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its a bloody outrage what it is ? ?
The future of Australian property prices
- Thread starter Joe Blow
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Yes, not long ago the media was up in arms about banks letting people borrow too much money, now they are up in arms because the banks wont let them borrow too much money.
There's no pleasing some people. ?
It hasn't taken long for all of the stories about people not being able to meet mortgage payments. I honestly don't know what people thought would happen when you borrow the maximum amount at the lowest interest rates seen. I still think it was a 'sit and pray' mentality ... sit and keep paying it down and pray that when rates did raise they would be far enough into their mortgage for it not to matter too much.
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It takes a hell of an income to put a dent in a $750k mortgage, I was on good money when I was working $160-$200k and I never went in deeper than $250k. The debt has to paid with after tax dollars, so in reality $250k is really $350k before tax plus interest (back of the napkin).
I don't know how people could sleep with $750k hanging over their heads, there must be some incredible wages getting paid at the moment, or people are a lot less risk averse than I was.
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I’d argue it’s less about risk aversion and more about necessity. Shortage of rentals, large property value increases over years and years prior to you know, about 12 months ago.
If you rent and work somewhere and you don’t want to or can’t move and you don’t want to rent anymore, realistically… what choice do you have? You just have to take on that risk.
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That is about choices, not about options.
If you chose to work somewhere and don't want to move, that's a choice and it limits your options to what you can earn.
If you are prepared to move to somewhere that the pay is greater and the living costs are less, you are in a position to have more choices and more options.
I didn't want to move to the NW of W.A, into an asbestos and tin house that wasn't air conditioned, with a wife and three kids under three.
But to save enough money, for a decent start on the housing ladder, there wasn't any other choice as far as I was concerned.
The options were, stay in Perth on struggle street for the next 10 years, or go North for a few years, then return to Perth and bypass struggle street.
I made the choice to go, at the time the wife wasn't happy, now she thinks it was worth it.
My older brother told me at the time I was a w@#%er and should do what he was doing, stay in Perth get a big loan, pay it down and then flip it and move up to a better house, that was in 1979.
He still is in that house and we both worked at the same place doing the same trade back then.
Everyone to their own, as long as people are happy with their choices, that is all that matters IMO.
It is only those who aren't happy with their choices, that do all the complaining.
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750k gets you basically nothing in Sydney/Melbourne, especially not if you have kids or want to have them and live somewhere near a school.
You have to go way out to the west of Western Sydney or down to Wollongong for 750k to get you a 2 bedroom townhouse.
A sibling of mine got their foot in the market in a 2 bedroom redbrick apartment in the Eastern Suburbs, right next to a highway paid something like 650k before the pandemic, apartments in that same block now trade for 700-750k.
Wages aren't incredible unless you're in IT or management. People just stump up and hope they can pay it off on the 30y loan.
The implicit bet is that prices will continue to rise.
greggles
I'll be back!
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If I was someone buying into the market today I would target a house in an area that isn't too fashionable but is ripe for future gentrification. I would target a house that needs some work so hopefully you would get a decent discount at the time of purchase keeping your debt as low as possible. Then I would slowly add value to the property over time by repainting and renovating it using your own cash flow and not getting into further debt. This is almost certainly a winning approach if you select a good property in the first instance.
Keep debt levels as low as possible and add value over time. It takes effort but most things in life do.
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Well then interest rates need to go up further, so that people can't afford to get the loan and those who have a loan have to sell, then the market finds the balance.
Just allowing prices to keep spiraling up, either makes people take stupid loans, or prices to collapse when those loans can't be serviced.
People constantly putting themselves under financial stress eventually manifests itself in personal health deterioration, relationship deterioration, mental health issues or a combination of them IMO.
Not for me, I would rather move to Darwin and I don't like the heat, or the humidity.
i stopped at Iron Knob one time a fair few years ago, we were driving the caravan back to Perth, anyway the golf club was having its xmas party and they invited the wife and I along, great people great night. But talking to one of the blokes there I asked him what he did, he said I drive haulpacs, I said where, he said just out of Port Headland he was FIFO.
At that stage I thought all the FIFO's were out of Perth or Busselton, I hadn't realised they came from everywhere in Australia.
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I would probably do the same, but i would probably also look for work somewhere North that paid well and supplied a house, then I would negative gear the property I had bought.
Go hard for a few years and then move back to where I wanted to be.
Yea I agree. I am paid pretty well these days (a few recent promotions, in a hot industry...just kinda fell into a niche area in the past 12months) and I am definitely not comfortable with a 750k mortgage. Even before the interest rates went up. Maybe if I had a combined income. But when I buy a place of my own in the future I will be sticking to the maximum 5 x salary rule-of-thumb. For a 750k mortgage that's 150k a year, but that would be a maximum (and you'd want a steady job and not too many things to fix/go wrong).
