........According to the screaming headlines yesterday, $30 billion was wiped off the value of shares. For someone with a $100,000 portfolio, that?s a $2,300 loss? and it?s roughly the same amount if they?d invested the same money at the start of the year.
That?s not a good return.
How home owners dusted tens of thousands this year....
Now let?s compare that to the poor sap who bought a house in January. Let?s say they used $100,000 as a deposit. Assuming they bought the median Australian home of $450,000 and buying costs were 5%, they would have needed a $372,500 mortgage.
At a mortgage rate of 6.5%, the homebuyer has already forked out $22,500 on the costs of buying the home, plus another $10,000 on interest costs? plus, if they bought in Brisbane or Perth the value of their spanking new home is at least 5-10% less than they paid for it ? probably more.
So yeah, we accept the share market goes up and down. We?ve never denied it. In fact, we?ve always openly admitted it.
But while no-one wants to dust $2,300 in one day on the stock market. Or $2,000 in five months, we?ll take that any day compared to the $30,000-40,000 hit the average home buyer has taken since the start of the year.
Yet still the property drones think their money is safe in bricks and mortar. So where are the headlines about the housing market taking a multi-billion hit? Remember, the residential housing market is about three times the size of the stock market.
As we?ve said before, housing should be low risk and low return. But at the moment, it?s high risk and high loss. Home buyers shouldn?t dust nearly $40,000 in less than six months on bricks and mortar.
That above all else is proof the housing market is stuffed.
