Poor first home buyers Sydney

In 2013 i purchased a fully renovated IP 3 bedroom home for 360k 15 minutes from Parramatta in Sydney. Rates around 5.2%.

Given yes it is harder now but 2013 is recent history and the same people were having a sook then about prices from what I remember.

Whoever sooked then at that price deserves a slap across the face.
 
So not true. Everyone I know in their 30's who doesn't own a home by now I can show you exactly why they don't. They spent most of their 20's blowing cash on night clubs, overseas trips, expensive cars, drugs, big birthday parties, hotels in the city etc. I did all that too BUT I put some money aside and now im fine.

You want to buy your first home? Here I'll show you how to do it on an average wage in 2 years:

Work Monday - Friday at you're normal job - SAVE - $300
Work Saturday/Sunday somewhere - SAVE - $200

...

Save...Easier said than done. I still have most of the habits you described above. Have my own place though...however that's mostly because of my constantly rising salary over the last several years, and it's really saved my *** despite my somewhat irresponsible and consistently poor saving habits.
It's not as.easy.to.save as you.say...
For some yes, for others, no...
 
Save...Easier said than done. I still have most of the habits you described above. Have my own place though...however that's mostly because of my constantly rising salary over the last several years, and it's really saved my *** despite my somewhat irresponsible and consistently poor saving habits.
It's not as.easy.to.save as you.say...
For some yes, for others, no...
Sacrificing and saving is hard work as you say.

That is why:

1. the majority of folks will retire on a pension (if it is still available)
2. so many of the retired population are already on a pension
3. Employers were forced to contribute to employees' Superannuation because the employees weren't doing it of their own free will - and most still don't.
4. All the "5 year interest free" Harvey Norman type deals wouldn't exist.

And so on.
 
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The average Australian wage last year was around 75k.
http://www.livingin-australia.com/salaries-australia/

The problem with this stat is when you add in salaries such as upper Management (even Middle Management), Board Members and CEO's etc - who are invariably earning many multiples of the real average wage that say; a full-time wage earning plumber, or nurse, or retail shop assistant, etc is earning.

One bloke/chick earning $5m per year whacks up the average pretty fast.

Keep in mind folks that the workforce is a pyramid - lots of low paid workers at the bottom, less and less workers as the wages increase...one or two very highly paid folks at the top of each organisation, a small group if high earning Management, and so on all the way down.

The average is somewhere in the middle of the pyramid in terms of distance from bottom to top - with the majority of folks on or below that point, and a small high to very high earning group above it.

One small example of not very high paid workers; mechanics.

There are thousands of them around Aus, most would be lucky to earn $25 per hour. A workshop Manager - only one person per workshop don't forget - may be earning around the $60k range. A very small handful might be on a bit more.

There are loads of other similar examples in every economy.
 
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Save...Easier said than done. I still have most of the habits you described above. Have my own place though...however that's mostly because of my constantly rising salary over the last several years, and it's really saved my *** despite my somewhat irresponsible and consistently poor saving habits.
It's not as.easy.to.save as you.say...
For some yes, for others, no...

I know. I have a family, no need to tell me it's hard to save!!! My wife isn't like me when it comes to this kind of stuff either. Sometimes $400 or $500 just disappears from the savings account magically and I then find out she bought a pair of shoes or a jacket or something. :confused: I'm ok with it though because we have done well financially now and have a solid asset base so no need to scrimp and save like we used to.

Our first home though was all my money, bought it myself before we got married. Did it through spending less than I was earning over a couple of years.
 
I know. I have a family, no need to tell me it's hard to save!!! My wife isn't like me when it comes to this kind of stuff either. Sometimes $400 or $500 just disappears from the savings account magically and I then find out she bought a pair of shoes or a jacket or something. :confused: I'm ok with it though because we have done well financially now and have a solid asset base so no need to scrimp and save like we used to.

Our first home though was all my money, bought it myself before we got married. Did it through spending less than I was earning over a couple of years.

You make the money..she spends it. It's called teamwork :cool:
 
Why should we have to change the way we all have grown up.

