Melbourne Historical Property Price Analysis And Financial Planning

Melbourne Historical Property Price Analysis

Melbourne historical property price is a relatively used for identifying the growth in property price. This detection of the growth in property price is a relatively helpful for deriving and preparing the financial plan for the client who is intended to achieve her Austrian Dream by purchasing the house. Adequate calculation of 2-year price average is used to calculate the price change in property of Melbourne to detect the future growth rate. In addition, average value of price change is taken for deriving the future 20-year property price (Rogers, Lee & Yan, 2015). 

The above figure relatively helps in depicting the overall price change of property over 20 years, which is essential to understand the level of investment that will be conducted by the client. The property prices relatively increased from 684,000 to 2,370,800 in 20 years, which relatively indicates the need of adequate investments by the client to buy the house in Melbourne.

Year	Weekly Income	Yearly Income Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	Two Year Average	Price change
1994–95	$                  1,340	$           69,680
1995–96	$                  1,297	$           67,444	68,562
1996–97	$                  1,342	$           69,784	68,614	0.08%
1997–98	$                  1,400	$           72,800	71,292	3.90%
1999–2000	$                  1,534	$           79,768	76,284	7.00%
2000–01	$                  1,475	$           76,700	78,234	2.56%
2002–03	$                  1,525	$           79,300	78,000	-0.30%
2003–04(a)	$                  1,582	$           82,264	80,782	3.57%
2005–06(a)	$                  1,681	$           87,412	84,838	5.02%
2007–08(a)	$                  1,967	$         102,284	94,848	11.80%
2009–10(a)	$                  1,870	$           97,240	99,762	5.18%
2011–12(a)	$                  1,914	$           99,528	98,384	-1.38%
2013–14(a)	$                  2,016	$         104,832	102,180	3.86%
2015–16(a)	$                  2,055	$         106,860	105,846	3.59%
			Average	3.74%
			Inflation	1.97%
			Growth in Income	5.71%

The table relatively holds the 20-year data of income that is generated by salaried individuals in Melbourne. This calculation would eventually help in evaluating the level of increment in income that will obtain by the client in future 20 years. The 2-year average calculation is conducted to determine the average increment in income, while the difference is used to detect the price change between the averages. Moreover, the price change average is taken into consideration as an incremental growth rate for the income generated in Melbourne for next 20 years. In addition, the inflation rate is also added to the income group which is essential as inflation plays a vital role in raising the level of income for citizens (Jacobs, 2015). 

With the help of the graph relevant increment in income of the client can be identified, which is essential to determine the overall savings that will be conducted to achieve her Austrian dream.  The level of income as a relatively risen from $80,000 to 242,850 in 20-year time, which would eventually help in buying the property as soon as adequate savings are conducted.

Particulars	Monthly	Yearly
Salary	$      6,666.67	$   80,000.00
Expenses on Amenities	$      1,750.00	$   21,000.00
Expenses on rent	$      1,350.00	$   16,200.00
Total expense	$      3,100.00	$   37,200.00
Tax		$17,547.00
Savings	$      2,104.42	$   25,253.00

Particulars	Value
Max LVR	80%
Property Value	$  376,265.00
Loan From Bank	$  301,012.00
Deposit to bank	$    75,253.00

The calculations relatively help in identifying the overall Monthly and yearly income of the client which would be essential to support the mortgage for the house. The evaluation directly indicated that total savings of $2,104.42 on monthly basis and $25,253 on daily basis is saved by the client.  this in accumulating a property value of $376,265 with a LVR of 80%.

Income Growth Analysis

With the help of adequate calculation relevant properties that can be loaned by the client is effectively evaluated. Moreover, there are two types of loan that is issued by bank first is without insurance premium and the second is with insurance premium. Both the loan need to comply with different types of LVR, which demanded for the borrower (Jacobs, 2015).

Particulars (Without Insurance premium)	Value
Max LVR	80%
Property Value	$  370,320.00
Loan From Bank	$  296,256.00
Deposit to bank	$    74,064.00
Stamp Duty	$      1,189.00

The above table relatively represent the maximum Property value of $320,320 that can be bought by the client with an LVR of 80%, deposit of $74,064 and stamp duty of $1,189.

Particulars (With Insurance premium)	Value
Max LVR	99%
Property Value	$  780,000.00
Loan From Bank	$  769,350.00
Deposit to bank	$    10,650.00
Stamp Duty	$    41,870.00
Insurance Premium	$    22,733.00

From the calculation it could be detected that the client can obtain a f Property value of $780,000 with an LVR of 99%, deposit of $10,650, stamp duty of $41,870 and Insurance premium of $22,733.

Year	Property price	Savings Target	5% upfront	Insurance premium	Stamp duty	Amount
0	$      684,000	$        75,253	$   34,200	$                20,222	$   31,868	$ (11,037)
1	$      727,860	$      102,719	$   36,393	$                21,519	$   13,446	$   31,362
2	$      774,533	$      132,553	$   38,727	$                22,899	$   14,949	$   55,979
3	$      824,199	$      164,583	$   41,210	$                24,367	$   16,549	$   82,457
4	$      877,049	$      199,079	$   43,852	$                25,929	$   18,251	$ 111,045
5	$      933,288	$      236,213	$   46,664	$                27,592	$   20,063	$ 141,893
6	$      993,134	$      276,168	$   49,657	$                29,361	$   21,991	$ 175,159
7	$   1,056,817	$      319,137	$   52,841	$                31,244	$   24,042	$ 211,010
8	$   1,124,584	$      365,328	$   56,229	$                33,248	$   26,225	$ 249,626
9	$   1,196,696	$      414,957	$   59,835	$                35,379	$   28,548	$ 291,195

