Hi people,
I just finished reading an interesting article on page 53 of the Financial review about problems with housing affordability for first home buyers. In particular it talks about;
– average loan size up $24,500 from last year (now $174,500)
– First home owners usually account for about 1/4 of owner-occupied home loans, currently they are about 14%
– House prices rose almost 40% in the past two years (ABS stat).I am a first home buyer and even though I have a $20K deposit and good income I am finding it difficult to get something at a reasonable cost. Of course the government is going to do an investigation blah blah, but there may not be much they can do according to this article. Obviously there are lots of investors in this forum who love the prices going up (hey I want to be an investor to but would like to stop putting dead money into rent first), and you are all voters and would hate things like negative gearing being abolished (I don’t think it would ever happen and don’t think it should). But what about things like reducing stamp duty for First home buyers? Another suggestion in the article was for the government to help with savings I don’t know how that would work.
I was interested to see if other people had read the article or what they thought about the problem, if you think there is one?
McDeyess
g’day mcdeyess
i reckon
– the govt shld leave the market alone – any reductions in stamp duty etc will only push the price further
– we should all spend more time reading the sports pages and wait for the market to correct itself.
the problem is no one is sure whats going on and this includes the polies
[
]Government interference with market forces doesn’t work.
Trying to abolish neg gearing will put rental through the roof as has happened previously.
I don’t think buying your first home is more difficult, the first step is difficult at any time.
It wasn’t easy for us initially either.“would like to stop putting dead money into rent first”
who says its dead money?
even if you buy a place and live in it, you are effectively paying rent anyway. you always have to live somewhere. if you moved out you could rent the house out to someone else, but it would still cost you money, (and dont give me any positive gear rubbish, cos none exist currently) so theres really no difference. if you save the difference between renting and buying, then invest it, after 25 or 30 years you are $1m better off. Its better to earn 13% on your money than pay off debt costing you 6%. Think about it.
Rent, save, invest in managed funds, and by the time mortgagee sales are in full swing you will clean up.
regina – i agree with all you said
except the bit about buying a home now being no more difficult. i just have to open the newspaperhome affordability at all time lows, property booms, young people leaving university with huge hecs debt etc etc
Thanks for the responses guys/gals?? Point taken re: Government interference. I understand it has always been difficult to take that first step however I think the current figure is that housing affordability is at it’s heighest point in 13 years, so I think something can be said for the current market getting more difficult in my time (13 years ago I was in year 7).
Crashy your point about waiting and rent not being dead money is a good one, I am trying to plan an investment portfolio and shares/managed funds will obviously form part of that. However the share market isn’t particularly strong at the moment either (which often means it is a good time to buy up) and one thing that concerns me is that I feel it would be an opportunity missed to let the FHOG slip past me. Though I suppose that would be irrelevant if house prises fell 10% or so??? Of course when you put money into your own home you do increase your equity, putting it into rent puts it into someone elses equity.I think what Crashy means is that the interest on a home loan is dead money and that it is. Perhaps at the moment if rent is cheaper than your interest bill you could save some money. Put this extra cash aside as a bigger deposit and buy your house when the market corrects. The problem you face is that if it doesn’t correct you would have been better off diving in now.
My personal veiw is buying your home in a year or so with a bigger deposit may be worthwhile. Buying at the peak of a boom is pretty tough.
Investing in tax deductable investment property is total;y different to buying your house.
MJK
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