All the people older than us lived a life where they could pay off a mortgage in less than 10 yrs for a detached house.

Wow - these two lines really got me scratching my head and wondering where you ever got those views.

Last time I checked, most people the generation older than myself (I'm nearing 50 at a scary rate) lived on flat 1/4 acre blocks (1,000m2) with a dozen chooks and swathes of veges gardens so they could feed their families and spent their weekends pushing hand mowers and playing with their kids - one car in the fibro garage (if they were well off), one tv per street ... and that street was usually gravel with no kerbing and no public transport.

When I first bought a house back in the late 1980's it was a three bed/one bath/one garage/tiny living area/unlandscaped on 800m2 - which was also nearly the side of a cliff - no carpet or curtains - out in the boondocks.

Next house was inner city on less than 200m2 - termite ridden, moldy and stunk so much I ripped the carpet out the first night so I could sleep. Three bed/one bath/no parking.

So what makes you think there is one way us "older" people lived? I've lived (and owned) in flats - I've lived on farms - I've lived inner city - and I've lived out in the boondock burbs

Also - I've never paid off a mortgage - wouldn't know what title documents look like ... but have increase the value of the ppor we live in by working every spare minute improving the dumps we bought, selling, upgrading, rinse and repeat - 15 houses over 15 years (including IP's).

Nowadays I just shake my head as some of the younger generation complain about not being able to afford (insert whatever they want) - but the next minute pull out a $700 mobile phone to take a photo of them on their latest overseas holiday.
 
Why should we have to change the way we all have grown up. All the people older than us lived a life where they could pay off a mortgage in less than 10 yrs for a detached house. Good luck doing that now..why should I change my way of living because singapore lives like that? Maybe we should waste less space on prisons too and throw all inmates in one jail like they do in some countries.. If we do that maybe there we be space for houses... See, that comment is as thoughtless as the one you just made..

If you can't see that there's an affordability crisis in Sydney then you're blind.. Might look ok now as rates are down but LVR's are probably at the highest they've been for young people..

Go on complaining about it and see where it gets you.
 
People in Singapore, Japan, HK - they're all human. We're all the same. Which means that given similar circumstances, Australian cultural values will have to make way for the compromises that all of us will learn to accept. It's not like they are any more inclined to compromise. You think they want to live in dog boxes either?

Right now you can choose almost any house and it can be yours if you work hard enough. 1-2-3 million are all within reach. In some of these countries that's not even enough for you to buy something half decent. No matter how ambitious they are, most of it is out of reach for them. If you like the life you live now, grab it while you will still have the chance. Make no mistake, collectively we will all lower our standards, because people from Singapore, Japan, Taiwan etc are not some different species.
 
Right now you can choose almost any house and it can be yours if you work hard enough. 1-2-3 million are all within reach. In some of these countries that's not even enough for you to buy something half decent. No matter how ambitious they are, most of it is out of reach for them.

Totally agree. Yes price-to-income ratios are high at the moment (7:1 nationally, much higher in capital cities like Sydney) but property is still attainable if you work hard and make sacrifices/compromises. This is not the case in some Asian cities, where it's more like 30:1 or 50:1.

When people whinge about needing 5yrs to save up for a deposit and how it's too hard to get in the market... i'm thinking "...and?". There are places where the average person would mathematically need 10yrs+ to save up a deposit (assuming ZERO spending and no price increases!). Now that's crazy.
 
When people whinge about needing 5yrs to save up for a deposit and how it's too hard to get in the market... i'm thinking "...and?"
It took me approx 15 months from virtually stone cold no money saved - but it required working approx 80 hours per week.

So, for anyone who is prepared to do those hours for that length of time, it's definitely within reach. It doesn't need to be in one job; it could be 2 or even 3.

If they are also living at home with Mum and Dad for the duration (I wasn't) then it is almost easy.
 
How about the fact that you can't fit more than 3 people in there.

