). 2 beds were as common as 4 beds in those days.

If you advertised that 2bd 8sq fibro in Condell Park to FHB for 3-5x their average income, trust me, you'd have no shortage of takers.

And in the old days no bank would finance you unless you had 20% down.

How are you going to save 20% of 600k? At the peak of the recent booms, prices were rising faster than people could save.

So you and your missus who had been living with mum and dad for years after they were married had saved every possible penny turned up at the bank with 20% deposit.

I agree, there are plenty of entitled twats in that age group. We had a salesperson who was living with her fiance with her parents to save for a home. Yet they were still doing trips to Bali and buying overpriced full breed dogs for thousands. Many are their own worst enemies. But I am annoyed at the idea that the stereotype is at all representative of the majority.

They bought a renovators delight but people back then knew how to do things. He'd be fixing the plumbing, frame and cladding while she was painting everything.

If you spend $600k+ for your first home how many people are going to have the spare cash to do any work on it? Nowadays, a lot of the work people did themselves would simply be illegal now, or you'd have no hope of getting it 'certified' so you could get an occupancy certificate (if needed).

And seriously don't get me started on single women's wish lists. I made myself so popular with them when I was younger pointing out the flaws in the plan.

Went to school with one of those. Was convinced she should not settle for anything less than successful and handsome. The fact her looks meant she was never going to get those sorts of guys' attention was lost on her. Ended up living with a guy and his dog in his caravan.

Every generation has people that delude themselves. How many boomers think they've paid enough taxes and its the young folk's turn to support them? That too is a laughable assertion. You dont stop paying your way til you die.

[zilo]

My version...

It's all well and good talking about 6 times average earnings blah blah
Whineing about how good we had it forgets a few facts.
Years ago we had one income...now there are two.

How did prices go up? At auctions we had people bidding on the assumption of one income.

As time went by the dual income equal opportunity hard working child care dependent women would assist in the auction, bidding the price up cause they had more money to bid with their partners.

The rest is history....the market is driven by what people will pay.

Where the sookey lah lahs get into trouble is when she gets pregnant and one income stops.

Happy to hear any other version of it?

Originally Posted by b0son

Went to school with one of those. Was convinced she should not settle for anything less than successful and handsome. The fact her looks meant she was never going to get those sorts of guys' attention was lost on her. Ended up living with a guy and his dog in his caravan.

That's a smidge offensive.

Both "successful" and "handsome" are pretty subjective. Successful at its most basic just means someone who has at least a shred of drive to do anything other than sit at home all their life and collect the dole. I don't think many people would bother with someone who has such little drive to better their own circumstances. You can be successful and still work a menial job.

And we all know how varied peoples' tastes are when it comes to what's good looking or not. There are plenty of people who are still good looking despite not being conventionally attractive.

I'm not surprised she ended up "living with a guy and his dog in his caravan" rather than pursuing her own success if she was told by people in her life that she had no chance at happiness because they thought she was ugly. That's pretty rough.

[zilo]

Originally Posted by leesa

Like my taxes paying for previous generations' pension, despite them receiving their full wage and not setting aside any money for their future

I paid a lot of tax in my life, and don't qualify for the pension.
I know of people who died well before they were old enough to get the pension, yet they also paid tax all their lives

Originally Posted by leesa

while I also get deductions from mine to pay for my own superannuation?

Employer contributions are not your money, it comes from the employer.

Originally Posted by leesa

It's almost as much of a joke as me getting access to hundreds of thousands of dollars in super when I'm 70 and probably only a year or two away from death while today I can't buy a house for my own shelter. A lot of good that'll do me then.

Tell me what you earn and I guarantee I reckon I can find a dwelling for you to buy....won't be your dream come true, but reward is usually linked to effort.

[raised by monkeys]

My little story.

I was silly enough to build a home and stay in the town I grew up in, Whyalla, based on heavy industry. The market boomed with the price of steel and influx of available jobs which further increased house prices. It become much cheaper to build new than buy old. Seemed logical. Nothing special 3br, fart box sized land, did my own landscaping and then artificial turf and small - yup, pergola! The build quality was less than desirable. The market dropped rapidly 2yrs later. Fast forward another 8yrs and the market has barely recovered due to oversaturation in the market - everyone built new inc. sub contracting companies to house employees before later selling on; and oil and steel prices never regaining what was. I have moved on but rent the property for slightly above market value and think breaks even. But when the property was built my parents put money into the property after making a brilliant sale of their house at the time. Many others who did the same but not supported by their parents would be worse off then me.

There is no reward without risk. There is no comparing apples and apples. There is no crystal ball. At low interest rates now there is only one way it would go. If you're buying, buy within your means and forecast for a increased interest rate rise. If the interest rate rise takes 2yrs longer than predicted then any buffer forecasted for then becomes a bonus. Don't rely on the current rate.

Get a girl with brains not one with '6 number' followers on instagram

Originally Posted by zilo

Employer contributions are not your money, it comes from the employer.

