Haha really? There're people who can probably afford that on an intern salary lol...
That's not to detract from starter's achievement though - well done!!!
Confidence in Australian Housing Market
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Haha really? There're people who can probably afford that on an intern salary lol...
That's not to detract from starter's achievement though - well done!!!
At 7.04% IO repayments on a $350K loan come to roughly $950 a fortnight. Where are you getting your figures from?
My son's IO loan of $292K will cost him about $396 per week. His school friend will contribute $150 towards living expenses. If it was not a friend, he could get more. There are PLENTY of young people willing and happy to share with just one other male. Why do you doubt it?
On Gumtree, the prices start at very basic $120 per week for one room and head well over $200 for better style, better amenities.
You have said you would not like some newbie to come on here, ask "is it a good time to buy" and be bombarded by enthusiastic "yes, yes, yes" from the older members. This really does not happen.
You have not been here long, but well before you first posted, there have always been "yes", "no" and "yes.... but providing...." and plenty of "absolutely don't buy now", and every other answer along the scale.
There is a good mix of opinion on here. I know that you know that, so stop pretending you are here trying to save "just one newbie" from being seduced into parting with their money because we didn't give them the "real" story.
We all know you are having fun, and believe me when I say, that you are being played with in the same manner. Have you worked out by now that we are "doing" people. Not always, some of us not that often, but actually doing something, working with the system (flawed though it may be).
Apart from having some internet "fun" why do you keep bothering? Go and do whatever it is that you want to do, but don't feel you have to save the newbies who may stumble upon the forum and be brainwashed into signing a contract, any contract, on something because we say they should.
Please believe me when I say newbies never get a "buy, buy, buy" message. There are some very wise people on here who have made a lot of money out of real estate, and just as many who are now very cautious about buying right now, depending on a lot of other factors.
There are just as many who have bared their souls and told of mistakes they have made. We are not simply a "rah, rah, rah" crowd and I cannot understand why you believe that to be so.
So, it all comes down to you just enjoying yourself in my opinion. Which is fun for a while, but now it is just getting tedious.
You have not been here long, but well before you first posted, there have always been "yes", "no" and "yes.... but providing...." and plenty of "absolutely don't buy now", and every other answer along the scale.
There is a good mix of opinion on here. I know that you know that, so stop pretending you are here trying to save "just one newbie" from being seduced into parting with their money because we didn't give them the "real" story.
We all know you are having fun, and believe me when I say, that you are being played with in the same manner. Have you worked out by now that we are "doing" people. Not always, some of us not that often, but actually doing something, working with the system (flawed though it may be).
Apart from having some internet "fun" why do you keep bothering? Go and do whatever it is that you want to do, but don't feel you have to save the newbies who may stumble upon the forum and be brainwashed into signing a contract, any contract, on something because we say they should.
Please believe me when I say newbies never get a "buy, buy, buy" message. There are some very wise people on here who have made a lot of money out of real estate, and just as many who are now very cautious about buying right now, depending on a lot of other factors.
There are just as many who have bared their souls and told of mistakes they have made. We are not simply a "rah, rah, rah" crowd and I cannot understand why you believe that to be so.
So, it all comes down to you just enjoying yourself in my opinion. Which is fun for a while, but now it is just getting tedious.
Well I could make an arguement about your figures but that's beside the point. You obviously have a different point to make than the rest of us Beebop, so here is the point that I am making. People in Prahan, as well as right through the ACT, as well as mostly everywhere else, are buying in areas where the prices are appropriate for their level of savings and earnings. As evidenced by the fact that house prices are increasing on the whole, and area by area people are paying low 20% of their earnings in repayments, and there is not evidence of growing foreclosures.
If people who are buying right now could not afford to pay more, they wouldn't be driving prices up.
And mostly Beebop my point is that if you can't afford an area then you should stop trying to buy what you can't afford, and claiming that even if you bought something affordable it will only drop in value anyway.
If you thought you'd be able to cause a scare in the market and get people to sell to you supercheap, I think people on this forum are not that gullible
If you have actual evidence that shows that people are buying houses they cannot afford, now is the time to show us, because our evidence shows otherwise. If you have actual evidence that prices have dropped never to return then show us. Otherwise just admit that across the board people are paying what they can afford, and that even though you want more, you may have to start smaller than you expected. It's not a sin to start small, most of us do it.
How can an intern service a 350k loan ? I'd love to see the math on that one.
I meant, someone on an intern's annualised salary can.
Well I could make an arguement about your figures but that's beside the point. You obviously have a different point to make than the rest of us Beebop, so here is the point that I am making. People in Prahan, as well as right through the ACT, as well as mostly everywhere else, are buying in areas where the prices are appropriate for their level of savings and earnings. As evidenced by the fact that house prices are increasing on the whole, and area by area people are paying low 20% of their earnings in repayments, and there is not evidence of growing foreclosures.
