Investors keep first-timers out of market

[TMNT]

I must admit, slightly longer commutes, or a kitchen that might not be up to my standards, a slightly smaller backyard, not being close to trendy shops etc. etc.

after a while I get used to and mean less and less to me,

even getting that new dream car ive wanted, im sure it will simply blend in to my peripheral vision after a few weeks, no matter how hot it is

its only when people say "oh your car is awesome will I probably truly appreciate it even more"

I guess its teh grass is greener syndrome that I have

 

[MsAli]

Wow, thread still going and I only made the first post. I didn't intend to start a Gen x and y debate. I'm Gen y. But I do see others the same age or older with no clue.......spend now pay later approach

 

[lizzie]

Agree with you re density.

It is always amusing to see people whingeing about not having enough services in an area, and then campaigning tooth and nail to stop new developments around them that would actually create the levels of demand needed to provide those services.

But you also can't have density and everyone live on a 500m2 block of land with a park on every corner ... or every unit to be 250m2 ... so the mindset will have to change about what is acceptable as a "family" or "singles" home.

As for increasing the population of Australia - we may be low density, and personally I like it that way - but similar to Iceland, we have vast tracts of area that are simply unsuitable for habitation. And the main barrier? Water.

The alternative is to build in the suitable areas - which also happen to be prime farming locations - so we reduce our food output to try and supply an increasing population. It doesn't make sense.

So, something has to give - either forgo the dream of the quarter acre block in exchange for a unit - or forgo population increase.

Personally I don't want to live in a country where the pollution is so thick it's like a blanket of fog - or the traffic jams stretch for hundreds of kms - like some Chinese, American and European cities one could name.

 

[Ideo]

Yep, agree with that.

The average Australian home is now the biggest in the world.

Just think about that.

I do design review work for a major land release area. Every second house has a formal lounge, a rumpus room, a theatre, double garage, informal lounge, formal dining, family dining, study and at least 4 bedrooms.

Why?

I was also looking at basic house packages for project home builders. It is basically impossible to get anything under 4 bedrooms.

Why?

Why does every modern apartment/townhouse have to have 2 full bathrooms plus a toilet? And then every 1 bedroom apartment only have space for a microwave and a 2 burner cooktop?

All that being said, the only possible answer is increasing density around key transport hubs and interchanges. This doesn't have to be units. Semi detached and attached housing is perfectly fine and still allows a usable backyard.

 

[BayView]

I do design review work for a major land release area. Every second house has a formal lounge, a rumpus room, a theatre, double garage, informal lounge, formal dining, family dining, study and at least 4 bedrooms.

Why?

I was also looking at basic house packages for project home builders. It is basically impossible to get anything under 4 bedrooms.

Why?

Why not?

I think one of the greatest things about our Country is the current situation we have of being able to enjoy space, large dwellings if you so desire etc.

When we lived in L.A, we lived in an area called Mid-Wilshire.

Nice area, but proliferated by loads, and loads and loads of apartment buildings....and no parking.

Having lived there, and lived here - here is waay better - unless in L.A you are in the top 5% of earners who can afford a house with a land plot, or a you-beaut apartment.

Do we really want to head down that path where if you are middle class or less you are shut out of the house market with a courtyard at least?

I don't.

But, I'm weird and not enthralled with living life like in a "Jerry Seinfeld" apartment.

One lady we knew very well lived in a one-bed apartment and had done for 15 years. It was a shoe-box. Right across the road from our apartment complex.

She stayed there only because she could not afford to give up the benefit of rent control she enjoyed, and she needed to be close to the school where her daughter was enrolled (same as our son). No parking.

She is a school teacher.

 

[chilliblue]

I like Kevin Lee's (Buyers agent at Smart Property Adviser) response:

FORGET THE 12.48% - WHO, WHAT, WHERE AND WERE THE OTHER 87.52%?

It never ceases to amaze me that first home buyers regularly receive a disproportionate amount of media and government attention when compared to the actual percentage of the total property market that they account for.

Forget the 12.48% who bought their first property - who, what, where? were the other 87.52%?

That's the number one question our politicians, policy makers, bureaucrats and property professionals should be focused on. With the right assistance/incentives this second group could (and should) have a much larger impact on the Australian economy.

However all the press is devoted to the precious few home buyers who are having their first go at becoming a rate payer. Weird isn't it!