In fiji they live in mud huts. Maybe our fhb should do that too.. It's so stupid comparing other countries to ours. Why should we have to change the way we all have grown up. All the people older than us lived a life where they could pay off a mortgage in less than 10 yrs for a detached house. Good luck doing that now..why should I change my way of living because singapore lives like that? Maybe we should waste less space on prisons too and throw all inmates in one jail like they do in some countries.. If we do that maybe there we be space for houses... See, that comment is as thoughtless as the one you just made..

If you can't see that there's an affordability crisis in Sydney then you're blind.. Might look ok now as rates are down but LVR's are probably at the highest they've been for young people..
It's worse than it ever has been. It will only get worse too unfortunately because that's how our economy has functioned. It's been so crap that we relied on houses to boost it for the last 50 years.. Us young people are now buying elsewhere and renting where its affordable to live.. Older generations didnt have to do that..

You won't find a house under 400k in a half decent place even 50km from cbd now. At least Melbourne and Brisbane you can. Sydney is just an overpriced mess as prices dont reflect the quality of the suburb anymore whereas interstate they still kind of are..

You asked why should you change the way you live life; it's because time and age moves on. We are not living in a repeated cycle on this planet where it resets to how it was 100 years ago and so on. Get it out of your head if you think life will be the same as your parents 30 - 40 years ago. Australia maybe a first world country but it is a very young country compared to the rest of the world, and like any young country, they had the luxury of living in a house with two lounges. I'm sure Singapore didn't have high rise apartments when its country was only 200 years old or its population of only 28 million. Now that Australia is maturing, we need to now adopt to change and that the way of living today is not what is way 30 years ago. Different story if you have money to throw around. Plus the fact that Sydney for example is unique in that we rely on one major CBD and property prices sort of get driven by the proximity to this one CBD. Other countries have mini CBDs all over the place and are not heavily reliant on just one CBD. That means it's more desirable to live in regional areas and near their mini CBD.

Should people who are 80 years old be complaining that the farm across their road is now a Westfield, or that the paddle pop ice cream use to cost 5 cents. We cannot predict the future that lies ahead of us. China could take over Australia in 200 years, or America could be under the ocean. How about the aboriginals, they lived life here for 60,00 years and now look what has happened; you think they are happy?
 
All the people older than us lived a life where they could pay off a mortgage in less than 10 yrs for a detached house.
Where did you hear this?

Yes, it can be done - but it wasn't the normal thing to pay off yer house in 10 years back when I was a kid (in the 60's) - or the Generations before that - as far as I know.

The climate was different in a few ways;

First; there were next to no loans over 80% of the value of the property.

There were next to no IO loans - the standard for a PPoR was a 25 year P&I loan, and only using 35% of income for loan servicing.

Most families ate at home, there were very few take-aways and or cheapo restaurants around; they were more of a novelty and once-in-a-while treat; rather than a more everyday type of activity as they seem to be these days, and once they got a house loan; became more conscientious about trying to pay it off.

Traveling was harder; air fares were expensive, roads were not as good so folks didn't travel as far; there were less theme parks, resorts in easy reach, etc - there were less things to spend money on.

So, a really switched on family could pay more off their mortgage quicker....but the same applies today of you cut out a lot of spending on stuff and do more work hours for more money, etc.

Many families had husbands who worked a six day week, and/or overtime whenever possible, etc. The same thing is possible today; but you have to wonder how many folks are doing those many extra hard-yard hours and squirreling away the dollars towards the house?

From my observation; it seems that much of the extra work being done is to fund travel, or some other doodad of which there are literally thousands available now, and without having to save any money to get them.

The temptation for younger folk would be enormous.

I watch my 3 kids; and it seems as though they want absolutely everything they see on the ads.

Me - and no doubt most other older P.I.T.A's - can watch an hour of ads (no hope in hell of that happening, actually) and they would merely leave me as cold as a MIL's stare - ads have virtually no effect on me to want to go out and buy whatever the doodad is that is being shown (except a block of chocolate). They annoy me, and thank god for Foxtel IQ.

