Is Australia an expensive country?

[ozmille]

In the almost 4 years that I have lived here now my weekly grocery bill has gone up around AUD30... Rent is definitely more expensive here then it is back in Belgium (but why would you go and live in Belgium ). Also buying a house here seems impossible. AUD900.000+ for a 2 bedroom dwelling is incredible. Petrol is still cheaper here and cars are a lot cheaper.

But hey, I am living in Sydney and am very happy with the experience!

 

[JetLagged]

Also buying a house here seems impossible. AUD900.000+ for a 2 bedroom dwelling is incredible. Petrol is still cheaper here and cars are a lot cheaper.

All depends on where you are prepared to live - anyone who wants to live in close to the Harbour or the like - well, it would be like any major city of the world, expensive. We live 45 minutes out from the CBD, tree lined streets, quite, with good shopping closeby - here I have a 5 bedroom house with pool etc and all for about $700,000 - so suppose it is relative (i'd hate to live cheek by jowel with everyone else, and apartment living is just not us).

But hey, I am living in Sydney and am very happy with the experience! .

Good to hear - yes, very different from Belgium, a mental leap as well as experiental - so glad you are enjoying your time here!

 

[JohnK]

You can't just add up the cost of the bacon, eggs, toast & fruit juice and say thats how much it should be.

I don't think I was implying it should be that way. But having a ridiculous mark-up (just because they can) is wrong.

2 Eggs = 40c
1 rasher Bacon = 50c
2 pieces Toast = 12c
1 glass orange juice = 30c
Cooking oil = 8c
Labour = $2.00 (assuming cook is paid $20/hour and spends 6 minutes making breakfast)
Overheads = $2.00
30% mark-up = $1.60

Giving a total of $7.00 for cooked breakfast. There a big difference between $7.00 and $18.95! But if everyone else is charging $18.95 and getting away with it why should I charge less?

 

[anat0l]

But if everyone else is charging $18.95 and getting away with it why should I charge less?

Pretty much! Same business principle goes for airfares, fuel, groceries, houses, rent...

Mind you - I can get a breakfast like that at a decent cafe in Brisbane for less than $18.95. It still wouldn't be $7.00, but it wouldn't be $18.95, and even if the bill did hit $18.95 or a few dollars left at least I can sit in relative comfort and be mostly assured of the quality.

Of course, in Brisbane, at a price like that you're almost better paying an extra $2 and having the breakfast buffet at the Holiday Inn.

 

[RB]

Giving a total of $7.00 for cooked breakfast. There a big difference between $7.00 and $18.95! But if everyone else is charging $18.95 and getting away with it why should I charge less?

I think you also need to keep in mind there are still plenty of country motels doing cooked breakfast for a lot less than $18.95

 

[anat0l]

I think you also need to keep in mind there are still plenty of country motels doing cooked breakfast for a lot less than $18.95

Come to think of it, we stayed at a B&B in Orange whilst on assignment last December.

We were charged $15 per continental breakfast; $25 per full breakfast. A little high compared to common travel standards, so probably good that the company was footing the bill. Very lovely owner, though.

 

[Oneworldplus2]

Also buying a house here seems impossible. AUD900.000+ for a 2 bedroom dwelling is incredible.

I agree with JetLagged, it's all relative and market forces at work.

Property isn't the best example because there are so many factors to take into account as each country varies with tax concessions it is difficult to make a broad assumption at face value on a countries house/unit/condo market value.

 

[Keith009]

Also buying a house here seems impossible. AUD900.000+ for a 2 bedroom dwelling is incredible.

$900k for a 2 bedroom is indeed incredible, but as pointed out above it really depends on where you're looking.

I don't know much about the property market in Sydney but I don't suppose it's that different in Melbourne as we're meant to be leading the country in terms of housing (un)affordability.

