Simple quiz for TP

[Tannin]

Think Positive, a little quiz for you.

The average income in Australia is $48,684. But we will be generous and call it $50,000 even. (1)

The average house in Sydney costs $1,000,000. (2)

Home loan interest rates are around 5%. That works out to $4,166.67 per month, or $50,000 per year. (3)

Like most Australians, you are earning around about the average income (that's what an average is, the thing that most people get) You take a typical home loan and buy an average house in Sydney 'coz Sydney is where the jobs are. Assume that you spend absolutely nothing at all on food, clothes, council rates, transport, insurance, health care, electricity, or anything else at all. You walk to work naked, you sit at home in the dark every night, you go without food for as long as it takes and put every single penny you earn towards the mortgage. How long will it take you to pay off the loan?

Simple question: how long to pay off an average house with an average loan on the average income.



References:

(1) https://mattcowgill.wordpress.com/2013/05/13/what-is-the-typical-australians-income-in-2013/

(2) http://www.smh.com.au/business/property/median-asking-price-for-sydney-houses-tops-1-million-20141112-11l0pm.html

(3) http://www.nab.com.au/personal/interest-rates-fees-and-charges/interest-rates-for-home-lending

* Averages: in both cases I have used the correct form of average for a skewed distribution, which is the median. By definition, 50% of people earn less than the median and 50% earn more. Similarly, 50% of houses cost less than the median price and 50% cost more. You could use the mean values instead, which would be mathematically wrong and earn you an instant fail on your paper because it fails to represent the common, normal experience (which is what averages are for in the first place), but as it happens, in this particular case your answer wouldn't be terribly different because you'd be altering both figures in the same direction (higher) and the errors would more-or-less cancel out.

[think positive]

I don't live in Sydney, and wouldn't want to. The average house price in my area is about 400,000 for a reasonable 16 square 3 bedroom 2 bathroom house with 640 square metre land size. $600,000 will get you a decent upgrade in either land size, or quality, for a really nice 46 square 2 story on a decent size block, your looking at about $750,000, unless you want the elspanlade the. Your looking at a cool two million.

Drive another 20 min in traffic and you can get a really nice four bedroom with ensuite, pool etc for $450,000, or a starter house for $360,000.

Maybe folks need to down grade their expectations until they can afford them.

[think positive]

What's the average rent in Sydney, which I repeat is not a market lower income people should be looking to, (lambast away I can't be £$%$ed explaining why).

Rent in my area for a $350,000 house is about $300 a week, what the loan payment a week? What do you get out of renting after 50 years? For around the same money, at these interest rates, you get a bloody big asset, or as I call it, superannuation.

[HAL]

[think positive]

If the average price for an average house is $1,000,000 people won't pay it, so the market will drop. If the market is dumb enough to pay it, or pay the rent for it, well who's faults that?

Supply demand, affordability.

[stui magpie]

[Tannin]

Sui, you ain't thinking straight.

1: Of course that income figure includes people on Centrelink. It's an average. It also includes James Packer and Gene Reinhardt.

2: Massive mathematical error on your part: you cited a mean figure from the ATO as if it "corrected" the median (average) figure we started with, which of course it doesn't. I don't want to rile you up, Stui, but answer me this: are you being deliberately thick here, or are you really a reading and mathematical super-klutz? heesh, I even went to the trouble of reminding you how averages work in my post which you either didn't read or didn't understand and you failed to read or understand the very article you quoted back at me. Let's quote the whole thing, shall we, instead of doing what you did: finding a very small part and quoting just that bit in as misleading a way as possible.

[Tannin]

And another thing: incomes have gone up by bugger-all in the last four years. Incomes for everyone except the Ginas and the Hockeys of this world have actually gone down in real terms.

[stui magpie]

I understand the stats perfectly well, and I can see exactly what you're doing so I provided some counter stats that you can pick holes in.

