Housing plan to tackle affordability

[tech/a]

You know I love armchair experts.

People with experience in only one part of the equation (and in some cases NO experience just theory) come out of the woodwork with un qualified opinion.Not only that but they take great delight in telling people who are experienced and are involved in practice---not theory---how it should be done.

They dont learn---simply because they now know it all

Few ever reach beyond mediocrety---as they soon find much to their chagrin--that life in theory doenst reflect life in reality.Their ideal worlds melt.
Harsh reality has these sheep battling to become the leading sheep---rather than aspiring to be a shepherd.

In all the above I see a great deal of regurgetation of other authors material.
Very little questioning or research into the reality of theory.

To these people I say be happy with YOUR LOT---youll never change the world as you'll never be in a position to!!!
No point in dealing in what should or could be---simply it is

Stop seeing those of us who have taken the hard knocks and the high risks and EVENTUALLY come out the otherside still breathing---as the enemy!!
Give us a break---when we use examples from OUR LIFE---to attempt to help you in yours its not chest beating----it just is!

 

[Happy]

One of the not explored possibilities is purchase of your first home little bit below your expectations. It is in not too bad area but not too flashy one.

Say you pay $200 a week rent, so you can afford to repay that kind of money per week and in current market one can secure about $120,000 loan ($190 interest, in 8% loan, so in 1st month $10 loan repayment).
I know not glamorous way to start the rat race, but you’ve got the foot in.
Some suburbs in some places have studio for twice or three times as much, but drop the suburb a notch and maybe, maybe outskirts, maybe bit further away.

Providing you can have some facilities in the loan like fortnightly repayments and no penalty for early repayments skip on some nights out and repayments can go fast forward.

If one is not prepared to live in dump maybe can arrange positively geared property, an option.

 

[krisbarry]

one can secure about $120,000 loan .

True, and most first home buyers have had that option in the past. But truely in todays market what can you find for that kind of money.

It would have to be a unit and in a dumpy condition, in a low socio-economic area, great for ciminal actvity!

An hour out of the city!

And maybe a one or 2 bedroom at the most.

That would be OK for me as I am single but what about a young family just starting out with lets say a child or 2, not an ideal setting!

No Lawn for children to play on, no pets to enjoy in unit blocks and plenty of noisy neighbours! bonking, drug dealing and throwing wild parties. Sounds like a real hoot! *** BEEN THERE AND DONE THAT!!! *** Luckily I was only renting!

 

[TheAnalyst]

I cant believe people really take the state and federal government serious, they say this in every boom and no one ever gets a place; so why even consider them to be serious they had a meeting and a nice couple of platters catered for them and some travelling expenses and accomadation paid for from the tax payer...then they went and caught up on some relatives and friends and seen some tourist attractions and had their meal allowance paid for at a really great couple of restaurants.

They went home disclosed this very important meeting to the media and nothing is done and when it does believe me history will repeat itself and people will end up leaving the homes because of some shonk mistake in the legislation and wont be able to afford to pay.

 

[tech/a]

True, and most first home buyers have had that option in the past. But truely in todays market what can you find for that kind of money.

It would have to be a unit and in a dumpy condition, in a low socio-economic area, great for ciminal actvity!

An hour out of the city!

And maybe a one or 2 bedroom at the most.

That would be OK for me as I am single but what about a young family just starting out with lets say a child or 2, not an ideal setting!

No Lawn for children to play on, no pets to enjoy in unit blocks and plenty of noisy neighbours! bonking, drug dealing and throwing wild parties. Sounds like a real hoot! *** BEEN THERE AND DONE THAT!!! *** Luckily I was only renting!

It's simply a stepping stone---a start.
Getting into the market.

Plenty of homes down south in Adelaide under $200K.
Plenty out North too.

I,m really interested in YOUR life plan and how you're going to fill it Kris.
Have you got one?

 

[mit]

I agree with Tech pretty much. Kris, you should try the forum

www.somersoft.com/forums/

It is a property forum, but getting beyond that if you search for some of the stories you will find many that overcome a lot of hardships and started out very humbly and have managed to overcome it. Most, I am sure if they had to start again would come out on top fairly quickly. There are quite a few here that also visit the other forum, probably wisely staying out of the debate.

MIT

 

[Smurf1976]

Say you pay $200 a week rent, so you can afford to repay that kind of money per week and in current market one can secure about $120,000 loan

Which isn't enough to buy a house literally next to the prison in the outer suburbs of Hobart. And yes, you guessed it, it's a low socio-economic area.

Basing the figures on $150K and assuming long term average interest of around 10% would be more realistic in my opinion. Remember that with low inflation the value of the debt doesn't "disappear" as in the past and of course abnormally low interest rates are just that, abnormal.

As for what is a relevant wage... I suggest that 35K wouldn't be too far wrong for a first home buyer given that a large portion of the total workforce is on 40-45K. (Even including the very high earners in the average only gets it into the 50's.)

Any yes, I do have a plan for myself. My concern is simply that in my opinion we're at the top of the cycle as far as housing is concerned. I read in the paper only today about Sydney being down 7% and the market flat overall nationally. I think that says enough.

 

[wayneL]

I would be interested in learning a formula to determine the intrinsic value of a particular piece of real estate.

This intrinsic value is not the price someone is prepared to pay, because that value is transient and depends on the economy, interest rates, public sentiment etc.

For instance it used to be (I have been out of this field for some time now) that commercial property was valued almost solely upon the yield of that property.

