Then you can sell, be 0% in debt, and have ~$150k in your pocket. Your point?
Confidence in Australian Housing Market
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Then you can sell, be 0% in debt, and have ~$150k in your pocket. Your point?
ummm - this doesn't make any sense.
what is pretend about the fact that one could sell and release just under $200k to have in their pocket? or refinance up to 80% and have an extra$80,000 in their pocket? or hold as is and let the rents catch up with the increased value and have the positive cashflow in their pocket?
i don't really care how the money gets into my pocket, as long as it does.
and what do you mean about a debt growing at 10% per year? if the debt when they bought was $200k, and X years later the debt is still $200k, then it hasn't gown at all.
Supply myth
Finally a property article that reflects reality, and doesnt perpetuate the myth of under supply:
http://theage.domain.com.au/real-estate-news/blogs/property-values/affordability-and-the-supply-myth/20101126-189ta.html
Too bad its only a blog post, and not in the printed paper.
Finally a property article that reflects reality, and doesnt perpetuate the myth of under supply:
http://theage.domain.com.au/real-estate-news/blogs/property-values/affordability-and-the-supply-myth/20101126-189ta.html
Too bad its only a blog post, and not in the printed paper.
that was a pretty "non event" article.
however, you miss the point. there is an under supply in "some" area. that is why there a people camping out in the middle of winter to score themselves a block of land in canberra - that is why there at 30 groups thru open homes for units in sydney, that is why my last sale didn't even make it to market before being fought over by two cashed up buyers and sold for top dollar ... but that is also why properties can sit on the market for months without a nibble in areas of the gold coast.
however, you miss the point. there is an under supply in "some" area. that is why there a people camping out in the middle of winter to score themselves a block of land in canberra - that is why there at 30 groups thru open homes for units in sydney, that is why my last sale didn't even make it to market before being fought over by two cashed up buyers and sold for top dollar ... but that is also why properties can sit on the market for months without a nibble in areas of the gold coast.
Lol, what I mean is that the person who buys your house x years latter will borrow almost all of what they need, meaning his debt and contribution to national debt increases by 10% per year.
You are 100% correct that many individuals can profit.
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Well if that is the case there would be homeless public servants on 70k a year. Finding a place is tough, but I haven't been homeless, yet :S
And it is 100% logical that property will be better than renting in the long run (.ie 30 years and give you a good return) even at modest rates of return of 3% at current prices after a 7 year period of owner occupation you have a really good return.
What I am arguing against is the belief that a 10% average return per year is appropriate for housing, or even a higher return on some properties is appropriate.
Aside from being morally reprehensible it is just unstustainable ..
IF those capital gains are assumed to be built into the behaviour of individuals in terms of their own willingness to pay (ie their valuation of the property), then we reach a point where the required return becomes so high that the next buyer simply cannot afford to service the debt.
At this point the price stagnates and as I've said earlier this would be as good as a fall as the 0% return assumption takes thousands and thousands off the value of the home.
This would obviously put our entire economy in the crapper and the government would most likely bankrupt itself bailing out banks (not a good prospect for a public servant like myself I mean I could probably work in private but the lifestyle up here is pretty good
).So why I say risky, is because if we meet that point where required return cannot be reached without intervention, we're going to see things happen that haven't happened in a long time. What the result would be I don't know.
I'm not one of those spruking for a crash. I like to look at facts. I want to buy myself but am of the realistic understanding I really can't afford to buy much of anything at the moment.
maybe i don't read all the threads - but i've never seen those sorts of returns touted. in fact, those of us who have been around a while vehemently deny this happens.
might have 3 years of no growth, two years of slow growth, one year of dramatic growth, one year of minor falls - and repeat.
over the 7 year period there might be an average of 7-10% growth in total, but not every year. some years might be 20%, some years might be -5%.
and it is never the whole country at the same time in the same stage of the cycle. each area takes turns.
to believe otherwise, or to argue against otherwise, is ignorant.
Yes, I put it there in my signature so that people can see my bias and take what I say, or otherwise, knowing that.
The market (in Sydney) has been flat since 2003 to 2008. The fact that the market now gets to show 20% returns in one year is perfectly normal behaviour - so that it reverts to trend.
At the risk of making an enemy (another one
) let me say that these last 3 snips, actually reveal where you are coming from (at least to me). OK, I get that you can't afford anything, or more acurately, you cannot afford anything 'up to your standard' BUT railing against the market, calling it reprehensible, unsustainable, etc does not mean the market will listen to you - it won't.To quote someone: "The market does what the market does and it does not do it to you".
The market does not care what you think. It does not care how well constructed your argument is. It will just do what it has always done - with or without you.My folks bought a house for 70k back in the early 1990, it just sold for 400k, 20 years latter, that is about 9.5% growth per year. If I could track it, I'll bet most of that comes from the last few years too :S And this is in an outer suburb which is still considered to be relatively 'cheap' housing.
Look, I'm not arguing that housing is a bad investment, it is a terrific invesment which is why I want to get into it, but I don't believe the last few years have seen reasonable growth. The average wage should be able to afford the average mortgage size in a cheap area.