If people who are buying right now could not afford to pay more, they wouldn't be driving prices up.
And mostly Beebop my point is that if you can't afford an area then you should stop trying to buy what you can't afford, and claiming that even if you bought something affordable it will only drop in value anyway.
If you thought you'd be able to cause a scare in the market and get people to sell to you supercheap, I think people on this forum are not that gullible
If you have actual evidence that shows that people are buying houses they cannot afford, now is the time to show us, because our evidence shows otherwise. If you have actual evidence that prices have dropped never to return then show us. Otherwise just admit that across the board people are paying what they can afford, and that even though you want more, you may have to start smaller than you expected. It's not a sin to start small, most of us do it.
Most of the people that have been living in a particular suburb for a long time could not afford to buy in that suburb if they were to make their purchase today. That is what you seem to be missing.
The impact on banking stability might be related to that 20% figure, but the affordability, ability to pay and therefore future house price growth is related to what people are able to pay and to maintain that 20% average they'd need to be earning 280,000 per year to purchase a 350k home. So obviously the average income is not that high.
The question is not what someone paid ten years ago, but what people are going to be able to pay tomorrow.
Say a 3x1 in Pakenham is 350k, lets grow that at 10% per year for 5 years which will make the price 563.
Lets be generous and increase wages by 4% per year. Average wage becomes about 79k (wages won't in reality, grow that much in pakenham so this is a very generous assumption). Fortnightly wage of 2329, mortgage payment of 2029.
This is also for a 30 year loan. So what makes this worthwhile ? 1) extortion. If you don't get in now it will only be more expensive 2) Expeceted price increases into the future. 3) Renting sucks.
So lets assume that this does occur, and the family will purchase because the wife earns enough to feed them and send the kids to the doctors. The house is bought on the expectation that they're not really losing money, because in 5 years time their wages will have gone up and the price of the house will have increased by 60%, making the family well off.
Income is now 96k a year and the house costs 907,000.
Do I need to do the math ? Ok I will.
Salary is 2738 and the cost is 3268 per fortnight, taking up most of the wifes wage, leaving not enough for a young family to live on.
This is not taking into account any shifts to lower paid work, and is extremely generous to assume a 4% pay rise per year.
What happens next is that growth HAS TO SLOW otherwise the family coming second simply won't buy the house at the demanded prices.
Then you've got the double whammy of lower asking price plus expectation of lower capital gains.
So unless the extorion effect of 'your family will be out on the street because there are not enough properties' dominates, prices will fall.
Beebop I think we are doing starter a disservice by focussing purely on his situation, which in any case is not the point but rather one illustration.
But if you must refer to starters situation then you should be accurate. He did not specify how much he borrowed but the purchase price was 350k. He started with some savings and then saved 70% of his wage on top of that.
Anyway he has since baught again in Prahran so I think it's safe to assume he could afford it.
Here's a quick calc.
House: 350k
Deposit: 20%
Loan: 280k
Interest @ 8%: $430pw
Repayment @ 30 yrs: $179pw
Total P&I: $609pw
Gross Avg Adult Salary: 68k
Net Avg Adult Salary: $52k or $1000pw
Conclusion
If you buy a $350k house on 80% gearing, you'll have $400 left to spend each week. Not a great deal, but enough to get by. If you take an interest-only loan, you'll have $570 left to spend pw.
House: 350k
Deposit: 20%
Loan: 280k
Interest @ 8%: $430pw
Repayment @ 30 yrs: $179pw
Total P&I: $609pw
Gross Avg Adult Salary: 68k
Net Avg Adult Salary: $52k or $1000pw
Conclusion
If you buy a $350k house on 80% gearing, you'll have $400 left to spend each week. Not a great deal, but enough to get by. If you take an interest-only loan, you'll have $570 left to spend pw.
A 70k deposit. Fanticiful numbers, just admit that housing is unaffordable and starter is not giving us the whole truth of his 350k loan for a 2 bedder on a graduate salary (most likely a grad salary times 2 plus help from the folks)...
Beebop I obviously have to say this once more with feeling. Its a given that many people cant afford all suburbs. As a suburb goes up in value some people cant afford it. But as land is released, subdivided and developed, land is made much more affordable for many people. Nothing new about that. You need to buy where you can afford, like the rest of us.
Just what is it about changing suburbs you have a problem with?
Just what is it about changing suburbs you have a problem with?
You keep quoting a $350k loan.
