Australian Housing Affordability Discussion

[cove]

Problem is the next generation has to repay a HECS debt as well as try to buy a place to live often with a mortgage size that resembles a telephone number.

 

[JohnK]

Problem is the next generation has to repay a HECS debt as well as try to buy a place to live often with a mortgage size that resembles a telephone number.

Stop selling property to foreign money launderers.

 

[alieninperth]

Stop selling property to foreign money launderers.

Not sure if that was a general comment or...

In any event, there is little data to support the assertion that foreign investment is having a negative impact on first home buyers, from the RBA (http://www.rba.gov.au/publications/bulletin/2014/jun/pdf/bu-0614-2.pdf) and news.com.au (Housing affordability: Are foreign investors to blame for high property prices?)

 

[JohnK]

Not sure if that was a general comment or...

Definitely the or.

This is becoming an issue worldwide. Where did I see the article about foreigners buying up property in Auckland and pushing up property prices?

We don't need foreign investment in our property and that statement is coming from someone with property investments.

 

[whatmeworry]

Not sure if that was a general comment or...

In any event, there is little data to support the assertion that foreign investment is having a negative impact on first home buyers, from the RBA (http://www.rba.gov.au/publications/bulletin/2014/jun/pdf/bu-0614-2.pdf) and news.com.au (Housing affordability: Are foreign investors to blame for high property prices?)

A friend in real estate tells me how empty nester’s in good school zones usually the middle suburbs) in Melbourne sell their homes (on large blocks) off and then buy a smaller home in Fitzroy, Carlton etc. The old family home they sell is usually bought by a developer at a premium, who subsequently demolishes the home to knock up 3 or 4 units/town-houses or if they have bought a number of blocks an apartment building. These dwellings are now considered to be new developments so they can be brought by foreign nationals who pay a premium to get their children in good schools. He used to witness Criminals buy homes in cash, now its foreign nationals who want launder or hide their cash in relatively safe investments.

The cashed up empty nester's now compete for the few properties in the trendy suburbs that are available. Because supply is short they then also pay a premium to purchase a trendy little terrace in Carlton. He witnessed one terrace sell for 2.1 million and then 8 months later the terrace next door which is identical sell for 2.8 million.

So where does this leave the first home buyer? Buy a home on the fringes of Melbourne, where so much land has been released, their home won't increase in value like those in the inner and middle suburbs. Plus with slow wages growth, they will never have a chance to catch up.

Sydney and Melbourne are slowly becoming like New York city, where only the rich can live near the centre.

 

[drron]

You haven't walked around Harlem then.

 

[Moindardt]

Wow. From most posts I had read on these forums, I had thought most people to be highly educated, conscientious, people who used their intelligence and hard work to squeeze more out of every dollar. Unfortunately this thread is more of the people who blame the F pax for them travelling at the back.

Some many people have referred to the median house price in Sydney as their starting point for their. OMFG!! How entitled are you people. I am pretty sure that most people on here would have been lucky to spend half of the median price on their first home. If you want to buy a home, do something about it. If you want to do it properly, then you should have done something about it 15 years ago when you were swanning around with your mates at the mall when the others were studying. What are you doing about it now? Do you do anything to improve your situation? Appears to me like you are blaming everyone else because you are not doing anything.

As this is about housing affordability, I will comment on that.
1/ A first home is exactly that. A FIRST home. It should be no more than 50% of the median price for city. A median home and an average home are very very very different things.
2/ If you think you are going to work 38 hours a week and afford an median home, you are totally wrong or you are majorly overpaid. Average ownership if for the people who have a second job or do lots of overtime or have a high paying salaried position (read lots of overtime and they did lots of work at school and uni). It is almost always a second or third home, even for doctors. About 50% of people I know like this are either immigrants or their kids. Most people over average are people who have done the hard work for long periods of time or for business owners who have risked everything and put in all the hard work.
3/ If you don't know what a house it worth, you don't know whether are getting a good deal. So many people overpay for homes and then complain about it. On average, we physically looked at 350 houses/unit each time (we are on to our third home). Each time, when the bargain came up, we knew and bought it each time. You don't make money when you sell the home, you make it when you buy the home.
4/ Your house is the best financial investment you can ever make. It is tax free profits. Buy low, pay down the mortgage as fast as you can and sell high. You can't do any of these without hard work.
5/ Forget the partying, holidays, many flat screen tv's or hotted up cars. Life is full of choices. Don't blame others because you were too lazy to know what the right choices were, and make them.
6/ Your first, second and maybe third, or even more homes, won't be perfect. Deal with it.

My wife's family came from the Philippines when she was young. Her mum worked 2 jobs as a cleaner to buy a house. Her aunt did the same thing. Both had minimal schooling. Another Aunt (who was the same age as her) married a Filipino guy, and both of them worked their butts off and by the time they were 40, had paid off their house and had kids in private schools. My wife and I went on our first holiday last year, since our honeymoon in 1999. I don't say this to boast or anything like that, it is to prove a point. Lots of people make comments about how lucky we are, but there was no luck involved. Like most people on here, it was due to hard work.

One last point. At my son's school, they spent a week on "Game of Life" where kids made choices about what they did at various stages in life. What choices they had were dependent on their previous choices. It showed the kids how choices like studying hard at school, living the high life in their early 20's, working a part-time job or taking overtime, whether that bought that cool car or saving for a deposit for the house, impacted on their future.

Life is made up of choices you made previously, choices you make now and choices you make in the future. No matter what the world throws at you, your options are based on your choices and your success or failure is nobody else's fault but your own.

