House prices in different countries

[bobby12 0]

go native, you sound like you live a charmed life. a few months later and you would have been hit with a double whammy instead. thats the way the stones fall sometimes i guess.

 

I have heard that with PR it is much easier to get a loan, and you can get a better rate more easily. It only takes 6 months or so to get PR if you have the right credentials (job + j-wife).

[bobby12 0]

"Even if you just buy a property out west and keep it as a renter and don't live in it. Just keep moving up the ladder, let other people pay your mortgage."

 

This doesnt really apply to Japan though does it? house values just drop over time here.

[HelperElfMissy 42]

Originally Posted By: bobby12

go native, It only takes 6 months or so to get PR if you have the right credentials (job + j-wife).

He has the job...but not sure he will trade in his Aussie wife for a J-wife just to get the PR! I reckon she sounds like a keeper!

[Go Native 70]

Yeah trading up to a younger model might be nice but frankly I just couldn't be bothered!

[NoFakie 45]

Originally Posted By: ger

I'm generation X, I suppose but I don't like the label and I thought that the Winonna Ryder movie was cheesy too. Statistical trends and fancy labels and stereotypes that the media latches on to are two different things. Back in the 90's the buzz was that we were all searching for something more meaningful as we were entering society because we were the first generation who would be worse-off than our parents.

If anything, we've been a bubble generation up until now though. All that deep emo-angst stuff was just flattery and media-hype.

I'm with you there brother. Its all bollocks.

As for house prices, the big rises in Western countries are largely down to bubblicious credit expansion. Without more debt, prices across the board won't be sustained, let alone continue.

[Go Native 70]

Australia is bit different though Mr Wiggles. As MB alluded to earlier one of the major driving factors in the Aus market is a lack of supply of new housing. Basically they really haven't been keeping up with the rapidly expanding population. Whilst demand continues to outstrip supply housing prices there are unlikely to drop anytime soon. The rapid increases have slowed but few areas have seen any major drops in prices.

 

Also the Aus economy has remained fairly robust since the GFC and banks in Aus never offered some of the ridiculous loans, especially to low income people, like they did in the US and so thus far there's been little increase in loan defaults and thus no flood of homes on the market. If interest rates went up rapidly though this could certainly happen.

[indosnm 0]

Originally Posted By: Go Native

Australia is bit different though Mr Wiggles.

It's funny how in a bubble its "always different this time".

Not that I think property market in oz is going to crash BUT unless wages increase in a big way is the growth we have had going to be sustainable??

Just my 2c

[indosnm 0]

An interesting chart.

 

[Go Native 70]

The growth we've had in the past is not sustainable and it has slowed dramatically since the GFC but I don't see a major crash happening anytime soon either, unless interest rates were to rapidly increase. The fundamentals of why prices are remaining high, demand outsripping supply, still remain in the Aus market.

 

And I would be very careful about reading anything into what Steve Keen has to say about the current state of our property market. He's been predicting a crash for ages now. Eventually it may well come true but he's been predicting it for years already and year after year is proven wrong.

[HelperElfMissy 42]

And you also need to look at where the housing is.

 

If suddenly the government opened up huge tracts of land for development, and builders suddenly quadrupled in number (this was one of the biggest problems we encountered in the last building boom - lack of tradies meaning it was taking 2-3yrs to get a house built!!) then the 'median' house price would be lower. Sure. Especially if we got smart and started to build the high rise unit style living a bit more often, and steered away from the 4x2 on 800sqm with a pool and a trampoline in the yard.

 

However it is unlikely that the prices of established homes close to the city centre will drop in value too much. They are highly sought after. It takes me 5 minutes in the car to get to the beach, 15 minutes to Fremantle and 20 minutes to Perth including acquiring multi story parking. I am a 2 minute walk from a bus stop, and 3 minute walk from a train station. What will be paid for in our situation is LOCATION. There will also be a premium because it is one of the few remaining large blocks in the area - most were subdivided long ago.

 

So even if the mean property prices go down when demand is even with or lower than supply, it is the outermost properties that will be cheaper. And we did see this effect during the GFC/increasing interest rates just prior to the GFC. People in overheated outer suburbs saw up to 30 or 40% of their previous valuation wiped off. Which did not matter unless they a) had only just bought, or had just borrowed against their new found equity. As for us...we had valuations done just before and then not that long ago - and the fluctuation was minimal...around 2% down.

 

The WA property market is not really a bubble...a bubble is where it is artificially inflated. For us it is just business as normal.

[bobby12 0]

Mamabear - how are people paying for the houses? If it is with crazy credit, then as Wiggles points out you may be in a bubble. If house prices are 3x earnings, then it is a different story.

