Homes officially out of reach for under 35's

[Doovalacky]

Neg gearing if anything means you are providing discounted rent to a tenant.
If a neg geared investor can go out and buy another property why can't a similar person without that funds sink? Simply because they are not willing to make the sacrifices to do so.

If they really wanted to fix housing cost its land they need to look at. My first block cost 10k for 800m2 and it cost something like 80k to build. Now a similar block would cost me 200k+ and 170k to build.

I think my family is a good example of life choices.
Myself PPOR and 3 IP's atm. Equity for 4th but cash flow issue currently.
Brother has 1 car and nothing else to his name.
Sister 5 acre block and a 350m2 McMansion (With partner), nice cars, holidays every year.

Brother has spent the last 15 odd years ******* his money away even when parent were letting him live in an IP at heavily discounted rate.
However its always someone else fault. Be it my investing, parents helping me/my sister more (lol) or the government taking too much of his money.

The average youth today does not blink at spending $100+ on a mobile bill. I'm still on a $10 plan. It's those kind of choices that have got me ahead.

 

[VYBerlinaV8]

If you're 35 now than that means you've had around 15 years to buy a house. If you haven't managed that by now, well, you've missed your chance to buy a house young.

For those under 30, I'd suggest waiting and saving, as there'll be opportunities over the next few years.

Unfortunately, home ownership (and property investment) is not the simplistic, method based activity that many in this world would think.

(FWIW, I'm 36 and own 9 properties. I got my first professional job at 23, and have never had an inheritence or payout of any kind)

 

[younguns]

I think it is rubbish! We purchased our first house in 2008 when I was 25 and my husband was 28. We had been renting for a long time getting nowhere fast in Melbourne and decided to follow the work to WA. We moved in with family in a 3 bed house with 6 people and two dogs living there (fun times!) saved a 5% deposit over 4 months and with the help of no stamp duty, purchased our first home Since then, through allot of hard work and sacrifice (my husband spends 20 days a month working in the oil and gas industry while I'm at home with our 2 children) we have purchased 2 IPs, our first home has become our 3rd IP and we settled on our new PPOR in Sept 2011 which we are now renovating. Allot of our friends say we are very 'lucky' but I argue luck has nothing to do with it. They could all do exactly the same thing if they were willing to prioritise, set goals, make some sacrifices and then jump in and have a go!

 

[Ocean Architect]

Wonderful. Another thread full of people who agree that purchasing a home for 9x the average wage versus 3x the average wage is equally affordable

 

[cimbom]

I don't think it's "equally affordable". I would love to have access to the prices my parents did, where one person working in an average entry-level job could afford a house a few kms from the city. But I don't, so I try to make the best out of my situation. The prices are a lot higher but they're not "out of reach" IMO. Just my 2c

 

[Graemsay]

I think housing is less affordable than it was when I purchased our first home 15 or so years ago, and the primary vehicle for us in growing our wealth has been the boom in property prices during that time, which allowed us to upgrade PPOR 3x without really extending our mortgage. Sure, we worked hard and we made sacrifices etc....... but we were also incredibly "lucky" to be buying and selling homes at the times we have.

PennyK is making the same point that I was in my previous post. Namely all the prices rises that have been beneficial to investors have come at the cost of new entrants.

(At least, that's my reading of her post. Sorry if I misinterpreted it. )

I work in IT, and the salary scale for permanent programming jobs in Sydney and Melbourne is around $65K for a junior developer, and $100K to $120K for a senior. At least, they're the figures I'm seeing on Seek.

A junior developer (someone with a year or two post university experience) could afford to buy a house in Nathan's Western Sydney hunting grounds. (He reckons on getting $230K to $240K upon refurbishment.) Given the comments that these sort of areas attract, I don't think that would be an attractive option.

A senior developer (probably late twenties / early thirties and on) could afford the Ellwood apartment and associated renovations.

I tend to see housing affordability as a problem, but rather than whinging I think that you need to look at solutions. Off the top of my head:

• Build or renovate a property. This will earn sweat equity if all goes well. But a lot of projects are sold at a premium compared to a completed development.
• Save very hard. If the senior developer bought the Elwood flat he could conceivably clear the mortgage off within a decade. Repeat the trick, and it'd be possible to own a million dollar home outright by fifty.
• Start a business. Failure rates are high, but if it works out then housing affordability becomes less of an issue. If it really works out then it becomes a non-issue.
• Invest. I'm not sure if you're going to get a good enough return off shares or gold to guarantee buying a place outright within a few years. (I'm sceptical of trading your way to a fortune.) Property might or might not work, but I think it's going to be a rougher ride over the next ten years than it was over the last.
• Find a high-earning partner. (Being an IT nerd, that's not going to happen. )

But these aren't the sorts of things that people ten or twenty years had to do to get a nice property. (Which is what Cimbom is saying.)

