the median house price rose by 14000, page-55

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.