[HelperElfMissy 42]

Bobby12 - home loan provision in WA (as GN said earlier) has never been the crazy credit scenario that it was in the US. Low Doc loans were few and far between.

 

Loans prior to the GFC were more lenient and people were buying on 0 deposit (if they had a First Home Buyers grant from the Govt) but they were restricted to the value they could borrow, and they had to have the income to service the debt. Many of these banks require people with large debt to income ratio's or just large debt to have income protection insurance.

 

Personally, despite exemplary repayment history, every time (except the last) that we wanted to upgrade home/increase our loan we were shown the door initially. We have had to really work it to get approval, and in two instances actually borrowed the shortfall from my parents temporarily. I can't imagine that the banks will be any easier on Mr and Mrs Average Wage Earner.

 

I think the conservative nature of our banking sector had a lot to do with us surviving the GFC relatively intact.

[NoFakie 45]

I don't wish financial problems on anyone, but that last statement depends on what "artificially inflated" means. One of Steve Keen's other charts shows an exponential increase in Australian household debt to record levels.

 

Along with simple buyers and sellers, you now have buyers and sellers of investment properties (i.e., non-"place to live" demand), REITs, derivatives like MBS, and overseas buyers all muddying the waters. Its hard to know what the fundamentals are. The danger is that when people are buying houses as investments, money will be pulled out much quicker if the market turns. If there is money from o/s, exchange rates too become a black swan.

[Go Native 70]

Household debt in Aus is at an all time high but then again so are wages to service those debts. Also although many Aussies have rather large mortgages many also have significant equity because of how much their homes have increased in value. And thus far they haven't been having too much trouble servicing those debts. This could certainly change dramatically if interest rates rose rapidly.

One of the biggest problems I see in Aus is that many Aussies have borrowed more money against the equity they have in their homes to buy lifestyles they otherwise couldn't afford. Using the equity to buy into more investments, property or otherwise, would be the smart move but many are using the money to spend on overseas holidays, boats, cars etc.

It may all come crashing down like a house of cards one day but there's still money to be made in the meantime for reasonably astute investors.

[js 0]

Originally Posted By: Go Native

Household debt in Aus is at an all time high but then again so are wages to service those debts. Also although many Aussies have rather large mortgages many also have significant equity because of how much their homes have increased in value. And thus far they haven't been having too much trouble servicing those debts. This could certainly change dramatically if interest rates rose rapidly.
One of the biggest problems I see in Aus is that many Aussies have borrowed more money against the equity they have in their homes to buy lifestyles they otherwise couldn't afford. Using the equity to buy into more investments, property or otherwise, would be the smart move but most are using the money to spend on overseas holidays, boats, cars etc.
It may all come crashing down like a house of cards one day but there's still money to be made in the meantime for reasonably astute investors.

I think you hit the proverbial nail on the head there GN. In the past 20 or so years, Gen X, and now Y, have been living the high-life on credit of one form or another. It's about time they all get their comeuppance for taking the whole system for granted.

It is now the norm for people to expect a new home that is fully kitted out with everything, right down to the LCD 3D TV! Gone are the days when young couples saved over years to get things e.g. carpet, new (not second hand) furniture, etc.

Expectations these days are completely stupid.

Admittedly though, it's not really their fault, it's poor governance (political and financial) that allows such a system.

Personally, I don't like the idea of using the housing market as an investment option because it inevitably is bad for the poorer in the community who are forced into a continual rent cycle, which is detrimental to the whole community, whilst the well-healed (local and overseas investors) garner profits.

Negative gearing on residential property is obcene. It may have been okay in the 70's and 80's when every swinging-dick worked in an ever growing economy, but that changed drammatically in the mid-80's, the expectations of Gen X have been slow to change. (I'm a Gen X'er by the way)

More recently, many of the Baby-Boomers have off-loaded their kids and are probaby more self-obsessed than X & Y put together. From personal experience, the BB's seem to be completely preoccupied with themselves. They also tend to be the ones holding the property market by the curlies i.e. multiple negatively geared residential premises, etc.

I grew up in a multicutural family and street. May of the neighbours were refugees from Europe. I inherited their aspirations = get a good job, own one home (not a 'house'), grow some vegies, fruit and chooks, enjoy life. Spend the saved money on necessary things like education, etc, and some on holidays. Simple idea that leads to a happy, worthwhile life.

Too much greed out there these days.

[Mintyjulep 0]

Gahhhh! Not all gen x & y are like that! Heck we have to save up for second hand furniture, lol.

 

I agree with your philosophy - our priorities are renovating our home, travel, and sending our kids to Rudolph Steiner (luckily we bought a 20 minute walk from there!) To us those things are the key to a happy life for us and future mini mintys.

