Australian Housing Affordability Discussion

[Princess Fiona]

Re: The totally off-topic thread

But does that mean I no longer make enough to afford that loan?

Commute

 

[TomVexille]

Re: The totally off-topic thread

Commute

I wish

 

[TomVexille]

Re: The totally off-topic thread

Yes, and if you had a car it wasn't bought new and was probably 5-10 years old, you didn't even know what a boutique was much less shop there and you certainly didn't eat out several times a week or haemorrhage cash buying shots in bars or champagne by the case from Dan Murphy's.................all things that are routinely indulged in by some who then complain they can't afford to buy a house.

So I drive a 15 year old car, my jeans I bought 2 years ago in the states for $30, we eat out maybe once a month, our grocery bill is almost always under $100, I certainly don't go out drinking shots in bars, and the only time I'll buy champagne by the case is when it's $35/bottle instead of $55. So okay, I do have one vice, travel. But I still do that cheap as well.

I still can't afford to buy a house with the way the market has artificially inflated.

 

[blackcat20]

Re: The totally off-topic thread

Commute

I don' think that compares favourably with my current 10 minute drive to work.

 

[blackcat20]

Re: The totally off-topic thread

Housing affordability: A nurse responds to Joe Hockey’s comments

Lots of people with good jobs cant afford a home.

 

[chelzmalee]

Re: The totally off-topic thread

I earn under $45k, am single, 27 and just bought my first home for under $260k, after saving hard. I live in Central West NSW, where housing IS affordable.

That said, moving from the city isn't a viable option for a lot of people for many reasons, but I'm just adding my two cents that it IS possible to get in the market.

And no, I don't by any means agree with Mr Hockey and his "get a good job" attitude. I just simply don't know what the answer is to housing affordability in the city.

 

[straitman]

Re: The totally off-topic thread

Absolutely. Sellers market at the moment. I'm hoping that it comes tumbling down in the next year.

I have done the math and according to the bank if I'm making double what I make now and blackcat20 is making the money she's making atm, we could at the top end get around $750k. Which really doesn't get you anything in Melbourne.

Maybe we just need to move to the Barossa

You could get something pretty nice in Newcastle for that you know

But does that mean I no longer make enough to afford that loan?

One hour out of Melbourne in several directions does fit in though.

In 1980 as an Airforce pilot I celebrated when my salary plus allowances passed $20,000. A cheap house 30-60 minutes from work was about $240,000.

Has it really changed all that much?

 

[smit0847]

Re: The totally off-topic thread

I purchased my first house 18 months ago – it was the only thing I really wanted to do before I turned 30. I was quite lucky – after looking seriously for 6 months a private sale came up 700 metres from where I was living and I was able to move on it very, very quickly (I signed the contract less than 48 hours after first viewing the house). I think I got a pretty good price for it – I am certainly ‘mortgaged to the hilt’ but have a good job and am making it work - haven’t had to give up the travel which, after my mortgage is by far my biggest expense. I don’t drive a fancy car or wear flashy jewellery or clothes but I live in a nice house and travel a lot.

I agree housing affordability is a big issue in this country but also don’t think negative gearing should be completely abolished – I think limiting it to one house per person is a fair compromise. If I could afford it I would absolutely purchase an investment property – my parents have done this to great effect although my parents are probably a classic example of ‘the rich getting richer’.

A wise piece of advice my parents gave me when I was looking for my first home was ‘most peoples first home is not somewhere they want to live but it’s a big step towards somewhere they do’. A lot of young people are spending a huge amount of their disposable income renting somewhere they really like (ie a new apartment in a nice inner city area). They are not willing to give up their ‘glamorous’ lifestyle to first save up a deposit and then live somewhere they can afford. Of course you can’t afford to buy that amazing place in that great area when you’re young, not earning much and have a very active social life. Something has to give. That’s just how the world works. I have many friends in their mid 30s who are still renting and I doubt they will ever purchase a property because its going to be too hard – you really have to make some sacrifices in your 20s IMO.

Much like those people who complain about how unfair it is that we travel in premium classes regularly I hear many people complain that they can’t afford to buy a house while refusing to make any changes to their lifestyle or exercise any financial discipline at all.

 

[chelzmalee]

Re: The totally off-topic thread

A wise piece of advice my parents gave me when I was looking for my first home was ‘most peoples first home is not somewhere they want to live but it’s a big step towards somewhere they do’.

I disagree to some extent. I think your first home should feel like home. If it doesn't feel like home you shouldn't buy it. You should be happy there. BUT I do agree that it's not going to ever be perfect and it's never going to be like Mum and Dad's fancy house - mainly because they've worked bloody hard for many years to get that fancy house!