A 2 bedroom place in the city or more expensive inner city areas would be pushing the $900k-$1 million mark in Melbourne. And for that price you'd be expecting top floor apartments next to the river or with amazing views of the city, or heritage buildings. But you don't necessarily need to spend that much to live close to the city. My partner and I put a priority on lifestyle over house size, and so we set our expectations and budget accordingly. We don't have kids. We don't care about getting the best views or living near a body of water. We do not want to spend too much time in traffic and want to be able to jump on a tram if going out for drinks with friends rather than rely on expensive taxis. We also intend to turn the property into an investment property after getting our FHOG (signed the contract during the GFC so our FHOG is highly inflated! ), so weighed up factors like average rental yields and likely capital growth. We were able to find an off-the-plan 2 bedroom/2 bathroom/1 carport apartment in a very desirable inner city area (South Yarra for those who know Melbourne) from a very reputable developer and top drawer architect and interior designer for a touch over $600k.

For our next property, purchasing as owner-occupiers, we want something slightly bigger but still within a 15-20 mins drive from the city. We are finding very nice 2 bedroom townhouses in the $550-600k mark. Lots of inner city suburbs that were once very scummy but are rapidly gentrifying and getting quite trendy - you can still get into these places at a very reasonable price. 10 years ago no one wanted to know Fitzroy, now hardly anyone can afford to live there! Slightly further out and you'll find townhouses in the $450kish mark. Look for solid fundamentals like public transport availability, schools, amenities, accessibility to the city.

Yes you could probably spend even less and get a property twice as big much further out, in the middle and outer burbs, so it's all about weighing up your personal desires and familial circumstances.

With house prices plateauing over the next 18 months (and indeed we've seen prices of some off-plan projects or houses that got passed in at auctions dropped considerably), it's never been a better time to buy.

 

[auriga]

Sounds like Sydney property is still A LOT more expensive than Melbourne.

 

[Mal]

With house prices plateauing over the next 18 months (and indeed we've seen prices of some off-plan projects or houses that got passed in at auctions dropped considerably), it's never been a better time to buy.

IMHO now is not the time to buy. The Australian property market is overpriced, and is set for a serious correction. Property is so overpriced in Australia it is ridiculous. In most (all?) other countries that have had such a bubble with house prices, their property market has crashed. Australia can't defy the trend.

 

[RB]

$900k for a 2 bedroom is indeed incredible, but as pointed out above it really depends on where you're looking.

I don't know much about the property market in Sydney but I don't suppose it's that different in Melbourne as we're meant to be leading the country in terms of housing (un)affordability.

A 2 bedroom place in the city or more expensive inner city areas would be pushing the $900k-$1 million mark in Melbourne. And for that price you'd be expecting top floor apartments next to the river or with amazing views of the city, or heritage buildings. But you don't necessarily need to spend that much to live close to the city. My partner and I put a priority on lifestyle over house size, and so we set our expectations and budget accordingly. We don't have kids. We don't care about getting the best views or living near a body of water. We do not want to spend too much time in traffic and want to be able to jump on a tram if going out for drinks with friends rather than rely on expensive taxis. We also intend to turn the property into an investment property after getting our FHOG (signed the contract during the GFC so our FHOG is highly inflated! ), so weighed up factors like average rental yields and likely capital growth. We were able to find an off-the-plan 2 bedroom/2 bathroom/1 carport apartment in a very desirable inner city area (South Yarra for those who know Melbourne) from a very reputable developer and top drawer architect and interior designer for a touch over $600k.

For our next property, purchasing as owner-occupiers, we want something slightly bigger but still within a 15-20 mins drive from the city. We are finding very nice 2 bedroom townhouses in the $550-600k mark. Lots of inner city suburbs that were once very scummy but are rapidly gentrifying and getting quite trendy - you can still get into these places at a very reasonable price. 10 years ago no one wanted to know Fitzroy, now hardly anyone can afford to live there! Slightly further out and you'll find townhouses in the $450kish mark. Look for solid fundamentals like public transport availability, schools, amenities, accessibility to the city.

Yes you could probably spend even less and get a property twice as big much further out, in the middle and outer burbs, so it's all about weighing up your personal desires and familial circumstances.

With house prices plateauing over the next 18 months (and indeed we've seen prices of some off-plan projects or houses that got passed in at auctions dropped considerably), it's never been a better time to buy.

