The Younger Generation Are Being Held to Ransom by Baby Boomers and Their "Investments"

adzzz on 20/08/2015 - 00:57

Does anyone else on here feel that the speculative price growth experienced across the country, including the ridiculous amount of wealth transfer happening at the moment between young and old is a significant social crisis facing this country?

I have watched many friends and family members (I am 23) attempt to enter the Sydney property market and purchase properties off mum-dad type investors that have sat on investment properties purchased in Sydney in the early 80's and make an absolute fortune off the proceeds, whilst these younger generations are being forced to borrow ever greater amounts of money to fund the lavish retirement plans of over 50s who are right now on the receiving end of a windfall the likes of which this country has never seen before (think every over 50 who bought more than one property having the equivalent of a Lamborghini dropped in their driveway.

I feel that as a younger person, the interests of these over 50s are so heavily represented in the political and economical policy mix these days that it feels like an artificial barrier has been placed between this generation and the last. The sad part is, this speculative property rise is going to bite our generation harder than any before, and will most likely bankrupt friends and family around me that have taken the plunge and given up "waiting" for prices to go down.

If there is any significant downturn in prices then they will effectively be in the worst financial position possible. Those of us that have held out and waited, will also be likely unable to borrow easily to buy in a depressed market due to all the bad debt and tightening of lending practices that would most likely come from a severe property price correction.

I just personally, can't see any situation where this can end well, and expect that there will be tough times ahead for Gen Y's entering the market and trying to start a family, now and into the foreseeable future. What is your opinion?

Financial

Comments

  • GnarlyKnuckles on 20/08/2015 - 01:08
    +9

    "the speculative price growth"

    I suggest alluding to an actual product/entity (property/land/real-estate?) in this first bit of your post… it reads rather cryptically, because that is lacking.

    Also, from memory I think that from about the start of 1987 to the end of 1988 (a 2-year period), house prices in Sydney almost doubled… in two years… so the levels of appreciation we're currently seeing are defo' not unprecedented, as you suggest.

    • adzzz on 20/08/2015 - 01:28

      Good point on mentioning a specific example, I will try and work that in.

      1986 was a particularly interesting year to use as it pinpoints the exact time the full effects of a freshly deregulated banking sector were felt:

      Between 1983 and 1985 Treasurer Paul Keating deregulated the system by (a) floating the Australian dollar in December 1983; (b) >granting 40 new foreign exchange licences in June 1984; and (c) granting 16 banking licences to 16 foreign banks in February 1985.

      This accelerated lending competition further. Banks competed with by reducing the security they required and lowering their rates. >Crazy loans were made to corporate cowboys.

      That period of growth you suggest, was precisely a starting point to the entire speculative property price trend. I believe it was around late 86 that the banks (and by extension those people that lent from the banks) began loaning more and more money to investors, basically adding fuel on a fire that otherwise would have been limited by people's abilities to save a deposit as LVR's of 90 - 95 and even 100+ were possible due to increased lending competition and relaxed lending criteria.

      • GnarlyKnuckles on 20/08/2015 - 02:40
        -1

        "1986 was a particularly interesting year to use as it pinpoints the exact time the full effects of a freshly deregulated banking sector were felt…"

        No one mentioned 1986 Azzza.

      • snook on 21/08/2015 - 12:58
        +7

        House prices had doubled by 1989. The highest bank interest rate at the time was 18%. Generally 17-17.5%. Back then investors had to pay a higher interest rate too. Getting another property was not high on the list for mum and dad because they were crippled by interest rates.

        Prices doubled again by 2003 - 14 years
        Prices doubled again by 2015 - 12 years
        Nothing about the current situation is particularly stunning or unprecedented.

        I have been watching Sydney property since 2004. The inner city ring has constantly increased in price during this time. The outer suburbs didn't really start moving until 2013 and four years ago, you could have picked up a less than spectacular house in many less than spectacular but good areas for around 450-550k … but no one wanted those houses …

        Over 50's today were under 30 in 1989. They couldn't afford more than one house and even if they'd bought before 1989, the interest rates stopped all but the very rich and very lucky from buying again. The interest rate shock was hard to take. Once most people worked out how to manage it, there was no way they were going down that path again.

        And those that did or who have managed it since? Good on them. Compulsory super is a fairly recent innovation. In the 80’s, you only got super if you paid yourself or worked for the government. Many over 50’s have enough super for a garden shed in the back yard. I wish I had bought again knowing what I know now but we grew up and lived in a time of fuel strikes, high unemployment and rising interest rates. Those of us on wages, took what we could get and were grateful for it.

        Combine house cost + Income + cost of loan and you actually have a much worse scenario than today. I remember I looked at houses for 110 and took one for 90. Interest rates took us to the wall. If I’d gone for that extra 20k, we would have lost the house. And Advance Bank (now St George) went to 18% for a full 12 months. We were lucky enough to be with them. People should think before they speak. Blaming over 50's is quite naïve and offensive. If they live in their house and that’s all they have, then they have no lambo sitting in their driveway and never will. The run of the mill people that just had wages back then, have much less today than the gen y’s will have at the same age.

        A much broader perspective is that this buoyant housing market has kept our economy afloat while others flounder. Obviously this plays into the Government’s decisions as the first priority and they don't care how it happens.

    • Fagin on 21/08/2015 - 21:10
      +4

      And negative gearing reintroduced in 1987….Its effect is not just on house prices. In Australia, negative gearing by property investors reduced personal income tax revenue in Australia by $600 million in the 2001/02 tax year, $3.9 billion in 2004/05 and $13.2 billion in 2010/11. More recent FYs would be interesting.

  • scrimshaw on 20/08/2015 - 01:20
    +20

    Much of the property being sold is being sold off to wealthy chinese investors — read up on china's biggest stock market crash of the decade on Wikipedia. Many of them have sensed the Chinese share market falling in the past few years and now prefer property investments to shares.

    The obvious way to fix the issue you describe of course is to stop foreign investment and potentially, money laundering schemes Too bad the banks and the government aren't doing anything to stop it.

    • adzzz on 20/08/2015 - 01:35
      +5

      The FIRB is a toothless tiger that has been stripped of any real "powers" by legislation and prevented from actually proactively prosecuting illegal foreign investment. The recent news quips by Joe Hockey are a token move to try and calm people down.

      One of the issues I have, is that whenever figures are quoted around foreign investment, they are said to be small, as they are only counting legitimate FIRB requests of which there are very few. The main way these transactions are done is through friends and families of wealthy foreigners who are being wired the funds to complete the transaction on their behalf. Technically it's not a foreign transaction as the owner on paper is an Australian PR or Citizen, they are just being bankrolled by someone overseas.

