Houses are now worth 2-3 times your income like in the eighties.

What are you now going to do with your free time now your house is paid off quicker?

Good!

Eh?

Housing market crash wouldn't help anyone who already owns a house (ie an adult ), you understand that right? We'd be stuck paying a big debt for nothing.

I'm trying to figure out whether you mean you have a huge income, or house prices are cheap where you are.

Me, I doubt house prices would fall at all. At most I suspect they just wouldn't rise any more for a while. Interest rates are low, rents are still the same as they were yesterday, so I am not sure what you think has happened to cause a drop in value.

I don't see how the market can crash while rents are so high. If property prices dropped a bit then people who are renting would be better off buying, thus increasing demand.

The main difference between the 80s and today is Australia's population has almost doubled while the number of new houses has nowhere near doubled. Plus most of the new houses are in places fewer people want to live, ie not close to work, recreation or decent public transportation.

before the crash, i was 70 k off owning my own house, at 32. I borrowed money and geared heavily into shares. now I owe lots more.

K Dog said...

Be interested to see what kind of life people would live not paying off a mortgage for the rest of their life. Would you just buy more houses, or is enough enough?[/b]

Obviously hypothetical.

Financial freedom is the goal. Paying off a house is not enough. The idea is to invest enough money that the money your investments earn is enough to live on. The question is how much do you need to live on?

Simple concept, but very difficult to put into practice without a very focused plan and lots of discipline. Most tend to forget the goal and raise their standard of living as they earn more instead of investing it.

grumplestiltskin said...

myusernam said...
before the crash, i was 70 k off owning my own house, at 32. I borrowed money and geared heavily into shares. now I owe lots more.

Geez, could be looking into a mirror.
Prior to the crash I was nearing the end of the mortgage, borrowed money for shares with the returns from the shares paying off the house.
Got to a point where the house was theoretically payed off with the shares now forming a wealth creation plan.
Market crashed and now owe more than I did before I looked at the shares
Oh well, once bitten .......

Have a mate who timed it well, did the same thing as you guys, but bought in when the market tanked.......... I sat on my hands

the gibbo said...
Topping 23mil population, cant build houses fast enough, no crash gonna happen here for a while. Demand way outstrips supply in the main cities

I am afraid that is not a shortage of builders in the country or material cost to justify high home prices.
The prices by Dixon Homes are phenomenally attractive but

THERE IS HUGE LACK OF LAND AVAILABLE FOR BUILDING.

Somebody is very interested in keeping prices very high directing all hard earned cash in this country into this waste drain.
Instead of building infrastructure and income generating businesses all money are spent on real estate. Lets look our families expenses and let me know if I am mistaken.

Since average home price is $500k but real cost or worth is only $150k, the rest is useless, wasted mark up, banquers gain.
Imagine that that $350 k wasted now you did invest in such passive and safe investment as solar panel on your roof.
at $1 per watt that give you 35 kw electric power on your roof !!

Income, at 40 cents per watts most of us will be paying for electricity is:

5kw per day x 35 kw x $0.4 x 365 days per year = $25,550 per year

not bad profit for doing nothing at all

I have paid my house off you think you're on easy street for a while windsurfing snowboarding holidays when you want then reality hits the bills don't stop the kids don't stop eating still sailing when windy working hard in between

Mobydisc said...So Americans can't buy a house even though the repayments would be less than paying rent?

of course they can [if they dont mind living in Detroit]

stephen

i am not complaining about very expensive RE, but

how come they build solid double brick houses in wa when in victoria they build $hity boxes made of ticky tacky and the prices pretty much the same !

that is the weirdest thing about the australian housing that i can't comprehend.

Mobydisc said...

Beaglebuddy said...

Mobydisc said...
I don't see how the market can crash while rents are so high. If property prices dropped a bit then people who are renting would be better off buying, thus increasing demand.

Well it happened here in the US, rents remained high while the housing market crashed in large part because people who lost their homes thru foreclosure then needed to rent, also lots of people sold at or near the top and rented while the bubble deflated.
Nobody wanted to buy and the banks weren't lending anyways because of rapidly deflating values.

So Americans can't buy a house even though the repayments would be less than paying rent?

The bubble completely deflated and values were cut in half in many places. It's been stable for a bit and prices are slowly coming back in most places and banks are lending again.
While it was rapidly deflating banks were not really lending because if the homeowner gets in a position where the loan is more than the value of the home the homeowner may just walk away from the home and let it go in default.

^^^ just to clarify for our australian listeners, what happened in the US will never happen here. Our property markets are entirely different. Our property laws are entirely different. Our mortgages are set up differently. Our economies are different. Our people and their attitudes to housing are different. Every single factor that influences a property market is.. wait for it... entirely different.

So while it's interesting to hear Beagle describe what happened there, keep in mind that it's entirely irrelevant to our situation.

kiteboy dave said...
^^^ just to clarify for our australian listeners, what happened in the US will never happen here. Our property markets are entirely different. Our property laws are entirely different. Our mortgages are set up differently. Our economies are different. Our people and their attitudes to housing are different. Every single factor that influences a property market is.. wait for it... entirely different.

So while it's interesting to hear Beagle describe what happened there, keep in mind that it's entirely irrelevant to our situation.

Is does make you wonder though. Even though we can't just walk away from our mortgages, I wonder if the banks here were lending easier than they should have been? It seemed very easy there for a while for people to get 'no doc' loans, and IF there were huge drops in the values, then they would be risky.

I am just annoyed though, as I had to provide a few years of tax returns and documentation when I applied for a loan, only to see a few years later banks allowing minimal documentation or low doc loans (with a higher rate of course).

Agree with comments on Aus RE.

RE represents such a big part of bank assets that they would never allow RE to fall. Would almost destroy our financial system if it did happen.

Forecasts are for decreased Chinese demand (Garnaut), though even if this did happen, I can't see RE ever decreasing.

Only exception could be Chinese investment in Aus RE. If for some reason they needed to liquidate their assets it could create a dramatic fall short term..... their re investment exposure here is huge. And not just residential, farms are being snapped up very quickly.

Have to agree with old mate on this one:

“Where is this headed? This is not just about the current generation, it's about our kids and our kid's kids. We should be selling the milk, not the cow, the food, not the farm,” Senator Xenephon said.

But here we have a very interesting attitude. If we can sell it, we will. I find it amazing, aussie attitudes, intreging really, because I don't understand it. I guess people get more outraged about the outcome of the show "The Voice" over selling out the future generations.......

Never thought I'd say this but - what about the children?