…not until I’ve had my two cents…
I think everyone, especially younger people, should firstly forget about ‘baby boomers’ and ‘gen x’, ‘gen y’ etc. This is all just marketing BS that someone made up so they could stereotype a whole generation.
The same with median house prices. It’s just a statistic and not a very good one. Where I live the median house price jumped by 80% for 2006. Someone congratulated me after reading the paper, and I told them my house was worth about the same or maybe even a bit less than 12 months ago. However, in my postcode one of the ‘best streets’ has seen a flurry of development with several new properties changing hands for 1.5 million plus. So the median price went up. Is my house worth more? Nup. It’s all lies and statistics.
Then you’ve got the problem of comparing housing multiples over time. 30 years ago the median was 7 times average earnings, and now it’s 14 or whatever. OK sure, but what was the weekly payments in fractions or a person’s take home salary? The median house 30 years ago would have probably been a 3 bed 1 bath chamferboard home with a single garage. Now the median is probably 4 bed, 2bath with 2 garages.
My point is forget about statistics and trends and marketing generalisations. Work out how much you’re prepared to borrow, and find a house that fits your criteria. When you can’t find any, then you can say ‘the dream is dead’. Forget about medians and boomers and all the rest.
And as for the people hanging on, waiting for some type of crash where houses are worth 30% less than they are now, I hope you realise your attitude is holding you back. There are worthwhile investments in every market. It’s true that some people overpaid a few years back and are looking at losses, but all the while there are more people looking for somewhere to live than there are houses to live in, coupled with the continued shrinking of household size, there’s not going to be a crash in house prices any time soon. Rents are rising swiftly in most places, partly due to the cost of the first home, but also due to the lower development numbers in the last year or two. It doesnt matter if you are a buyer or a renter, you still need somewhere to live, and that keeps prices at least on an even keel. Prices will crash only when households start consolidating and the population starts to trend downwards, neither of which are likely to happen in Australian any time soon.
And don’t forget about inflation, which everyone shoudl be aware of as it has featured in the news a lot recently. Inflation not only increases the value of your property in numbers (not necessarily in real terms) because of the rent-mulitplier. (ie if rents increase 3% year on year, values must eventualyl catch up) inflation also reduces the size of your mortgage in comparison to your salary. The amount of inflation from 30 years ago to now is mind-boggling to say the least.
Even if the bank has to liquidate a lot of properties, it’s still not going to send prices crashing. Most people mistakenly assume that a bank wants to get your house. That’s patently not true and a lender will do anything in its power to keep a loan going, because they make far more profit from someone sitting there and paying the mortgage. In fact if a lender has to foreclose on someone they think it is a very good result if they get all of their mortgage and outstanding interest back, which doesn’t happen very often.
The cynic and pessimist have to realise that the person most damaged by their forecasts and knowing declarations is themselves, because the cynic and pessimist will continue to drive the armchair or monday morning wisdom until the day they die, and won’t ever know what it’s like to take a chance, live some life and fulfill your potential.
(sorry that got a bit long, but I do feel strongly when I see cynicism and negativity. )
_____________________________
We all need somewhere to live – but do we all need a CBD apartment?Peter,
I hear your frustration and yes it is difficult to get into the property market in the 21st Century. I am 37 myself. Is the Great Australian Dream your Dream or part of a belief system handed down from the baby Boomer generation. Soldiers Grants (post war), land releases and so on were all part of stimulating a shattered economy and nation post war. Australia didn’t start to recover until the late 50’s early 60’s. I would doubt that a bank would have known what a home loan was (as we understand it today )in 1946.
The Geat Australian Dream of owning your own home is – in real terms a new phenomenon, it only got up and going for the majority at the end of WWII and then really started to pick up steam in the last 30 years.
Home ownership is even less common in like for like developed countries; France and America for example. The UK only started to develop a home ownership model as recently as the last 20 years.
Supply + Demand are the primary drivers of every market (as you would know). Was the dream part of a collective conscience or was the dream created – partly to instill hope in a shatterd nation,and stimulate the economy . When developing any market their is a strategy; who are the stakeholders in seeing Australia being the largest per capita home owners in the World. I can think of building supply businesses, builders, banks, agents, trades and governments to name a few. The outcome may not have been as contrived as I am suggesting it might be, but none the less the results speak for themselves. It is no surprise that the property market in Australia underpins the Australian economy and not the Financial Markets or mining. Do we ever stop to think about why – as such a small nation (population wise) we are one of the wealthiest nations in the world. It’s not mining its property and all those businesses that rely on it- it is the Oxygen in Australia’s Economy – not just residential its also commercial, retail and industrial.