      One just needs to watch the wealthy foreigners texting between each bid to know what is going on. No-one gives minute to minute updates to friends or family when they have been to 20+ auctions and been outbid by investors and rich foreigners.

      • GnarlyKnuckles on 20/08/2015 - 02:52
        +3

        "One just needs to watch the wealthy foreigners texting between each bid to know…"

        You're beginning to sound a bit, erm, I'll say 'paranoid' there Azzza, I know a couple of WHITE couples attempting to buy houses here in Melbourne at the moment, and believe me, everyone is 'texting on' between bids at the auctions. Particularly when there's quite a few places in the same area being auctioned at the same time; only one person can be 'on the ground' to bid at each one… So hubby is at one, wifey at the other, and if a third place is a potential option; a mate is there… and all need to text each other. Voice ('conference') calls are not really an option usually, cause it disrupts proceedings. Though this seems to be different at the more rural locations, where the auctions are a bit more civil. Surely you're aware of this stuff though Az?

    • tonyjzx on 20/08/2015 - 01:39

      i actually dont think thats true in volume but its true as far as 'media bluster' driving the market higher

      last time i looked bona fida chinese nationals buying property was 4%… I cant imagine it being 8% now. But the sheer force media and admittedly, the amount of 'dark haired yellow people' at auctions gives you another picture.

      My biggest issue is that housing is being used as an investment and retirement vehicle.

      Excuse me but houses are for LIVING… not speculation.

      But hey I'm part of the problem and I'm glad I purchased years ago when prices werent that crazy. I see the problem, but my wealth is built on it so I'm a part of the problem but I dont want to rent so what can I do.

      But I wonder what it will be like when my kids get to young adulthood and the jobs are gone and the price is NYC level.

      • adzzz on 20/08/2015 - 01:48
        +3

        Totally agree, if people want to speculate on the share market, in gold or any other investment vehicle go ahead, it isn't going to stop a new family from being able to afford a home in their lifetime.

        The irony is, NYC's average house price is actually cheaper than Sydney

        NYC average house price is $769,198.34 AUD (780 Sq Km)
        http://www.zillow.com/new-york-ny/home-values/

        SYD average house price is $1,000,616.00 (1580 Sq Km)
        http://www.domain.com.au/news/sydney-median-house-price-now-…

        So NYC is half the size, and 25% cheaper. Go figure…

        • GnarlyKnuckles on 20/08/2015 - 03:00
          +2

          780 Sq Km?!?!

          Far out hombre, where do I sign?!?

          Seriously though, I'm not sure why you think the size of the block is the main determinant in that particular comparison; I mean, there's little towns in the outback of Australia where property is almost free. It's about the perceived quality of living at a given location.

        • Evil-Elmo on 20/08/2015 - 09:15
          +2

          @GnarlyKnuckles:
          I think he's referring to the area of the city? I.e. New York is 'smaller' as far as land area is concerned, so there is less to go around? Not sure though…

          There is no way the average Sydney block is 1,580sqm (nearly half an acre), yet alone sqkm :)

        • Odin on 20/08/2015 - 19:26

          @GnarlyKnuckles:

          it's the city area, not the block

        • GameChanger on 20/08/2015 - 22:21
          +2

          Have a look at the income distribution.

          I doubt New York minimum wage earners earn like here. A cleaner here can earn the same as a office worker with a degree.

      • centrelink on 20/08/2015 - 16:59

        whats that saying? 1% of the population makes 99% of the total income?

        • DeafMutePretender on 21/08/2015 - 02:28

          I've heard another saying, goes something along the lines of, workers have been more productive than ever before, but the value generated by the workers (profit) are skimmed by the employers.

        • dealman on 21/08/2015 - 16:16
          +1

          @DeafMutePretender:

          I guess it's time then for the worker to stop working and get into business instead of sitting and bitching about how little he's being paid.

        • Fagin on 22/08/2015 - 20:51

          @dealman: Good call….and make sure your business imports via an assoc. business located in Ireland that absorbs any profit for your Australian business. End result no tax payable for hospitals and schools plus chance of knighthood and liberal preselection:)

        • dealman on 22/08/2015 - 21:17

          @Fagin:

          Hey if that's what floats your boat, so be it.

          I was talking about creating more value, taking some risk, investing capital and getting paid for it..

          Each to his own I guess.

  • GnarlyKnuckles on 20/08/2015 - 01:31

    "Much of the property being sold is being sold off to wealthy chinese investors"

    I thought that for quite some months now, this practice has essentially been halted; and that there's even a couple of hundred 'investors' being investigated/made to turn the properties back over into the market, to serve as examples? Or am I wrong about that?

    • adzzz on 20/08/2015 - 01:39
      +6

      Still going on everywhere, I have been to over 20 auctions with my brother in the last few months and at every one, there is a foreigner there with a phone, texting between each bid. One was actually sold next door to a friend of mine about 6 months ago, he said they showed up once or twice after it was settled, and since then the house has been empty with the front yard now overgrown. Looks to be someones piggy bank abroad instead of a home.

      • GnarlyKnuckles on 20/08/2015 - 01:53

        "about 6 months ago"

        You are aware that it's pretty unheard of for 'settlement' to be anything less than 90 days (3 months), right? And it's the seller who dictates this, not the buyer.

        • altomic on 20/08/2015 - 21:04
          +3

          possibly he means that the purchase has been settled and that the new owners have no interest in living in it or renting it and are leaving it empty.

          i.e. the house is a commodity. like gold stuck in a vault. rather than worn on a chain around your neck.

        • Steptoe on 03/09/2015 - 19:55

          42 days is pretty standard settlement from exchange of contracts

  • GnarlyKnuckles on 20/08/2015 - 01:51
    +1

    I can't work out what you are suggesting/implying should be done Azzza, or indeed who you think is in the wrong, if anyone. Are you suggesting that those who bought property in Sydney ten+ years ago should have a new tax applied to them, with the proceeds to go to… first home-buyers? What about those who bought property in Sydney prior to 1986/7? Should they be hit with 2 new taxes, because they've had their properties double in value twice?

    It may interest you to know that a general rule of thumb is that many investors aim to double their money every 7 years… of course you can take less risky paths, and go for doubling every 10 years… and this is NOT via property, at least not exclusively. So whinging about the fact that hard-working peeps have done well by buying property in Sydney over the last 30 years, and implying that there should be some sort of 'enforced correction' (if that is in fact what you are doing) is a bit misguided, methinks.