My home is just that, my home. I love it. It's not perfect, and it's not flashy, but I love it. And it's never not felt like home.

I remember saying to a real estate agent that I didn't like a house. He asked why. My answer "I can't see myself coming home". He couldn't get his head around it.

 

[eastwest101]

Re: The totally off-topic thread

Housing affordability: A nurse responds to Joe Hockey’s comments

Lots of people with good jobs cant afford a home.

With a qualification like nursing (with experience) - that person could literally get a job anywhere in Australia as their qualifications and experience make them extremely employable and the industry recession proof. The nurse described in the article does have a "good job" with very high job security. If they can't afford the average $750K house in Sydney (which admittedly is a bit of a stretch on the sole income of a nurse) then there are much nicer places to live in Australia where average house prices are about half that of Sydney. In fact = pretty much all the rest of Australia except for the inner suburbs on Sydney and Melbourne.

People move to further their career (or get jobs). Everyone I grew up with in Tasmania for instance has left the state to further their career, many have brought houses, the ones that stayed, generally stayed and had babies. Another large part of my family all have finished school/uni, got jobs and left Sydney and purchased in Darwin, Adelaide and Perth etc and now have their careers there. I wish people would talk more about the issue of labour mobility, state government stamp duties on property are the biggest culprit and also contribute to the distortions in the labour and property market by discouraging home owners from selling where they are and buying somewhere else, and by taxing the purchasers of properties and possibly making the hurdle for first home buyers a bit higher.

So the answer is - yes - you do need to have a job that pays money to borrow to buy a house, but you get to choose how much to borrow and where to buy, and when to buy. Nothing surprising or outrageous in those statements.

 

[blackcat20]

Re: The totally off-topic thread

My home is just that, my home. I love it. It's not perfect, and it's not flashy, but I love it. And it's never not felt like home.

Thats what my home is to me, but its not just about the house. Its about the neighbourhood, and the fact I know all the neighbours by face if not by name. There is someone who will check my mail, or mind my dogs while I'm away. I wouldn't trade that for a fancy house in an outer suburb where no one wants to interact with the people next door...

 

[NM]

Re: The totally off-topic thread

One hour out of Melbourne in several directions does fit in though.

In 1980 as an Airforce pilot I celebrated when my salary plus allowances passed $20,000. A cheap house 30-60 minutes from work was about $240,000.

Has it really changed all that much?

I think one thing that has changed is the expectations of many people. Many young folks put a priority on things like servicing a mobile phone account with the latest model phone, owning a TV, owning a nice car (or two), eating out regularly. When I first entered the housing market, my first home cost about 4 times my annual salary and I had saved about 25% deposit (about the same as my annual salary) over the previous 6 years of working after finishing uni. I did not have to pay for a mobile phone and associated calls/texts/data. I watched 4 Free-to-Air channels on a second-hand 22" TV, and my wife and I had one car between us - a 10yo Ford Falcon that I owned for a further 10 years. We would eat out about once a month and consider it a special event - yes even if at McDonalds. I took a packed lunch to the office each day.

Watching my kids and their generation is a different story. They all have mobile phones and most with all-you-can-eat contracts and latest model phones. They have nice cars, few more than 4 years old that they replace/upgrade every few years, they frequent movie cinemas, have a large screen TV in their bedrooms, eat more take-away meals than home cooked meals, buy lunch out every day, etc etc. They wear Calvin Klein underwear (yes, the name clearly printed on the band showing above the top of their baggy designer jeans) and Vans shoes. And wonder why they can't save.

Yes, there are exceptions, and one of my kids is very much an exception to that. But he is a student and lives very frugally and relies on hand-me-downs for things like his mobile phone, food from Aldi and clothing (only when the need is desperate) from K-Mart and Best & Less if he can't find something suitable at an op-shop. But while he has no regular income (while studying) he is not saving anything. He gets no government handout or assistance other than student rates on public transport and as part of his studies he has managed to travel both domestically and internationally by saving the "allowance" I provide for him and finding the cheapest option for almost everything he does. But he is unlikely to find himself in a position to buy a house in the next 10 years unless he gets his inheritance earlier than I am planning to make it available. His study is not going to land him a high-paying job, but he loves what he does and has a positive impact on those around him.

 

[footy99]

Re: The totally off-topic thread

The trick seems to be to get the hell out of Sydney. It needs a correction. The rest of the country isn't too bad.

Discussing this with Sydney cousins in their 20s the other day, I can't understand why they want to buy their own house right now. Rents aren't nearly as outrageous. They almost always end up cheaper than repayments + maintenance + rates + body corp (and frequently include electricity, water and internet too). The only justification for buying seems to be for capital gain and tbh I'd say you are better off in the share market starting now with that goal. Excluding near 100% cash buyers (who aren't a concern anyway), I'd say renting is the wiser play.

