Cupcakes, I'm glad we didn't scare you off. You really have to excuse some of us as we see all sorts of newbies coming here with an agenda. You don't seem to fit that mold, so lets see what we can do to give you more of an understanding.
I don't think I have a sense of entitlement or high expectations. I expect my first home (rent or own) to be a small apartment or unit and I'll probably share with someone. I'd like something clean and within a reasonable distance to the city (say less than 45 minutes by public transport) as that's where I'll be working next year. To be honest I don't want to live in a studio apartment (I'm not sure if that's too much to ask).
Anyway, I've noticed that I can afford the above..but I won't have all that much left over. So I was just wondering if it’s somewhat difficult for me (a single person with 0 responsibilities) how do people with children do it? I mean, they can't really have roomies, they need a bigger place as the children need bedrooms, they have to feed the children and everything else. How on earth do they do it?
OK, don't worry about how others are going to do it, worry about how you are going to do it. For the most part you will find that those on low incomes with kids are getting a whole lot of middle class welfare, so lets leave that one alone for now.
I've noticed comments that you can get a loan on a low income. Well, I agree. But whether or not people can afford the repayments is another question. It seems banks are quite happy for their customers to live off very little after they make their repayments.
I think the cost of rent is as much of an issue as the price of a mortgage - in fact, I think it's even more of an issue. It seems to be low income earners who have to rent that are being hit the hardest.
Your first mortgage will be the hardest few years of your life. You really need to understand that and to go into this willingly with your eyes wide open, but it is worth the struggle. Consider this:
As a young person, it is reasonable that your income is only going in one direction. Up! Of course, this won't happen overnight and will come in many possibly small increments over the years. If you purchase a property, however, your repayments will stay the same (if you fix the loan, that is). Over time, the value of the mortgage will seem small.
If, on the otherhand, you choose to rent, well, I can tell you that as a Landlord, I want my rents going up. So, rent will always come at a cost. It might start out as the cheaper option, but over time it will always go up. The longer you rent, the longer you delay the hardship that you will go through in purchasing your first home.
Of course, not everyone experiences the same amount of hardship. We all have a different level of income & savings. The best advice that I can give anyone starting out is to SAVE as much as you can while still living at home with your parents and don't develop any expensive 'needs'. Live as simple a life as you can. Once you step onto that rent treadmill it will make things so much more difficult. You now not only have to find the rent money, but also have utilities & support yourself. All this makes saving that much harder.
I'm not sure about the negative gearing issue. There seem to be other threads on that. I was hoping this thread would discuss policies other than negative gearing. POLICIES not HANDOUTS.
I was thinking more along the lines of policies such as the government encouraging urban density, making it less expensive/easier for developers, lowering stamp duty taxes, perhaps introducing a tax on vacant land and properties, encouraging skilled migration for labourer's to make building less expensive etc. I really wish the government would start to look at these types of issues instead of just throwing grants at us!
This is a whole other issue. The government are the ones that have made it more expensive for developers. They are not going to change that. It would be lovely, I agree, but I really can't see it happening. Lowering stamp duty is the same. Just wishful thinking, I'm afraid. It is a whole lot cheaper for the government to throw random grants to people than to remove taxes and at the end of the day, they really don't care how expensive things get to the little people (you, me & the rest of us), they only care what will win votes.
I've also noticed the trend in property sizes are so odd. You have Mc Mansions in the outer suburbs and tiny shoe-boxes closer to the city. What about building reasonable sized apartments in cheaper areas? Could that help solve the problem? There don't seem to be apartments/units/town houses in the mortgage belt areas where the land is cheap? I suppose there must be a low demand for that or something. I think we need more properties for singles, couples without children and retirees as these are the growing trends in household size.
This has to do with the value of the land. To build a McMansion in the city would be a massive cost. Land is much cheaper on the outskirts than the city. As for the apartments in the cheaper areas, well, you need to look more to where the transport is located.
Take Sydney (are you from Sydney?) Lots of new developments going ahead, but the new apartments are mostly on the rail lines, not the new housing developments. Town houses & villa's are often in the established areas where you get larger blocks of land, so development costs are cheaper.
Also I don't think older generations had it "easy". Most of the literature I've read on housing afordability actually states that it isn't a recent phenomenon and housing began to become unfordable in Australia during the 1970's! Which makes sense as I know my parents had it tough, but my grandparents are always very sympathetic. My grandparents always tell me they think it's really hard for young people these days, which shocks me because they went through a major depression!!! But, I do think housing afordability is a growing issue and over time it has gotten much worse.
I think afordability is no worse than it has been, in fact I think it is easier if you stick to simple living. You are right, it WAS hard when we started out and it would have been hard when your grandparents started out. The difference is that nowadays there are so many new things coming out and everybody just expects to have the latest & greatest. Everyone carries a mobile phone, they have Foxtell, a new car, the latest biggest TV, expensive meals, going to the movies, clothes (I have daughters, I know how much gets spent on that alone) overseas holidays. See where I'm going here?
The basics are actually cheaper than when I was young. I remember saving for months to buy a VCR (do you know what that is? video recorder). It cost me something like $500 and this was in the '80s. I remember my dad fixing my kettle, yet now if they break you can get a new one for something like $10, why would you bother fixing it?
Anyway, I just thought it would make an interesting discussion. I'm sorry everyone felt the need to attack me over it. I guess I'm just one of those lazy, ungrateful Gen Ys who doesn't want to work hard for anything in life.
No, we are always willing to help those that are genuine. Sometimes it is hard to tell at first. There ARE lazy, ungrateful Gen Ys, but that certainly does not describe ALL Gen Ys.
