Permanent full time position or insecure employment?
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Boomers vs Kids these days
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Given the interest rates at the time, and that you were earning 80% of the average income at the time (I guess you were young) and you bought a house 15% over the median price, I don't think I would have done it in your shoes. With hindsight I assume it has been a pretty good deal.
Not sure how your experience changes the argument - house prices as ratio to median income are objectively way higher thesedays.
Stop, you are embarrassing yourself now.
fact 1: House price growth has been growing 2-3x faster than income growth for 25years. Try to pretend you had an idea on finance related matters for a moment. What does this fact tell you? (It’s not that hard - please try. Clue it’s got something to do with Australian households being the most - or very close to - the most leveraged to household debt in the world)
fact 2: The fastest growing components of the labour market in the last 10-15 years are part time and casual work - not permanent full time jobs. What does this mean?
fact 3: your article is based on another country. Do you want to try again for the market and country we are discussing here?
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my first house . A very pretty 2BR cottage in a good street in Norwood in 1994
House price 138k. Grad salary 26k
now the house is worth 4-5 x that
Guess how much Grad salaries have increased?...(less than half that)
Young people can’t afford a property in Burnside, Unley or Norwood.
My Grandfather bought a house in Payneham for 6K, it’s not fair that I couldn’t afford a place in Payneham when my turn came.
No one is winning this, it’s the same argument that every generation has had.
Not to be pedantic, but the median house price for Adelaide Dec2020 was $510k and the actual percentage my '78 house was above the median then, was just over 11%, so that would be $566K for an equivalent purchase price today. The property you'd be able to purchase today for that price would be far superior to that which I was able to purchase back then.
In that copied post of mine, I'd calculated the comparison using only a single income, to show that today you can purchase a superior property (costing around $370k) to the one I purchased in '78, with only an equivalent single salary today. If I was to do it same/same and added another salary to the total income in the same ratio as my situation back then, ie add an extra 75% of $70k salary ($52500) for a total of $122500, then by the 5.3 times the total income scenario of my situation back then, an equivalent price today is close to $650000. At that price, what you could buy today far surpasses an equivalently priced house back then. By equivalent, I don't mean the same price, I'm referring to the ratio of the salary to price.
The purchase of an equivalent quality house but with all the bells and whistles included in the cost today, that required our two incomes back then, is achievable on one salary alone - the relative $70K of a starting teacher to be precise.
Cmon Jenny, you are better than that and I just don’t get why boomers, or indeed others like myself (Gen X) who have made huge sums on the property market and once (or twice) in a century sharemarket floats from the early- mid 1990s like CSL (up 300x ) and CBA (share price up 16x plus massive dividends). 2 of the biggest 3 companies on the ASX today. Many clients retired purely from buying 5-10k of CSL when it floated.
People need money in peak consumption years (20-50 including whilst bringing up kids) not when they are in their 60’s.
and what about the large chunk of the population that doesn’t get parental hand outs / inheritances.
Do we want to have a permanent under class or citizens that never own a home in a country that affords VERY LITTLE rights to tenants compared to more progressive Euro countries (5-10 year leases with fixed yearly rental increases).
I really don’t understand why all fortunate people (mainly boomers but including others like myself ) can’t just say we were kissed on the #### by a fairy. Free Uni, plentiful full time permanent jobs, cheap housing for own initial owner-occupier properties followed then by the most generous tax regime on investment property in the whole world. All of this combined with houses up 30-50x in 45 years...
why can’t people just admit there was a very lucky generation or 2 born from 1945-early 1970’s that had the best of it in every way from a financial perspective.
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- Jul 19, 2010
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Hands up all the Boomers in this thread....
You forgot the third reason a lot of people under 30 don't have a credit rating they are either staying with their parents or renting with others but do not have the name on the lease,
That is true enough, but also a reflection on modern society. Back in the 70s people were shacked up, knocked up and working in their "rest of their life" job by 30.
- Jul 19, 2010
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Now they’re sedentary, pr0n addicted and depressed.
yawn. I seem to recall you retreating at F1 pace last time with your facile claims
presumably you’re hoping no one remembers and you can keep repeating the same crap until sufficient boredom to refute for the umpteenth time sets in
interesting example
the real mistake, and in some cases conceit, is the idea that buying a house was ever “easy”.
it always required sacrifice, difficult choices and compromises, same as now, same as then
funnily enough, I’m curious as to how you got together the deposit and afforded the mortgage on that meagre salary? Tax rates much higher (net after tax income around $18,000) and interest rates around 9%
is your “it was so easy” humble brag somewhat tarnished by the whiff of family money?
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beware the claims of people saying how easy it was
to buy a $138,000 house in 1994, the tax rates were high and so was the interest
look at these and do your own maths, and see how easy (or true) these claims are
jenny61_99
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Oh thank you, most wise one. I bow in the shadow of your greatness.
Want to point out what is factually wrong with that? I didn’t say ALL millennials, just that they are more likely. FMD.
