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Damn, I would assume houses must be much cheaper in Australia than in the US? Or only the very very rich can afford to buy their own home? (Or is it amortized o

Damn, I would assume houses must be much cheaper in Australia than in the US? Or only the very very rich can afford to buy their own home? (Or is it amortized over more than 5 years, you just have a balloon you need to refinance?) In the US, where 30-year mortgages are standard, the LARGE majority of homeowners would not be able to afford payments on their home amortized over only 5 years.

firecall 5y ago
I dont have information that can compare Apples to Apples as such, as in US vs AU values. But I can say that prices are rising rapidly here in Australia. The already expensive Sydney market rose on average ~$1200 a day over the last quarter! Melbourne isn't far behind! We too have low interest rates! Whats not clear is how people are paying for the houses. Where is the money for deposits coming from, and how are they servicing such huge loans? Dual incomes and parents assisting would account for a lot of it. But what happens if/when the parents need the money back and the DINKies decide to have children and either lose the dual income or get slugged with child care fees! https://www.theguardian.com/business/grogonomics/2021/sep/16/australias-house-prices-are-disconnected-from-reality-and-the-rba-wants-you-to-know-it-isnt-to-blame https://www.theguardian.com/business/grogonomics/2021/sep/16...
perl4ever 5y ago
I don't know about Australia, but it sounds like the comment you responded is saying that mortgages there are something like a US 5/1 ARM, not that they are paid off in five years. That is, the interest rate is guaranteed for five years and then it periodically adjusts.
- xyzzy123 5y ago
  Yes, this.
foldingmoney 5y ago
>Damn, I would assume houses must be much cheaper in Australia than in the US? The median home price in Australia is about US$725k. So no.
- perl4ever 5y ago
  I looked for some official statistics, and while I'm not sure if I'm in the right place, it paints a rather different picture from yours. The figure for housing costs implies a typical home value of more like 300K USD or 400K AUD. Also, if this is accurate, Australia is more of a nation of homeowners than of renters. https://www.abs.gov.au/statistics/people/housing/housing-occupancy-and-costs/latest-release https://www.abs.gov.au/statistics/people/housing/housing-occ... "66% of Australian households owned their own home with or without a mortgage. 32% of households rented their home. Average weekly housing costs were: $484 for owners with a mortgage; $53 for owners without a mortgage; and $366 for renters." 484 AUD/week = 1500 USD/month 366 AUD/week = 1150 USD/month It also says housing costs for renters have increased 51% in 20 years (to 2018) which is an average of 2% annually. "housing costs are defined as the sum of rent payments; rate payments (water and general); and mortgage or unsecured loan payments (if the initial purpose of the loan was primarily to buy, add, or alter the dwelling)"
  - throwawaythekey 5y ago
    Nice data but that it's from 2018 before the covid boom... > The nation's median property price lifted by 1.5 per cent last month (to $666,514) https://www.abc.net.au/news/2021-09-01/property-housing-corelogic-house-prices-rise/100423896 https://www.abc.net.au/news/2021-09-01/property-housing-core... That's a >50% increase over ~3 years and from the article 20% over the last year.
    - perl4ever 5y ago
      'according to the latest CoreLogic data.' This appears to be a data provider oriented towards entities with large real estate portfolios, and they specifically say on their website that their "hedonic" index is not meant for affordability calculations, for what that's worth. It's difficult for me to tell which index is in the article, but the note about the missing data under the chart implies to me that the article is (inappropriately) using the hedonic index. I wonder how much difference it makes. 'this month's figures from CoreLogic did not include Perth or regional Western Australia "pending the resolution of a divergence from other housing market measures in WA" ' "Rather than relying solely on transacted sale prices to provide a measure of housing market conditions, the CoreLogic Daily Home Value Index is based on a ‘hedonic’ methodology which includes the attributes of properties that are transacting as part of the analysis." https://www.corelogic.com.au/research/monthly-indices https://www.corelogic.com.au/research/monthly-indices "The fact that median or other percentile based series cannot be used to track changes in value of a market portfolio does not make them wrong: it is simply that they have different applications than hedonic indices. For example, median price series are useful in answering economic policy questions relating to housing affordability." https://www.corelogic.com.au/research/types-of-indices https://www.corelogic.com.au/research/types-of-indices
sanp 5y ago
I think the rate is fixed for 5 years and then readjusted for another 5 years. The terms of the loan is a lot longer
postingawayonhn 5y ago
30 year mortgages are standard I Australia too. After your initial fixed interest period expires you will then pay the current floating rates or chose to refix for another period (of up to 5 years) at the current interest rates.
nl 5y ago
The rate is fixed for 5 years. The mortgage is normally 30 years. (Australian housing markets in major cities are some of the most expensive in the world.)

