Home prices
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Richard A. Abbott wrote:
Average wage in UK is meaningless.
Well, average wage is always somewhat meaningless. The average is $45k here. That doesn't mean a lot to the many people on $25k, and given that you can't earn less than zero, but you can earn a lot more than $90k, it's clear that there's a few people with really high wages who pull the average up more than anyone can pull it down. But, it's a reasonable measure of affordability. Where I live it's also true that different areas have different prices, there's no way anyone on less than $100k could buy in Battery Point, for example.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
I feel sorry for the first time buyer. As Dalek Dave would tell you, if the first time buyers cannot afford to purchase even modest priced property, it has the effect of creating problems further up the chain where higher priced property just cannot sell. Unless property company's can be persuaded to build first time buyers homes as subsidized under some dual ownership scheme, the first rung on this ladder will remain missing (or not properly afixed in place).
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I feel sorry for the first time buyer. As Dalek Dave would tell you, if the first time buyers cannot afford to purchase even modest priced property, it has the effect of creating problems further up the chain where higher priced property just cannot sell. Unless property company's can be persuaded to build first time buyers homes as subsidized under some dual ownership scheme, the first rung on this ladder will remain missing (or not properly afixed in place).
Yeah, as I said before, I plan to help my kids get into the property race. But, I don't see it as the end of the earth that some people are forced to rent, so long as people of reasonable means can work their way into the market still.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Average wage is similar as in 45 thousand pounds, or if you convert it ( making it about 22k ) ? The pound was far stronger a few years ago, it's very weak compared to the AUD right now, as is the USD. 500k for a house with significant land, or just an acre or less ?
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
£23,000 is about ave wage. £500,000 would get nowhere near an acre. A good sized 4 bedroom with front and rear garden. for example[^] And that is a Semi, not even a detached, and Bedford is not even the best of areas near here.
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
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£23,000 is about ave wage. £500,000 would get nowhere near an acre. A good sized 4 bedroom with front and rear garden. for example[^] And that is a Semi, not even a detached, and Bedford is not even the best of areas near here.
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
In that case, bloody hell. I'd have expected wages to be lower in country areas and prices to drop as a result. That's how it works here. Our house would be worth a ton in the city, being 20 minutes out lowers the value, even with the river view. Not that I care, I chose to live here, we love it.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Yeah, as I said before, I plan to help my kids get into the property race. But, I don't see it as the end of the earth that some people are forced to rent, so long as people of reasonable means can work their way into the market still.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
Christian Graus wrote:
so long as people of reasonable means can work their way into the market still.
And there is the problem. For more years than I care to guess at, house prices have outstripped wages so wages can never really catch up. Before this financial crisis, salary multipliers went stupidly high, coupled with in excess of 100% mortgages, so people bought property that was beyond their reasonable means, and although interests rates are low at the moment, severe pain will be felt when they hit, for instance, double figures. Then wholesale repossessions occur that can have the effect of, for example, banks not lending as much as they once did - their capital is tied-up in property where a sale can be protracted. And with many properties worth substantially less than the financed mortgage, many people just give up with their investment thus having the added capacity of causing more pain to the bank as well as the mortgage surrenderers. Strangely, it is often cheaper to pay a mortgage than to rent.
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martin_hughes wrote:
Secondly, regulations were relaxed and where previously individuals or couples could only borrow three times their annual income, suddenly the banks were prepared to lend ten times (and more) that amount and on an interest only basis.
Yes, that is happening here, too. With no disrespect to anyone, my impression locally is that most people who are losing their houses, are losing them b/c they thought that low interest rates would last forever, when we were plainly in a period of unreasonable rates due to external pressures.
martin_hughes wrote:
There's a real, and dangerous, disconnect between what a house costs and what it's actually worth.
I'm not sure how easy it is to calculate what a piece of land is worth, I guess you could measure it in terms of wages in the area ( that is, what you can earn by living there ), but apart from that....
martin_hughes wrote:
I'm glad I'm not a first-time buyer getting saddled with a huge mortgage, which realistically most of them won't be able to pay off and that I don't have a mortgage.
