Classic!

Work!? - you need some sort of steady income to pay for groceries!

Bubble!? - they are quoting intake into greater Melbourne of 1500 people per week. That softens any bubble. Plus we dodged the global recession on the back of resources. I can't see a significant "bursting of the bubble". But perhaps a flattening period.

Move again ! - to the coast to your South East, or South West!

Mining/Resources - don't underestimate the collateral wealth that it provides to Australia... the guys working in the field, transport operations, a plethora of suppliers and their workers, white collar project management, accommodation services, pubs & restaurants near the sites, etc, etc. Then plenty of that money finds its way back to city bakeries, restaurants, grocery stores, car yards, footy clubs.... Mining & Resources collateral should never be underestimated.... (then a government sees an opportunity... another tax or two gets invented! - mining & carbon taxes are quite popular in their concepts to some,.... but plain and simple, cost of living increases again... - yes we need a sustainable future... no easy answers... )

Recently had an old buddy staying from London. He moved out after a couple of weeks into a share house. I saw him about 3 moths ago he said he was moving back to London. He said he couldn't afford to live in Melbourne!!!!

log man said...

here's a bit of perspective http://www.historicproperties.com/results.asp

Thanks buddy. I tried to look up McKinnon and after some frustration I thought to myself that I should start smoking again.

log man said...

Mckinnon, I'd rather live in London

Not only do I live in stupid McKinnon, I'm living in the shadow of a Henley Home going up right next door. I'm going to have a fag right now.

I sure have made some poor life choices.

Thanks buddy

log man said...

Recently had an old buddy staying from London. He moved out after a couple of weeks into a share house. I saw him about 3 moths ago he said he was moving back to London. He said he couldn't afford to live in Melbourne!!!!

What? I'm starting work there next week week and I'm seriously considering buying instead of renting because studio units (all i need) in the city start at $135,000. < That is not a typo.

That said I'm waiting a few months for them to fall further.

I'm not sure how Sydney property prices can be said to be overpriced.

I bought my first house in 1994 for $100K in Nambucca Heads. I was earning $20K a year. So the house cost me around five times my salary. Mortgage interest rates were about 13% a year.

We bought a unit in Sydney in 2007 for again around five times my salary.

We bought a house on the Central Coast of NSW last year for a bit over $300K. Again thats about five times my salary.


Sure if I bought a house in Neutral Bay it would cost probably 15 or 20 times my salary but that was probably the case back 15 years ago too.

Right now in Sydney where I live it costs about $420 a week to rent a two bedroom flat. You can buy the same flat for around $410K. If you have a deposit and buy the flat you won't pay much more in mortgage payments than what you will for rent. One of my neighbours did exactly that last year. Bought a unit nearby to live in.

Rents in Sydney are so high and they are the reason why real estate prices will not drop. Why would a place renting for $400 or $500 a week suddenly drop in value to $150K to $300K? If they did people would buy them and get positive gearing on them. Buy 10 and don't work any more. Prices would go back up very quickly.

Unless Sydney experiences a drop in income due to high unemployment then prices won't drop. The other issue is a lack of land in Sydney. We have the mountains to the west, the national parks to the north and south and the ocean to the east. There really isn't that much spare land in the Sydney basin. Mean while tons of people move here from interstate, country NSW and overseas. Is the only place where there are the goods, services and jobs people want. The big problem with Sydney is there are too many people here. Too many people raises rents. Too many people cause congestion. It took me two hours on Friday afternoon to drive from Campsie to Hornsby. Thats around a 30km trip. Traffic jam after traffic jam. To many cars on the road.

I'm not sure about Melbourne or Brisbane prices. In Melbourne there seem to be tons of new units going on the market all the time. We don't get that in Sydney. Also when flying into Melbourne you see all that flat land stretching out forever. We don't have that in Sydney either. Looks like you could fit a few hundred thousand houses out there no worries. Brisbane has a lot of flat land around it too.