The irrational obsession with ownership, especially at such young ages, is part of the driving force behind the bubble in Sydney (along with record low interest rates and the huge drop in the dollar making our property look cheap to foreign investors). My play is to get comfortable with renting. If the crash comes and buying becomes a sensible consideration, great. If it doesn't, life as a renter is still good. Whining about it seems both silly and pointless.

 

[RooFlyer]

Re: The totally off-topic thread

Of course we old stagers faced some challenges too. Yes, I was paying a mortgage during the period of 16%-17% mortgage rates!



And then we went through the 'recession we had to have' (1990/91). Now, if we are talking outrageous comments from Treasurers, this from one PJK may be worth a look-in:

The first thing to say is, the accounts do show that Australia is in a recession. The most important thing about that is that this is a recession that Australia had to have.

 

[NM]

Re: The totally off-topic thread

Of course we old stagers faced some challenges too. Yes, I was paying a mortgage during the period of 16%-17% mortgage rates!

Oh yes indeed. I think my first home loan was initially at around 13% and it quickly increased to 17% which required some belt tightening. This also coincided with Mini NM#1 making an appearance and Mrs NM leaving the labour market, so down to a single income and three mouths to feed. At least the interest rates had dropped slightly (~10%) when the next two mouths came along.

 

[OATEK]

Re: The totally off-topic thread

Oh yes indeed. I think my first home loan was initially at around 13% and it quickly increased to 17% which required some belt tightening. This also coincided with Mini NM#1 making an appearance and Mrs NM leaving the labour market, so down to a single income and three mouths to feed. At least the interest rates had dropped slightly (~10%) when the next two mouths came along.

Anyone who has not had to cope with 17% interest rates on their home loan cannot appreciate just how tough it was!

 

[Warks]

Re: The totally off-topic thread

We bought our house as newlyweds (well about 8 months later) for $230K or so when variable rates were 10% and we fixed for 8.75%. We earned a combined $70K and our loan was about $205K from memory - we could barely borrow a cent more - had to pay several thousand in stamp duty (no grants) and we also had to pay stinking mortgage insurance of about $2500 to protect the bank from the house value falling! If we'd had more than a 20% deposit we wouldn't have had to pay it. So we basically borrowed three times our income.

Fast forward nearly 20 years and we've spent money on extensions (rather than moving) and the house is effectively paid off (have a large redraw facility just in case). But with kids and the costs of modern living we barely have money to spare in some months. As I'm self-employed my income is highly variable though. But when you look at all the things we didn't have to spend money on back then like:
mobiles
internet
massively higher council rates, water and power
food seems so much more expensive - of course we didn't have kids back then
two cars (not one) - green slips were about $150 - now about $650.
insurances - so many including health which we didn't have back then. House, contents, cars, life, income...

So while we are not badly off we certainly couldn't buy a house now even though I'm earning way more. Well we could maybe but never have a holiday again. That's one thing here no one would want to sacrifice I'm sure.

Our house is now in the $1 million range. We are not in a flash suburb of Sydney, not bad but it was always seen as a cheaper suburb in a more expensive area. The surrounding suburbs are now $1.3-2 million so we are still a 'cheap' zone but I wouldn't want to try and pay for a house here from scratch.

 

[Warks]

Re: The totally off-topic thread

From NoNews:

SYDNEY IN 1995:Median weekly household income before tax according to 1996 Census: $700-$999
Median house price according to a university report: $196,750
Time it would take to save a 20 per cent deposit ($39,350) based on saving 30 per cent of an income of $700 ($210 a week): 3.6 years
SYDNEY IN 2015:
Median weekly household income before tax according to 2011 Census: $1447
Median house price in March according to Domain: $914,056
Time it would take to save a 20 per cent deposit ($182,811) based on saving 30 per cent of income ($434 a week): 8.1 years

Property prices: Is Joe Hockey right about housing affordability?

 

[medhead]

I want to buy a house in Sydney. So I've decided to become the Treasurer of Australia. It's a good job that pays good money.

My employer will even pay for my wife's investment property.

Let me just say outright, my post most definitely isn't about housing affordability. I didn't start this thread on the topic listed. You lot can go your hardest about housing affordability but don't blame me.

 

[medhead]

Re: The totally off-topic thread

Anyone who has not had to cope with 17% interest rates on their home loan cannot appreciate just how tough it was!

Only please. Inflation also meant that the value of your property was rapid increasing at the same time. Not to mention interest rates were 17% for a blink of an eye. Perhaps it would have been better to do nothing about stagflation?