Tell me what you earn and I guarantee I reckon I can find a dwelling for you to buy....won't be your dream come true, but reward is usually linked to effort.

My salary is negotiated with my employer and then super is subtracted from it and withheld until I'm old enough to retire, assuming I'm still alive by then. It doesn't come from the employer, it's money I have to negotiate as part of my contract and then forfeit access to for several decades.

I'll pass on telling you what I earn, it's pretty good but still not enough to pay rent AND save for a house deposit on a single income. I'd move out to the sticks but silly younger me lacked foresight and picked a line of work that doesn't exist outside of a capital city. Can't afford to buy close to work, can't move away else I'll have no work. I really ****ed myself in that regard.

But this coronavirus year has given me a time to reflect and once it's passed I'm going to move out of the city and throw the career down the drain. The one that I worked so hard to progress in, I don't think you'll find anyone amongst my family or friends who wouldn't agree that I put in plenty of effort to get there. Seeing as it comes down to enjoying life or career, I'm going to pick life.

[b0son]

Originally Posted by zilo

The rest is history....the market is driven by what people will pay.

And how easy it is to access credit. I was approved for >$1mil with ZERO deposit earlier this year, not that I took it.

[b0son]

Originally Posted by zilo

Employer contributions are not your money, it comes from the employer.

Superannuation came in under the Prices and Incomes Accord - super came in in place of wage rises.

Employees negotiate 'packages' inclusive of super.

[raised by monkeys]

Originally Posted by leesa

I don't think you'll find anyone amongst my family or friends who wouldn't agree that I put in plenty of effort to get there. Seeing as it comes down to enjoying life or career, I'm going to pick life.

Sex work is more frowned upon these days

But in all seriousness, most people have 2-3 careers in their life. I worked retail, heavy industry and then found myself at Uni and become a social worker. Although I barely consider retail and my stint in heavy industry careers, I don't doubt that ill move on from social work. But most skills are transferrable.

If it means working just to survive VS changing career and living more remote for happiness and health, then risk seems worth it

Originally Posted by raised by monkeys

Sex work is more frowned upon these days

So is cotton picking.

[asagaai]

Originally Posted by leesa

My salary is negotiated with my employer and then super is subtracted from it and withheld until I'm old enough to retire, assuming I'm still alive by then. It doesn't come from the employer, it's money I have to negotiate as part of my contract and then forfeit access to for several decades.

I'll pass on telling you what I earn, it's pretty good but still not enough to pay rent AND save for a house deposit on a single income. I'd move out to the sticks but silly younger me lacked foresight and picked a line of work that doesn't exist outside of a capital city. Can't afford to buy close to work, can't move away else I'll have no work. I really ****ed myself in that regard.

But this coronavirus year has given me a time to reflect and once it's passed I'm going to move out of the city and throw the career down the drain. The one that I worked so hard to progress in, I don't think you'll find anyone amongst my family or friends who wouldn't agree that I put in plenty of effort to get there. Seeing as it comes down to enjoying life or career, I'm going to pick life.

I hate getting advice from well meaning brothers- and know nothing about you.

But- If you enjoy your career-you should try to think laterally about buying something that you can get that has good capital growth- it may not be new, pretty, in a desirable location, but something to get a toe in the market in an area that is feasible to get to your work from.

Even an old solid flat with parking and low strata fees etc.

Just beware throwing away your career and moving to the country and then getting an unrewarding job and suddenly ending up full of regrets.

Anyway- good luck !!

[guzzis3]

Originally Posted by b0son

How are you going to save 20% of 600k? At the peak of the recent booms, prices were rising faster than people could save.

They would have to rise 5X the savings rate, but anyway..

(I edited that sentence. I don't know why but sometimes what appears when I post is different to what I intended to type. Could be my wireless keyboard, or something else)

I think you misunderstood the intent of my post. I hear young people complaining how easy the boomers had it and conversely older people complaining how easy young people have it today. I was trying to illustrate that overall, while the situation is different, it's not that much harder or easier.

Some friends have a daughter who must be 30 this year. She has an extensive property portfolio on sydney. I watched in amazement as she built it through her 20's. She works in jewelery, assessing stones I think. I don't really understand it, but I don't think it's ridiculously well paid. I know another young lady, daughter of other friends, who likewise built a portfolio in brisbane, worked in china for years, built herself quite a career. Smart girls who know how to work.

I agree, there are plenty of entitled twats in that age group. We had a salesperson who was living with her fiance with her parents to save for a home. Yet they were still doing trips to Bali and buying overpriced full breed dogs for thousands. Many are their own worst enemies. But I am annoyed at the idea that the stereotype is at all representative of the majority.

And there are plenty of boomers who have had a dream run. Full employment in the 60's, massive property increases in the 80's, but remember they also had conscription and Vietnam, the Hawke government stole all the money in the retirement fund, it was virtually impossible for a woman to get a job after she married until the early 70's, and don't even start on welfare. Not everyone is the same.

