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re: best places to buy propert Ohhhhhh, for crying out...

  1. bbm
    2,264 Posts.
    re: best places to buy propert Ohhhhhh, for crying out loud!

    Don't people get it?

    Yes, property is a good long term investment. Very rarely you will lose if you hold for the long term.

    This is not the issue at the moment.

    The issue is that people who buy now or have done so in the last couple of years will not be able to make a quick profit like we saw in the late 1990's and early 2000's.......Why?.... It is overvalued based on prices, mortgages, rents and average weekly earnings.

    It is so rediculous for people to make comments without knowing the statistics or doing their own analysis. People who have a vested interest in property talk it up and those without talk it down.

    I, along with a few others base the current state of play on number crunching analysis because it eliminates any emotional bias.

    Try it, you may be surprised with the results.

    Here is an extract of one of my earlier posts detailing the scenario.

    The following analysis is based on net average weekly earnings and interest rates which were current at the time the data was used.

    Average Home Loan:
    1989 - $45000
    1996 - $100000
    2000 - $132000
    2005 - $210000

    Net Average Weekly Earnings:
    1989 - $387
    1996 - $512
    2000 - $610
    2005 - $729

    Major Bank Interest Rates:
    1989 - 18%
    1996 - 8%
    2000 - 8%
    2005 - 7.32%

    Loan Term: 25 years

    Weekly Repayments:
    1989 - $157
    1996 - $178
    2000 - $235
    2005 - $353

    Debt Servicing Ratio (ratio of repayments to NAWE):
    1989 - 41%
    1996 - 35%
    2000 - 39%
    2005 - 48%

    This to me does not look like housing is affardable right now. Notice how in 2000 the debt servicing ratio was closely approaching what it was in 1989. It would have achieved this target by 2001.

    It should also be noted that for every 0.25% increase in interest rates the debt servicing ratio increases by 1%.

    Sooner or later these figures will filter through to the average Joe.

    Once again, I repeat.....property is a good long term investment.

    There will be better buying in the years to come.

    Cheers all.
 
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