There will be more renters

[Luv2Travel]

No, two kids means that a 3 x 1 is a requirement. Unless of course you as a landlord dont actually care about the quality of life your tenants have?

Oh that's right, kids can't share bedrooms anymore. Apart from me wanting to kill my sister because she was extremely untidy and I was obsessively tidy, we managed to survive with 3 kids and 3 BR house, meaning the two girls shared.

Unless of course you're talking about older kids who are boy/girl, then that's different.

 

[skater]

I don't think things are necessarily harder these days, just different.

Precisely right.

For the record Dean, it appears in this post http://www.somersoft.com/forums/showthread.php?p=543598#post543598 that you are a potential FHB. Now, I understand that this was nearly 12 months ago, but are you seriously trying to tell us that you not only bought your home, but paid it off completely AND have an IP in just 12 months? And if you did, why all of a sudden are you trying to say that things are too hard for FHB's. Have things changed that much in WA in the last 12 months?

Something is just not reading the right way, here.

 

[keithj]

Keith, way to rip a thread to pieces so someone cant reply to it. You set a fine example as a moderator, not to mention failing to read through everything so you could put it into context.

I think you misunderstand - I've read most of this thread (except the bits that were posted in the 10 minutes before I posted).

No, her decision to stay at home is not a lifestyle choice. Day care costs per kid are over $50 a day. Two kids = $100 a day. Thats $2200 a month on daycare. What does her post tax income need to be to cover that?

I was meaning her decision to have kids before buying a house. Not doing the child care thing appears to be a no-brainer.

No, two kids means that a 3 x 1 is a requirement. Unless of course you as a landlord dont actually care about the quality of life your tenants have?

You misunderstand... I was referring to them looking at 3x1 in a significantly less than stellar suburb.

They are FHB's with an above average income looking for a below average home. Ill repeat that because the property wizards seem to be ignoring this

ABOVE AVERAGE INCOME TRYING TO BUY BELOW AVERAGE HOME WITH A LARGE DEPOSIT

Where did I say they wanted an average home? I said it was out of reach, yet even the below average homes are out of reach? Their deposit will be above average mate.

Do you mean they have a 50% deposit ? That's what I''m referring to. As I said above... Average houses are bought by average wages earners with average deposits. A 20% deposit is way below average. Average houses are usually bought by upgraders who have a 50% deposit.

If they buy a house they can afford, pay down P&I for 10 years, and then they will have a 50% deposit for the next house. And that house will be a lot closer to a median house than the one they can afford today.

 

[DeanoC]

I knew that the B&W TV would get a mention. No, the TV was CHEAP. That was the point. Same as the average box these days (but you need the set top box to play the thing soon). The point I was trying to make is that the fancy new plasma is a luxury.

You know, you can say all you want, but there are a few of the younger generation who don't bother making excuses, they just take a deep breath and get the job done.

Take my youngest, for example. 18 yrs old earning a minimum wage. She knows she can't afford a PPOR at the moment, but also knows that she can make money from property. Instead of whinging that it's all too hard and spending all her salary on 'stuff', she is looking for an IP that she CAN afford now.

Now, you mention your sister is looking at Clarkson as a starter home. I've been to Clarkson. The suburb is made up of quite nice, realatively NEW homes. The point we are all trying to make here is that if Clarkson is too expensive, then maybe she should be looking at something where the houses are a lot older. Something that needs fixing. Something cheaper or further out than Clarkson.

There are plenty of starter homes in outer Sydney suburbs that you can pick up for $100k less than your starter in Clarkson. Old homes. Small homes. Some are average, some are less than average. You would probably call them slums, but they are perfectly good homes. These are first home owner homes. I am sure you have something similar in the outer areas of Perth.

So you are 45+ then. Which means you are so far out of touch its not funny. You never had to buy a house at these kind of debt levels or when the difference in value/income was this high. Seriously, you DID have it easier.

Clarkson is a cheap area.

The median price is what in perth? About 450k now?