Yes, we own our house, and it's perhaps the best thing to come out of us making some money, to know we own where we live. I used a mortgage calculator this morning. If someone has no debts ( unheard of in our society, and has saved $50k, they could buy an entry level house in todays market, on the average wage, which is $45k. Very few young people make that much money, most make something in the low 30s, or less. It's a tough market. I intend to use our rental property to help my kids save to buy a home, without having to live at home, that's one reason I want to buy a second rental property. I'm just waiting for the bubble to burst before I jump in.
martin_hughes wrote:
potentially leaving hundreds of thousands unable to keep up with their mortgages and homeless.
The bit I don't get, and have never got - if I have a stable job and I make my payments, who cares what the market says my house is worth right now ? Is the issue that the bubble has meant people need to borrow more than they should to even have somewhere to live ? I drive every day past a house that was on the market when we were looking, but it was $500k then, ours was $300k. We could have afforded it, and could have owned it now, but at the time, I simply
Christian Graus wrote:
The bit I don't get, and have never got - if I have a stable job and I make my payments, who cares what the market says my house is worth right now ? Is the issue that the bubble has meant people need to borrow more than they should to even have somewhere to live ? I drive every day past a house that was on the market when we were looking, but it was $500k then, ours was $300k. We could have afforded it, and could have owned it now, but at the time, I simply refused to borrow that much. I don't really regret it, but it passes my mind ever day.....
The problem really is that people have needed to borrow far in excess of what they can actually afford to repay in order to have somewhere to live. And I don't mean anywhere nice, but simply somewhere to live. When times are good and there's low interest this works, but as now when interest rates are rising (despite base rates of 0.01%) for borrowers, the cost of living increasing, house prices start to fall and jobs are not readily available it leads to negative equity and eventually repossession. It's a sad state of affairs where people can't actually afford a home, however rude, and almost the entirety of their income is spent paying for it.
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In that case, bloody hell. I'd have expected wages to be lower in country areas and prices to drop as a result. That's how it works here. Our house would be worth a ton in the city, being 20 minutes out lowers the value, even with the river view. Not that I care, I chose to live here, we love it.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
Them with money move to the Rural Areas. As mentioned above the exception is London, where it is all higher. But generally anywhere on the M25 Feeder Corridors or Main line rail networks are going to be expensive, Luton has both (M1 and Rail). Move to Virginia Water[^] and watch Millions disappear as you buy a shed. Or Burford[^], poshest village in the Cotswolds.
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
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Christian Graus wrote:
so long as people of reasonable means can work their way into the market still.
And there is the problem. For more years than I care to guess at, house prices have outstripped wages so wages can never really catch up. Before this financial crisis, salary multipliers went stupidly high, coupled with in excess of 100% mortgages, so people bought property that was beyond their reasonable means, and although interests rates are low at the moment, severe pain will be felt when they hit, for instance, double figures. Then wholesale repossessions occur that can have the effect of, for example, banks not lending as much as they once did - their capital is tied-up in property where a sale can be protracted. And with many properties worth substantially less than the financed mortgage, many people just give up with their investment thus having the added capacity of causing more pain to the bank as well as the mortgage surrenderers. Strangely, it is often cheaper to pay a mortgage than to rent.
That's what parents are for, or it seems to be for my son. He has already said that when he wants to buy a house he will need me to buy half of it with him. Seems ok, he lives in it and pays a small rent for my half, and I get my share when he sells. (Nominal rent of £1 per week for legal reasons, he cannot then live there for 12 years and claim habitable possession!) But the principle being he could not afford to buy without bank of Ma and Pa.
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
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That's what parents are for, or it seems to be for my son. He has already said that when he wants to buy a house he will need me to buy half of it with him. Seems ok, he lives in it and pays a small rent for my half, and I get my share when he sells. (Nominal rent of £1 per week for legal reasons, he cannot then live there for 12 years and claim habitable possession!) But the principle being he could not afford to buy without bank of Ma and Pa.
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
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Dalek Dave wrote:
But the principle being he could not afford to buy without bank of Ma and Pa.