    The majority of the peeps who've done well/are now 'sitting on gold-mines' are the ones who bought in Sydney early/in their youth, worked hard and paid off their properties, and held on to them through thick and thin. Perhaps instead of outwardly expressing your outrage/jealousy towards these peeps, you could try and emulate what they've done; at least to some extent, by TAKING A RISK, and WORKING HARD, like they did.

    My highly speculative tip, is to by a house in Adelaide, on as BIG A BLOCK OF LAND as you can afford, as CLOSE TO THE CITY (or a beach) as you can afford. Don't worry about the state of the house, only worry about the size of the block, and proximity to the city (or a beach). Compared to the rest of the country (except maybe Tassie), property in Adelaide is UNDER-PRICED at the moment. There will be a correction, and it will be relatively soon. Mark my words!

    • adzzz on 20/08/2015 - 01:57
      +18

      I would like the current unfair policy mix of negative gearing and 50% CGT discount to be removed so that property prices can accurately reflect the demand for shelter in Sydney and not the hunger for investment based return.

      In my opinion I don't believe their should there be a 50% CGT discount applied to property, as opposed to any other investment vehicle. Especially when that investment in an already established home does not add to the current housing pool / alleviate any demand pressures.

      It's purely a system of keeping the rich and older generation in a position of power, over the younger generations trying to enter the market in my opinion.

      EDIT:

      I don't believe any one individual is wrong, as people will spend as much as they can borrow. However I do believe that the Banks and our Politicians have setup this grand Ponzi scheme as a way of creating this ever increasing speculative pool of debt that each new generation is expected to borrow to afford.

      • tonyjzx on 20/08/2015 - 02:07
        +4

        adzzz, its clear you have a good grasp on the situation

        i'm sure you are aware of fractional lending and the whole "creating money out of thin air and credit driving our economy"

        when stuff is paid off and your mortgage is over, that is a bad thing according to the banks

      • GnarlyKnuckles on 20/08/2015 - 02:08
        +1

        You call it a '50% discount', while those who actually have to pay it call it what it is; a 50% tax (that's what the "T" in "CGT" stands for). Many would argue that this 50% tax is extortionately high. Personally I think it's perhaps not, given the potential benefits of negative gearing, I'm 'juz sayin'.

        My next question Azza, is why the obsession with living in central Sydney? I mean, I might like to live in Toorak (actually I wouldn't but just pretend I would for argument's sake), but I realise this is way beyond my means, so I'm happy to look around/ live where I can afford. Why 'home in' on the single most expensive few square kilometres in the biggest continent in the entire world, and then express your discontent because as a 1st-home-buyer, you can't afford to buy there/ are being priced out of the market by older/ more 'economically established' people?

        • tonyjzx on 20/08/2015 - 02:20

          JOBS

          cities have the jobs

          about CGT: should there be a 100% CGT then?

        • adzzz on 20/08/2015 - 02:20
          +11

          @GnarlyKnuckles

          It isn't a tax, it's a discount on gains earned on an investment in property.

          If I bought a gold bullion at $500 an ounce and sold it for $1500, I would declare an income of $1000 on my tax return, and pay any applicable income tax bracket that I fell within.

          If I bought a house for $100,000 and sold it for $1,000,000 I would earn $900,000 however would only have to declare an income tax windfall from that investment of $450,000 (hence the 50% discount)

          In other words, money earned any other way (whether you earn that in a job, or through gold speculation etc) is taxed as a regular income. Investment properties are not.

          Also, I have no intention of wanting to live in the CBD, but even 50kms out the prices still seem to stay prohibitively high and I would like to work in a commute of at least 1.5hrs of my job. Any further out and I would spend 1 full work day a week commuting. Moving from the city I was born and raised to Adelaide might be my only option, but it would mean leaving behind all of my friends and family.

          @tonyjzx

          Exactly right, the days of being able to live without borrowing are gone. It seems that if we aren't borrowing 10x - 15x our incomes and living beyond our means then we aren't good citizens.

        • Matt P on 20/08/2015 - 02:28
          +1

          This is a good point. Sydney is a damn desirable place to live. Weather is good, Crime is low, social welfare is high (so people without jobs don't turn to crime to feed families etc.) and public services are reasonably good (hospitals, roads etc.. i'm sure people would debate this but those people need to go spend some time overseas, we're above average at least)

          People want to live there. This is going to mean Sydney real estate is going to get expensive. Damn expensive. Once upon a day when air travel was expensive, immigration was low and we didn't have a global economy, the demand simply wasn't there and the world was a different place. That has changed.

          Also re: Chinese investment, IMO a lot of the external investment isn't necessarily just down to people being worried about the Chinese economy, but also trust for the government. The average Chinese person simply just doesn't trust their government so they invest overseas, it makes it harder for the Govt to seize their assets etc.. Also some countries offer citizenship if you invest over a certain amount, this can be lucrative if things ever go south.

          I'm about to do what GnarleyKnuckles suggests, buy in ADL. Not because i think its a smart investment to do though, but because i'm living there at the moment and have recently sold my Sydney place. I will buy as big a block as practical in as good a suburb as practical as close to the city as practical etc.. though

        • GnarlyKnuckles on 20/08/2015 - 03:20
          -2

          @tonyjzx:

          Many cities have jobs; not just central Sydney. In fact, employment prospects are better than they are in central Sydney, in numerous OTHER parts of Australia.

          Now, re this:

          "about CGT: should there be a 100% CGT then?"

          Are you trying to pull a bit of a Jedi mind-trick on me here toejax? You do realise that that would mean that all profits would be turned over to the government, right? I mean, erm… my answer to that would be a tentative nooooo, but I'm not sure what you mean by the question… and more to the point, I'm not sure that you do either.

        • GnarlyKnuckles on 20/08/2015 - 03:32
          -2

          @adzzz:

          "… a discount on gains earned"

          What? Consider this scenario…

          After investing a few hundred thousand bucks, a dude earns (to use your word) $10k over the course of a year, then he has to give half of that to the government, in the form of "Capital Gains TAX"

          So he is left with $5k, not the 10k he actually 'earned'.

          What bit of this are you not understanding, that is leading you to post the stuff you are posting referring to 'discounts'?

        • GnarlyKnuckles on 20/08/2015 - 04:34

          @Matt P:

          "I'm about to do what GnarleyKnuckles suggests, buy in ADL."