By definition, most of this 12.48% won't do much for the next six or seven years. Sure they'll struggle to make their monthly repayments, buy some furniture, have a kid or two, maybe buy a new car, and send their kids to schools in the area.

Don't try to tell me that the other 87% of purchasers don't contribute in the same way?

It matters nought whether the purchaser is an owner occupier or investor - the end result is always the same.

Whether you purchase a property to live in yourself - or for someone else to live in - there's still a household to be formed, things to buy, kids to go to school, and people who will live a life there.

Let's face it, governments devoid of any real ideas, balls or brains created incentives for a minority group to stop renting and purchase their own home. First home owner grants of $7,000, then $10,000 then $14,000 ... but wait there's more. Buy now and we'll also throw in free stamp duty - in NSW that's a potential saving of another $23,000.

So the government spends millions of dollars to entice maybe 100,000 extra people to join this minority group. Why? Because this is what financially un-educated people do.

Smart people - those people with a financial education - set goals and take the necessary action to reach those goals. They get other people to pay off their debt for them.

Little do these bureaucrats know that many savvy first time buyers were in fact buying their first investment property, all they had to do was comply with the rules and live in the property for a very short period.

If these bureaucrats had any clue, they would incentivise all people who are trading up or down by removing (or at least reducing) the two most insidious taxes ever created: stamp duty and land tax. The average Sydney couple buying a modest home or investment property for $700,000 pays just over $27,000 NSW stamp duty for the privilege.

That's equivalent to furnishing that property, a pretty special holiday or a whole mouth full of dental work. Our economy would be so much stronger if that $27,000 was spent on goods and services for the individual, instead of employing another pencil pusher.

They were supposed to eliminate those state based taxes with the introduction of the GST, but our governments are like heroin addicts - their addiction to the tax is on the same level; they will do anything to get it and just can't give it up.

 

[Ideo]

So, Bayview, is the answer forced sterilization? Or just keep on developing over farmland? Or, let me guess, no more immigration?

I prefer higher density living. It is my preference. I fail to see why this is not a valid housing choice.

Current development patterns do not provide anything in the way of outdoor space - instead 900mm side setbacks and 4m rear setbacks are the norm. And that gives you about as much outdoor space as an average terrace. But of course, being sprawling suburbia you get none of the advantages of inner city living. No facilities. No shops. No restaurants. No public transport connection. No parks. And yet this is somehow a "better" option?

Of course, areas in inner urban areas with large parcels of land do exist. And they rightly have a premium price on them. But of course, one can't go complaining if they can't afford something - they just need to look elsewhere

 

[cimbom]

As for increasing the population of Australia - we may be low density, and personally I like it that way - but similar to Iceland, we have vast tracts of area that are simply unsuitable for habitation. And the main barrier? Water.

Sydney is 12,000km2. Melbourne is 10,000km2. Shall I go on? Which part of these cities is not suitable for habitation?

Personally I don't want to live in a country where the pollution is so thick it's like a blanket of fog - or the traffic jams stretch for hundreds of kms - like some Chinese, American and European cities one could name.

Again, just go from one extreme to another. Pretty tired cliche. I'm not sure where such cities were used as ideal examples in this thread.

 

[BayView]

So, Bayview, is the answer forced sterilization? Or just keep on developing over farmland? Or, let me guess, no more immigration?

how about simply capping the child rate at two maximum per couple? Replace only yourself.

I prefer higher density living. It is my preference. I fail to see why this is not a valid housing choice.

depends on your upbringing I guess. I have lived in both rural, suburb, and city.

I prefer semi-rural, with the option of getting to clogged cities when the need/want arises. I like open spaces and relative seclusion - the ability to escape from humans with annoying dogs, or hon mobiles with loud exhausts and so on. Apartment living is fraught with noise pollution problems and difficult neighbours both below and above, as well as to the sides. Some don't mind it I guess.

Current development patterns do not provide anything in the way of outdoor space - instead 900mm side setbacks and 4m rear setbacks are the norm. And that gives you about as much outdoor space as an average terrace. But of course, being sprawling suburbia you get none of the advantages of inner city living. No facilities. No shops. No restaurants. No public transport connection. No parks. And yet this is somehow a "better" option?

There is no reason why emerging developing suburbs can't have all the amenities and infrastructure...places like Chadstone, Know City for eg have all the requirements...maybe not the restaurant selection or top-end schools.