firecall 5y ago

I dont have information that can compare Apples to Apples as such, as in US vs AU values. But I can say that prices are rising rapidly here in Australia. The already expensive Sydney market rose on average ~$1200 a day over the last quarter! Melbourne isn't far behind! We too have low interest rates! Whats not clear is how people are paying for the houses. Where is the money for deposits coming from, and how are they servicing such huge loans? Dual incomes and parents assisting would account for a lot of it. But what happens if/when the parents need the money back and the DINKies decide to have children and either lose the dual income or get slugged with child care fees! https://www.theguardian.com/business/grogonomics/2021/sep/16/australias-house-prices-are-disconnected-from-reality-and-the-rba-wants-you-to-know-it-isnt-to-blame https://www.theguardian.com/business/grogonomics/2021/sep/16...

perl4ever 5y ago

I don't know about Australia, but it sounds like the comment you responded is saying that mortgages there are something like a US 5/1 ARM, not that they are paid off in five years. That is, the interest rate is guaranteed for five years and then it periodically adjusts.

xyzzy123 5y ago
Yes, this.

foldingmoney 5y ago

>Damn, I would assume houses must be much cheaper in Australia than in the US? The median home price in Australia is about US$725k. So no.

perl4ever 5y ago
I looked for some official statistics, and while I'm not sure if I'm in the right place, it paints a rather different picture from yours. The figure for housing costs implies a typical home value of more like 300K USD or 400K AUD. Also, if this is accurate, Australia is more of a nation of homeowners than of renters. https://www.abs.gov.au/statistics/people/housing/housing-occupancy-and-costs/latest-release https://www.abs.gov.au/statistics/people/housing/housing-occ... "66% of Australian households owned their own home with or without a mortgage. 32% of households rented their home. Average weekly housing costs were: $484 for owners with a mortgage; $53 for owners without a mortgage; and $366 for renters." 484 AUD/week = 1500 USD/month 366 AUD/week = 1150 USD/month It also says housing costs for renters have increased 51% in 20 years (to 2018) which is an average of 2% annually. "housing costs are defined as the sum of rent payments; rate payments (water and general); and mortgage or unsecured loan payments (if the initial purpose of the loan was primarily to buy, add, or alter the dwelling)"
- throwawaythekey 5y ago
  Nice data but that it's from 2018 before the covid boom... > The nation's median property price lifted by 1.5 per cent last month (to $666,514) https://www.abc.net.au/news/2021-09-01/property-housing-corelogic-house-prices-rise/100423896 https://www.abc.net.au/news/2021-09-01/property-housing-core... That's a >50% increase over ~3 years and from the article 20% over the last year.
  - perl4ever 5y ago
    'according to the latest CoreLogic data.' This appears to be a data provider oriented towards entities with large real estate portfolios, and they specifically say on their website that their "hedonic" index is not meant for affordability calculations, for what that's worth. It's difficult for me to tell which index is in the article, but the note about the missing data under the chart implies to me that the article is (inappropriately) using the hedonic index. I wonder how much difference it makes. 'this month's figures from CoreLogic did not include Perth or regional Western Australia "pending the resolution of a divergence from other housing market measures in WA" ' "Rather than relying solely on transacted sale prices to provide a measure of housing market conditions, the CoreLogic Daily Home Value Index is based on a ‘hedonic’ methodology which includes the attributes of properties that are transacting as part of the analysis." https://www.corelogic.com.au/research/monthly-indices https://www.corelogic.com.au/research/monthly-indices "The fact that median or other percentile based series cannot be used to track changes in value of a market portfolio does not make them wrong: it is simply that they have different applications than hedonic indices. For example, median price series are useful in answering economic policy questions relating to housing affordability." https://www.corelogic.com.au/research/types-of-indices https://www.corelogic.com.au/research/types-of-indices

sanp 5y ago

I think the rate is fixed for 5 years and then readjusted for another 5 years. The terms of the loan is a lot longer

postingawayonhn 5y ago

30 year mortgages are standard I Australia too. After your initial fixed interest period expires you will then pay the current floating rates or chose to refix for another period (of up to 5 years) at the current interest rates.

nl 5y ago

The rate is fixed for 5 years. The mortgage is normally 30 years. (Australian housing markets in major cities are some of the most expensive in the world.)