Steve Navra (one of the more sensible gurus around the traps) suggests that residential real estate should be valued this way also.

Thoughts?

 

[mit]

Personally, for residential, if the yield is 5%+ I would start looking closer at the property. This works fine for where and what I buy. I think Steve's rules are better as it takes into account local historical averages as typical yields can vary from place to place. I think these things are handy just to filter out the dross and keep you from buying at the top of the market.

MIT

 

[Happy]

OK, lets try a little bit harder, $200 you pay anyway, so we’ve got the $120,000
You also can snatch some disposable income say $50 a week (no dinner out, maybe cheaper wine for a while or no Tim-Tams - similar to what Anita Bell did - no Tim-Tams for 3 years) so we’ve got another $30,000 loan

Now we are talking $150,000 loan, I know studio or 1 br flat is not much, but we are not talking spending the rest of your life there this is being paid from the money you actually spend.

But when you spend it this way, for the inconvenience of mod-coms you actually retain some residual value of the money would actually disappear.

And if this cannot capture your imagination, don’t worry some never buy a property and live so it is not a crime, after all if everybody had own property, investment property owners would have a hard time.

 

[krisbarry]

It's simply a stepping stone---a start.
Getting into the market.

Plenty of homes down south in Adelaide under $200K.
Plenty out North too.

I,m really interested in YOUR life plan and how you're going to fill it Kris.
Have you got one?

Not interested in the real estate market at all for the next 4 to 5 years. It has become way over-priced. The stock market seems to be paying out a little better.

At the moment I have free accomodation in a nice suburb at a mates place, so why would I give that up for a ferral cream brick 70's unit 1 hour out of the CBD!

This has allowed me to clear a $23,000 HECS debt and start saving for a house deposit.

I am contibuting to my own super account with extra payments too.

I am 30 years of age and have no intention of having children.....woooo hooo! That is one debt relief I can be free from.

I have no other plans at this stage other than the fact I am dead certain that I do not want to be chained to a bank with a morgate for the next 30 years.

** My biggest regret is that I should never have gone to uni and then I would have saved $23,000 + Plus lost wages and I would have been able to buy a house by now.....you see Tech/a the damage that uni is causing.

A whole generation of uni grads paying off their debt before they can even think of getting into more debt by buying a house.

Did you know that the current HECS debt owed buy Australian's has topped $14 Billion Dollars

Now that has to take a serious dent out of the savings of young people, hence they are having less children and buying less homes.

 

[krisbarry]

no Tim-Tams - similar to what Anita Bell did - no Tim-Tams .

She must have been on a serious binge after that 3 year period with no Tim-Tams, as I saw here on TV just last week and she is quite a large lady. LOL

 

[Happy]

I got the same impression, she should have bought more houses and forget Tim-Tams for good.

 

[krisbarry]

LOL....too funny!

 

[tech/a]

Kris.

What did you do at Uni and why?

Do you hold any responsibility for anything in life---you seem particularly bitter--why?

30---living at a mates--getting rid of a $23000 Hex debt---how long ago did you finish your degree? What are you doing now?
Sorry but I'm fascinated with where your at at 30.

I'm also fascinated by the way you seem to think that your going to be chained to a bank if you buy property.
Done correctly you'll have the bank and its money working for YOU.

A quantum shift in thinking is needed here!!--or in 20 yrs time you'll still be bitter and twisted---not that Ill give a rats ---I'll be dead!

 

[mit]

I got the same impression, she should have bought more houses and forget Tim-Tams for good.

Her books almost turned me off property for life. It was all about screwing the last dollar out of everybody and doing everything yourself. Wasn't she the one who took her family to McDonalds for christmas dinner? Although Tim-Tam withdrawl will do this to people.

She actually got sick of property and went into shares instead.

MIT.

 

[Happy]

The moral is:
If you want something, sometimes sacrifice is the only way to get it.

Alternatively you can wait for Lotto win.

 

[TjamesX]

If you are at the stage where you need to buy a house for family/personal reasons then i reckon tread carefully and don't get into too much debt. But if you don't;

Renting is still waaaaay cheaper than owning the same place. The place I'm renting ATM for example, i live with a mate and we halve the rent;

To rent, yearly cash outflow (for me) - $8190

To own (assuming I own whole House and charge him his half the rent)
Desposit $38,000 (10%)
Interest only Loan $23,940 (part of which would be tax deductible)
Rent recieved from mate $8190

So all up to own I would need $38,000 tied up as deposit and I would have a cash outflow of $15,750 per year (just on interest - not including rates, maintenance etc). This yearly outflow figure would be reduced slightly due to tax deductability of half the loan.

All this for the privalege of owning an asset and hoping it will continue to rise in value , no thanks..... see you in a couple of years

TJ

 

[Smurf1976]

"You can't lose with real estate"

Um...

http://www.thecouriermail.news.com.au/common/story_page/0,5936,16200706%5E462,00.html

 

[mrfirkin]

Bloody Uni.

Seems as though these days every man and his dog has to go to Uni.

You are looked down upon if you haven't got some dumb ass degree.

In a few years from now we will have all these di*kheads, Uni degree in hand and there will be nobody to empty their garbage bins or fix their cars or perform many other TAFE taught trades all because Mommy just had to send little Johhny to Uni - Keeping up with the Jone's mentality.

Any fool can graduate from Uni today. it's just an extension of High School. Not too many years back, you actually had to be intelligent just to get in.

Just my 2 bobs worth.

Oh, and I'd hate to be a kid growing up today. They are doomed as far as home ownership goes.