You are in a very small minority who can do that. The overwhelming majority would like to help their kith and kin but just can't, not won't.
OT: Did a read up and played with external CSS over the weekend. Much better, and quite easy to implement, thanks very much. I googled a few beginner sites and after a couple of walk throughs I threw a few test sites together. Main Topic: you are right that there are not many that can, but such is life, and if Tom, (my son), is to ever get a place he will need help. (Or find a rich wife).
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
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Christian Graus wrote:
The bit I don't get, and have never got - if I have a stable job and I make my payments, who cares what the market says my house is worth right now ? Is the issue that the bubble has meant people need to borrow more than they should to even have somewhere to live ? I drive every day past a house that was on the market when we were looking, but it was $500k then, ours was $300k. We could have afforded it, and could have owned it now, but at the time, I simply refused to borrow that much. I don't really regret it, but it passes my mind ever day.....
The problem really is that people have needed to borrow far in excess of what they can actually afford to repay in order to have somewhere to live. And I don't mean anywhere nice, but simply somewhere to live. When times are good and there's low interest this works, but as now when interest rates are rising (despite base rates of 0.01%) for borrowers, the cost of living increasing, house prices start to fall and jobs are not readily available it leads to negative equity and eventually repossession. It's a sad state of affairs where people can't actually afford a home, however rude, and almost the entirety of their income is spent paying for it.
martin_hughes wrote:
It's a sad state of affairs where people can't actually afford a home, however rude, and almost the entirety of their income is spent paying for it.
I own two homes outright, so I am perhaps speaking a little out of turn, but I don't see any issue with a world where minimum wage earners cannot own their own home and have to rent, so long as some of the taxes taken from the wealthy are used to provide affordable public housing and places in nursing homes that meet a basic standard of care.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Them with money move to the Rural Areas. As mentioned above the exception is London, where it is all higher. But generally anywhere on the M25 Feeder Corridors or Main line rail networks are going to be expensive, Luton has both (M1 and Rail). Move to Virginia Water[^] and watch Millions disappear as you buy a shed. Or Burford[^], poshest village in the Cotswolds.
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
I guess it's a different market. We live 20 min drive from the city centre, and that's considered so far that it pushes our prices down. We live on 11 acres, river views, it's magic. The population of Tasmania is around 500k people, around half in and around the capital.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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martin_hughes wrote:
It's a sad state of affairs where people can't actually afford a home, however rude, and almost the entirety of their income is spent paying for it.
I own two homes outright, so I am perhaps speaking a little out of turn, but I don't see any issue with a world where minimum wage earners cannot own their own home and have to rent, so long as some of the taxes taken from the wealthy are used to provide affordable public housing and places in nursing homes that meet a basic standard of care.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
I know what you mean, there is no stigma in renting. But the banks don't see it quite that way. They would much rather have mortgage payments going to them (an effective rental), than see money pass to private individuals. This is why they, and Government in collusion, offer these silly mortgage terms; they may get some of the collateral back, but for the most part they own the property, earn interest on it so long as the tenant pays up and then repossess and "resell" the property on the same terms when the tenant cant repay. I disagree that minimum wage earners shouldn't be able to own their own homes. There are many essential, but low paid, jobs that you and I rely on - rubbish collection, post delivery, road sweeping... people are employed to do these things, should they all be doomed to public housing? I say not: people should be able to afford a place to live, without state funding. After all, state funding admits there is a fundamental inequity in society.
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I know what you mean, there is no stigma in renting. But the banks don't see it quite that way. They would much rather have mortgage payments going to them (an effective rental), than see money pass to private individuals. This is why they, and Government in collusion, offer these silly mortgage terms; they may get some of the collateral back, but for the most part they own the property, earn interest on it so long as the tenant pays up and then repossess and "resell" the property on the same terms when the tenant cant repay. I disagree that minimum wage earners shouldn't be able to own their own homes. There are many essential, but low paid, jobs that you and I rely on - rubbish collection, post delivery, road sweeping... people are employed to do these things, should they all be doomed to public housing? I say not: people should be able to afford a place to live, without state funding. After all, state funding admits there is a fundamental inequity in society.
martin_hughes wrote:
I disagree that minimum wage earners shouldn't be able to own their own homes. There are many essential, but low paid, jobs that you and I rely on - rubbish collection, post delivery, road sweeping... people are employed to do these things, should they all be doomed to public housing?