Well then interest rates need to go up further, so that people can't afford to get the loan and those who have a loan have to sell, then the market finds the balance.
Just allowing prices to keep spiraling up, either makes people take stupid loans, or prices to collapse when those loans can't be serviced.
People constantly putting themselves under financial stress eventually manifests itself in personal health deterioration, relationship deterioration, mental health issues or a combination of them IMO.
Not for me, I would rather move to Darwin and I don't like the heat, or the humidity.
i stopped at Iron Knob one time a fair few years ago, we were driving the caravan back to Perth, anyway the golf club was having its xmas party and they invited the wife and I along, great people great night. But talking to one of the blokes there I asked him what he did, he said I drive haulpacs, I said where, he said just out of Port Headland he was FIFO.
At that stage I thought all the FIFO's were out of Perth or Busselton, I hadn't realised they came from everywhere in Australia.
The promises of house prices always going up, a 'sure fire way to set yourself up for life', 'you can't lose in real estate' mantra's, all contributed to it really. But even when affordability was brought up, the policy was to just make it easier to get money and/or add to the ability of first homeowners to get grants. But didn't that just make prices go up? People had an extra 10-20k, that didn't make things more affordable that just made it easier to bid more money. I always felt the gov's in power were just playing 'hot potateo' with the market ... keeping it going and hoping it'd blow-up in the next gov's face.
I also have very little sympathy for landlords/investors. All investments come with a risk but I'm sure they will try to put it off onto others.
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Apparently the defibrillator, is getting the last bit of life out of the deflating Sydney property market.
By getting first home buyers into the hamster wheel, I mean the property market.?
https://www.smh.com.au/property/new...s-driving-competition-up-20230209-p5cj7h.html
First home buyers are driving up competition for entry-level Sydney homes thanks to stamp duty changes that have given them up to an extra $66,000 to spend at auction.
First time buyers have been out in force since the roll-out of the new property tax, which allows them to swap a lump sum stamp duty payment for a smaller annual tax for properties worth up to $1.5 million.
Those who opt for the tax, introduced on January 16, have ended up with tens of thousands of dollars extra to spend on their first home, agents report, leading to stronger-than-expected results for eligible properties.
A NSW Treasury spokesperson said the tax change was not expected to have any noticeable impact on dwelling prices in NSW
By getting first home buyers into the hamster wheel, I mean the property market.?
https://www.smh.com.au/property/new...s-driving-competition-up-20230209-p5cj7h.html
First home buyers are driving up competition for entry-level Sydney homes thanks to stamp duty changes that have given them up to an extra $66,000 to spend at auction.
First time buyers have been out in force since the roll-out of the new property tax, which allows them to swap a lump sum stamp duty payment for a smaller annual tax for properties worth up to $1.5 million.
Those who opt for the tax, introduced on January 16, have ended up with tens of thousands of dollars extra to spend on their first home, agents report, leading to stronger-than-expected results for eligible properties.
A NSW Treasury spokesperson said the tax change was not expected to have any noticeable impact on dwelling prices in NSW
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baked beans for life
Isn't this just the same gimmick as before? Boost first home buyers with extra $$$ ... just means they pay more. It's not opening up new opportunities for them to buy. —Also, I must be a peasant because I also can't believe that sub 1.5mil is 'entry level'. Also, if you're spending above 1mil for a property, why would $66,000 be an issue for you?
Yup. From their 30s to their forced retirement age ... what a way to live.
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I can hear it now, "look honey, we have another $66k we can pay for the overpriced house".
If we get in financial trouble, we have always got Wallet Wizard. ?
wayneL
VIVA LA LIBERTAD, CARAJO!
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Except maybe when they're $17 a can? (It's rapidly heading that way)
I'm beginning to believe the story about the goose that laid the golden egg is allegorical about hyperinflation, an egg eventually being worth its weight in gold.
Hahaha. Agreed. It's not encouraging people to look in other places such as new property developments. It's not adding to the supply, only the demand and competition. I'm sure there are experts who have said that such policies aren't likely to ease the supply or affordability issue. It's a shame no one has taken heed. I'm glad the veil is finally starting to lift around the 'real estate can't fail. it's king'. I'm not against owning real estate (as I've stated) its just the societal fetishism of it that I don't get.
To our systems credit, though, other countries are having similar issues with rent affordability and the real estate market.
And I really hope people don't start getting into things like wallet wizard. those types of payday loans are predatory.
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Met one once who had a second job driving taxis in Hobart.
They come from afar yes.
No idea why he drove taxis. I doubt the money was needed or really worthwhile. Gave him something else to do I suppose.