Let's talk about a $350k property. In the old days (when property was cheap
) you would need a 20% deposit plus purchase costs - in cash with no FHOB to help - to secure the property. That is $70k for the deposit, plus about 6% for the purchase costs = $21k. A total of $91k in cash. The loan would be P&I - no IO back then, so the loan would be $280k.Based on these traditional criteria, your figure of a $350k LOAN would equate to a house costing around $440k. This is not a FHB's pricepoint for a first house. You need to start thinking a bit lower for the first one - unless your income would allow you to go higher.
When I bought my first house, I paid more for it than the previous owner did, who bought it at a cheaper price some 15 years before me. Your argument is stupid. Look outside the current window of 6 months or so that you are using.
Grad students have never been able to afford to buy anything. Why? Because they have been in Uni studying and earning no money.
But wait; some of them did work, and saved some money for their cash deposit with no FHOG to help, or they had some help from Mum and Dad. Unless you fall in to this exclusive Club, you will be like everyone else and have to start small, and work your way up, buddy.
The other thing that you mention is the figure of 20% of someone's income for loan repayments. Where does that enter into the argument?
Traditionally, Banks work on 30-35% as a maximum for loan repayments as a % of gross income. naturally, everyone pushes this boundary to the limits.
So, if you wanted to, you could work on those numbers to help you work out what is an acceptable amount for you to spend.
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Can't afford anywhere, thats the problem.
Let's talk about a $350k property. In the old days (when property was cheap ) you would need a 20% deposit plus purchase costs - in cash with no FHOB to help - to secure the property. That is $70k for the deposit, plus about 6% for the purchase costs = $21k. A total of $91k in cash. The loan would be P&I - no IO back then, so the loan would be $280k.
Based on these traditional criteria, your figure of a $350k LOAN would equate to a house costing around $440k. This is not a FHB's pricepoint for a first house. You need to start thinking a bit lower for the first one - unless your income would allow you to go higher.
These mystical FHB entry point properties simply don't exist. What I have found is crap value for money properties that are falling apart and are therefore advertised for FHB.
And that is why I will continue to vote for the Liberals, because if I have to suffer, so does everyone else. Bring on work choices mark 2 I say ! Lets hasten the economic destruction of this country so that things can eventually go back to sanity.
Secondly, no one has a 70k deposit, if you do you are clueless. it'd take years to save that up and you would have basically given it away due to capital gains since then.
Based on these traditional criteria, your figure of a $350k LOAN would equate to a house costing around $440k. This is not a FHB's pricepoint for a first house. You need to start thinking a bit lower for the first one - unless your income would allow you to go higher.
These mystical FHB entry point properties simply don't exist. What I have found is crap value for money properties that are falling apart and are therefore advertised for FHB.
And that is why I will continue to vote for the Liberals, because if I have to suffer, so does everyone else. Bring on work choices mark 2 I say ! Lets hasten the economic destruction of this country so that things can eventually go back to sanity.
Secondly, no one has a 70k deposit, if you do you are clueless. it'd take years to save that up and you would have basically given it away due to capital gains since then.
Then stop being a victim and keep renting and be happy.
Can I suggest you ask Santa for a book called "The Little Red Caboose" as clearly you missed this lesson in life when you were a child. You need to change your thinking to "I think I can, I think I can, I know I can".
Why do we keep entertaining this loser.
The guy is either on here taking the **** out of everyone, or is actually that clueless about getting ahead in life.
Beebop, getting into property is possible (your calculations are completely incorrect). You can either continue with your victim attitude, or make changes that will help you get into property (eg, study harder and get a better job, rent and get an investment property first, etc).
Why do we keep entertaining this loser.
Because it is (for me, anyway) by turns, fun, annoying, irritating and more fun
The guy is either on here taking the **** out of everyone, or is actually that clueless about getting ahead in life.
I think it is the former, but so are many the replies. It started out that people wanted to show him how to get on the property ladder, and how he CAN afford to buy if he so wishes, but it is very clear by now (long ago, actually) that he is here for some fun and just to be argumentative.
But that's okay, because I have had plenty of practice with other immature teenagers (my sons)
. When I have something I want them to hear, I just keep saying it. I know they are listening, even when they pretend they aren't......Before we know it, Beebop will be on here telling us about the great place he bought and he will thank us all for persevering with him.
My God do we have a break through ?!
You say you "Can't afford anywhere" and what ?!
"thats the problem" !!!!!
All along we all thought the problem was that no-one else could afford anywhere, because of greedy land owners, and pending disasters. The world's about to end, and society's to blame.
But you have pulled the wool from over our eyes and shown us the real problem.
Congratulations Beebop!!
Now if only we could understand the problem further, perhaps you could part with some more wise words, like...
"I can't afford anywhere, that's acceptable to me". Or,
"I can't afford anywhere, yet ". Or,
"I can't afford anywhere, with a garage big enough for my Monster Truck ".
That sort of thing
.
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