          Good for you hombre, and one thing I didn't mention cause it was not relevant to the topic being discussed, is that the peeps/locals there tend to be really friendly/laid back, even right in the middle of the city centre. Just sommat I noticed, not sure why exactly that is; lack of mortgage stress maybe?!?

          I've been there twice, and both times the 'randomly friendly spirit' of the people has stood out. Noticeably different level of 'street stress' to Sydney or Melbourne. Comparable to Darwin and Tassie, in my own personal experience. I loved it there.

        • poppynyet on 20/08/2015 - 08:27
          +8

          @GnarlyKnuckles:
          "Many would argue that this 50% tax is extortionately high."

          What on earth are you talking about? The 50% CGT discount does not mean you pay 50% of your profit to the government.

          It means that your profit is taxed at normal income tax rates, however 50% of the profit is not taxed at all.

          As a hypothetical - if you paid 25% income tax on $100k salary or $100k profit from shares, you would pay $25k. If the $100k profit was from an investment property you just sold (e.g. you sold a property purchased for $400k for $500k) you would only pay $12.5k tax.

          Why should this tax break exist considering the current overheated market?

        • Euphemistic on 20/08/2015 - 10:19
          +9

          @poppynyet:

          CGT discount applies to capital gain from shares too, if you have held them for more than 12mths.

          The discount was designed to reduce speculative investing, short term buying and selling. If you hold for 12mths then you get a discount on the tax you pay.

        • Davros on 20/08/2015 - 10:54
          +1

          @adzzz: If I bought a gold bullion at $500 an ounce and sold it for $1500, I would declare an income of $1000 on my tax return, and pay any applicable income tax bracket that I fell within.

          Sure you would.
          I am yet to come across a gold bug or blogger yet who says they would pay cap gains on their gold if they sold, instead they all proclaim how smart they are having gold as it avoids these issues.

        • RockyRaccoon on 20/08/2015 - 11:44
          +1

          @Euphemistic: Plus keep in mind that if you buy an asset at say $100 and inflation is 2% each year, then you really are not ahead if you sell it for $102 and pay tax on $1 after concession.

          When you take the 50% concessional rate you cant make adjustments for inflation. On things like Property it works out well when the gain is higher than inflation, on other items like it might actually be a disadvantage if you sell in a down market, which say shares 10 years after 20% inflation that have moved only 10% means you pay CGT on a real loss.

        • SaberX on 20/08/2015 - 19:22
          +4

          @adzzz:

          Umm seems like you either are ignorant of tax law or cherry picking facts but any investment or capital product also has available to them 50% cgt discount. What you are suggesting is because you feel that homes are only for living and not for investment that these people who have worked hard and played the game right do not deserve the cgt 50% discount.

          At the end of the day life is always going to be, so long as we live in a capitalist society about the have and have nots. It rewards generally those who take risks and play the game right e.g.gear up investment strategy.

          On your same notes should those investing in equities also be penalised? Should they be any different? Equities relate to businesses which relate to employment, livelihood etc. Should traders be banned? Should derivatives be banned?

          Life is all about buy and sell higher. If you really think about it everything from your woolies to your shares to your education are all onsold higher. Everything is an investment for someone behind the scenes.

          You need to read Rich Dad Poor Dad by Robert Kiyosaki. You sound like one of those persons baning for the blood of those whp strive to take risks and reap the rewards. I wish yes everyone could have an equal chance but so long as we arent a communist or social land of people what your suggesting is merely cherry picking what suits your scenario at the expense of others.

        • Odin on 20/08/2015 - 19:32
          +7

          @GnarlyKnuckles:

          Honestly gnarlyknuckles, if you're representative of the property investor class of Australia, it's clear why we're in such deep shit.

          You have such a profound ignorance and misunderstanding of even the most basic concepts associated with property / investing in general, and yet you're the only loud supporter of the current arrangement.

          Just on this one post, let me put you straight:

          Capital gain = profit

          CGT = Capital gains tax

          Capital gains tax = tax you owe on the profit you make (same as every single thing in australian life). Which mean if you earn $100,000 and are in the 37c / $1 tax bracket, and you make a profit of $50,000 on a house sale, you pay 0.37 x $50,000 = $18,500 in tax.

          50% CGT discount = literally that. A 50% discount on the tax you pay if you hold the asset for more than 1 year, so in the above example the calculation becomes —-> 0.37 x $50,000 x 50% = $9,250.00 total tax to pay.

          When talking about CGT most australian's know that a 50% reduction was introduced about 15 odd or 20 odd years ago to remove the indexing to inflation (because people thought it was "too hard"). In reality, it caused some big problems.

        • thechemist on 21/08/2015 - 22:28
          +2

          actually 50% discount would apply to you gold bullion if you held it for over a year. Same discount for shares gains as well. Also the house example then if it was you primary residence you would be exempt from CGT all together

      • RockyRaccoon on 20/08/2015 - 02:19
        +1

        I don't believe any one individual is wrong, as people will spend as much as they can borrow.

        Your headline implies something else. - Baby boomers, so have you now changed your position.

        Instead of believing in generation wars that sell papers or promote some media event just look look past the headlines.

        With record low interest rates

        Boomers AND anyone else with some investment capital, will now at best get 3% return on capital if left in the bank.

        So like everyone else they will look at ways to get a higher return

        Property is one of those.

        Property investment can be direct or indirect (thru property funds etc)

        With increasing foreign investmnt, plus immigration the demand for property has oustripped supply. Supply that was constrained by various governments of both political sides at Federal and State levels. Eg Environment, Safety concerns, budget cuts etc

        Foreign investment like others has has an impact. Canada stopped much of this capital coming in to Vancouver, so guess where that now goes.

        Its not just a simple - Blame the Boomers.

        Low interest rates = Higher prices. Conversely if interest rates rise, prices fall. Its all to do with cost of ownership. However as pointed out above, if people from overseas have another (safety) motive for buying real estate costs may not have the same traditional impact

        • adzzz on 20/08/2015 - 02:25
          -1

          Baby Boomers simply spent the maximum amount they were able to borrow from the banks in the years before and just after deregulation. A significantly smaller amount than us younger generations have access to now thus pushing up the prices.

          I don't think I have contradicted myself, I was simply stating that it wasn't an Individual as in "Jim" or "Jane" but rather the attitudes of a generation (the boomers) that have caused the issue.

          Don't get me wrong, had it been in reverse and it was our generation that was in their position 30 years ago, I believe we would have created the same mess. It's just the fact that the policy mix that keeps this untenable situation in place that frustrates me, as true market forces are not left to actually correct to the true value.

