You're right. I see now. Sorry, had the blinkers on!
Not a prob. I should be apologising as I muddled up my replies. Trying to reply between work and procrastinating doesn't help.
The future of Australian property prices
- Thread starter Joe Blow
- Start date
Not a prob. I should be apologising as I muddled up my replies. Trying to reply between work and procrastinating doesn't help.
Nonsense, that puts into perspective how crazy that bloke and his wife are.
I know Sydney and Melbourne are leaps and bounds ahead of Brisbane affordability wise, but to be on $450k and crying poor like it's somebody elses fault is a joke.
Assuming the whole lot is taxed at the highest marginal tax rate, which it isn't, that is over $20,500 per month in net income from salary alone. If they have a car loan on a family car that's $19,500 per month. If he thinks he is living at his bare minimum let's call living costs for him and his 2 kids $5k per month. That's double what it costs me and my Mrs including rent.
If they spent about half of what was left, $8,000, they can afford a million dollar mortgage over 30 years - at 8% p.a. let alone the 5.4% they'd get now - and have another $6.5k left over for calling up their friends and talking about how poor they are. Wage growth adds up when you're on that kind of income, so a few years down the track that 8k is now no longer 39%, it's 35%. A couple more and it's out of mortgage stress territory. You could by that stage even refinance it back over 30 years and reduce payments by $2.2k a month down to $5.8k.
If that's all too much work, buy a house that isn't a million bucks out in the suburbs a bit.
Bloody whingers. If they think that's too hard, Australia's loss my ****. They can have their 30 year 2% fixed rate loans on $250k McMansions back in the states. Earn an Australian wage and you can afford to pay Australian prices.
Deadset, what a load of crap. Where do you find 'journalists' without their head in their asses? I'm yet to see one.
Nah. For what you get, houses are crazily expensive.
A **** box in an over congested, poorly planned, smelly expensive to live and entertain city which is growing too fast which has infrastructure that is still like it was in the 1990's. Women are uppity, people are rude, the servants are rude and the food is ****.
Why bother ? Get a job in and move to the country IMO.
Play golf on weekends, turn into a piss head, go fishing. Spend your life wondering what people mean when they say "peak hour" and why they pay 600k more for a falling apart house because it is closer to a dirty smelly, crowded pool of human defecate.
Anyone touting the "life style" element of melb our sydney is kidding. I will happily commute 45 minutes to get AWAY from those cities.
A **** box in an over congested, poorly planned, smelly expensive to live and entertain city which is growing too fast which has infrastructure that is still like it was in the 1990's. Women are uppity, people are rude, the servants are rude and the food is ****.
Why bother ? Get a job in and move to the country IMO.
Play golf on weekends, turn into a piss head, go fishing. Spend your life wondering what people mean when they say "peak hour" and why they pay 600k more for a falling apart house because it is closer to a dirty smelly, crowded pool of human defecate.
Anyone touting the "life style" element of melb our sydney is kidding. I will happily commute 45 minutes to get AWAY from those cities.
explod
explod
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Good post.
Just moved up to Bendigo about 4 months ago from the Mornington Peninsula. No traffic or hold ups, all the shopping at the same prices, petrol the same, life is just great here.
And the Monash, forget it, in town it is choked and property prices will soon tumble as a result. Loss of jobs, da de da and etc.,
Hahahaha better yet move to an island somewhere in xxxx (replace xx with name of exotic place). I grew up on one. No concept of time, traffic, bad weather (except for the occasional cyclone lol).
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You've missed the point of the article. Regardless of what these people are earning the point was they would pay a lot less for a home in US than what they would have to pay here. Just because they are earning big bucks doesn't mean they should pay over the odds for property.
But that's the point, most people earning a Australian wage can't afford to pay Australian prices.
Sorry, but I don't believe that's the case. Most people earning an Australian wage mustn't know how to budget or make luxury sacrifices for the short term, as well as lower their expectations for a first property until they have enough equity to put down a large deposit and have had enough wage growth to allow them to upsize.
OK show us a budget.
55k with a HECs debt, but a house.
(Gotta love these rich people who haven't budgeted since the 1990s try and write a budget threads)
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They might be able to save a deposit but taking out a mortgage that is between 5 and 10 times your annual salary is not sensible financially and yet that is what you would have to do in today's real estate market in most places to buy a house. A house that costs more than 5 times your annual income is not affordable IMO.
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Even worse, when people question it the usual retort is that they are wanting to "have it all". As though they are living some decadent lifestyle which is why they can't afford a home.
I've been looking at houses around the $1-$1.2m mark recently, I've also been considering moving back to the US, although I'll move to the West Coast not the East this time. Tbh, it's not just the price of housing, everything in Australia is overpriced. Yes, the quality of life is high, but once you reach a certain level of income, you're really subsidising someone else's quality of life.
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Even worse, when people question it the usual retort is that they are wanting to "have it all". As though they are living some decadent lifestyle which is why they can't afford a home.
I've been looking at houses around the $1-$1.2m mark recently, I've also been considering moving back to the US, although I'll move to the West Coast not the East this time. Tbh, it's not just the price of housing, everything in Australia is overpriced. Yes, the quality of life is high, but once you reach a certain level of income, you're really subsidising someone else's quality of life.