There were next to no credit cards back in those oldies days, so most folks lived on cash and spent only what they actually had. The only loans were basically a car (which was usually a higher interest personal loan), and/or a house.

There were next to no "store loans" such as "5 year interest free" etc.

Buying new furniture for younger couples was virtually unheard of, and noone had an expectation of a glamorous home to live in. The problem these days I reckon is there is so much bombardment of young people in the media of living in cool houses, a rich appearing lifestyle and so on.

This sets an expectation that is - in my opinion - unrealistic. Just look at all the teen shows on channels such as Disney and so on - all those kids are perceived as rich, cool; living in nice accommodation, nice cars and phones; living the dream.

I'll just head back to my "shoebox in the middle of the road", now.
 
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Righto Hooray you champion, cause it's stopped me so far...my worry isn't so much for myself cause I'm fine and work hard enough on my own business that I started from scratch to be able to afford a good start. I worked hard and smart and saved for a deposit and got my first property this year all within 2 yrs of finishing uni..

Nobody's saying it wasn't hard back then, but if you're telling me it was harder then than now then you're delusional and wanna make yourself feel better about the state of the housing market and how crap it is for the future generations to come.. Come back to me when affordability is calculated on one income again rather than two. And then come back to me after that when wages grow as quick as property does in Sydney..

What I was saying about changing the way we live is why does a 22yr old have to pay 8 times his income for a unit in Fairfield when back in the day it was 3 times your income for a detached house...crap house prices will affect the way we do business in the future. Bigger mortgages, less ability to spend on business or everyday things to stimulate the economy..

And to clarify this all, I believe every city in this country is affordable except Sydney.. That's why I been telling my mates to get the hell out of the Sydney market as much as they can.. I'm still gonna invest but it's gonna take a lot for FHB to get into the sydney market in future.

This country really needs to push business more than property in the next 10 years more than ever so all our wages grow and catch up..

Just my opinion.. Times change bu the great Aussie dream of owning your own home will slow die for our future generations until of course all the baby boomers are dead and all their properties hit the market haha
 
Nobody's saying it wasn't hard back then, but if you're telling me it was harder then than now then you're delusional and wanna make yourself feel better about the state of the housing market and how crap it is for the future generations to come.. Come back to me when affordability is calculated on one income again rather than two. And then come back to me after that when wages grow as quick as property does in Sydney..

Exactly! It always takes sacrifice to buy a house but the FACT is that it was 134% cheaper in 1977 to buy a house in relation to disposable income than it is today.

I don't care though coz I don't live or invest in Sydney:D
 
Exactly! It always takes sacrifice to buy a house but the FACT is that it was 134% cheaper in 1977 to buy a house in relation to disposable income than it is today.

I don't care though coz I don't live or invest in Sydney:D

Look at what an average new house was like in 1977 though compared to now.

Also back then Sydney was just begining its path towards being a proper international city. There was hardly any sky scrapers in the cbd itself until the mid 70's. In the 80's the overseas money came and the rest is history.
 
What I was saying about changing the way we live is why back in the day it was 3 times your income for a detached house...crap house prices will affect the way we do business in the future.
Can you provide an actual example of this?

I'm sure it did occur, but we need to compare apples with apples on this argument.

If you consider that back when I and my parents were kids, the "normal" house was a 2 or 3 bed house, one loungeroom. one bathroom, maybe a detached garage, or a carport attached to the house...approx 11-14 squares, then yes; I'd say it was doable.

Of course; this was in an area like an outer suburb - my PIL's bought a new home in Noble Park back in the early 60's, and it was basically out in the sticks - surrounded by vacant blocks and market gardens mostly; for $11k.

It was a 3x1 with 1 lounge and bathroom/laundry. They have since added another small living, bedroom, ensuite - house is currently worth about $400k at a guess?...it is tired and run down though.

But now; Noble Park is a middle ring suburb, and in demand. Of course the properties will cost more, becuase there are more folks who want to live in the area, and it is closer to the human race - unlike 50 years or so ago.

But, take the same house, remove the extensions, move it out to the "new" edge of civilsation and price it.