Everyone who has a job, is doing something useful to somebody, and there's no shame, in my mind, in having a low paying job. I don't mean that I think we should aim for them to not afford housing, I'm saying that if someone does not make much money, they can't expect a new car, or a trip around the world, they perhaps cannot expect to own a home. It is just the way life works, society does not OWE people the right to own a home, is really my point.
martin_hughes wrote:
I say not: people should be able to afford a place to live, without state funding. After all, state funding admits there is a fundamental inequity in society.
There is always inequity. Any attempt to readjust that, is obviously a form of socialism. The question becomes, do we hate socialism so much that we don't help, or do we help ? And if we help, we have three choices: 1 - try to interfere with the market to force down house prices 2 - subsidise the purchase price of housing for people who have less money ( which, ironically, just causes prices to go up to absorb the subsidy, as we've seen in Australia ), or 3 - provide public housing Of those three, I think the last option is the best one all around. Of course, if the market moves in ways that make housing affordable to people on lower incomes, that would be better, but, you can't count on it, or expect to change it and have things work out exactly as you'd hope.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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In that case, bloody hell. I'd have expected wages to be lower in country areas and prices to drop as a result. That's how it works here. Our house would be worth a ton in the city, being 20 minutes out lowers the value, even with the river view. Not that I care, I chose to live here, we love it.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
I don't think there can be a basis for comparison, outskirts of Tasmanias capital and the outskirst of one of the worlds mega cities is just a little too much of a stretch for me. We looked at buying something (small) in the uk a while back, when the pound was reasonably strong but the numbers just didn't add up. The UK have some quite draconian laws for offshore investors. If you were going to do some sort of comparison you would need to pick some backwater in Scotland... What gets me is the return on investment, in Oz I can expect 7-10% return, in Singapore they are getting less than half that on properies in the 1.5m to 5m range, astonishing.
Never underestimate the power of human stupidity RAH
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martin_hughes wrote:
Secondly, regulations were relaxed and where previously individuals or couples could only borrow three times their annual income, suddenly the banks were prepared to lend ten times (and more) that amount and on an interest only basis.
Yes, that is happening here, too. With no disrespect to anyone, my impression locally is that most people who are losing their houses, are losing them b/c they thought that low interest rates would last forever, when we were plainly in a period of unreasonable rates due to external pressures.
martin_hughes wrote:
There's a real, and dangerous, disconnect between what a house costs and what it's actually worth.
I'm not sure how easy it is to calculate what a piece of land is worth, I guess you could measure it in terms of wages in the area ( that is, what you can earn by living there ), but apart from that....
martin_hughes wrote:
I'm glad I'm not a first-time buyer getting saddled with a huge mortgage, which realistically most of them won't be able to pay off and that I don't have a mortgage.
Yes, we own our house, and it's perhaps the best thing to come out of us making some money, to know we own where we live. I used a mortgage calculator this morning. If someone has no debts ( unheard of in our society, and has saved $50k, they could buy an entry level house in todays market, on the average wage, which is $45k. Very few young people make that much money, most make something in the low 30s, or less. It's a tough market. I intend to use our rental property to help my kids save to buy a home, without having to live at home, that's one reason I want to buy a second rental property. I'm just waiting for the bubble to burst before I jump in.
martin_hughes wrote:
potentially leaving hundreds of thousands unable to keep up with their mortgages and homeless.
The bit I don't get, and have never got - if I have a stable job and I make my payments, who cares what the market says my house is worth right now ? Is the issue that the bubble has meant people need to borrow more than they should to even have somewhere to live ? I drive every day past a house that was on the market when we were looking, but it was $500k then, ours was $300k. We could have afforded it, and could have owned it now, but at the time, I simply
Christian Graus wrote:
I'm just waiting for the bubble to burst before I jump in
You might look at the Cairns market, we have just bought there and if our track record holds then the bubble is about to burst there sometime in the next 3 months. Last time we bought in Sydney and exchanged contracts the day the first rate reduction, marking the start of the GFCs effect in Sydney. I remember buying tech shares early 2000 just in time to see them lose 90% of their value :sigh: . Then when we decided to diversify into funds, the entire market crashed, we only lost 70% of our equity that time. As I said I have a history with markets...