[Go Native 70]

Originally Posted By: SubZero

I grew up in a multicutural family and street. May of the neighbours were refugees from Europe. I inherited their aspirations = get a good job, own one home (not a 'house'), grow some vegies, fruit and chooks, enjoy life. Spend the saved money on necessary things like education, etc, and some on holidays. Simple idea that leads to a happy, worthwhile life.

Nothing wrong with that at all but it's not the best way to become wealthy. For me becoming somewhat wealthy is not about having a whole lot of materialistic crap like a big flashy house, or expensive cars, jewellery, massive TV's or whatnot. For me it's about retiring early and getting to ski lots. And I guess giving my daughter an exciting life full of great adventures as well, she better bloody love skiing though! I don't need that much to keep me happy so thankfully I don't have to worry about trying to accumulate multi, multi millions to reach my goals. Property investment though has certainly helped me get closer to these goals than I otherwise would be. Retirement at 50 is my main goal at the moment. In the meantime I have to live this terrible life living and working at one of the great ski areas on this planet!

[js 0]

Originally Posted By: Go Native

Originally Posted By: SubZero

I grew up in a multicutural family and street. May of the neighbours were refugees from Europe. I inherited their aspirations = get a good job, own one home (not a 'house'), grow some vegies, fruit and chooks, enjoy life. Spend the saved money on necessary things like education, etc, and some on holidays. Simple idea that leads to a happy, worthwhile life.

Nothing wrong with that at all but it's not the best way to become wealthy. For me becoming somewhat wealthy is not about having a whole lot of materialistic crap like a big flashy house, or expensive cars, jewellery, massive TV's or whatnot. For me it's about retiring early and getting to ski lots. And I guess giving my daughter an exciting life full of great adventures as well, she better bloody love skiing though! I don't need that much to keep me happy so thankfully I don't have to worry about trying to accumulate multi, multi millions to reach my goals. Property investment though has certainly helped me get closer to these goals than I otherwise would be. Retirement at 50 is my main goal at the moment. In the meantime I have to live this terrible life living and working at one of the great ski areas on this planet!

Perhaps COMMERCIAL property investment is a more palatable alternative to residential investment? A bit more uncertain perhaps - a market relying on many factors.

Speaking from experience - being surrounded by older people who are/were aiming to retire early - they tend to fall into two categories:
1. after a short time they drift back to part-time or full-time work because of boredom (there's only so much skiing, renovating, travelling, golfing you can do before it gets monotonous), or the wife gets annoying, the kids grow up and their priorities change, etc
2. They die earlier than those who continue with employment (voluntary or otherwise)

50 is an awfully young age to 'retire', but I do envy the choice. (Similarly, I could afford to retire at that age and be kept busy doing many more enjoyable things, but the thought just doesn't sit right).

Good luck to your plans and hope they work well for ya.

[HelperElfMissy 42]

I disagree that rental property investment causes the less affluent in our society to be downtrodden. With the exodus of private investors in the market of late the rental market has tightened up - the government didn't buy up all those rentals - new homeowners did. And it has left the impoverished fighting with the young new starters saving for their first home for a roof over their head. The government housing waiting list is hideously long, and people are homeless left right and center.

 

Get lots of private investors back on the market and you will see rent prices come down as demand is met, that is GOOD for the impoverished.

 

ohh...and just in case anyone thinks I am pontificating from my comfortable life with no real knowledge at all... OUR first home had concrete floors covered by old bits of mismatched carpet that I picked up at a few auctions for next to nothing - and it stayed that way for 2 years. We got lawn down by buying one or two rolls of roll on lawn when we could afford them, and cut it with a knife into little lawn 'plugs' and planted it out like an Ashley and Martin balding head. It took us two years, but we eventually had a lawn for the kids to play on. I KNOW about doing it slowly, bit by bit, and within your budget.

[Go Native 70]

Retiring to me is not about stopping all work altogether. It's about having the choice about how much and what sort of work you want to do. It's being in a position that any work you do is not about making money it's just about doing something because you find it interesting and/or fulfilling. It's also about having the time and money to do the things you really love. Working has never been something I really love! So making money from things like investing in property and shares really appeals to me. It's easy money!

[indosnm 0]

Originally Posted By: Go Native

Retiring to me is not about stopping all work altogether. It's about having the choice about how much and what sort of work you want to do. It's being in a position that any work you do is not about making money it's just about doing something because you find it interesting and/or fulfilling. It's also about having the time and money to do the things you really love. Working has never been something I really love! So making money from things like investing in property and shares really appeals to me. It's easy money!

I share the same opinion on retirement GN.
I often see my retired clients return to some sort of part time work anywhere from 6 mths to a few years after retirement. Usually it's not for money reasons, but social reasons.
It's said that once you retire you spend an extra 2000 hrs a year more with your spouse/ partner! (& that may not be taking travel time into consideration!)