Incidentally, the report isn't whinging, but saying that there is an affordability problem, laying out what the authors believe are the causes, and proposing solutions.

 

[Graemsay]

Wonderful. Another thread full of people who agree that purchasing a home for 9x the average wage versus 3x the average wage is equally affordable

And also people who've benefited from the growth in values from 3x to 9x the average wage complaining that those who've been penalised by that are a bunch of whingers.

 

[Ocean Architect]

And also people who've benefited from the growth in values from 3x to 9x the average wage complaining that those who've been penalised by that are a bunch of whingers.

Sorry I took so long to reply. I must have fainted after reading your post.

"Common sense? Here? On this forummmmmmmm..." *boof*

 

[Angel]

"A junior developer (someone with a year or two post university experience) could afford to buy a house in Nathan's Western Sydney hunting grounds. (He reckons on getting $230K to $240K upon refurbishment.) Given the comments that these sort of areas attract, I don't think that would be an attractive option."

That is true, but remember, affordable is not meant to be ATTRACTIVE. That is the whole point we oldies are trying to make. It was never ATTRACTIVE to buy our first homes which were either out in the boonies compared to where the trendies want to live today, or very run-down. They were way below median prices and standards, not the median houses quoted in Sydney. The median house prices in the other capitals are 4 to 6 times the average wage, NOT 9 TIMES.

Another example of an affordable property I know of is in Maylands, an inner ring suburb of Perth. A couple of years ago I house-sat there in a perfectly nice villa that I would be happy to purchase. I had a twenty minute walk to the shopping centre and the train station, past what we would describe as highly unattractive Commission towers.

The 1990s 2 bedroom villa I stayed in was worth around $300K, a $20K reno would make it "good as new". It was on the same street that included brand new mansions facing the riverfront.

 

[luce.rocks]

When I was 23 I gave up my trendy boho life in Surry Hills and moved to Orange to live with my mum, get a job, save a deposit and buy a house. Bought a house in Orange in 2004 for $120k.

Has been refinanced 3 times since then to help for deposits on other IPs that mum and I bought together.

This year we're selling 3 IPs. The sales should net enough that hubby and I could maybe afford an unrenovated semi in the Inner West. We'll still have a big mortgage, but at least by putting down a big deposit we can look for a house instead of a unit.

And that's how you work your way into the Sydney property ladder if you're young, on a small wage, don't have great salary prospects in your career, and don't have any inheritance coming to you any time soon.

FWIW, I'm not sure we'll buy in Sydney anyway because it would leave us so stretched. Perhaps we'll just buy in the Blue Mountains and have a really small mortgage, and live comfortably

The city is a hard place to live. If you're at your financial, time or emotional limit, and you don't realistically see any way to change your situation, consider getting out.

 

[Piston Broke]

The real reason is that buying houses generally gives crappy returns.
Why would you buy when the returns are 2-3% and CG is F.A.?
Renting is half the price, and so many suckers happy to lose a few hundred bux a week.

 

[Rockstar]

Wonderful. Another thread full of people who agree that purchasing a home for 9x the average wage versus 3x the average wage is equally affordable

Please show me who said that mate?

I tend to see housing affordability as a problem, but rather than whinging I think that you need to look at solutions. Off the top of my head:

• Build or renovate a property. This will earn sweat equity if all goes well. But a lot of projects are sold at a premium compared to a completed development.
• Save very hard. If the senior developer bought the Elwood flat he could conceivably clear the mortgage off within a decade. Repeat the trick, and it'd be possible to own a million dollar home outright by fifty.
• Start a business. Failure rates are high, but if it works out then housing affordability becomes less of an issue. If it really works out then it becomes a non-issue.
• Invest. I'm not sure if you're going to get a good enough return off shares or gold to guarantee buying a place outright within a few years. (I'm sceptical of trading your way to a fortune.) Property might or might not work, but I think it's going to be a rougher ride over the next ten years than it was over the last.
• Find a high-earning partner. (Being an IT nerd, that's not going to happen. )

The above are all potential options but I will add:

SACRIFICE AND DELAYED GRATIFICATION (2nd job/part time income, spend less time and money on luxuries), MENTAL APPLICATION AND WILL and DEVELOPING HIGHER ASPIRATIONS

Incidentally, the report isn't whinging, but saying that there is an affordability problem, laying out what the authors believe are the causes, and proposing solutions.

