[ponder]

Just stumbled across this:



Not sure who put it together (one of our very own S&S bear buddies, perhaps?), but ... wow.

[urchin]

ponder, on 30 June 2010 - 05:04 AM, said:

Just stumbled across this:

Not sure who put it together (one of our very own S&S bear buddies, perhaps?), but ... wow.

really helps to visualise it, doesn't it? if you average the price/multiples multiples for the past 55 years you get something like 3.5. so if wages remain constant and there is a correction to that long term average it would mean a drop of 45%.... not that i expect that to happen as people seem to have become accustomed to pouring every last spare penny they have into their mortgages, but it does show how over-inflated the market is.

[Bernard L. Madoff]

Whoever compiled that, nice work.

[Dose]

urchin, on 30 June 2010 - 05:50 AM, said:

...people seem to have become accustomed to pouring every last spare penny they have into their mortgages...

I wonder what those older generations wasted all that extra money on?

[Solomon]

Dose, on 30 June 2010 - 06:48 AM, said:

I wonder what those older generations wasted all that extra money on?

Most saved it, or spent it on their children.
Remember welfare wasn't quite as generous as it seems to be nowadays.
Others poured it back into making their living.
There wasn't always tax exemptions for work related expenses either - you had to buy your own safety gear once and tools once.


I built my own home in 1981 for $35,000. That was one of the lowest mortgage periods on that graph, although it didn't seem so at the time.
I sold it in 1999 for $120,000. It was just at the beginning of the uptick on that graph.
Seems to have begun to turn upward in about 1995.
In 2007 the property sold again for $370,000.
That's almost the first peak.
Winners and losers. Those who sold definitely struck an opportune time. Those who bought may yet lose.

Interesting though to see something of my own history illustrated so clearly.

[Dose]

Solomon, on 30 June 2010 - 07:08 AM, said:

Most saved it, or spent it on their children.

I was being a bit facetious...but what I was getting at relates to what you refer to.

I have more than a few concerns for the coming generations. My parents spent a lot of time, energy (and money) on their children. Money that is no longer available to be "wasted" on family holidays or memberships or dues or the like. This money now goes to the house. IMO that is an unfortunate waste.

[ummester]

Another interesting thing in that graph are the low points. Who was buying then?

I reason that they are generational gaps. Late 60s the BBs weren't getting into the market just yet - the majority would have been in their teens. Early/mid 80s and the majority had already brought in, having a median age of around 35 by then.

Theoretically, Jones' who brought their PPOR in the mod 80s and LVRd for IPs in the mid 90s stand to make the most (% wise) out of our housing bubble (if they sell). Xers who got their housing sh*t together early (pre mid 90s) would also be in a very comfortable position. Y never had a chance.

This post has been edited by ummester: 30 June 2010 - 07:32 AM

[sydney3000]

The most interesting part of the graph is actually the population growth figures by decade.

[Mr Medved]

ponder, on 30 June 2010 - 05:04 AM, said:

Just stumbled across this:

If reliably sourced that is a brilliant chart. The only thing that could top it is if it was extended back to 1880 to compare it with the last rise and fall of marvelous Melbourne.

Howard's hidden legacy.

[staringclown]

Australian Household income now has a wiki page. It largely agrees with the OP figures.

wiki - Australian Median Household income figures

Quote

Australian Capital Territory 324,034 AUD$91,624 $63,188
Northern Territory 192,898 AUD$86,788 $59,853
Western Australia 1,959,084 AUD$72,800 $50,206
Queensland 3,904,532 AUD$68,276 $47,086
Victoria 4,932,422 AUD$66,872 $46,188
Australia 19,855,328 AUD$66,820 $46,082
New South Wales 6,549,177 AUD$66,820 $46,820
New Zealand 4,100,000 NZ $62,556 [1] $41,293
South Australia 1,514,377 AUD$55,848 $38,515
Tasmania 476,481 AUD$50,700 $34,965
Main source: Australian Bureau of Statistics, Household Income and Income Distribution, Australia 2007-08 .[2] Note: GDP per capita cannot be used to predict median household income (See median household income).

Sorry about the formatting. Best I could do.

[booboo]

The Wikipedia figures look way out, sorry.

http://www.ausstats....les_2007-08.xls

Table 14A has mean and median gross household incomes for each captial city.

The following is Sydney-centric, sorry.

Sydney gross household income:
Mean: $1981 / week, or $103,012 / year
Median: $1425 / week, or $74,100 / year

Using RP Data figures, the Sydney median home price is $517,250.

Let's assume a generous 5% per year increase in Sydney median income, which brings it to $81,700 (which may be a little on the high side). Currently, the median Sydney home price using RP Data values (which is lower than APM and Residex) is 6.3 times median Sydney income. No wonder Chris Joye and other spruikers do not like using median household income to median house prices.

Joye must've gone to some effort to create the 3.x times figure in previous posts on his blog. As mentioned in another thread, Joye is a master of compiling masses of information which never tell the real story, but are create at painting the picture he wants to see / wants you to see.

BTW, I just can't reconcile how you could use equivalised household income as a comparator for house prices. But we're different here, right?

[booboo]

Oh, I put the mean household income there for a reason, which I forgot to mention. The discrepancy between the mean is median is surprisingly large, which hints at inflated top end salaries in some of the capital cities.

Looking at table 1A, it becomes clear why: the mean income per week of the highest quintile ($1709) nearly doubles over the fourth quintile ($933), and this top quintile earns a massive 41.6% of all income, and it's a trend that has been increasing. One might make a basic assumption that the rich are getting richer, and poor getting poorer (as the share in the lower quintiles is dropping). Not a good trend for social cohesion, sadly.