Discussion in 'Property Market Economics' started by Gockie, 30th May, 2015.
Damn investors with their equity!!!
No need for first home buyers to pretend they cant afford a property. I puchased my first property for 400k when my income was only 40k. Average income is now in the 60s so there is no reason not being able to afford a property. You may need to buy in a different suburb or an older house but its certainly achievable.
Investment property or PPOR? Did you have a partner?
Houses in Mount Druitt are now around 500k. Alternatively you could live out Campbelltown way and pick up something for high 400s. As for 600k you could get a place in Macquarie Fields but than you spend 3-4 hours a day of your work week just commuting. Why bother may as well just relocate. Sydney is only a good place to live if you're on a six figure income imo.
As a Gen Y who bought a property in Inner Sydney using only MY savings, I say BS to that. My peers just want to spend money so they can post on facebook, and whinge on facebook how expensive homes are.
I remember when house prices hit $100,000 average (in adelaide) - the entire sentiment at that time was "my god, $100,000 - no one is ever going to afford to buy real estate anymore".
I purchased my 4th investment property at $135.000 (sold later for $600,000) and people were telling me I have gone mad to pay that much for a house, it's overpriced and I was never going to get my money back.
More proof that no matter what you buy that after 30-40 years time it will quadruple in value
Well, yesterday's dollars aren't quite the same as today's dollars.
Would be interesting to see house prices adjusted for inflation over the years.
Real house prices would actually make profit if the capital gains rate was higher than inflation.
It's really tough for first home buyers in this market unless you've been working for years in a trade and saved up. It's so disgusting to the point where I kinda wonder why I went to uni in the first place when I probably couldve made more money in property, but thats life. It's not just about being book smart I guess..
Anyway, I'm 25 and recently purchase a block of land in the ponds and will build a good home on there all up for 620k. That'll be an investment property that'll be a PPOR in 3-5 yrs time.
It's tough for first home buyers but they've just gotta shut up and do it and stop sooking.. If its too expensive in Sydney then buy an IP elsewhere..I bought where I did because I know homes in the Ponds aren't gonna go down anytime soon and if I wanna live there I have to buy it now rather than come back in 5 years because the property will be worth 850k+ within a year or two.. I believe looking at comparables i've made a wise decision..
I think first home owners can do the same.. Buy a house and rent it out.. Most first home buyers are young couples.. Rent a 1 bedroom apartment and rent your house out and come back when your income increases and live in it as a PPOR if you want more than one room.. That strategy will save me $350/week..
Just so you don't feel too badly; this exact same scenario you describe above, has been going on since I can remember...at least 40 years of my life so far (as a 14 year old starting a part-time job doing paper-rounds in the a.m).
As a teenager you have numerous choices;
1. While living at home, get a part-time job after school/weekends and save some of it for your future - house, car, holidays etc.
2. While living at home, get a part-time job after school/weekends and spend the lot on stuff.
3. Do no part-time work and earn nothing until you leave school (other than pocket money) and/or home, then get a job. If you are smart, you will save some of the pocket money towards your future.
4. Do no part-time work and earn nothing until you leave school (other than pocket money), then go to Uni, but stay at home.
5. Do no part-time work and earn nothing until you leave school (other than pocket money), then go to Uni, but stay at home and get a part time job. Save some of this money towards your first property.
6. Do no part-time work and earn nothing until you leave school (other than pocket money), then go to Uni, but stay at home and get a part time job. Spend the lot on stuff, holidays to Vietnam and Bali, etc.
7. Do no part-time work and earn nothing until you leave school (other than pocket money), then go to Uni, move out of home and rent with friends and get a part-time job and save some money towards first property.
8. Do no part-time work and earn nothing until you leave school (other than pocket money), then go to Uni, move out of home and rent with friends and get a part-time job and spend the lot of stuff.
9. Do no part-time work and earn nothing until you leave school (other than pocket money), then get a full-time job, but stay at home and save some of it towards your first property.
10. Do no part-time work and earn nothing until you leave school (other than pocket money), then get a full-time job, but stay at home and spend the lot on stuff.
11. Do no part-time work and earn nothing until you leave school (other than pocket money), then get a full-time job, move out home and rent, but save some of it towards your first property.
12. Do no part-time work and earn nothing until you leave school (other than pocket money), then get a full-time job, move out home and rent/board, but spend the lot on stuff.
13. Leave school early, get a trade apprenticeship (or any other full-time job), stay at home and save towards your future.