I'm genX. I left my parents home at 18 with a bag of clothes and the change in my pocket. I starved, I slept on the street. I spent my 20's getting up at 5 am then studying engineering till 7 and 9 pm every night after work. My life was not easy. Not complaining, just pointing out...

If you spend $600k+ for your first home how many people are going to have the spare cash to do any work on it? Nowadays, a lot of the work people did themselves would simply be illegal now, or you'd have no hope of getting it 'certified' so you could get an occupancy certificate (if needed).

You can do everything yourself apart from electrical and plumbing. Nothing else requires a licence. If the value of the renos is above a certain amount (I think it's $10k) you need an owner builder's licence. You renovate precisely because 2/3 of building costs are labour, and that's before you go shopping for bargains. I can do every job building a house, except maybe painting, I've always been rubbish with a brush. So you buy a house for land value, renovate and sell it on after 3 - 5 years for a tax free profit and climb the ladder. That's how people used to do it. Maybe half the new houses in the 60's and early 70's were self build. Even into the 80's it was still common as muck. Get a block of land, build the house yourself. That's how people did it.

Every generation has people that delude themselves. How many boomers think they've paid enough taxes and its the young folk's turn to support them? That too is a laughable assertion. You dont stop paying your way til you die.

The problem is there are about 3000000 voters in each generation so the government do what they must to appease each age group, and every other voting block in society and because people squeal when they put up taxes they take the easy option and kick it down the road by borrowing to fund pork barreling. The boomers will get their welfare and tax cuts, you will get your child minding and your children will be left with the debt and the interest payments.

I was complaining to anyone who would listen in the 80's as Hawke systematically dismantled our society. The most radical right wing government in our history came from the labor party, but no one since has moved to correct those atrocities. I hate so much of what Australia has become and some of the issues you raise are among them, but I'm old sick and powerless. You young people need to figure out how to fix it. Truth is no one cares. People just want to yell at each other on internet forums and wave their fists at the TV.

[zilo]

Originally Posted by leesa

My salary is negotiated with my employer and then super is subtracted from it

It is calculated as a percentage of your wage therefore it is on top.
It comes from your employer's bank account, no matter how you slice it or dice it.

Originally Posted by leesa

. I'd move out to the sticks but silly younger me lacked foresight and picked a line of work that doesn't exist outside of a capital city.

What line of work?

anyway...

(a) you need a partner to share a mortgage with (it halves the numbers)

(b) start a business...even a coffee van does better than PAYE

I can think of two capital cities that you can buy a house for under 300k right now.

[b0son]

Originally Posted by zilo

It is calculated as a percentage of your wage therefore it is on top.

100/109.5 ... no longer on top.

It comes from your employer's bank account, no matter how you slice it or dice it.

So do wages... ?

[Polyal]

OK some interesting news to come out to help the housing industry. Great, more tax payer money going into capital to help home owners FFS.

I get tradies will pick some work up but seriously what other industry gets so many hand outs?

Personally I wont be eligible due to the proposed income brackets, so we will continue our middle class slug to prop the industry up and not get our new deck....

https://www.abc.net.au/news/2020-06-...s-25k/12317786

[buggerlugs]

https://www.abc.net.au/news/2020-06-...eeper/12318274

Interesting times ahead..............

[Polyal]

Id prefer the Gov just let it run its course and invest the money in people and support to build the future, not band aid the housing market alone as the problems run deeper than someones patio.

[Mulva]

Originally Posted by Polyal

OK some interesting news to come out to help the housing industry. Great, more tax payer money going into capital to help home owners FFS.

I get tradies will pick some work up but seriously what other industry gets so many hand outs?

Personally I wont be eligible due to the proposed income brackets, so we will continue our middle class slug to prop the industry up and not get our new deck....

https://www.abc.net.au/news/2020-06-...s-25k/12317786

WTF? I can't see many individuals earning less than $125k per year, or couples earning less than $200k per year, spending $150k of their own on rennos as we enter a recession.

$150k plus Govco's $25k..if you spent $175k renovating a home here in Adelaide's 'burbs you've just spent nearly 50% of the homes value. I'd have to put on a second story to spend that kind of money on rennos.

I just can't see many that could afford to spend that kind of coin, and very few that could find enough work to be done that would cost that kind of coin. Is this something where they want to be seen to be doing something without people actually taking them up on the offer?

Should I join my wife watching Tarek and Kwithtina on channel 94?

[MITCHAY]

I had this same discussion just then in the office. I really doubt they are going to pick up many renos work out of this. Just doesn't stack up.

[b0son]

Isnt the cyclical nature of construction work one of the justifications for the high pay rates? Not really sure why this time around we need to be subsidising construction, especially when high house prices are such a drag on the economy.

Of course, why should we be surprised. Didnt courts just rule casuals that work regular hours now get the same leave entitlements as permanents AND get to keep their casual loading? It's almost as if people think money grows on trees...