OK, lets have a work through of 2 examples and see what we think. put real numbers on the claims, and see what it might look like.
the first one, is buying a house for $138,000 on a graduate salary of $26,000. Now this is claimed as an example, to show how easy it was to buy property and make money.
in 1994, a salary of $26,000 was taxed at $6,003 + 35.5 cents on every $1 above $20,700 which gives a net salary of $18,116 ($1,510 per month)
Mortgage rates were around 9% at this time, and this situation wasn't getting the best rate on the market. far from it. but lets be kind and say 9.25% interest. Lets assume a minimal 10% deposit, which is $13,800 or 76.2% of the net annual salary. not an easy savings target in any way. but 138,000 *90% gives a mortgage amount of $124,200. truth be told it could be higher, but lets again be generous. that's 4.78 times gross salary or 6.86 times net salary. which is very ****ing high, hard to believe high.
you have to bear in mind there is an impact of higher interest rates and tax scales, which later also take account when they are lower.
using Mortgage calculator - Moneysmart.gov.au
Owner occupier; $124,200 25 years 9.25% = $1,064 per month mortgage repayment (minimum) or $12,768 per annum
against a net, after tax salary of $1,510 per month, $18,116 per annum = 70.5% of all after tax income going on mortgage repayments.
that is both unsustainable, barely believable, and as far from a free ride as its possible to imagine.
put another way $445 per month for car expenses, rates, utilities, insurance, food, clothing, entertainment etc etc.
the first one, is buying a house for $138,000 on a graduate salary of $26,000. Now this is claimed as an example, to show how easy it was to buy property and make money.
in 1994, a salary of $26,000 was taxed at $6,003 + 35.5 cents on every $1 above $20,700 which gives a net salary of $18,116 ($1,510 per month)
Mortgage rates were around 9% at this time, and this situation wasn't getting the best rate on the market. far from it. but lets be kind and say 9.25% interest. Lets assume a minimal 10% deposit, which is $13,800 or 76.2% of the net annual salary. not an easy savings target in any way. but 138,000 *90% gives a mortgage amount of $124,200. truth be told it could be higher, but lets again be generous. that's 4.78 times gross salary or 6.86 times net salary. which is very ****ing high, hard to believe high.
you have to bear in mind there is an impact of higher interest rates and tax scales, which later also take account when they are lower.
using Mortgage calculator - Moneysmart.gov.au
Owner occupier; $124,200 25 years 9.25% = $1,064 per month mortgage repayment (minimum) or $12,768 per annum
against a net, after tax salary of $1,510 per month, $18,116 per annum = 70.5% of all after tax income going on mortgage repayments.
that is both unsustainable, barely believable, and as far from a free ride as its possible to imagine.
put another way $445 per month for car expenses, rates, utilities, insurance, food, clothing, entertainment etc etc.
Now using those inputs what might current situation look like:
Graduate salary $70,000
Mortgage rate 2.48% (december 2020 per money smart website)
Tax rate $5,092 plus 32.5 cents for each $1 over $45,000
total tax = $13,217
Net Salary = $56,783 (4,732 per month)
Suggestion earlier was for a house at $375,000 which is 5.3 times gross salary (same as $138,000 is 5.3 x 26K gross salary in 1994)
deposit = $37,500 (54% of gross salary compared with 53% in 1993) (66% of net salary => compared to 76% in 1994)
using Mortgage calculator - Moneysmart.gov.au
Owner occupier; $337,500 25 years 2.48% = $1,511 per month mortgage repayment (minimum) or $18,132 per annum
against a net, after tax salary of $4,731 per month, $56,783 per annum = 32% of all after tax income going on mortgage repayments (compared with 70.5% in 1994).
So its clear that a property of $375,000 today is considerably cheaper than a property of $138,000 in 1994. By factor over 2.
let me say that again:
1994: $138,000 property on graduate salary of $26,000 with 10% deposit = 70.5% of all after tax income on mortgage
2020: $375,000 property on graduate salary of $70,000 with 10% deposit = 32% of all after tax income on mortgage
tax rates and higher interest charges meant that it was more expensive to buy property in 1994 than now.
truth is, it has never been easy to buy property. the idea that it was an easy river of gold that people of today missed out on is bogus.
a phoney claim.
as an aside is anyone saying that you can't buy a property for $375,000?
Graduate salary $70,000
Mortgage rate 2.48% (december 2020 per money smart website)
Tax rate $5,092 plus 32.5 cents for each $1 over $45,000
total tax = $13,217
Net Salary = $56,783 (4,732 per month)
Suggestion earlier was for a house at $375,000 which is 5.3 times gross salary (same as $138,000 is 5.3 x 26K gross salary in 1994)
deposit = $37,500 (54% of gross salary compared with 53% in 1993) (66% of net salary => compared to 76% in 1994)
using Mortgage calculator - Moneysmart.gov.au
Owner occupier; $337,500 25 years 2.48% = $1,511 per month mortgage repayment (minimum) or $18,132 per annum
against a net, after tax salary of $4,731 per month, $56,783 per annum = 32% of all after tax income going on mortgage repayments (compared with 70.5% in 1994).
So its clear that a property of $375,000 today is considerably cheaper than a property of $138,000 in 1994. By factor over 2.
let me say that again:
1994: $138,000 property on graduate salary of $26,000 with 10% deposit = 70.5% of all after tax income on mortgage
2020: $375,000 property on graduate salary of $70,000 with 10% deposit = 32% of all after tax income on mortgage
tax rates and higher interest charges meant that it was more expensive to buy property in 1994 than now.
truth is, it has never been easy to buy property. the idea that it was an easy river of gold that people of today missed out on is bogus.
a phoney claim.
as an aside is anyone saying that you can't buy a property for $375,000?
- Sep 30, 2014
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Life expectancy is about 15 years more than it was 40 years ago
that’s 15 years of unproductive living where you use up any savings you have, but more likely take as an age pension, funded by those who are working and productive
its not funded by the working and productive unless the government leaves its pension liabilities unfunded
which if true (it is) is not the fault of any recipient. It’s just typical of the old age Ponzi scheme most governments run
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