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House price crisis


Melbpom

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Just out of interest I took a look at the first house we bought in 1989 for a grand total of $137,000. With the wonders of internet, you can look up anything. So at the time the average weekly wage was $26,000 and interest rates went high as 17%. So with a very basic calculation 90% of one wage covered the interest bill.

Today the same house is estimated at being worth between $690,000 and $870,000 so let's take an average of $780,000 (bit of a stretch considering it's a rental now). Take an average weekly wage of $60,000 and interest rates of 5%. Again by the same basic calculation 65% of one wage covers the interest bill.

Basically it's never easy.

 

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19 minutes ago, Melbpom said:

Just out of interest I took a look at the first house we bought in 1989 for a grand total of $137,000. With the wonders of internet, you can look up anything. So at the time the average weekly wage was $26,000 and interest rates went high as 17%. So with a very basic calculation 90% of one wage covered the interest bill.

Today the same house is estimated at being worth between $690,000 and $870,000 so let's take an average of $780,000 (bit of a stretch considering it's a rental now). Take an average weekly wage of $60,000 and interest rates of 5%. Again by the same basic calculation 65% of one wage covers the interest bill.

Basically it's never easy.

 

That was a particularly nasty period - I was quite young - but I remember my parents hanging on for dear life. I don't think they were that high for that long though?

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12 hours ago, newjez said:

That was a particularly nasty period - I was quite young - but I remember my parents hanging on for dear life. I don't think they were that high for that long though?

We bought our current house in 1989 with a  variable interest rate of 17.9%.  In 1996 we were still paying 10.8%.  I think it dropped below 10% in '97.  (This was in Oz).

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58 minutes ago, Skani said:

We bought our current house in 1989 with a  variable interest rate of 17.9%.  In 1996 we were still paying 10.8%.  I think it dropped below 10% in '97.  (This was in Oz).

Yes I think you are right. Low rates have only been a phenomenon for the last twenty years. God knows what would happen if they rose again.

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