Not meant as a criticism and sounding like an old cought but I hope you are getting some (plenty) of qualified advice re buying off the plan & also the tax implications of changed circumstances when moving between properties.
As per your comments I agree not to let your house to dictate your life-not sure if that is the case with some people in my nearby PMQ who have spent well more than $1 million on an apartment.

 

[RB]

Come to think of it, we stayed at a B&B in Orange whilst on assignment last December.

We were charged $15 per continental breakfast; $25 per full breakfast. A little high compared to common travel standards, so probably good that the company was footing the bill. Very lovely owner, though.

Seems to go against the idea of B & B to charge separate for breakfast?
Funny how 30 yrs ago you could not drag people to stay in Orange, Mudgee, Oberon (now trendy growth areas) because of the questionable climate , particularly the sh** cold winter.

 

[PaulC83]

I don't think I was implying it should be that way. But having a ridiculous mark-up (just because they can) is wrong.

2 Eggs = 40c
1 rasher Bacon = 50c
2 pieces Toast = 12c
1 glass orange juice = 30c
Cooking oil = 8c
Labour = $2.00 (assuming cook is paid $20/hour and spends 6 minutes making breakfast)
Overheads = $2.00
30% mark-up = $1.60

Giving a total of $7.00 for cooked breakfast. There a big difference between $7.00 and $18.95! But if everyone else is charging $18.95 and getting away with it why should I charge less?

There is a little bit more that comes into play. What if your the only one who comes in during that half hour, then it becomes $10.00 labour for your cooked breakfast. Yes its likely they will have busy periods and none busy but you can't quite break it down so easily.

And overheads of $2 is a little low. Assuming the property is rented, the space would have a specific cost /sqm associated with it. Then you have the furniture, the dishes (and then washing them after), the table cloth. How about the time spent by whoever buys the stocks, and then the electricity cost of keeping the food safe when its not breakfast time. If the chef is on $20/hr and on a casual basis (as most hospitality professionals tend to be), then its more like $25/hr (including 25% leave loading) and add on super and its starting to add up a bit.

And then there is the complicated (and expensive) issues of insurance, both for public liability and work cover. The cost of complying to modern hygiene standards is not cheap either.

I'd agree prices of things is increasing, but there are a lot of costs as a business owner these days and things can't be broken down quite as easily as you have mentioned.

My 2c anyway.

 

[anat0l]

Seems to go against the idea of B & B to charge separate for breakfast?
Funny how 30 yrs ago you could not drag people to stay in Orange, Mudgee, Oberon (now trendy growth areas) because of the questionable climate , particularly the sh** cold winter.

Perhaps it was against the trend, but there you go.

Mind you, it was a modest rate and a nice big room; not too surprisingly all of her customers (including us) were all working at or for the same place. No prizes for guessing where it is.

 

[anat0l]

There is a little bit more that comes into play. What if your the only one who comes in during that half hour, then it becomes $10.00 labour for your cooked breakfast. Yes its likely they will have busy periods and none busy but you can't quite break it down so easily.

And overheads of $2 is a little low. Assuming the property is rented, the space would have a specific cost /sqm associated with it. Then you have the furniture, the dishes (and then washing them after), the table cloth. How about the time spent by whoever buys the stocks, and then the electricity cost of keeping the food safe when its not breakfast time. If the chef is on $20/hr and on a casual basis (as most hospitality professionals tend to be), then its more like $25/hr (including 25% leave loading) and add on super and its starting to add up a bit.

And then there is the complicated (and expensive) issues of insurance, both for public liability and work cover. The cost of complying to modern hygiene standards is not cheap either.

I'd agree prices of things is increasing, but there are a lot of costs as a business owner these days and things can't be broken down quite as easily as you have mentioned.

My 2c anyway.

Well... your 2c wouldn't make a big impact on the price.

Still - if we factor in a lot of the above, there's still a $11.00 differential to make up between JohnK's perceived cost and the real cost.