14. Leave school early, get a trade apprenticeship (or any other full-time job), stay at home and spend the lot.
There are other scenarios of course, but you get the idea..the common theme here is;
Get some form of work, as early as you can, and save some of it towards your future.
It is preferable if you have the luxury of staying at home until the ripe old age of 25 (or more) too.
Does everyone do this?
No. most don't, actually. Then they get to aged 22 or whatever, and find it very hard to buy something - but this is not new.
This site is one of the places where the representation of folks who do the right financial thing at an earlier age is extremely large, so this site is not a true indication of what folks do out there..
Well done!! I bought my first PPoR at aged 25, and knew nothing about investing in property...so you have a tremendous head start.
Thanks mate! Trying not to make it my PPOR until I buy a few and until I need more than 1 bedroom haha.
Wow so many different scenarios! Haha. I lived at home and worked part time from the age of 16 and saved a fair bit but in saying that I wasn't sure on living in Sydney forever so I studied overseas which set me back 10k. I saved up about 25k but had to give a fair bit to some people close to me because they were struggling financially..
The problem at the moment isn't the affordability of repaying the loan. The prolem is having to come up with a much bigger deposit to buy because the houses are 10 times our income.. I personally would take a 9% interest rate over 4% because i'd be at a way higher LVR with a bigger deposit..
The problem with this bit is the where and when?
The where usually comes back to the suburbs the FHB's are looking at - their expectations of where their first property should be.
If your where and when is: inner-city "postcode" suburbs, and asap... a world of pain awaits., and always has.
In previous generations of buyers, the First home was usually very modest, often older - or newer, but out in the boondocks - and usually in the lowest 20% of the market prices.
The when is in relation to the market cycle - Sydney for eg is at the worst time in the cycle for pretty much everyone from what I'm reading about it.
The "when" is only important of your "where" is unrealistic.
Go back to say; 2003 in Sydney; not much whining about house prices then - except if you were an investor who had just purchased and were expecting rapid CG.
My first property was a PPoR, and I have no idea (and didn't then either) at what point the cycle was...but it was cheap, waay out of town, and needed work. It was in Boronia; an hour by train to the CBD, no freeways. Now there is the Eastern right out to Ringwood, so it's actually better.
Boronia is approx the same travel distance to CBD as say; Frankston, and similar demographic overall....I don't hear much noise in the media from FHB's about how they are looking in places like these two.
I think if we said to every FHB; "You're first property must be; cheap, way out of town, and needs work, and not all that desirable"
I wonder what the reaction would be?
I looked at Campbelltown, parts of Blacktown and Penrith and both were 400-500k for some of the least desirable areas someone can live in. I personally don't mind living there but my girlfriend went there and was actually scared because she is a social worker and works with some of the families in those areas who abuse her all the time..
Let's assume first home buyers buy in the cheapest places..whalan, tregear etc are 400k. Airds is 430k. It's still 6-7 times an average income..
Surely, there are properties below $400k in the greater Sydney area?
If you were to draw a line around Sydney at the 1 hour train commute point from the CBD; there would have to be somewhere below this figure. Would it be fantastic? Of course not.
Go ask a 20 year old builder tradie in say; Narre Warren - who lives and works in the area - if the CBD is of any importance in either affordability or desired location to him.
Only the media and the whining CBD-centric FHB's focus on this issue.
This whole whine about affordability - it's always CBD, and almost always Sydney or Melbourne as the only places in the universe.
FHB's should rent where they want to or close to where they want to live and invest the rest
Plenty of properties to invest in regional aus that will make you $$$ and in Metro areas in other cities
You wont find many, if any dettached houses in Sydney under 400k..
Which regional areas are the go at the moment Coastal?
FHB's should live with their parents for as long as they can. Obviously it saves a lot more money than renting but it also frees up supply (if more people were to do it) and is the best way of 'voting with your feet'.
"Young adults in 2011 were also more likely than those in 1976 to be living without a partner or child but with one or both of their parents. In 2011, around 29% of young adults lived without a partner or child but with one or both of their parents, up from 21% in 1976".
"The recent decades have seen many changes in the lifestyles of young adults. Compared with young adults 35 years ago, young adults in 2011 were less likely to be married, more likely to delay moving out of their parental home, more likely to work part-time, and have more educational qualifications".
Yep. I'm staying home til the day I get married. I've had my fun living overseas for a year
Xenia, your picture is super flattering if you've been in the game that long!! You dont look a day over 25!
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