How will a buyers strike work? Withdrawal of capital? Problem is you may go on strike but what about the couple living down the street who won't? You won't buy the place but they will. So you just refuse to buy somewhere. Thats fair enough but in the meantime you are paying someone else's mortgage by renting or you have to live with your family or something like that.

Whenever a place is up for rent around where I live they have an open day on a Saturday and about 20 or 30 people come around. There is really a shortage of housing. A supply shortage plus high demand is driving the rents up and that is pushing prices up.

Economists in England or Geneva don't get that. They think Australia is a big empty country. In one respect it is but on the other hand its not. People don't or can't live out in rural and regional areas. Besides housing prices in many country towns are not that cheap anymore either.

You need to be careful with those Nambucca Heads stats. They might have dropped a big block of premium beach front units onto the market to skew the stats....

Some say Real Estate is the basis of all wealth. Usually that is what wars are fought for.

Others say Cash Flow is King. Cash flow enables accumulation of asetts (be they precious property, metal, paper, vehicles or yachts) by using leverage (borrowing somebody else's money).

Some others say family, friends and memories are the most valueable things in life (ie, money spent on doing things is better spent than on buying things).

What say Ye??

I am in the first and the third options and am looking at the second....angry man ..err oliver.

I think immigration is too high putting pressure on housing. If we cut back on immigration then their is more for the rest of us!

Property prices are one of the top dinner party topics of discussion anywhere in Australia ... and I would guess in any part of the "first world" regions.

Ozzies seem to do it best though by beating themselves up over whether they have TOO much invested in property, over committed themselves, don't have enough property or the hottest one -- how are the young ones ever going to afford to enter the property market ???

Well regardless of where you sit in the equation there AINT too much you can do about it. The market is the market and if you do decide to jump on for the ride you ( like most of us ) will do your utmost to pay the mortgage -- even to the detriment of having a new board or sail every year...

Having said that I would probably baulk at locking myself into the level of debt required now but don't forget younger folk ( I'm ++50 ) have a different tolerance to life's challenges than someone of my vintage.

The worst that could happen is another GFC where you see property prices dropping way below what was paid for them a month or two before

When comparing average incomes to average prices, one significant, often overlooked factor is increase in dual incomes in paying off house. Probably more important is that banks now assess ability to pay on dual incomes and having children will not necessarily mean that dual income stream will cease.

correct in the sense that any further growth is unsustainable, but any growth attributable to dual incomes is heree to stay... unless number of dual incomes declines.

Immigration will not stop the housing bubble from bursting.
It did not stop the bubble bursting in Ireland and the US which were countries of high immigration why are we so different....
It's about affordability, return on investment and liquidity.
IMO property is currently a high risk low return investment. Australian housing is the most expensive its been in history relative to the average income and yields are lowest. Negatively geared property could be the financial death of many if capital values slide.
Lending is down 20% so far this year compared to last year according to Broker News (I will try and find the link to that info).

Little Jon said...

I think immigration is too high putting pressure on housing. If we cut back on immigration then their is more for the rest of us!

If you lived on the capital growth of your houses you would be working, just in a different profession. You would be a property speculator. Lots of people do that.

That's fine as long as you can generate enough income to live and to purchase new properties. You can also renovate or subdivide or whatever you want to do to increase the income you gain. It's all work, just different to what you are doing.

I would not debate that property is expensive now. But that has awlays seemed the case.

In the late 70s, when I started working, houses in Bentleigh were around $45000. With my $5000 annual income and the prevailing social attitudes it made more sense to spend my money on cars, surfboards, drugs and women. There was no way I would ever be able to save up enough to buy a house or submit to the horror of having a mortgage for the rest of my life.

Looking back, I could have bought a cliff top property near Flinders with my own beach for $7000, which is what I paid for a car at the same time. That property recently sold a few years ago for $8m.

We used to hang out in farms out the back of Mullumbimby and I could have bought great chunks of land near Byron for $100,000. Of course I didn't do that. Who in their right mind wants to go into a business partnership with a bunch of flea bitten drug addicts on the dole?