Why is that an indivdual investor gets the advantage of negative gearing from the ATO and bsuinesses struggle to get any Government support or incentives or relief in establishing and growing buimnesses? Property is that important to our economy…
It is the way it is because by and large we bought the Dream and we still can but how important is home ownership – is it Status, Ego, have we “made it” because we own our own home, because we have ball and chained ourselves to a 25 or 40 year mortgage?
Is it your dream or an inherited dream and belief. What’s wrong with being a landlord? It serves Frank Lowy, Harry Trigubuff, the Gandel Family and Stocklands (for example) well.
The opportunity going forward might be – to be a landlord, rents are going up and there going top stay up – water always finds its level, so it will be with residential property. Accept the things you can not change and change the things you can – your thinking, your perspective, your approach!
You might like to think of conjuncting on a property with a friend or colleague. Look into Co-ownerhip and tenancy in common, pool resources. Look into being a landlord, rent where you want to live. Let the passage of time deliver asset growth and wealth – you’ll own your own property soon enough. Be creative, create your own Australian Dream – we are living in the lucky country!
Food for thought – banks primarily rely on the home loan market ergo – property industry – to be their cash cow for developing more profitable business units – corporate banking, Financial Market trading, credit and so on. Its their bread and butter! Your a Bank Officer right? Thank the property industry and the baby boomers for without it and them you may not have ever had a job in the bank at all.
Good luck on your journey – focus on the solution, create one, have fun – enjoy!
Stuart Jones
Rose and Jones Property Pty Ltd – Sydney, NSWPeter,
I feel for you. I know exactly how you feel. your question on the property prices crashing, my view is unlikely. And if there was a crash, you are unlikely to want to enter at that point either. If a downward spiral does occur most buyers hold off until the boom starts again and it’s only the very smart money that can pick the bottom of a cylce (let’s call it luck!!)
I was earning just over $40k when I purchased my first property for $250k so 6 times income. I remember people saying the property market will crash at any time now. but one wise person said to me “land will never be as cheap as it is today”. how true that is. This purchase was in 2002. Since that purchase that house is now worth $400k.
Trust me on this. You have done the hard yards and completed further education. Big tick!! In a few years time, if you work at it, you will easily be earning 3 times what you earn today. You may not believe me. I didn’t believe this when my lecturer said it to me. But it’s true. Word hard and the income rewards will come.
Imagine if somebody told you in 4 years you will go from $40k income with 0 property to $120k with 3 properties. i bet you wouldn’t believe it. but, do the yards at work, buy something with the most money you can afford, and you’ll make it happen.
Good luck with it all. i own properties, earn good money and I still think how will I ever afford to upgrade my house to something closer to the city, newer etc. The feeling doesn’t go away, but work with what you have and push yourself to achieve and it will all come.
I still have friends doing nothing. they will continue to do nothing for years to come. I don’t blame them for it – doing nothing is the easiest thing in life, but it achieves nothing!!
If you decided to buy a Brand New but Cheap property/ies, youcan email me [email protected]
Website: http://www.maylene.zoomshare.com
If you decided to buy a property, a brand new but cheap property for only $40/week. please email me [email protected]
Website: http://www.maylene.zoomshare.com
Hi.
A few of the others have already mentioned this but I think it is important to say i again. If you want something go and get it. I’ve just turned 22. I’m not an invester as yet, i’m just starting out, but I have bought my first place.
Your right, property prices are going up and up and you do seem to be chasing your tail trying to save a deposit. I won’t tell you what you need to do, i’ll just tell you what I did.
I worked, I saved. that wasn’t working so I got a second job, and worked and saved. It was still taking longer than I wanted so I applied for higher paying jobs and kept applying until I got what I wanted.
While my friends were out partying and getting expensive cars, I worked my butt off to buy my first place.
Make a choice, and follow through with it.
No one will read this, but here is the problem with stupid young people (I am one, so don’t critisise): Young people want to live in the CITY where its EXPENSIVE, rather than OUTSKIRTS or COUNTRY where its still affordable. Don’t tell me you can’t afford a house, I’m on 50,000, my partner is on 30,000 and we have our house, an investment house, a residential block and another 28 acre bush block with views. So quit whining, get off your “I want to spend $300K on a house” bandwagon and start thinking… [evo]
I know nossing!