One of the things you mentioned is what if there's only one customer, then the average labour goes up. Not only does this need to factor in dynamics due to time (e.g. busy vs. quiet periods), but also the fact that the price of your goods (and the quality) affects how many people buy. In this case, you could have a whole bunch of people who - like JohnK - balk at the price of your breakfast, and won't buy. On the other hand - and perhaps this is one of the "real" reasons - if your place is being frequented by mining crew who don't give a rats how much breakfast costs, you might be lucky and get a consistent, if perhaps sometimes mad snowballing, stream of customers every morning. A busy week of breakfasts probably outweighs a few scowls on the weekend where the only person eating breakfast if even that is Mr Tumbleweed.

Another theory in all of this is that the cost of the breakfast includes a loading of markup which covers another area of the expenses of the property. This is the same theory behind, say, the practice sometimes common in Italy where the food may be a good price but the drinks will be rather extortionate. Or, going to a computer store and buying a printer which makes negative margin, but later having to come back and buy cartridges which makes decent positive margin.

Back to a tactical base, however, customers in 95% of cases don't think like this. Certainly, even if they could see things this way, it won't make them empathise with the owners and buy a breakfast any more than if they chose to do so or not to do so in the first place.

 

[Flashback]

... and what's wrong with people making profit? Would you rather they didn't, were closed as a result and you'd then have nowhere to stay? Clearly not everyone here thinks like a business person ....

 

[Keith009]

Not meant as a criticism and sounding like an old cought but I hope you are getting some (plenty) of qualified advice re buying off the plan & also the tax implications of changed circumstances when moving between properties.

Yes, the tax stuff is a minefield. We've had numerous concerns but now have several foolproof ways around them. Luckily one of our friends is an accountant and so we a lot of things through her, and tax is one of the classes I paid more attention to back in law school! We will still engage an accountant professionally when all the tax stuff gets too complex though.

We had a lot of concerns initially about off-the-plan. We did a fair bit of research before deciding to go the off-the-plan route. Our developer tried to include a rather lengthy sunset clause in our contract for our deposit which rang some alarm bells, but we managed to negotiate it down. All seems normal, all relevant milestones have so far been met, and *fingers crossed* the apartment ought to be ready in August! I know friends whose properties have been delayed for more than 2 years. With about 13% of off-the-plan properties in Melbourne actually commencing construction in the last 2 years, I think we got very lucky! Or maybe I've just jinxed myself.

IMHO now is not the time to buy. The Australian property market is overpriced, and is set for a serious correction. Property is so overpriced in Australia it is ridiculous. In most (all?) other countries that have had such a bubble with house prices, their property market has crashed. Australia can't defy the trend.

Historically the Australian market doesn't seem to have had a massive downturn. It's had plateaus and minor downturns, but not a crash. Still, given the easy credit conditions of the last 2 decades, never say never! Already I'm seeing a fair bit of price reduction in the areas we're exploring.

 

[anat0l]

... and what's wrong with people making profit? Would you rather they didn't, were closed as a result and you'd then have nowhere to stay? Clearly not everyone here thinks like a business person ....

Nothing wrong with people making profit.

Profit generation is a balance however between tolerable pricing and sales. However, tolerable pricing is not an absolute thing amongst everyone. In that guise, one person complaining about a price of something and someone suggesting that a merchant has every right to charge it is a matter of opinion (for better or worse) unless judged otherwise by the law.

 

[Mal]

... and what's wrong with people making profit? Would you rather they didn't, were closed as a result and you'd then have nowhere to stay? Clearly not everyone here thinks like a business person ....

Profit is fine and is an expected part of (good) business practice. But when the profit is over reasonable margins, that is where people tend to get a little bit upset.

 

[anat0l]

Profit is fine and is an expected part of (good) business practice. But when the profit is over reasonable margins, that is where people tend to get a little bit upset.

It's rather funny this said. It reminds me of so many problems we had to solve in high school math. Naturally, the problems ran along the lines of "costs of manufacture are this much, costs of maintenance are this much, expected sales are these many units... given market research how much should be charged per unit in order to maximise profit".

I think this is what happens in real life as well, and as you suggest it isn't necessarily something we like.

And what is "reasonable margins"? That is where a human element comes into play, but business-wise that's sometimes viewed as depriving yourself of potential.