Next move in interest rates up ?

Originally posted by acorn ↑

The video is a bit interesting . He says that lending to investors as a percentage of home buyers has always been 10 to 20 % and yet the chart in front of him shows that it has been well above that for more than 20 years .

The second chart talks about the increase in house prices after the introduction of the capital gains tax discount . The chart refers to ' dwelling price to household disposable income ratio ' . It claims that prior to the cgt discount the ratio was under 3 . I'm not sure where this number was taken from but I'd dispute that it was a fair average . Under three times in the early 90's ? All depends on where you were shopping .

Charts are great for historical comparison but you need to make sure that you're comparing apples with apples . As an example a new car is roughly the same dollar price now ( or cheaper ) than they were in the early 90's . Far better vehicles and much reliable . If you expand this thinking to many consumables ( clothes , tv's , etc ) then they are all much cheaper as well . So , in reality , they could be half or even 1/3 of 90's prices in buying power terms . So yes , house prices may have risen but so has disposable income and living standards .

Add to that the increase in average house size and the extra contents of those houses compared to the 90's . What about the rise of the second income earner per household ? I don't see him mentioning that ?

There is no doubt that house prices in some areas are nose bleedingly high but then again , they always were . I can remember people complaining about Sydney house prices in the early 90's as I knew some people that were relocated there for work reasons . I'm betting the Sydney prices weren't 2.5 - 3 average back then .

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"....... increase in average house size and the extra contents of those houses compared to the 90's "

My comment:

This article suggests that some of the young are considering different AFFORDABLE options.

FROM:
http://www.smh.com.au/nsw/sydney-re...ansion-antidote-on-wheels-20140619-zsf9c.html

"You have to consider what makes you happy and you have to cut. Even as someone that loves the idea and loves the simplicity, it’s a difficult process to go through when you’re used to having lots of stuff in a big house.”

"You have to consider what makes you happy and you have to cut. Even as someone that loves the idea and loves the simplicity, it’s a difficult process to go through when you’re used to having lots of stuff in a big house.”
The movement has taken off post-GFC, fuelled by rising house prices and the inability to secure mortgages.

You also say:
"What about the rise of the second income earner per household ?

"My Comment:
The extra income is almost essential to keep a roof over your head IMO.

Ever wondered why all the news about child care, lack of facilities? I know people that work in child care. They get stuff all pay, have lots of accountability, get hammered by the press whenever things go wrong. Their pay is so inadequate, not much chance for them to buy a home unless they secure a well off partner...... many will be forced to live in very outer suburbs if they can afford a home and spend huge amounts of time getting to and from work.

Agree with you that cars are cheaper. One can see plenty of bargains by the side of the road for sale in WA. Maybe some are people that have lost their jobs and are taking off to where they can find a job.