Of course, areas in inner urban areas with large parcels of land do exist. And they rightly have a premium price on them. But of course, one can't go complaining if they can't afford something - they just need to look elsewhere

true.

 

[Deltaberry]

Houses are unaffordable for some, because there are people out there who can afford it and are willing to pay a price you can't.

So what's unaffordable again?

 

[starter]

Yeah I'd personally rather not have to cap the number of children I can have so some people can live in a house and not an apartment.

 

[Dan_p]

We really needed that bit of extra money, but I couldn't afford child care, and wanted to be home with the kids. If not for having done the hard yards before children came along, I would have had no choice. As it was, we had no money to lash out with on ONE beer so often that we laugh about it now.

This argument has no ending. Those too young to know better think that we "oldies" were handed everything on a silver platter, didn't pay HECS, didn't pay child care, didn't have to work. That is so wrong, but I'm not going to bang on about it, because those with that mindset will not listen anyway.

I believe it is just as hard now in some ways, but easier in others. Our son at age 20 on a salary of $38K was able to borrow $295K to buy his first crappy, horrible, dirty unit. We guaranteed him to the tune of $50K but didn't give him any financial help and we helped him paint and alter the kitchen, but he and his partner did most of it themselves. There is NO WAY I could have borrowed that sort of multiple of my salary at his age. So, in that respect, he has had it much easier to get into his first (and at age 23, his second) house.

Hi Wylie, If it was hard for you and your partner on two incomes when house prices were about 3:1 of the average wage, how would you have fared on two wages in todays market where the average house is close to 8 : 1. ?

 

[weg]

Hi Wylie, If it was hard for you and your partner on two incomes when house prices were about 3:1 of the average wage, how would you have fared on two wages in todays market where the average house is close to 8 : 1. ?

The comparison would have to be between the house she bought then and something similar not the 'average' house now.

The first house I bought would only be worth about 220K now - a 3/1/1 40km from the cbd.

Second house was an unrenovated 3/2/1 8km from the cbd now worth about 320K if still unrenovated {400K renovated}.

That makes those homes roughly around 3x and 4.5x.

Both below median and very affordable to both FHB and single income families/individuals.

Edit: those houses at median now would have been out of our price range years ago.
Desirable areas and properties have always existed. 2nd and 3rd home buyers generally outbid and dominated in those markets, much like now.

 

[TMNT]

um...one more thing which im quite surprised that has not been mentioned is the costs of weddings and expectations

http://www.theage.com.au/lifestyle/...eath-do-us-part-with-cash-20131114-2xizq.html


When me and my ex married, we....well more her side so the wedding we had quite an affordable one, I think we kept it small, but spent $10k and had the time of our lives,

in the remote chance of me getting remarried (ie winning lotto three times in a week), id probably spend $10-$20k with my cliose friends and family in bali or similar,

ive heard a lot of bridezillas insisting on spending $50k plus on "the day that its all about me!" "its the one day in my lifetime that im treated like a princess" type garbage, when both parties or on modest incomes.

since im apparently a scared and scarred single male, and wouldnt have a clue, do the younger gen really want and insist on the enormous wedding????

 

[wylie]

Hi Wylie, If it was hard for you and your partner on two incomes when house prices were about 3:1 of the average wage, how would you have fared on two wages in todays market where the average house is close to 8 : 1. ?

The first house we bought was nothing like 3:1.

 

[skater]

The first house we bought was nothing like 3:1.

Neither was ours!

We were on one income, higher interest rates & a higher overall cost of living as a percentage of income with no grants or middle class welfare.

Our first house was a tiny crappy thing. It was weatherboard that had chicken wire wrapped around it then cement rendered. The front two windows were old bus windows (the large ones at the back) and they had the hinge holes full of silicone, or something similar.

We had a front door, with no steps to get to it & a large drop from the house. This was around the side, so many people didn't realise it was the front door, & walked around the back, which is what we used.

In the hallway, we had a large hole that had been wallpapered over, one day there was a bird that had gotten into the wall & it flew out this hole. There was a sliding door, that was always open. After buying the home & closing the door, we discovered another door behind it, but smaller. This door still opened, but of course, there was nothing there. It just opened into the wall.