        • GnarlyKnuckles on 20/08/2015 - 04:05
          +2

          @adzzz:

          'Baby Boomers simply spent the maximum amount they were able to borrow from the banks in the years before and just after deregulation.'

          That’s a major generalisation, and one that will offend many ‘baby boomers’.

          'A significantly smaller amount than us younger generations have access to now thus pushing up the prices.'

          Reading between the lines a bit, I’m assuming you’re trying to state that you have it harder than previous generations, re your prospects of property ownership. This is absolutely false, but there is not room to explain all the reasons why here.

          'I don't think I have contradicted myself'

          Actually you have. Soz. Not in a ‘serious’ way though, so I don’t reckon you have anything much to worry about in this respect.

          'I was simply stating … the attitudes of a generation (the boomers) that have caused the issue.'

          Thazz what I’m talkin’ about … not your wisest choice of words to post hombre… but lucky for you the boomers are a forgiving lot… they’ve had to learn to be… it was either that or disown their own children.

          'Don't get me wrong, had it been in reverse and it was our generation that was in their position 30 years ago, I believe we would have created the same mess.'

          You just keep reeeeling them in, dontcha Azzza?!?

          'It's just the fact that the policy mix that keeps this untenable situation in place that frustrates me, as true market forces are not left to actually correct to the true value.'

          Reading 'beyond the grammar' a bit in an effort to interpret it, this statement is erroneously overly complicated, while at the same time being completely false by virtue of the fact that it is a major over-simplification. The fact is that true market forces determine price, in any market.

          By definition.

        • RockyRaccoon on 20/08/2015 - 10:21
          +7

          @adzzz: > the attitudes of a generation (the boomers) that have caused the issue.

          Would you care to explain.

          According to many figures sales of new houses are to the younger generations, X and Y rather than Baby boomers. Baby Boomers by virtue of their age already have houses many paid off. Yes they bought at lower prices but what would you expect them to do.
          "hey I bought at a lower price so I will sell at a lower price!" The stupid Auctioneer shouldnt accept any bids over this price!!

          Demographics have changed. I live on the Central Coast whereas all the young ones want to live in the city. Prices here havent moved as much here, but you have to train it to the city 90 minutes each way.

          People of my generation (I'm not declaring which) bought houses and renovated them prior to House Rules/The Block type shows. Many for their own use. They bought houses far away from the City. They didnt have all the fancy new stuff found in every house today. The Baby boomers, or those of the War Baby generation (Who also would be targets of your "hate"), and even less so Prewar (depression era) babies who were more frugal and careful after facing hunger and uncertainty.

          Not all BB's have extra investment properties

          Many of these started work at age 15 so could save for their homes earlier than your generation who has gone thru Uni. Its so hard to draw comparisons on one factor only. These generations only ate out one day week, at best, this was Friday night Fish and chips. Ate basic cuts of meat and potato. Drank water rather than Coke. Walked rather than rode. Hell with no TV/Internet to rush home to, walking home was their entertainment. On the weekend they fixed their 20 year old cars to save money. And with so little entertainment distractions it gave them something to do. No flash new imported cars with inbuilt entertainment systems. Most never needed a Passport as they couldn't afford to travel OS

          The trains were not air conditioned or heated and so on. So when you compare what you have or havent got compare everything

          China wasnt the engine of growth, that affected the rest of the world. We never had the Multinationals we have now. Much of our goods were manufactured locally. People paid much more for goods that today are thrown away when they break.

          As GK says you are playing the stupid media game of blaming other generations for change which you I and everyone else are part of, by just being.

          And many of those BB's and earlier generations dont spend the kids inheritance, they pass it on. Yes a few who the media quote do, but it's not the majority. Getting them to spend is sometimes the hardest things for families to do, I have tried it with those of earlier generations than mine, and they are so set in being frugal, they would put most OzB'ers to shame

        • snook on 21/08/2015 - 14:27
          +5

          @adzzz:

          Baby Boomers simply spent the maximum amount they were able to borrow from the banks

          this so isn't true.

          We grew up with high unemployment, fuel strikes and rising interest rates. Going forward, this was to be our life. We bought at 15.5% in 1987 and we borrowed 75k. This only sounds like a small amount TODAY, but back then it was a conservative amount for the time we were living in. We could have borrowed 95 and bought a better house. If we had, we would have lost it. Interest rates peaked at 18% for us and it pushed us to the wall. We couldn't even afford to keep a second bank account.

          After we got through that, it wasn't something we wanted to relive in a hurry. We didn't buy again until 1998. In 2003, we had lost jobs and had to sell a house to get by. We sold the good one. Our house is a small 2 bed fibro shack with a second hand kitchen. Have been here for 12 years. I’ve never had a nice bathroom, let alone a new one. I’d like to know how many of you could even live like we do? My guess is that it would be totally beneath you.

          We never had great jobs, just very average wages. Growing up, we were told to work and then get a pension at retirement. Where is that pension now? Where will it be in 10 years? These are the things you know nothing about adzz because it doesn't affect you.

          Rather than want for an extravagant house when our position improved, we have bought 3 other properties since 2010 instead. This was the earliest time, in all those years, that we were in a position to borrow money. We did without other things because it's always been hard and we've never had much. We have negligible super and even if we didn’t, there’s absolutely zero guarantee that it will be worth anything going forward. Call us greedy, and we’ll never pay these houses off, we just really need what we have to work for us so that we can continue to do something akin to being alive when we can’t work anymore … and time is getting short. We have struggled all our lives watching real wage growth decline while executives and corporations get richer. No one is going to help us. We are all aware of that. We work hard to help ourselves and we have gone without all our lives to be just that little bit better self supporting on the other end.

          I think the younger generation are holding themselves to ransom with technology and the want to have everything now.

      • burningrage on 20/08/2015 - 13:36
        +3

        This sort of thread smacks bang something like this:

        "Please make the seller his property cheap so I can buy it cheap and if the seller doesn't want to sell it at my price, MAKE HIM/HER!"

        If you are seller, how would you feel about this forced devaluation?

      • frewer on 23/08/2015 - 18:01

        Well stated. I'm glad there are still people like you whom aware of this deception in this world. Sadly, material is all some of us ever needed.

    • [Deactivated] on 21/08/2015 - 16:56
      +1

      I agree with @adzzz . As someone who is benefiting/benefited from this boom, you can't blame the young for not trying "emulate" the actions of those who succeeded. The capital one requires to buy-in these days isn't attainable for most, and working hard doesn't equate to being well-off.