They are looking at something between 330k and 350k. Clarkson is far, but thats why the newer homes are in that price range. Thats cheap for the area, but plenty of them to go around. Its not the age of the homes that drive prices, its based more on location. You are a property investor, aren't you?

What is the difference in buying a newer home further away at a cheaper price than buying one closer to the CBD that happens to be older? Its still, based on its price, WAY ABOVE AVERAGE?

By the way, they are not whinging. They are getting on with the job of it. I just get pissed off when people like the OP like to believe that housing affordability is not really a problem, and even if it was, its no train smash.

Way to much anecdotal ******** on this forum. I have seen two posts so far where people other than myself compared land prices to house prices. I am seeing people talk about weatherboard homes as average still, when they are not. Im seeing people ignore outright the massive difference in house pricing based on incomes of today.

Im even providing examples of someone who earns above average, wanting to own below that, and despite having a large deposit when they take the plunge, still being in mortgage stress from day 1

Are we are talking macro economics here, or this is the forum where the Home and Away fans talk property?

 

[DeanoC]

Oh that's right, kids can't share bedrooms anymore. Apart from me wanting to kill my sister because she was extremely untidy and I was obsessively tidy, we managed to survive with 3 kids and 3 BR house, meaning the two girls shared.

Unless of course you're talking about older kids who are boy/girl, then that's different.

So for a young family to want a 3x1 in a fringe suburb 35km from Perth somehow makes them unrealistic, even though hubby earns more than 20k a year more than national average?

No, they are two young boys. But I guess these days the Australian standard of living has reached the point where above average incomes land you two bed flats in former council areas.

Yep, no affordability issues at all.

 

[Shadow]

Home ownership implies OWNERSHIP. If you have used an asset to secure credit, which is the procedure one follows when they buy a house, then you dont own that asset until you have paid off your outstanding debt. You dont own the house. Its an asset that does not really belong to you. Its a leveraged asset, not an owned asset.

That's not really true. Legally and practically the house belongs to the buyer. The buyer pays the rates, decides who can enter the house, decides if or when to sell the house, what colour to paint the house etc. etc. The buyer receives all of the capital gain as the value increases - the bank gets none.

The buyer also has a contract with a bank for the loan of a sum of money, with the house used as security. The bank has absolutely no claim over the house whatsoever, unless the buyer breaks their contract with the bank.

Ownership rests with the buyer, not the bank.

 

[Luv2Travel]

I am seeing people talk about weatherboard homes as average still, when they are not.

I don't think anyone is saying it is average, they are saying that maybe young people should accept an older weatherboard home in the suburbs for their first house, and upgrade later when they can afford it. My first car was a 20 year old Datsun, my next one was a 15 year old Mitsubishi something, my next one a 10 year old Barina and now I drive a brand new car. Buy what you can afford, and don't b!tch about not being able to afford what you want first up.

For the record I'm 32, so I don't know whether you consider me one of the young ones or one of the old ones, but I'm certainly not from the generation of 30 years ago when everything was so "easy".

 

[DeanoC]

I was meaning her decision to have kids before buying a house. Not doing the child care thing appears to be a no-brainer.

First was a mistake. Contraceptives failed. These kinds of things happen. They have no regrets.

You misunderstand... I was referring to them looking at 3x1 in a significantly less than stellar suburb.

Which is what they are doing. As mentioned, 35km from perth, not a great area, but seems to be getting better. They are trying to be realistic

Do you mean they have a 50% deposit ? That's what I''m referring to. As I said above... Average houses are bought by average wages earners with average deposits. A 20% deposit is way below average. Average houses are usually bought by upgraders who have a 50% deposit.

No, they are aiming for a 20% deposit. Grant will take them up to 25%. Very few people put a 50% deposit down on a home. Where did you get that info from?

Investors in particular were building houses with 5% deposits at one stage. Its not a level playing field for them. Im an investor myself, I just dont see long term good in this for them or us.

If they buy a house they can afford, pay down P&I for 10 years, and then they will have a 50% deposit for the next house. And that house will be a lot closer to a median house than the one they can afford today.