Year	Property price	Savings Target	20% upfront	Stamp duty	Difference
0	$      684,000	$        75,253	$              136,800	$   31,868	$      (93,415)
1	$      727,860	$      102,719	$              145,572	$   13,446	$      (56,299)
2	$      774,533	$      132,553	$              154,907	$   14,949	$      (37,303)
3	$      824,199	$      164,583	$              164,840	$   16,549	$      (16,806)
4	$      877,049	$      199,079	$              175,410	$   18,251	$          5,417
5	$      933,288	$      236,213	$              186,658	$   20,063	$        29,492
6	$      993,134	$      276,168	$              198,627	$   21,991	$        55,550
7	$   1,056,817	$      319,137	$              211,363	$   24,042	$        83,732
8	$   1,124,584	$      365,328	$              224,917	$   26,225	$      114,186
9	$   1,196,696	$      414,957	$              239,339	$   28,548	$      147,070
10	$   1,273,432	$      468,258	$              254,686	$   31,020	$      182,552
11	$   1,355,088	$      525,475	$              271,018	$   33,650	$      220,807
12	$   1,441,981	$      586,868	$              288,396	$   36,449	$      262,023
13	$   1,534,446	$      652,715	$              306,889	$   39,428	$      306,399
14	$   1,632,839	$      723,308	$              326,568	$   42,597	$      354,143
15	$   1,737,542	$      798,958	$              347,508	$   45,970	$      405,480
16	$   1,848,959	$      879,994	$              369,792	$   49,559	$      460,644
17	$   1,967,521	$      966,765	$              393,504	$   53,378	$      519,884
18	$   2,093,684	$   1,059,641	$              418,737	$   57,442	$      583,463
19	$   2,227,938	$   1,159,014	$              445,588	$   61,766	$      651,660
20	$   2,370,801	$   1,265,300	$              474,160	$   66,368	$      724,771

Both the tables relatively represent the minimum years that needs to be taken by the client to purchase the property with an upfront payment of 20% and upfront payment of 5%.  The calculation relatively represents different level of expenses and income that will be incurred by the client before purchasing and after purchasing the property. From the overall calculation it is detected that with an upfront payment of 5% the property can be bought within 2 years of savings. On the other hand, with an upfront payment of 20% the property can only be bought in 4th year after the client has accumulated adequate savings (Rogers & Dufty-Jones, 2015).

	Property value	$      774,533
	Loan amount	$      735,806
Year	Interest rate	Mortgage Payment	Saved	Savings
3	3.39%	$24,944	$    105,373	$ 80,429
4	3.39%	$24,944	$    132,695	$107,751
5	3.39%	$24,944	$    163,071	$138,127
6	7.00%	$51,506	$    196,694	$145,188

The mortgage payment condition of the client is relatively evaluated in the above table, changes in interest rate would not affect the ability of the client to successfully pay her mortgages. The savings that is conducted by the client is relatively adequate where the mortgage payment can be conducted regardless of the increment in interest rates. The calculation relatively represents that increasing the interest from 3.39% to 7% would eventually increase the mortgage payment from $24,044 to $51,506. However, this will not impact the Savings and the earnings that is obtained by the client, where she will smoothly conduct her activities (Akimov, Stevenson & Young, 2015).

The negative impact of job loss, increment in interest rate more than 8%, economic crisis and income loss would relevantly result in the failure of the drafted financial plan for the client. The above measures would directly hinder the progress of the client in maintaining adequate income to support her Austrian dream of owning a house in Melbourne. However, on other circumstances the financial plan would eventually allow the client to effectively support her operations and maintain the property (Kohler & Van, 2015). The financial plan address for the client comprises of all the relevant expenses, income, mortgage payments, and savings that will be conducted over the period of her life.

Reference and Bibliography:

Abs.gov.au. (2018). Ato.gov.au. Retrieved 27 May 2018, from https://www.ato.gov.au/calculators-and-tools/simple-tax-calculator/

Akimov, A., Stevenson, S., & Young, J. (2015). Synchronisation and commonalities in metropolitan housing market cycles. Urban Studies, 52(9), 1665-1682.

Colic-Peisker, V., Ong, R., & Wood, G. (2015). Asset poverty, precarious housing and ontological security in older age: an Australian case study. International Journal of Housing Policy, 15(2), 167-186.

Jacobs, K. (2015). A reverse form of welfarism: some reflections on Australian housing policy. Australian journal of social issues, 50(1), 53-68.

Jacobs, K. (2015). The ‘politics’ of Australian housing: the role of lobbyists and their influence in shaping policy. Housing studies, 30(5), 694-710.

Kohler, M., & Van Der Merwe, M. (2015). Long-run trends in housing price growth. Reserve Bank Bulletin, 21-30.

Rogers, D., & Dufty-Jones, R. (2015). 21st-century Australian housing: New frontiers in the Asia-Pacific. Housing in twenty-first century Australia: People, practices and policies, 221-236.

Rogers, D., Lee, C. L., & Yan, D. (2015). The politics of foreign investment in Australian housing: Chinese investors, translocal sales agents and local resistance. Housing Studies, 30(5), 730-748.

Senate Economics References Committee. (2015). Out of reach? The Australian housing affordability challenge.

Stampduty.calculatorsaustralia.com.au. (2014). Stamp Duty Calculator. Retrieved 27 May 2018, from https://stampduty.calculatorsaustralia.com.au/