 

[Moody]

...
My wife's family came from the Philippines when she was young. Her mum worked 2 jobs as a cleaner to buy a house. Her aunt did the same thing. Both had minimal schooling. Another Aunt (who was the same age as her) married a Filipino guy, and both of them worked their butts off and by the time they were 40, had paid off their house and had kids in private schools. My wife and I went on our first holiday last year, since our honeymoon in 1999. I don't say this to boast or anything like that, it is to prove a point. Lots of people make comments about how lucky we are, but there was no luck involved. Like most people on here, it was due to hard work. ...

Nice that your wife's family had a good work ethic and other members of your extended family were able to pay off their home in their 30's AND send their kids to private schools.

But did this happen last month? Last year?? Last decade???

We are discussing housing affordability NOW ..... and you have proven a very important truth about it. Just not the one you were intending to, I presume.

 

[Moindardt]

Nice that your wife's family had a good work ethic and other members of your extended family were able to pay off their home in their 30's AND send their kids to private schools.

But did this happen last month? Last year?? Last decade???

We are discussing housing affordability NOW ..... and you have proven a very important truth about it. Just not the one you were intending to, I presume.

I think younger ones was about 8 years ago they bought and the other aunt was about 3-4 years ago. We bought our new place 18 months ago.

 

[clazman]

My accountant was telling me she met mum and daughter from China, who purchased 6 off the plan houses / flats in a 36 hour flying visit to Perth.

They drove to each planned location and bought with no haggling

When i quizzed her why it was to get cash out of China

 

[Warks]

Our first house (our only house which we still live in) was just about on the median price which in 1996 was around the $220K mark. Could have bought a place at St Marys for around $100K or in a flasher suburb like Epping (Sydney) for a bit under $300K. Combined income was $70K. Interest rate was 8.75% and falling.

I see the problem as prices in Sydney are rising faster than anyone could expect to save or earn. About 10X faster.

 

[Warks]

Sydney house prices jump 22% in one year to reach $1m median, report says | Australia news | The Guardian

And the median in Sydney is now over $1 million apparently. 22% growth in a year?

 

[cove]

Sydney hovels now sell for amazing money. Crazy that so many very ordinary places now have 2 commas in their selling price.
It is very sad for our younger generation of savers.

 

[Warks]

How about this? Heard of it happening before but not on this scale.
http://news.domain.com.au/domain/re...astle-hill-to-developers-20150723-giisln.html

The joke of it all is that the area is zoned for higher density around a transport hub with the aim that more people can live closer to the new train, however, they are pushing this development in China so I can't see what is meant to be achieved.

I am starting to get the feeling we will be seeing situations like this in Sydney in the next few years, but who knows? Booms usually last forever don't they?
Europe’s post-crash ghost towns | CityMetric

 

[Isochronous]

How about this? Heard of it happening before but not on this scale.
http://news.domain.com.au/domain/re...astle-hill-to-developers-20150723-giisln.html

The joke of it all is that the area is zoned for higher density around a transport hub with the aim that more people can live closer to the new train, however, they are pushing this development in China so I can't see what is meant to be achieved.

I am starting to get the feeling we will be seeing situations like this in Sydney in the next few years, but who knows? Booms usually last forever don't they?
Europe’s post-crash ghost towns | CityMetric

This is why I've been moving money out of AUD into other currencies and will swoop in to buy when the bubble bu

 

[whatmeworry]

London reminds me of this in OZ..

Autocratic hypercapitalism without Western checks and balances produces new elites whose dream is an American or British lifestyle and education for their children, and whose other goal is to buy into the rule of law by acquiring real estate, driving up prices in prime markets to the point where the middle classes of those countries, with incomes stagnant or falling (and taxed), are pushed aside.
London is the capital of these trends. That is the different reek, of something amiss and skewed and wrong, in its purring streets.

http://www.nytimes.com/2015/07/28/o...entable-london.html?smid=fb-nytimes&smtyp=cur

 

[whatmeworry]

New study finds owning your own home becoming a fantasy.

The great Australian dream has become an unattainable fantasy for more people, with a new report showing home ownership is becoming increasingly out of reach.
Data collected by the Australian Institute of Health and Welfare shows a dramatic fall in the proportion of households with outright ownership of their residence and an increase in the percentage of renters and mortgagors.

Home ownership dreams dashed: Australian Institute of Health and Welfare report

 

[Warks]

I wonder if I count as a mortgage owner, owing about $200 for the past few years. I'd pay it off but then I'd have to take out another loan if I needed money. Redraw is very handy but you have to be disciplined.

I would dread trying to buy now. What I can't understand in my own suburb is houses that appear to be just about the same go for $1.1 to $1.6 million - can't quite work out the reasons for the difference. Considering the same houses would have traded for $700K-900K two years ago I really can't understand how they've become so much more valuable.

If we sold we'd have to move to Brisbane or Adelaide to reap the benefit.

 

[drron]

New study finds owning your own home becoming a fantasy.



Home ownership dreams dashed: Australian Institute of Health and Welfare report

Of course the figures also say that owner occupied housing was 66.4% in 1996 and 67% in 2011.

 

[knasty]

I wonder if I count as a mortgage owner, owing about $200 for the past few years. I'd pay it off but then I'd have to take out another loan if I needed money. Redraw is very handy but you have to be disciplined.

I would dread trying to buy now. What I can't understand in my own suburb is houses that appear to be just about the same go for $1.1 to $1.6 million - can't quite work out the reasons for the difference. Considering the same houses would have traded for $700K-900K two years ago I really can't understand how they've become so much more valuable.

If we sold we'd have to move to Brisbane or Adelaide to reap the benefit.

In my area some are heritage listed some are not. Those that are not can be redeveloped as a duplex hence command a premium. In the past they'd both be lived in hence similar prices. About 500k difference it seems at current levels but it changes every week...all madness.