Oh they know that. Thats the plan. But that missed the point. Even with a good deposit (and 20% is higher than what most FHB's were putting down) and with him earning above average, A BELOW AVERAGE HOME STILL PLACES THEM RIGHT INTO MORTGAGE STRESS.

Home are unaffordable for people. Many are buying on interest only. Many have to have two bread winners. Many are taking loans over 30 years now. All ways to cope with prices that are now 6-9 times their wages. Its not good for our economy, and long term its not good for us as property investors either.

 

[DeanoC]

I don't think anyone is saying it is average, they are saying that maybe young people should accept an older weatherboard home in the suburbs for their first house, and upgrade later when they can afford it. My first car was a 20 year old Datsun, my next one was a 15 year old Mitsubishi something, my next one a 10 year old Barina and now I drive a brand new car. Buy what you can afford, and don't b!tch about not being able to afford what you want first up.

For the record I'm 32, so I don't know whether you consider me one of the young ones or one of the old ones, but I'm certainly not from the generation of 30 years ago when everything was so "easy".

Im also 32

And those weatherboard homes in the suburbs cost just as much as the newer homes do in the outlying suburbs.

a 350k home is a 350k home, the mortgage payments are going to be the same

As a percentage of income, a newer home could be had if you are prepared to travel. But at 350k, which is way below medians in most capitals, people on an average wage wont be able to buy anymore.

 

[skater]

So you are 45+ then. Which means you are so far out of touch its not funny. You never had to buy a house at these kind of debt levels or when the difference in value/income was this high. Seriously, you DID have it easier.

The one who is out of touch is you my friend.

You did not have to endure 17.5% interest rates AND then become retrenched. You have not had to raise a family and live on a diet consisting of baked beans, instant noodles & rice. You have not had housing costs take up over 80% of your income, and this is with a crappy, disgusting, awful home, not an "average" home.

You have not had to suffer half of the stuff that some of us "older" folk have had to do in order to keep a roof over your head, so don't even start to try to tell me how "easy" we had it.

For the record, I am under 50.

 

[DeanoC]

Precisely right.

For the record Dean, it appears in this post http://www.somersoft.com/forums/showthread.php?p=543598#post543598 that you are a potential FHB. Now, I understand that this was nearly 12 months ago, but are you seriously trying to tell us that you not only bought your home, but paid it off completely AND have an IP in just 12 months? And if you did, why all of a sudden are you trying to say that things are too hard for FHB's. Have things changed that much in WA in the last 12 months?

Something is just not reading the right way, here.

I am an immigrant Skater.

I sold up before I emigrated, and had a large capital base to work from. I was fortunate enough to come over with about 750k. I bought my home, and was going to use the equity in that along with the spare reserves to buy a few more IP's. I made most of that through flipping homes. My understanding of thE Aussie market 12 months ago was minimal. I was like a lamb to the slaughter

Not feeling comfortable with the way the market is headed over the next few years, I plowed most of it into a second home which I now rent to my sister who also moved here recently. I wont be investing in property for a while again, but I am happy to holds long term.

I used these forums as a basis for research. I have an Australian passport as a result of ancestry, and was given money as part of the grant Rudd threw out to the masses. I was going to leave the money in the bank and just let it collect interest while I continued to save, but I was not happy paying somoene else rent after a while

 

[DeanoC]

That's not really true. Legally and practically the house belongs to the buyer. The buyer pays the rates, decides who can enter the house, decides if or when to sell the house, what colour to paint the house etc. etc. The buyer receives all of the capital gain as the value increases - the bank gets none.

The buyer also has a contract with a bank for the loan of a sum of money, with the house used as security. The bank has absolutely no claim over the house whatsoever, unless the buyer breaks their contract with the bank.

Ownership rests with the buyer, not the bank.

So what happens when the owner defaults on payments...

 

[keithj]

No, they are aiming for a 20% deposit. Grant will take them up to 25%. Very few people put a 50% deposit down on a home. Where did you get that info from?

Can you see how buying a PPOR today & in 10 yrs it will have doubled, giving them a huge deposit for an upgrade ? That's where the 50% deposit comes from that allows average wage earners to buy average houses.

