Everyone faced the same conditions and prices reflected it.
Now. Everyone faces the same conditions but interest rates can’t move anywhere but up.
No more easy way a next generation can be lent enough rope to increase dwellings prices again at an unrealistic price.
Also why no valuations are realistic in equities markets too I think.
Paying off 18% on a 50k house vs 3% on the same house now worth 750k.
Actually it got up 18% on a 110k joint on Mt Rd on a 40k wage.
so thats equivalent value of 500k accounting for inflation.
whats the joint worth now?
1989 it was 170k for a median house in Sydney and that median house was probably about 15km from the CBD.
Now it’s 1.45 million dollars and probably about 35-45kms from the cbd.
If a salary was 40k then which afforded a house it would take a 400k salary to afford it now.(and prob about right. Dual high income earners or access to wealth)
The thing is now we have millions of people that will always rent.
And I’m not sure where the growth comes from that there will be people earning even more to see a standard house say in Sydney or Melbourne double again. We can’t have rates go negative.
Where does the financial system restructure and how painful is it gonna be?
Lifetime mortgage or lifetime renting…. Will become same same if your just treading water with repayments on the principal.
Why is an average 30 something person buying an average house and still being in debt when they retire, especially if you buy now, dinting that principal is going to be tough?
8-850k/ 933-955 Mt. Rd
would need at least a 150k income to borrow buy that enough to get that if you live a frugal life.
And be more frugal as rates rise.
Just be paying interest in an asset that treads water value wise.
So about 20% of your 150k pays the mortgage.
and dont give up on your job because you’re burnt and take a step back
if you could convince a bank to let you pay half your pay checque to a loan, power to you
Or get divorced. Then your really boned.
How do you get to half your pay cheque
Exactly how fast are you paying down that debt at 20% of a post tax paycheque on a 150k job? And that’s a very healthy income on todays wages
Which leaves you 80% of a post tax pay cheque.
Not sure about your assertions, and cannot see how Governments are responsible for the crazy prices people are paying for property.
I guess Government could start a credit squeeze and make Banks limit lending, but would you agree with that as probably you then would not have got a loan to buy your first house.
No doubt because borrowing is “ cheap “ more is borrowed and hence prices get pushed up, but it is the buyer who sets the price not us poor old Boomers how salivate when some lunatic 20 something offers half a millions dollars above asking price.
I have been to many auctions locally and get bewildered by the frenzy of young bidders who just keep bidding and bidding. The run-on effect is telling, as cashed up Boomers then move to the beach making prices at most seaside locations even more ridiculous.
Something has to change but it starts with buyers not sellers.
Do you think you need to pay down the principal on a home?
Or you have an undying belief that property just doubles every 8 years.
I mean that’s the past 40 years.
It’s not the next 40. We have hit the bottom. This boom is the last hurrah
At least driven by interest rates. And that’s the only thing making housing remotely affordable.
Maybe we could build our way out of it if we imported a lot of builders and freed up a lot of land. But that will also push down current prices.
18% mortgages I agree were brutal. But that was on mortgages that were $30 to $100k. This was only 3 x the national average wage.
Most mortgages now are 5-10 times the national average wage … it’s simple economics
On every single one.
As l mentioned before, 45% on your wage paying a mortgage is humbling.