Never underestimate the power of human stupidity RAH
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When I bought my first home, it cost $65k. When we sold it, about 7 years later, housing here went through the roof. We sold for $140k, and I wish we hadn't, it would be worth a good $300k now. We bought for $150k, and a year later were offered $250k for the same house, no renovations. We kept it, and bought the house we are in for $300k. Our house is now worth at least $500k, perhaps nudging $600k. It's a bigger house ( 27 square ) and on 11 acres, with a river view. The paper advertised on the weekend that housing in our state is the most affordable in the nation with some suburbs having a median price of $295k. So, we are still a cheaper place to live, but housing prices have gone up, and the response to the story has mostly been from people saying they can't afford to buy a house, and have a right to own one. I think that's retarded. I expect prices to drop ( I have money ready to buy another when they do ), but, the market sets the price, and it's not the governments job to intervene. If they did, then the people who worked hard and invested money would lose out, why should they lose out so people who don't make much, or don't even work, can get their stuff ? I wondered how housing affordability is, and has changed, where other people live.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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I don't think there can be a basis for comparison, outskirts of Tasmanias capital and the outskirst of one of the worlds mega cities is just a little too much of a stretch for me. We looked at buying something (small) in the uk a while back, when the pound was reasonably strong but the numbers just didn't add up. The UK have some quite draconian laws for offshore investors. If you were going to do some sort of comparison you would need to pick some backwater in Scotland... What gets me is the return on investment, in Oz I can expect 7-10% return, in Singapore they are getting less than half that on properies in the 1.5m to 5m range, astonishing.
Never underestimate the power of human stupidity RAH
Mycroft Holmes wrote:
outskirts of Tasmanias capital and the outskirst of one of the worlds mega cities is just a little too much of a stretch for me.
It's obviously very different. That's why I was asking for comparisons of average wage, because that is what defines how reasonable the average house price is.
Mycroft Holmes wrote:
What gets me is the return on investment, in Oz I can expect 7-10% return, in Singapore they are getting less than half that on properies in the 1.5m to 5m range, astonishing.
You mean return on rents ? I can't cover the mortgage with rent here. If you mean on property values, that bubble will burst soon enough. I'm waiting for it to before I invest again.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Christian Graus wrote:
I'm just waiting for the bubble to burst before I jump in
You might look at the Cairns market, we have just bought there and if our track record holds then the bubble is about to burst there sometime in the next 3 months. Last time we bought in Sydney and exchanged contracts the day the first rate reduction, marking the start of the GFCs effect in Sydney. I remember buying tech shares early 2000 just in time to see them lose 90% of their value :sigh: . Then when we decided to diversify into funds, the entire market crashed, we only lost 70% of our equity that time. As I said I have a history with markets...
Never underestimate the power of human stupidity RAH
Sounds like your ability to predict markets is far better than my advisors, I just need to do the opposite of what you advise :P
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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But the cost of a house is not the sale price it's the cost once you finally own it. If credit is cheap people will pay more for property and governments usually have some control over the credit market.
It's true that interest rates decide what you actually pay. And it's true that governments have some control over that. But, I still think anyone who does not take a high rate into account when they buy, is asking for trouble. In any case, the average wage in AU is $45k or so. It's less in Tassie, and average by definition means many people earn a lot less. Based on the prices in the paper ( houses still available under 300k ), I worked out that someone on $45k could buy a house in Tassie if they have no other debts ( so, own their car, have no credit cards, etc ), and have saved a $50k deposit. I'm not sure how a young person who has to pay to live, assuming they manage to make $45k, can then save roughly 18 months worth of their wage to get the money together to buy, assuming that they also don't have a degree, otherwise they'd have HECS debt.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.