McLovin, if you move into a mansion in LA, can l rent a room from you?
prawn_86
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The point some people here are trying to make is why should someone in the top 5 - 10% of earners need to do this? Bascially you are then relying on further capital gains just in the hope of moving up the 'ladder'.
The suburb i live in the average house price is well over $1m. Show me how someone earning 250k pa gross can afford one of these houses? Someone earning that much is not likely to have a lot of further wage growth (depending on qualifications and industry, but assume no further wage growth as they are already top 10%)
Totally agree. Great lifestyle, but now the most overpriced country in the World by far
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McLovin, if you move into a mansion in LA, can l rent a room from you?
You're welcome anytime mate! There will be the obligatory day trip to Tijuana though.
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Especially when some furniture is made in Indonesia.....(Off the Dick Smith website)
(Link)
Life Hacker Articles on Australian Pricing
Australia Has The Most Expensive IKEA Products In The Entire World
Ask LH: Why Does The Nexus 7 Tablet Cost So Much More In Australia?
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You're welcome anytime mate! There will be the obligatory day trip to Tijuana though.
Tijuana ??? - sounds dangerous.......
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You'll be OK. You've got two kidneys right? Well, you only need one.
Garpal Gumnut
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I'm thinking of buying a few rental houses in Cairns, I'm not all that keen on apartments with insurances and body corporates.
Has anyone any experience in the Cairns market.
I hear the Chinese comrades have discovered it as a tourist destination.
gg
Has anyone any experience in the Cairns market.
I hear the Chinese comrades have discovered it as a tourist destination.
gg
prawn_86
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I have looked at Cairns a few times as the market is quite cheap and in a slump at the moment. It is very tourist/boom driven, so if the AUD ever goes down that would be a good thing for Cairns property prices.
One thing to look out for, as you have already mentioned, are the body corp and insurance. Body corp seems very expensive for some unknown reason and insurance is quite high due to cyclone risk. These 2 generally take the advantage out of most cash-flow postive places, but if you are buying outright then it is a different story
Looked at Cairns maybe a yr or two back as there were a few cash flow pos places being marketed. However had similar concerns to what prawn_86 highlighted. Very dependent on tourism. With what was happening to the GC, we got put off. Mind you we were focusing more on small commercial.
Don't know what the market is doing at the moment.
Here's mine and my fiancees:
590 Rent - We share a 4br house that is to big for us with a friend.
100 Transport - We both catch the bus to and from work. We live down the street from a shopping centre and walk there. Car recently died and decided not to replace it.
250 Food
60 Power
55 Gym Membership
135 2 Mobiles + Internet
50 Medical - Prescriptions/Basic Extras cover.
200 My spending money
200 Mrs spending money
$1640 Expenses per fortnight.
$1050 excluding rent.
$1280 Savings per fortnight.
$1870 with rent.
Can't afford to hold insurance policies personally at the moment so we both have appropriate Life/TPD/Income Protection cover through super funds, but other than that can't see any glaring omissions. That's been our budget for the last 1.5 years, seems to work for us.
If that's steady income, and assuming that 55k is including super, you'd be eligibile for a loan of about $250-$275k. Property of about $285k with a 5% deposit of about $14500, capitalising LMI for a total LVR of about 96.5%. That would factor in $1200/mth living expenses by the bank - mine are about $1750 as shown above.
Payments would be about 46% of net income in the first year at current rates, well into 'mortgage stress' territory obviously, but for the first 5 or 6 years of the loan if you treat that as your savings + investments as well as housing costs, that's not terribly over budget. At the end of year 5, assuming growth over the period of 2.5% p.a. (not a given, but seems pretty reasonable to me that over a 5 year window a decently located property would at least keep up with inflation) you'd be below 80% LVR without making any extra repayments by the end of year 5. If you had no capital growth and didn't contribute any wage growth to the mortgage, you're looking at 10 years.
Your repayments, assuming wage growth of 3% and taking into consideration the extra amounts lost to increasing SGC percentages over the next few years, would still be about 42% after 5 years. You'd have about 65k equity in your property though, and could refinance the remaining amount over 30 years again - bringing repayments down to about 39.5% of net income if you wanted. Percentage of income will be higher as interest rates increase again, but assuming interest rate increases come about due to inflation including property you'll be better off sitting on an appreciating asset than getting 5% p.a. rent increases.
Considering that owning the roof over your head is a solid lifetime investment, I wouldn't have an issue with allocating my housing and savings/investments budget sections to the mortgage.
That buys a two bedroom apartment in Brisbane across the street from a train station that takes less than 20 minutes to get to central station.
I'm 23, and while that's a very tight budget and buying a house on 55k on your own is likely to be even tougher, it doesn't look to me to be a bad decision financially.
Either I put more value in owning a home than some others here due to it's dual benefit of getting off the rent cycle and also having future access to an asset that can be leveraged highly for investment purposes, or I'm just not as frightened of paying that much
Benefits:
No terrible landlords.
Rent money is no longer dead money, and the mortgage becomes a savings plan allowing you future access to cheaper investment lines of credit.
Costs:
It's tough for a few years paying off your residence on your own. Shock horror.
I spent far too much of my time putting that together considering it will no doubt be picked apart immediately. The numbers stack up for us though, and me and my partner are the only people that need to worry about that.
To each their own, I just can't help myself when people say "It can't be done!" when what they mean is "That will be tough and less than ideal!".