      As for the correction, as much as I'd like there to be one, sadly, I know people who have been saying that for ages. People with very large investments in property. It's been over a decade, they're still saying the same thing.

  • t_c on 20/08/2015 - 05:18
    +10

    Don't worry all we have to do is get 'better jobs' like Joe Hockey said. :S

    • airzone on 20/08/2015 - 14:08
      +6

      And as a bonus, once you have money, you can drive a car :p

      • DeafMutePretender on 21/08/2015 - 02:32
        +6

        And if you climb up the ladder high enough, you'll have access to helicopters.

    • DeafMutePretender on 21/08/2015 - 02:31

      Awesome.

      So.

      Where do I find these "jobs"?

      • Baysew on 21/08/2015 - 19:28

        It's more of a captains pick, rather than finding these jobs.

  • Geewhizz on 20/08/2015 - 06:06
    +10

    So basically what you're looking for is a free meal ticket, the ability to say, "I want it," and to get it without having to work for it? Do you think those 'mum-dad type investors' simply walked into a big flash house because they wanted it there and then?

    They worked for what they got, bought where they could afford to do so, often in undesirable locations, and worked their way up to whereever it is that they are now. They didn't have the luxury of staying with mum and dad well into their adulthood to enable them to save for a deposit. They did without, to scrape it together in many cases. And don't forget that their disposable income was a heck of a lot less than it is now, so that $200 000 they may have paid for their property then was a darn sight more money to them than it is to you now. The vast majority of them then would not have been anywhere CLOSE to being able to consider home ownership at 23. You might just have to struggle for a while like they did.

    • rump parliament on 22/08/2015 - 00:52
      +3

      …the luxury of staying with mum and dad well into their adulthood

      This isn't a choice, it's a result of the huge financial barriers to first home-buyers, the erosion of blue-collar jobs and the godawful rental market. And living with your parents isn't even an option for some people.

      …to struggle for a while like they did

      Back when university tuition was free and it only took 8 years on average to pay off a mortgage, huh.

  • tomleonhart on 20/08/2015 - 08:53
    -6

    My opinion:

    They work hard and they deserve it.

    • one man clan on 20/08/2015 - 09:19
      +7

      Who worked hard? How do you know how hard they worked?

      Does an executive work harder than a cleaner? A nurse? They would certainly earn more.

      It's a false paradigm.

      • tomleonhart on 20/08/2015 - 09:22
        +3

        I don't understand.

        If an executive worked hard for his/her own properties. He/she deserves it.
        If a nurse worked hard for his her/his own properties. She/he deserves it.

        What difference does it make ?

        • one man clan on 20/08/2015 - 10:12
          +14

          It makes a difference when people suggest that the OP doesn't deserve it because he doesn't work hard, or when Joe Hockey suggests people get a better job so they can afford a house. It's the same post from everyone else in this thread who is shitting on the OP.

          "Work harder. Sacrifice. etc. etc."

          There's a limit to how much "hard work" can get you, especially in capital cities. A Registered Nurse earns max about $75k a year. The average house in Sydney now costs over $1 million dollars. The numbers don't add up.

          My point is there's more to it than "gen Y are lazy and won't sacrifice". It's a major issue.

        • tomleonhart on 20/08/2015 - 10:53
          +4

          @one man clan:I never said anything like "Gen Y are lazy and won't sacrifice". I'm a Gen Y and that would be knocking my own face. I however take the positive approach of "If i don't do anything to change my own circumstances, no one else will".

          I don't suggest OP doesn't deserve it but knocking the whole generation because you can't afford something is a lazy excuse.

          I've got friends and clients who work 7 days a week, 14 hours a day and they are gen Y. Others work 2 jobs and run a business. They own 2 -3 properties now but 4 - 5 years ago they were on 45k/year.

          And there's no limit to how much can get for people. Actually there is, people are their own limitation.

        • moar bargains on 20/08/2015 - 13:46
          +5

          @one man clan: Totally agree with this. There's far more to it than "get a better job, work harder, save more, go without".
          There IS a problem, but anyone trying to raise it gets shut down because those who don't experience it think the problem is with the people not the system.
          Blaming and generalising entire generations doesn't help, and neither generation is innocent of that.

      • centrelink on 20/08/2015 - 17:02
        +3

        Or did they work smart? Why does working smart get overlooked? I work a few hours a month and still make 6 figures because I used my brain and figured out I can use automation to do the work for me.

        • tomleonhart on 21/08/2015 - 08:23
          +3

          Yes. We all know you're a genius.

          However not everyone is a genius like you. Working hard is an essential requirements for most people/entrepreneur. My business partner who earns 7 figures works really hard and long hours. Does he work smart? Depends. Does he work hard? Yes

          People can deny working hard all they want but the truth is that nothing is easy. Unless you're a genius like spn.

        • centrelink on 21/08/2015 - 15:21

          @tomleonhart:
          Gotta love the sarcastic. You don't need to be a genius at all. I rather do nothing and make money than work hard and make money. I worked hard once, thought it was the biggest waste of time.

          People just gets so offended by good advice all the time.

        • tomleonhart on 21/08/2015 - 15:49

          @spn: believe me or not that's not a sarcastic comment. I admire people who come up with idea that enables them to do nothing but earn good money.

        • centrelink on 21/08/2015 - 15:58
          +1

          @tomleonhart: yeah.. it did sound pretty sarcastic but here is something that Bill Gates said that inspired me to go this path.

          “I choose a lazy person to do a hard job. Because a lazy person will find an easy way to do it.”

      • snook on 21/08/2015 - 12:41
        +1

        It is common knowledge that executive pay has increased by something like 200x since that time so this isn't relevant. Executive pay today is something that pisses me off. There was a time when business owners would take less money if business wasn't going well. Today, they tell their staff that THEY must take cuts to save their jobs or they just lay them off.

        Life is very different today than how it was then. More than mums and dads in their 50s, I blame this executive style of greed. When someone can spend over a mill on a house, pull it down, build a new one and rent it out, a certain sort of group here have too much money. The government helped them and it's not mum and dad investors. That term is for a normal family with wage income who have 'an' investment property, usually modest.

    • Odin on 20/08/2015 - 19:39
      +1

      My opinion:

      Our idiotic policies (like stamp duty, no land tax, 50% CGT discount, low interest rates, lax lending standards, easy loans, no deposit loans, overfocus on investors, vested interests in positions of power [like property moguls being politicians], lack of stopping foreign buying, and on and on) are rewarding ignorant, greedy, and stupid speculators.