You talk a lot about whinging mate and I don't know why? Who is whinging? Posters here are just putting forward POV's based on their experience. There is no point putting anyone down for their current position in life. Progress and achievement is valuable for everyone and posters are indicating how they have dealt with their aquisitions. You folk who think somehow it was once easy for everyone are misguided. I still remember the dump I first lived in - character building stuff!

AND I'M NOT WHINGING!!!

 

[kathryn d]

I still remember the dump I first lived in - character building stuff!

And many times when you look back at those days, you smile and have fond memories...the place was yours !!!

I still look back at my first apt I rented.(basic furnished) Remember my first meal I cooked, and buying bedding for the place. I was so excited. I remember being surprised when I open the pack of flannelette sheets...and discovered it was just one sheet. I had 2 towels. Took me forever to save money for another one.(Didn't have dollar stores back then)
ahhh..fun memories


Why do we want to reprive these types of memories from the current generation?

 

[devo76]

Wonderful. Another thread full of people who agree that purchasing a home for 9x the average wage versus 3x the average wage is equally affordable

I dont think anyone would say they are the same. Basic maths does not escape most people.
It's about making the most of your situation.
Not one of us had a say in our birthdate and therefore working age may have come during affordable housings or not. Eitherway you have the hand you were dealt so you have to have a go or give up before trying.
I was lucky that I bought my first house in cheaper times while my friends pissed their cash away. Houses were cheap but jobs were sparse in the building trade. I had a risk with my income but jumped anyway.
Today people have high prices. It's a shame for first home buyers but it is what it is. Prices have stalled or pulled back a bit. Wages are still rising. Rates are low. I just don't get it. Property has ups and downs and people enter the market often due to age or job status not timing of the market. There is nothing new here.

 

[wylie]

Today people have high prices. It's a shame for first home buyers but it is what it is. Prices have stalled or pulled back a bit. Wages are still rising. Rates are low. I just don't get it. Property has ups and downs and people enter the market often due to age or job status not timing of the market. There is nothing new here.

Couldn't agree more. Son who is buying his second house and will rent his first unit bought at $290, 4km from the city, dump. First home... yes. He used to whine that he could never afford a home, until I showed him it could be done.

 

[Dazz]

Either way you have the hand you were dealt so you have to have a go or give up before trying.

Kudos. Some of course choose a third option - to try and influence things that are wholly removed from their sphere of influence....as can be seen here on a regular basis.

Of course, that third option, like the second option, always goes nowhere.

If they refuse option 1, to have a go, they end up in this vortex of cyber bleating....makes for fascinating reading....what with their literary skills on full display, but always ends up nowhere in the real world.

 

[VYBerlinaV8]

Wonderful. Another thread full of people who agree that purchasing a home for 9x the average wage versus 3x the average wage is equally affordable

You know what's really unfair? That people who are now in their 50s had to deal with far, far higher prices for a whole range of things when they were starting out than youngsters of today, such as:
* Cars
* Whitegoods
* Appliances
* Travel
* Clothing
* Food

Also, people of this age group had to deal with the high inflationary environment of the 1970's, and real incomes were lower.

It's just so unfair...

(Swings and roundabouts, people)

 

[Deltaberry]

My advice to those 35 year olds who are angry they can't buy are to lap it out or start a revolution. Or of course get a job in journalism.

 

[Ed Barton]

Couldn't agree more. Son who is buying his second house and will rent his first unit bought at $290, 4km from the city, dump. First home... yes. He used to whine that he could never afford a home, until I showed him it could be done.

the unit pics you've posted are not a dump. very liveable without the renos and with the renos quite a nice place for someone on a low wage.

 

[Ed Barton]

* Cars
* Whitegoods
* Appliances
* Travel
* Clothing
* Food

Cars - way cheaper than the 70's, last longer.
White-goods - way cheaper but don't last as long
Appliances - see white goods
travel - My grandmother used to go back to europe every year. I remember her celebrating getting a ticket in 85 for $1800. way cheaper than before.
clothing - cheaper
food - about the same

these are real prices. the cost of living in oz is unchanged from the 70's, the cost of loving living has declined exponentially. (real, eg inflation adjusted terms.)