This is the only way you can compare apples with apples.

You can't compare a 2x1, or a 3 bed townhouse etc in an inner suburb, because even way back then the inner suburb demand was there and prices were unaffordable to the majority of folks.

Hence; places like Burwood, Boronia, Noble Park and so forth sprang up on the outskirts...cheap and more affordable (still not easily affordable) but with a commute.

Bigger mortgages, less ability to spend on business or everyday things to stimulate the economy..
A bigger mortgage is a choice. If the Banks suddenly said you could only have a 70% lend, then folks would have to do it. But no; they can get a 90%, or more with LMI, and buy a more expensive you-beaut house.

Imagine what they would look at buying if they opted to only get a 70% lend.


And to clarify this all, I believe every city in this country is affordable except Sydney.. That's why I been telling my mates to get the hell out of the Sydney market as much as they can.. I'm still gonna invest but it's gonna take a lot for FHB to get into the sydney market in future.
I agree. Sydney is now out of control and any sanity has disappeared. Great for sellers atm.

This country really needs to push business more than property in the next 10 years more than ever so all our wages grow and catch up..
Now that we have a global economy; this will be harder to do.

The only way it will happen is if the service industries grow. Manufacturing is declining (due to wages and other high costs), and any larger companies who can move their services to an O/S base and provide them from there - are doing so or have done so.

The good news is that if wages continue to be slow, then eventually the prices will stagnate/correct a bit.

So FHB's now have a good opportunity to get ready with a strong savings plan.

Just my opinion.. Times change but the great Aussie dream of owning your own home will slow die for our future generations
It is not dead, but the steps required are not being recognised by the FHB's.

The steps are;
1. Start saving hard and early.
2. Take on more work to facilitate step 1.
3. Cut out spending to facilitate steps 1 and 2.
4. Lower expectations about property type, condition and location.

This will get them into property no.1

Then, like everyone else has had to do; you continue on with the above plan, and then upgrade to the more you-beaut property later on if you wish.

of course all the baby boomers are dead and all their properties hit the market haha
Baby boomers who have done well have followed the above plan. FHB's may want to learn from this instead of slagging them/us off and tall-poppying them/us.

Plenty didn't follow the above plan - my whole working life has been surrounded by and in the service of this demographic.

They have retired mostly broke in large numbers, on a pension (or part pension), living in a much more modest house (or never having moved from their first house like my PIL's); or they are even renting or living with friends and relatives.

Some have done well, of course.

Most well-off baby boomers are living in areas that are clearly not FHB territory, and/or retire to areas (such as where I live), which are also not the desired selection of FHB's.
 
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I think that we are in for a exended period of low wage growth, there will be exceptions in certain industries where the supply demand equation will favour those with the right skills and expertise but our wages are still high internationally in many areas IMO.
How this affects house prices going forward remains to be seen but a 1990s type market looks likely with not much happening.
Whats happening in Sydney defies a rational explaination but once its over there will be long period of consolidation at best.
 
You can't compare past, current and future state as they are not all equal.

In the past as others have said there were more restrictions on loans, in fact if my memory serves me right there were not a lot of loan options it was just pretty much a P+I variable loan without any extras (no offset, no LOC, no or limited early repayments). This was only available if you could actually GET the loan. If you were under 30 - forget it, kids? - forget it unless the bank manager was your bestie or family member.

Which leads me to my next point. To get a loan you had to go for an interview with the bank manager. Yes, an interview. This was AFTER you had already jumped through all of the hoops they had already presented to you, including references. If the bank manager didn't want to approve it, you wouldn't get a loan. If you were even thinking of getting a home loan at some point in your life, then you would start building a relationship with the bank - using no other bank for ANYTHING and getting to know the staff and particularly building up that relationship with the bank manager.

This was a long term project. Not like now... Ask anyone who has taken a mortgage out in the last five years whether they know who the bank manager is (who now has pretty much zero authority to give out loans) - most would say no.

So, if you think it's difficult now, it was also difficult back in the day but just in a different and in my view more personally tortuous way.

vtt
 
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