Investors in particular were building houses with 5% deposits at one stage. Its not a level playing field for them. Im an investor myself, I just dont see long term good in this for them or us.

Skater has found when you posted in May last year, when you said you were a FHB....

Ill keep putting money aside and saving up a healthy deposit for now.

Today you say you're an OO with no mortgage, and also an investor...... care to clarify ?

Oh they know that. Thats the plan. But that missed the point. Even with a good deposit (and 20% is higher than what most FHB's were putting down) and with him earning above average, A BELOW AVERAGE HOME STILL PLACES THEM RIGHT INTO MORTGAGE STRESS.

But they aren't competing with FHBs, they are attempting to compete with upgraders who can afford a slightly below average home because they have a significantly above average deposit.

Home are unaffordable for people. Many are buying on interest only. Many have to have two bread winners. Many are taking loans over 30 years now.

Welcome to the real world .

All ways to cope with prices that are now 6-9 times their wages.

Prices of 6-9 times their wages are irrelevant to them. They should be looking at houses 3-5 times their wages. When they have a 50% deposit they can look at houses 7-9 times their wages.

 

[Rooster]

So for a young family to want a 3x1 in a fringe suburb 35km from Perth somehow makes them unrealistic, even though hubby earns more than 20k a year more than national average?

They may want a 3x1 but deep down they know they could easily manage in a 2x1.

It also doesn't help that you are comparing the "National" average for wages against the median average for houses in a state that is in the midst of a resources boom.


Rooster

 

[weg]

Thanks for your insightful feedback weg. I see you took the time to read through this entire thread and ensured to the best of your ability that you had a handle on what had been discussed up until now.

Im 32

Im no FHB mate. I live in a big home in a decent area. I own it outright. I own another property, with a very small mortgage, that I rent to family so they can save to buy a house of their own.

Do people actually read anything here, or is it straight into attack mode the minute someone dare question the status quo here? I wonder if this place is full of investors or if its just one big circle jerk where people are trying to convince themselves more than anything else

I grouped you in with the FHB's in your attitude only, and did not think you were a FHB, although it could have been interpreted that way.

Many here simply don't share your view and I doubt it's a case of Q the status quo upsetting them.

If any group of people understand how to enter the housing market, it's probably going to be people like the ones here at SS.

Many here have and are still doing it tough, that when they hear of buyers that can afford to buy say they can't, they justifiably want to argue the case.

No need to get so defensive.

 

[DeanoC]

So, now you are saying that in 12 months, not only have you purchased two properties and completely paid one off, but the one that is owned outright is a large home in a decent area, meaning an expensive house.

Please enlighten us how you did this?

Im not a typical FHB skater, and my case is different. Using me as an example does not make sense.

Are you that hard up to contest my views that you have now resorted to trying to attack my credibility instead of my views?

Here, let me show you how this foreigner was thinking

750k or so expected in reserves, but GFC has just hit. I made my money flipping homes during the boom. K? I was liquid.

Now, the idea was to buy a cheap 350k home, and continue to save as I learned to understand the difference between this market and the one I came from.

Instead, based on what I have saw, I decided to buy a house outright, and a decent one at that. I then bought a second home with a small mortgage after a big deposit, and I have stuck the rest into gold and platinum, which is where most of my savings have been going.

I understand leverage and how to use it. I love property. I just dont like leveraged property in this market. I changed the way I invest. So I reduced my risk. I moved from some who bought and sold houses after renos or sold off plan at a profit. I made a lot of money during the credit boom

The credit boom is over. So I have changed my strategy to suit what I think is right for this market. I am still learning and I will admit that. I have done plenty right up until now though.

 

[wylie]

Our oldest son (three boys) was 7 when we moved from a two bedroom house into a three bedroom house. It would have been considered "average" though it had been rented for years to young people and it was nothing much more than a flea pit, which we renovated.

The house we left with two bedrooms (and a sleepout the size of a single bed, which was too small for a bed really, but which the baby slept in because it fit a cot rather well) used to house a family with seven children. That's right, nine people living in a two bedroom house with tiny sleepout.