Housing has gone from my income (net~950 per week) being able to afford a mortgage to literally not being able to borrow enough to afford almost any house because things have jumped so fast and all the cheap properties are now 380-450k. (350 is rare but does exist). Great for home owners, not so great for first home buyers.
It is a lot like the stock market in appearance, where people were saying that $150 a share was a fair price for RIO, well it went down to about $30 a share and is still only about 50% of it's peak. Certain stocks have never recovered and the worlds stock market is still shot into volatility and world governments are still going broke as a result of the mess housing prices have caused.
FYI if we make it 1.07 growth each year, the price drops to 250k, 8% is 300k. Which is a lot more reasonable and still highly profitable for my folks.
A basic three bedroom house in an outer suburb would be fine. To basically afford what my parents could afford to buy on McWages.
250-300k, i'm happy to pay, the extra 80-100k added on the last couple of years, what a joke that is.
FYI - a constant compounding growth of x% of property value per year is an exponential growth pattern. The % growth should be decreasing as house prices move high (using wages as the benchmark), but it is doing the exact opposite until the last quarter, where it stopped.
I can understand your pain but 'morally reprehensible'? I think you need to apportion the blame where it's due. In Victoria for example voters have been none too happy about planning, public transport, roads infrastructure, the quality of schooling etc, and these issues are exacerbated in outer suburbs. Add FHB giveaways and it's understandable that buyers who can pay more, will pay more to avoid these issues.
i don't know what outer suburbs you're talking about - i'm not from sydney. but put in campbelltown with your requirements of 3 bed under $300,000.
came up with 89 listings without even trying.
http://www.realestate.com.au/buy/wi...000-in-campbelltown/list-1?preferredState=nsw
every generation since time began has been having a crank about affordability. considering 120 years ago the majority of people lived in slums, 10 to a room, with no amenities, i don't think anyone nowadays is hard done by.
I really don't see how that shows housing is affordable. There are probably houses in sale or other rural areas for under $250,000 too.
You can cherry pick cheap properties. I can say on the same line that housing in Canberra is dirt cheap because you can get units for 170k in quenebeyan, or buy rural houses for 300k or less, doesn't mean it is worthwhile in terms of value for money (and therefore necessarily cheap) it just means the price is a bit lower and there could well be a good reason for that.
It could well have been half that price a year ago but campbelltown does look affordable. Not sure if you would have any luck renting out the rooms though, which is also a consideration.
If that house had gone from 150k to 310k in 2 years would you still call it cheap or affordable ?
You CAN buy a three bedroom house in an outer suburb for very reasonable prices. My 21 year old son started looking about a month ago and could buy a three bed/two bath pretty nice place at Slacks Creek, 15 mins to the city on the freeway (out of peak hour) for around $300K to $350K. He didn't want to travel that far, so has chosen a two bed boring unit five minutes from the city (out of peak hour) which he got for $292K.
He earns $38K per annum and is borrowing $292K (full purchase price). He has no savings (has been paying way more than required on a car loan though, instead of saving).
I only know the bits of Brisbane that I have been looking at (inner 5km ring) and outer southern suburbs along the freeway, but I know from other posters on here that similar good buys are available in other cities.
My son "would like" a bigger, flashier place, but he knows he has to start small, because that is all he can afford.
It can be done, and those who moan that they cannot buy a decent house for "McWages" are just looking for excuses.
National auction clearance rates of around 60-65%, including Sydney. Thats around 40% unsold. Its hardly a drought of properties on the market.
what idiot lender would give someone $292k on a wage of $38k............
whats the kid gunna eat, rice??
no wonder people are in mortgage stress in some areas...
i wouldnt sleep at night knowing my child was in this situation, seriously...
the idea of buying is great but the finance amount is ridiculous especially when he has zero sayings..
i must be old....
what ever happened to proving he can save?
who was the bank/outlet?
depends whether you're talking rentals or ppor's, i guess.
but as pointed out - some areas are oversupplied, some areas are undersupplied. to lump everything in on a "national" basis is naive.
hang on ... above is your quote. you were having a mutter about not being able to afford to buy in the outer suburbs for less than $300k on (your term) mcwages.
i just pointed out 89 3 bedroom houses in an outer suburb for less than $300,000.
so, what's your problem? i can be done. it is doable.
the outer suburbs of 40 years ago are no longer the outer suburbs due to growth, but they would have had the same vibe as today's "outer" suburbs - lack of infrastructure, lack of public transport, long commute (comparatively). also, many investors on this forum have properties in campbelltown with no problems with tenants.
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if you'd read wylie's posts on her sons' purchase, you'd know that he is renting out the spare room to a friend and is paying interest only on his loan
at the going room rental rate of $150/wk, and interest only repayments of around $395/wk ... and on a wage of $38,000/yr ... he'd have around $350/wk spare.
i wouldn't call that living on rice. he will have to budget and be reasonably frugal, but wouldn't say $350/wk after mortgage is poverty level.
say/wk
- petrol $20 as he lives 5mins from work
- body coporate $30
- utilities $30
- food $100
- play money $50
still leaves $120 over for his car payment or whatever. food and play money are adjustable ... sure it will be tight-ish as he adjusts, but it is doable.
those who whinge that they can't are only creating excuses for their choices. get rid of can't from your vocabulary and replace it with "how can i?"
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