The fox says – Australia is still the lucky country
Whoever would like to buy a Cheap but absolutely Brand new properties in Australia, just email me your name, address, landline number (not mobile) and available time to contact you.
Email add: [email protected]
Check my website: http://www.maylene.zoomshare.comAll the people laying the boot into the OP need to take a chill pill. One day you may well be down on your luck and may need a helping hand.
Air goes in and out. Blood goes round and round. Any variation is a bad thing
Originally posted by maylene:Whoever would like to buy a Cheap but absolutely Brand new properties in Australia, just email me your name, address, landline number (not mobile) and available time to contact you.
Email add: [email protected]
Check my website: http://www.maylene.zoomshare.comI am happy to be proved wrong, but the above website looks like a classical two-tier marketing system with everything done for you. The properties are more than likely overpriced for the area.
BEWARE people, and insist on INDEPENDANT legal, finance, valuation and building inspections before signing anything.Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Originally posted by brc:And as for the people hanging on, waiting for some type of crash where houses are worth 30% less than they are now, I hope you realise your attitude is holding you back. […snip…] there’s not going to be a crash in house prices any time soon.
Originally posted by poperr:“What do others think about the likelihood of a house price crash?” I would also like to hear?Originally posted by mimaranda:Foundation, I’m not sure that I follow the logic of your housing bubble crash ‘rant’.
The basic law of supply and demand indicates that house prices will continue to rise over time rather than crash, simply because more and more people are bidding for the same parcels of land.Sorry, I’ve been away a lot lately. I don’t have time to address your last point here mimaranda, but believe me, we’ve been building houses at a far greater rate than the household formation rate. The mathematics is simple:
(household construction) > ((births – deaths) + immigration) / (average household size)
This has been the case right through the recent housing boom. So the ‘basic law of supply and demand’ you cite should have seen house prices falling, no?
Anyway, the reason I am 100% confident of a very significant correction in house prices, either through stagnation while wages, and rents catch up (this will take many, many years, not, 2 or 3), or through outright nominal falls, or more likely through a combination of both is very simple.
Debt.
For house prices to continue to grow (on average) at the average rate over the last 30 years requires housing debt to grow at an unsustainable pace. Unsustainable because it would soon take more than the entire income of every man and woman in the country just to pay the mortgages of every mortgage holder… Impossible? Yes, therefore unsustainable.
Furthermore, for house prices to simply maintain current levels, additional housing debt must be acquired at a rate of $80 billion to $100 billion per year for at least the next decade. This too, is unsustainable, and would nearly bankrupt the country.
I’ve written much more on this subject, some of it can be found here using the search function. I’m happy to also discuss it further when I get time. I’d suggest some reading first, starting here:
http://www.debunkingeconomics.com
with the most recent Debtwatch newsletter.
Cheers, F. [cowboy2]
Dear oh dear!
What a hard life u have. Yes I am a baby boomer and rich as well. I was born in England into a very poor family, left school at 15, my parents needed the extra income.
Bought my first place at 18 which was a complete dump, worked hard on that, sold it for a profit and did the same 4 or 5 times.
We didnt have the time or money to sit around wallowing in self pity!I assume your parents helped u thru uni, u should be grateful that u had the chance, I didnt. But I made sure my kids did.
For 16 years I worked building up a business 7 days a week for 10 – 12 hours a day.Get off your lazy arse and dont be so bloody selfish.
Make do with a small run down unit to start with and go from there.
Alternatively get bombed, smashed and reap the results.
hi peter i understand your way of thinking u will have to change your negative mindset to possitive , mix with possitive people, read books,do what it takes,u will find life gets easier,not harder go for it enjoy life rjames[specool]
rj
Don’t get bitter Pete, get better.
Who cares if prices are unaffordable? Just rent and save your money and get smart at investing in shares.
Buying a house right now is an absolute rip off, and the most over-rated “dream” I can possibly think of.
Why anyone would want to fork out $400K to live in a two bedroom shack in Bankstown and be in debt to the bank for the rest of your life is beyond me.
Save your money for yoursef. Don’t give it to the bank! And then you’ll have the freedom to do whatever you want.
Daz
WOW!!!!