      There's no benefit to being intelligent wise investor when the politicians and power brokers want to line their own pockets, and the collective momentum of the greed of the baby boomers keeps the whole thing propped up while they mortgage the future of the younger generations.

      • tomleonhart on 21/08/2015 - 00:24
        +1

        Yup. By all means blame the system.

        The thread was set up to blame the generation which took advantage of the system. Wrong target.

        • DeafMutePretender on 21/08/2015 - 02:34
          +2

          Know your enemy.

          Who set up the "system"? Who benefits from the "system"/status quo?

          If we can answer those questions, then we know who to go after with our guillotines.

        • tomleonhart on 21/08/2015 - 08:27
          +1

          @DeafMutePretender: Who set up the system ? That's a longggggggggggggggggggggggggggggggggggggggg and complicated answer.

          Who benefits from the system ? Myself, my friends and many of my clients (mostly Gen Y). And many more people out there.

  • geek001 on 20/08/2015 - 10:03
    +4

    I think the first thing you need to learn, if you haven't already is life is never fair. It is unproductive to complain about a good looking person just because you are fugly.

    I know this is cliche, but every problem is an opportunity. If you can't beat them, join them. People has been saying house price is too high for as long as I can remember. If you believe house price will continue to rise, instead of complaining about it, why not find a way to secure a property as well? Maybe get together with some family members and invest in a block of land?

    Why do people like property? Because it gives good returns on your money. Let me give you an example, I bought 2 properties for around $620,000 in 2007, before the stock market crashed, 20% deposit, 80% borrowed from the bank. When the stock market crashed and people I know bailed out of the property market, I held on to mine. 8 years later, my properties are now worth around $1.1mil. My 20% deposit of around $125k is now worth $605k. I would say this is based on an average property price rise, as I didn't buy in any of highly sought after areas. It could have been much much more lucrative. That is a return of close to 500% over 8 years. The properties are slightly negatively geared, as the rent covers the bulk of the maintenance and interest costs. So, take out the money I had to put in, it is still around 300% return over 8 years on my initial deposit of $125k. Much better than leaving my money in the bank I would say.

    Note: This is not a brag post, as professional properties investors will lol at my pitiful returns.

    • RockyRaccoon on 20/08/2015 - 10:38
      +2

      The real point is you took a risk.

      The GFC might have blown up in your face.

      You took a punt and it paid off.

      Many think that getting what you want doesnt involve taking a risk

      Ok when Mom and dad would buy you anything you wanted, but now when grown up you have to do it yourself.

      Its never been easy. People who bought in 1988 and had to sell when interest rates reached 17% found that out.

      Like I said if the market crashed with the GFC none of the wingers would have helped you out.

      • Odin on 20/08/2015 - 19:40
        -1

        I think the point is he got lucky

        • GameChanger on 20/08/2015 - 22:15
          +1

          He didn't get lucky, have a look at the housing data.

          After a global financial crisis its almost the best time to buy property, everyone I know who bought in 2009/2010 have made massive profits.

        • Evil-Elmo on 21/08/2015 - 15:46

          @gamechanger:
          I bought in 2009 and have not made massive profits. Once you take inflation and improvements out of the equation I think we'd be lucky to break even. Depends on the city you're in. Sydney and Melbourne, yes. Elsewhere, not so much.

        • GameChanger on 21/08/2015 - 15:52

          @Evil-Elmo:

          I'm in Perth and even with our mining boom deflating prices are still profitable.

  • DealzEddy123 on 20/08/2015 - 10:07

    agree with the geeky guy above.

    as an owner I do not want the prices to fall. There will be always be winner-and losers in a market,it's just a matter of who the government sees who should be the winners.

    I don't see any reason baby-boomers are less deserving of the younger generation to be making money.

    The younger generation just needs to make money in other areas or look at other places to live.

  • geek001 on 20/08/2015 - 10:22
    +3

    As a side note, every generation has their own problems. I envy how Gen Ys can make insane amounts of money by doing what they are passionate about. When I was younger, the only way to make good money is by going to university and get a good job even if it is not what you love. Now, you can even make good money by having a good time, like travelling or gaming.

    • DealzEddy123 on 20/08/2015 - 13:18
      +1

      exactly. the ones who go to uni thinking a degree = job is stuck in a mindset of a previous generation, thus many are struggling to find jobs they are happy with

  • Euphemistic on 20/08/2015 - 10:24
    +4

    All this talk about how unaffordable houses are has been going on for decades, I remember my parents talking about it in the late 80's (at least sometime when I was in teens). It's on a cycle and we are at a bit of an extra peak at the moment fuelled by low interest rates and media hype.

  • lost69 on 20/08/2015 - 10:53

    And everyone ignores the fact that we need way way more low income housing. If you are on minimum wage or below (or even slightly above) then rent is stupidly high. If we have Medicare for all, we should have cheap housing for all and you shouldn't be spending 50% of your net income on rent. And no living in the arse end of nowhere with the kangaroos and commuting 3hrs day all up is not living nor is saving a stupid amount of money for a pile of bricks and then spending decades paying it off.

  • johninmelb on 20/08/2015 - 12:01
    +1

    I'm a baby boomer and never had it easy.

    Retired this year, not enough super for a reasonable lifestyle, and get a part pension.

    Bought my first house in 1979, had no carpet or curtains for the first year, and minimal furniture. I made do. Gradually got more things as I could afford them. But the worst disaster for me was mortgage rates going up to 18%. That nearly killed a lot of people. I hung on, and got through it. After rates started going down, I kept paying the higher monthly payment as I had factored it into my budget, and paid my house off in 9 years.

    I now live in a unit, which I own. If I didn't have that, I'd be up sxxt creek I reckon. I am managing on savings, and part pension at the moment, and about to start income stream from my super.

    I haven't had a deprived life, with many trips overseas etc which I saved for. I don't change my car very often, and don't have the latest and greatest of everything. I lead a fairly simple life - and I am single, so that helps.

    I do often wish that I had bought an investment property or two when I could have managed it, but I didn't. I've been too conservative when it comes to money. We didn't have much when I was growing up, so I am careful, though not stingy. If I want something, I buy it - within reason of course. I am not stupid.

    Young people are doing it tough re housing, I think we can all see that. However, so many young people only live in the moment. They spend every cent they earn and then some. Well, I say enjoy your life, but don't come whinging to me, when you can't buy a house or whatever. As others have pointed out, every generation has had it tough.

