Bzzzzt. Wrong. That's average full time earning. You think everyone works full time?Trader wrote:Average income in 2017 is not 55k, it's $75,275 for South Australia.
You're not even close.
http://www.abs.gov.au/ausstats/abs@.nsf ... num=&view=
Cmon mate. Surely you've seen enough .6 and .9 contracts down your way.
http://www.abs.gov.au/AUSSTATS/abs@.nsf ... enDocument
Avg for Australia is 60k, SA is 55k. (I think this was 2011 census though, probs higher now)
In case you couldnt be naffed doing the calcs, here is something lifehacker prepared earlier:
https://www.lifehacker.com.au/2017/05/h ... in-a-year/
Sure, but we're not talking about housing worth, we're talking about housing affordability. As in what is the cost when you're trying to buy at the start.Trader wrote:As for what you pay over the life of the loan, you do realize that they end up with different assets. The 1990s purchaser ends up spending 513k and owns an average house, which you say is worth 480k. Any shock that those numbers are very similar?
You wont get an argument out of me that having a property is great and the increases are well worth your time. Heck, I fought tooth and nail to keep my house and am about to buy my second, I know how the system works, believe me, I might be empathetic but I aint silly.
Again, different argument. Housing affordability <> housing market value.Trader wrote:Of course the 2017 guy pays more, and at the end of the life of the term, his 480k house is now worth 870k (2% inflation for 30 years), which is very similar to the 888k he's paid.
Errr. No, its very relevant.Trader wrote:The cost of the house in different years $$$ is irrelevant.
Fair point, I'll pay you that one. However, the crux of that calculation was that it did not include wage growth over the term of the mortgage.Trader wrote:You need to look at the purchasing power between the two groups.
Or explaining it another way, you've compared 513k in 1990 dollars to 888k in 2017 dollars. It's not the same thing.
Or a third way, based on the figures you've used.
The 1990 guy spends 21 times his average income (513/24) to acquire his home.
The 2017 guy spends 16 times his average income (888/55k) to acquire his home - and we know that 55 is actually 75, so its only 11 times.
Simply put, in 1990, you needed to devote 56% of the average wage to own an average house.
In 2017, you only need to stump up 39%.
Factor that in, and it very quickly becomes apparent which scenariou is more sustainable. As Q mentioned, the lack of wage growth also makes it difficult to get to that 20%.
I agree that once you get a property, you're better off in 2017 than 1990, but getting to that tipping point where you can get one, is not