tcissboss
back of the envelope stuff mate
but having said that my estimate is conservative don't you reckon
amount borrowed "$2177 a month, or $544.25 a week."
2177 x 12 = $26,124
interest rate on housing loan = 8%
capitalised amount = 26,124 / .08 = $326,550
if prices are less than $500,000 the situation is even worse
that means people have more debt
eg
asset = $400,000
liability = $300,000
equity = $100,000
debt/equity = 300%
would you invest in a business with that much debt?
they reckon houses should be 3x annual income to be fair value
3 x $60,000 = $180,000
so the balance sheet for house ownership should look something like this
assets = $180,000
liabilities = $80,000
equity = $100,000
debt/equity = 80%
gearing = 44%
that looks pretty healthy
when you look at property trusts like gpt you have a gearing ratio of 46%
and you know what that company is getting trashed
just a bit of perspective.
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