    • one man clan on 20/08/2015 - 12:54
      +8

      That's an interesting anecdote but statistically, it is harder to buy. Basically twice as hard.

      https://upload.wikimedia.org/wikipedia/commons/6/65/Melbourn…

      When you purchased, the average house price was 3.7x the median salary (using Melbourne as an example). It's now 7.6x, and peaked at 8.1 in 2011.

      • DealzEddy123 on 20/08/2015 - 13:19

        what has the population growth been since that time?

        https://upload.wikimedia.org/wikipedia/commons/thumb/8/82/Me…

        seems like population has doubled too

        if the supply of housing hasn't matched the population growth, that can also be acontributing factor. I'm sure housing has increased in Melbourne / Sydney though.

        People just whinge because they refuse to buy on the outskirts of Melb/Syd, when actually there is affordable housing.

        • one man clan on 20/08/2015 - 13:31
          +1

          What has population growth got to do with it? I'm responding to the common answer which is always "work hard, I struggled too" when it's patently twice as hard.

        • DealzEddy123 on 20/08/2015 - 13:34

          @one man clan: ah yeh true. sorry I was providing more reasons for the growth for no reason.

          I kinda just clicked your link, didn't read anything else and rambled on about my theories lol

      • RockyRaccoon on 20/08/2015 - 13:31
        +4

        OMC

        You make a valid point, but like all statistics it isnt always 2 dimensional

        Affordability is a factor of price X Cost of money

        So 2X the capital cost is the same if the interest on the loan is half the price.

        Plus its hard to take a point in time.

        John Bought with interest rates at 9.13% vs today its 5.21%

        Not double but getting close to the average house price difference between the two you mentioned.

        And if you use John's point that in 1989 the interest rates were 18% then someone buying in 1989 would be twice as worse off.

        (Actually using the same table it was 17%)

        http://www.loansense.com.au/historical-rates.html

        So dont always read the headlines and think you are informed. Our media wants to create drama as it sells their product. Journalists tell the truth 1.001% more often than a politician 😄

        • DealzEddy123 on 20/08/2015 - 13:36

          very good point

        • RockyRaccoon on 20/08/2015 - 13:39
          +1

          @edwinlin88: Another dimension that is forgotten is income tax rates. Higher in 1979 for many people vs tax rates today, affecting net income.

          Now thats a little more complex for my brain to fully calculate.

          If someone wants to do it here is where they can be found.

          https://atotaxrates.info/individual-tax-rates-resident/pre-2…

          Plus family welfare benefits differences.

          Again too complex for me and the average journalist as well

        • tonyjzx on 20/08/2015 - 15:39

          9% interest?

          I think it got as bad as 13? 17%?

        • chillin222 on 22/08/2015 - 08:31

          This is a terrible point.

          Even if interest rates were 18% at the beginning of a loan in 1989, they quickly fell. You need to look at the average rate paid over the whole loan term in order to calculate affordability relative to today.

        • RockyRaccoon on 22/08/2015 - 10:06

          @chillin222:>

          This is a terrible point.

          Quickly fell? The problem is that you haven't even looked. If you want to argue a point make sure you know what you are arguing.

          My argument was based on John's 9% rate not the 18% rate. i mentioned that the 18% rate as that was a case that the rates went upto AFTER he bought.

          I also backed up my argument to a link with all the historic data on interest rates

          Lets take the time period 1979 - 1995 15 years on a 30 year loan. No quick fall then.

          1979 - 9.13%
          It never got below this rate until 1993 when it was 8.75%
          Then it rose/fell again until Nov 1996 when again got below 9%
          thats not even 15 years its 17 years

          This not even allowing for the rates of greater than 12% for 10 years from 1981 thru to 1991

          So my point would even be stronger not "terrible"

          Dont believe your media writers many who only had pocket money when people like John bought, and are too lazy to even look at true comparisons

          House prices are based on people's ability to buy.

          Low interest rates = higher prices vs Higher interest = lower prices. If you dont believe me ask the Reserve bank. They have issued various warnings about buying when rates are at 50 year lows

        • johninmelb on 22/08/2015 - 20:29

          @RockyRaccoon:

          Unfortunately, I no longer have all the paperwork for this house. Way too long ago.

          I cannot remember now how much I borrowed. It is complicated by the fact that I had bought the land some years before (new estate in Endeavour Hills), and was paying it off.

          I had the house built, and all up with extras came to around $25,000 as I recall. It was not a big house, around 10 squares. So I had to borrow enough to pay for the house construction, and pay out the land contract. Maybe someone could tell us what $25k in 1979 is worth in 2015 dollars.

          I took out a loan with Hotham Permanent Building Society. However I was not able to borrow enough, as repayments had to be less than one third of your salary. I then had to take out a second mortgage with the Vic State Government's Housing Finance Trust, to make up the balance. The two loans meant that I was technically paying out over one third of my salary every month.

          The loans started in July 1979. I paid out the Building Society loan in about April/May of 1988, and the HFT loan in November 1991. I sold the house in November 1992.

          I seem to recall Building Society loan rates were higher than the banks. I think my loan started at 9.5% when that historical table says 9.13% for banks. And although that table says bank interest rates did not reach 18%, I was briefly paying 18% on my loan at one point. I was lucky in that I was working for Telecom Australia (Telstra) and managed to get two promotions, and occasional pay rises to help meet the increasing mortgage payments. I also had a good boss who gave me a bit of overtime occasionally to help me out.

          I will also add that wherever I could, ie, overtime payments etc, I paid more than the minimum loan repayment, to try and nibble away at the principal. That meant that more of my monthly payment came off the principal, and reduced the interest bill faster.

        • RockyRaccoon on 22/08/2015 - 21:39

          @johninmelb: I understand the benchmark rate isnt what everyone will pay, but it gives an indication of the rates at the time. The problem most younger people have is they have no understanding of the historical issues. Just that the price of the house has increased, and as Chillin believes, things like high interest rates "quickly" fell.

          The real issue is that they need someone to blame. Rather than realise that for many generations getting started wasn't easy. They weren't around when their parents did it tough as well

        • smithydll on 23/08/2015 - 15:56

          @johninmelb:

          $25k in 1979 is $110k in 2014. It is not possible to build a house for that now. You can get the cheap prices quoted by builders if you already have a perfectly level lot, and then the inclusions are minimal. It is true credit is much easier to get now, but that just means you really do need the extra credit. $200k is closer to the mark, plus land which is even more.

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