If your sister wants to get into the property game, then maybe choose an even cheaper one, and use it as a first step. Plenty of us did that.

And enough with the "plasma" thing. You seem to have an issue with this. You can get a plasma for less than $1K now, but even four years ago when we got our first one, they ranged between $2.5K up to $10K or so for a "good" one.

Though they are cheap now, it is still $1K that could be used better elsewhere if someone is happy with a big, boxy, ugly tv that can be bought for less than $40 on ebay. Multiply that type of saving by 20 "must have" items, and there is nearly $20K. It adds up rather quickly.

You say we "oldies" have blinkers on, but I think you are showing that you are not willing to listen to anything we have to say. We have walked the walk. A different walk perhaps to that which our children will have to walk, but to say that buying a house was "easy" in our day is just not right.

And I still think your idea of "average" is not right.

 

[Luv2Travel]

It's not impossible for FHB, in fact it doesn't even need to be that difficult.

They just need to adjust their way of life, adjust their thinking, be realistic and stop whinging. Simple as that, but whilst they are whinging and complaining and doing nothing to change their ways, they are tenants looking for somewhere to rent, so I actually want to thank them for being the Prince/Princesses that they think they are to help ensure my IP's are never vacant.

 

[skater]

You say we "oldies" have blinkers on, but I think you are showing that you are not willing to listen to anything we have to say. We have walked the walk. A different walk perhaps to that which our children will have to walk, but to say that buying a house was "easy" in our day is just not right.

And I still think your idea of "average" is not right.

I will also add, that due to a Business failure that we walked away from around 9 years ago we had to start again. We had a home that was purchased to be the PPOR, but due to the whereabouts of Hubby's job, we moved elsewhere. This home had a large mortgage.

So, with only a handful of equity, and ONE AVERAGE INCOME, we started again, purchasing a dump in one of the so-called worst area's in Sydney. We only moved out of that house around 12 months ago. So, with only ONE AVERAGE INCOME (which you seem hung up on), we not only purchased our PPOR, (a very much LESS THAN AVERAGE home), but have also picked up a portfolio of homes that range from Sydney, to regional NSW, to regional VIC.

The first PPOR is not meant to be easy, but it gets easier over time.

 

[DeanoC]

If your sister wants to get into the property game, then maybe choose an even cheaper one, and use it as a first step. Plenty of us did that.

And enough with the "plasma" thing. You seem to have an issue with this. You can get a plasma for less than $1K now, but even four years ago when we got our first one, they ranged between $2.5K up to $10K or so for a "good" one.

Though they are cheap now, it is still $1K that could be used better elsewhere if someone is happy with a big, boxy, ugly tv that can be bought for less than $40 on ebay. Multiply that type of saving by 20 "must have" items, and there is nearly $20K. It adds up rather quickly.

You say we "oldies" have blinkers on, but I think you are showing that you are not willing to listen to anything we have to say. We have walked the walk. A different walk perhaps to that which our children will have to walk, but to say that buying a house was "easy" in our day is just not right.

And I still think your idea of "average" is not right.

My sister does not want in on the property game. They want to buy a home as shelter for their family. A place to maybe have the odd barbecue. Let the kids have a backyard. They are quite positive about everything because for them they are bombarded with positive media spin on an almost daily basis.

I on the other hand look at the situation and I find it alarming. As someone who likes property as an investment, it concerns me. Fine if you have money or bought early, not so fine if you did not? Where does future demand come from? How can capital prices rise if credit drys up? How can people pay their loans and stop a landslide if jobs are lost? Realistic questions based on fundamentals.

Then the exclamations from people who bought in YEARS AGO BEFORE THE LARGEST CREDIT BOOM IN HISTORY saying they had it just as tough. How they had to start off small.

Yet to them, tough was 2/3 times wage, while to the those starting out, they are looking at over 6x wages in most cases.

What is your definition of average? My definition of average is what they construct today. Those run of the mill, 200-220k homes you see in the display villages. Those ARE average homes now.