If you want to be able to buy a house you need to be able to earn enough to do that. If you want to buy a new car you need to be able to afford that. No massive surprises there. I'm not thick, just not blinkered. I did uni level maths in HSC thanks for asking.

[Tannin]

I don't believe you.

Sorry, you can't possibly have done maths to that level and not understood a simple basic like an average.

Or is your blind insistence on citing the wrong answers to elementary statistical questions not ignorance at all, but a determination to misrepresent the truth? It has to be one or the other.

[stui magpie]

DILLIGAF about whether you believe me or not, fat rats clacker I do not give.

There's a fuckload of houses that aren't in Sydney that ARE affordable to people on the average wage.

I do have kids, whether they can afford to buy a house will depend on what they do. My daughter is working hard and saving money, despite not having a degree i expect her to be buying her first home before she's 25 with no help from me. My son, not so much any time soon but hey, shit happens.

[Bucks5]

Generally most first home buyers buy something worth $300/400K and after 10 or so years they upgrade to something worth $550/750K and then they upgrade again if they want. To break into the Melbourne housing market you have to be prepared to live on a housing estate, or in a suburb which isn't popular or one that sits on the outskirts of the Metro area. If you want inner city then you would probably purchase a unit, apartment or flat initially.

It is totally unrealistic for anyone to buy a $1M mansion as a first home unless you are on a very high income or have won lotto.

[think positive]

Well said seeds

Anyhow it's all Micks fault

http://news.domain.com.au/domain/real-estate-news/mick-malthouse-has-set-himself-up-beyond-footy-with-shrewd-real-estate-plays-20150526-gh9zzm.html?utm_source=outbrain&utm_medium=cpc&utm_campaign=newsnetwork

[think positive]

By the way, just retread the post that seems to have garnered me my own thread as if to say get your head out your arse TP, and I have to say WTF. Did I say that merits this?

The bit about budgeting?

I'll say the dreaded "when we were young" we had a smaller house, second and sometimes third hand furniture, and fourth hand cars, no big holidays, and a shitty TV. I grew a lot of our veggies, and cooked all our meals, treat night was a Movie, not always a new release either, from the video store. Our wedding pics were printed at Kmart.

Go into a young couples house now, they will have a 55 inch min flat screen TV, honeymoon in Vegas pics on the wall, a couple of grand worth of wedding pics on the wall, and another thousand or two of pictures in a book, they will probably never look at, and burn in the divorce. A nice affordable 4 cal car in the drive, bought new or only a year or two old, and the four wheel drive to tow the JetSki! And all of it on credit!

But guess what? There was people like that back when too, and they are still struggling to pay it all off, and then tell us how lucky we are to have a nice house! My husband is blue collar, I've haven't worked full time since the kids were born,no it wasn't easy and I felt like a single mum for a very long time! And now I'll tell you the even sadder tale of my parents, and my dad fixing tractors in the snow in cotton overalls and no creeper!

Then there's the young couple I know, mum is home with the three kids, hubby is working hard, they moved to a further out suburb, so they could buy not rent, and even lived with the parents for a while to save a deposit. Their car isn't new, and neither is all their furniture. They are still saving for the wedding. Her sister has done the same thing. The weeding wasn't a million dollar affair, but gees it was a bloody good night. No airs and graces, and everyone genuine and having a great time. And they should be bloody proud of themselves, nothing has been handed to them on a platter. (And Pa has converted their rooms so they don't come back again!)

Fact is it doesn't matter what any politician tells you, you won't hear the message. The former prime minister lived not far from me growing up, the house is nothing special, and she is bagged for being a bogan. It's just no win.

Yes it's hard. Yes minimum wages are still too low, and yes unemployment is too high. But it's not impossible. And bargains are out there! We paid a ridiculously low price for our rental property but guess what? We had no competition, it was a private sale, not at auction, so why should I feel guilty that I bought a cheap house, cleaned it up and rented it out?

Talking to a friend who is a property developer, he says it is turning, the inflated prices will burst soon, which is why I want to get my old trashed house fixed and on the market pronto.