Property is not dead so it would be a shame is ones dreams are.
Chin up people and dare to dream![cigar][cigar][cigar]
Hi Guys
With the predicted shortage of accomodation for Uni students I would have thought that an obvious start for Peter and others would be to purchase a house close to a Uni and rent out the rooms to students. Rate here in Brisbane seems to be about $110 a week, so that is $330 a week contribution to your mortgage. Could be more depends what you offer, as I have seen up to $160 per week for all mod cons.
To make youself eligable for a loan, get rid of all debt mechanisms (credit cards, loans etc) with the first time home loan and stamp duty relief you can save heaps.
Last thought is that 6 bedroom houses are valued at almost the same as 4 bedroomed houses, so look, drive around and talk to the estate agents. They will not still be advertising the same house that has been on their books for 6 months!!Firstly, I can’t wait until property prices fall over and every interest only investor is instantly bankrupt. It would be a good day for justice and a wake up for the goverment. Giving ‘investors’ tax deductable interest while struggling home buyers don’t get that is a complete injustice. Most investors would not be in the market if it weren’t for this negetive gearing. The investors themselves are what is driving prices so high.
The baby boomers have now paied off loans and all investing and we seen a massive property bubble. They all buying up houses for investment. I get sick and tried of hearing “I have 1.2million in property” when they really have 1million in debt and 1.2million in POSSIBLE property if the values don’t fall over.
Having said I can feel for the orginal poster. I was in the same position in 2003. Out of uni and into a $39k job. It took a few years of work but now I am on $60k but also have girlfriend who earns about $41k. So things can change quickly and we are now in a situation to loan about $300k and we should be able to pay $750 per week now and in a 2 more years up that to about $1000 per week after my HECS debt and her car debt finally come to an end. We want the house paid off in under 10 years.
However people are being really unfair to the original poster. When you are on your own making $39k nothing is affordable. People her claim that $180k apartment (and some even said $300k houses) are available. I can tell you right now that they will not give young people on $39k more than about $140. If a couple you can get them upto about $260, thats a big if for most people. He is pretty much in a part of his life where he can’t do ANYTHING. You can’t save much on $39k at all living by yourself. Not even $200 a week, in that time property prices can explode. I was looking for hosues around $200 when i just finished uni, 3 years later when I am finally ready the same houses are now asking $300 and I guess selling for about $280.
Originally posted by dacium:However people are being really unfair to the original poster. When you are on your own making $39k nothing is affordable. People her claim that $180k apartment (and some even said $300k houses) are available. I can tell you right now that they will not give young people on $39k more than about $140. If a couple you can get them upto about $260, thats a big if for most people. He is pretty much in a part of his life where he can’t do ANYTHING. You can’t save much on $39k at all living by yourself. Not even $200 a week, in that time property prices can explode. I was looking for hosues around $200 when i just finished uni, 3 years later when I am finally ready the same houses are now asking $300 and I guess selling for about $280.
Seriously, you have NO idea what you are talking about.
My second job i took a pay cut and was only earning approximately $25k/yr. I was able to save $200 a week from that measily pay packet. I just had to be creative and wise in how i spent my money.
We purchased our first home in 2002 (close to peak prices here in Melbourne) solely on my wifes income of slightly less than $35K/yr and the bank (CBA) gave her $150K.
Anyone on $39K/yr that cannot save money from their pay packet really needs to think about what they are wasting their money on.
Maybe you guys would like to re-read what has been said in this thread and try to change your perceptions and reality a little. Learn from those older than ourselves.
You can do it, you just need to make it your reality and work out ways to do it. The great part is once you work out you can do it, you realise you can still have a very social and fulfilling life.
If you or the OP would like some tips on how to save money then feel free to message me.
MT.
PS I’m still in my 20’s, albeit just! [wink2]
What I mean is that if people have debts already they struggle really badly.
$39k per year is about $576 per week. $200 rent. $125 car payment. $80 other car costs (fuel, insurnace, rego). $40 bills (elec. phone. etc). Food $100. HECS $30. That leaves $0. Maybe $100 if you used share accomidation and paid $100 a week rent. Either way a loan repayment, you can only afford may $200 per week. That only covers interest on about $135k loan.
I was on $39k and I saved over $30k in 2 years so it can be done, but i had no car loan and $50 rent. It can be done sure, but something is wrong with society when kids have to do this out of school, where none of this is taught.
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