The bathroom was hideous. Wooden panelling on the ceiling and halfway down the walls. The rest of the walls were tiled in dark blue. The 'vanity' was a bench that went right across the room, tiled dark blue, of course, with a sink halfway along it. Nothing underneath. We did improve that by putting a white curtain below it, as it was really grotty & nasty underneath there. We had an old cast iron bath. It was badly stained. You could not clean it at all. Well....of course we cleaned it, but no matter how hard you scrubbed it, it just looked filthy.

The roof was tin. It was rusted & full of holes. I remember us both climbing up there trying to repair it & paint it. I also remember sliding down the roof, petrified that I was going to fall off. Lucky it was the side that had a small verandah with a lower pitch.

But it was ours! It was all we could afford!

I wonder how many FHB's today would be happy to live in our old home?

THEN.......after having to sell this 'lovely' home due to a business failure we had to start again.

Our second PPOR was a tiny ex-housing commission place in 2770. It was nicer than the first one, but by this time we had improved the first one & extended it, so this one was way smaller. Lovely original kitchen, tiny dining area. I put my computer in the corner of the dining area as my 'office' and we had a tiny dining table against the wall. If anyone's been inside these homes, there's not a lot of room, but we made do.

The area was not great, and many on this forum scoff at even buying an IP there. This time around though, we COULD afford better, but chose not to. By this time Hubby was working elsewhere & had a decent (but not huge) income. This one was bought because it was reasonably cheap, had a second 3bedder on the block to rent out, AND was close to the skating rink.

We made 'do' in order to be able to afford for our family to skate, & funnelled a lot of money into that, but also so that we could buy more IP's, which we did.

Again, many FHB's turn their noses up at homes like this.

We are now onto our third PPOR. Much different to the other two. Better neighbourhood, much better quality home, 4 bedrooms, two living areas, inground pool. BUT this is not our first home, this is our third home. The point is that many FHB's want to start in something like our third home, not our first or second one. Our first one has long since been demolished, but our second one is still there. It's another IP and it is worth maybe $200k (if it were a stand alone home) less than this one.

 

[wylie]

....I wonder how many FHB's today would be happy to live in our old home?

....Again, many FHB's turn their noses up at homes like this.

We are now onto our third PPOR. Much different to the other two. Better neighbourhood, much better quality home, 4 bedrooms, two living areas, inground pool. BUT this is not our first home, this is our third home. The point is that many FHB's want to start in something like our third home, not our first or second one. Our first one has long since been demolished, but our second one is still there. It's another IP and it is worth maybe $200k (if it were a stand alone home) less than this one.

Skater, well done for bothering to put your story. You and I, and those who've struggled to buy the crappy first home in the "less than trendy" area understand this, but honestly, some people just are not interested in listening.

The question about how we could afford our first home at 3:1 showed me just how much isn't understood about "the old days" :roll eyes:.

You need some sort of badge for trying to explain it .

 

[skater]

Skater, well done for bothering to put your story. You and I, and those who've struggle to buy the crappy first home understand this, but honestly, some people just are not interested in listening.

The question about how we could afford our first home at 3:1 showed me just how much isn't understood about "the old days" :roll eyes:.

You need some sort of badge for trying to explain it .

Haha, thanks Wylie. I know the 'oldies' get it. A lot have been there.

Something else to ponder. Even now, in our third home, although a nice home, it is not located near Hubby's work. He does the commute every day. To this day, we still can't afford to live closer to the City. Well.....we could afford to live closer, but only due to the wealth that we've accumulated from our IP's, so we would have to sell IPs in order to do so & it's much more important that we set ourselves up that we have an income in retirement, than a PPOR close to his work. Work won't last forever, retirement will.

When listening to some people complain that they can't afford their PPOR, sometimes it's because they are unrealistic in their expectation that they should be able to afford to buy in the city. Clearly, not everyone can.

 

[Angel]

OMG, my first home was so much nicer than your two. It didn't have any holes in the roof or walls at all. The bath was original but beautifully clean, and there was only one window that couldn't close. wow, I feel so much wealthier now!

 

[TMNT]

I think is a good starting point is to work out what teh average income is , followed by seeing what their serviceability based on this income for example is, and then seeing what the median price for a sydney suburb with a reasonable commute time to be, lets say 1 hour by car or public transport,

that article with the guy whinging how expensive houses are and their max serviceability is $600k , then if your first house is above teh median or even at the median who is going to buy the below median properties

im not from sydney, so what is the median income, and house price for a reasonable commute time thats not a complete slum, and if you can afford that then, why complain?!?!?