The most recent ABS figures show that Ist home buyers account for 7.6 % of new homes, the worst figure on record. The affordability index looks OK but only because it is factored against record low interest rates. Housing prices are rising well above inflation, 10%+ in the areas where demand is greatest. So a young person needs to find deposit interest rates to match the increase in order to keep the home ownership dream alive, and that won't happen. If they dive in they have to pay on average around half of their disposable income, and that's at record low interest rates.
And the low interest rates aren't going to last, a slight incremental rise in interest will send affordability through the floor. Anyone calculating affordability against the current record low interest rates is either very short sighted or not afraid of foreclosure, which was the case in the U.S. and Britain.
Property prices measured against current rent yield indicate that houses are massively overvalued at present- basically we've got a bubble that is being artificially inflated by the new money from O/S and a cashed up super industry looking after the assets of the old ■■■■■■ who already have houses.
The bottom line is that at present new home owners are NOT entering the market, primarily because they can't, they're stuck in the rent trap. Housing approvals are actually on the rise but they're not being built for the first home buyers.
I'm not sure about the whole "Australian Dream" stuff being bandied about.
Australian's just seem to take it for granted that you should be able to leave school, get a job, marry your sweetheart and buy a home together by the time your 21yo.
There are plenty of country towns or outer suburbs of major cities where prices are very reasonable. The dream is still alive if you are willing to save your pennies, make sacrifices and willing to be practical. First home buyers these days seem to expect their first home should be a house in a trendy suburb with a garage and an al fresco entertainment area and all the trimmings.
My wife and I saved for about 4 years while we lived in a little shoebox in St kilda, and bought a small unit together in Cheltenham, which we've just sold (after 6 years) to buy a nice old home in a cheaper part of Cheltenham, which needs a heap of work done to it!
So all in all it's taken us 10 years since we got our finger out and started saving properly, and we have to continue those saving habits if we want to stay on top of the huge mortgage we have (which is our choice, we could have moved further out).
I guess my point is it's not some magical entitlement, and it doesn't come easy or quickly, but it's frustrating to hear people blame the government (or the chinese or whatever) for taking their dream away, when they drive a brand new car, just came back from their mates bucks party in Vegas and rent a penthouse apartment in Toorak.
I'm not sure about the whole "Australian Dream" stuff being bandied about.
Australian's just seem to take it for granted that you should be able to leave school, get a job, marry your sweetheart and buy a home together by the time your 21yo.
There are plenty of country towns or outer suburbs of major cities where prices are very reasonable. The dream is still alive if you are willing to save your pennies, make sacrifices and willing to be practical. First home buyers these days seem to expect their first home should be a house in a trendy suburb with a garage and an al fresco entertainment area and all the trimmings.
My wife and I saved for about 4 years while we lived in a little shoebox in St kilda, and bought a small unit together in Cheltenham, which we've just sold (after 6 years) to buy a nice old home in a cheaper part of Cheltenham, which needs a heap of work done to it!
So all in all it's taken us 10 years since we got our finger out and started saving properly, and we have to continue those saving habits if we want to stay on top of the huge mortgage we have (which is our choice, we could have moved further out).
I guess my point is it's not some magical entitlement, and it doesn't come easy or quickly, but it's frustrating to hear people blame the government (or the chinese or whatever) for taking their dream away, when they drive a brand new car, just came back from their mates bucks party in Vegas and rent a penthouse apartment in Toorak.
Problem is there's no ■■■■■■ JOBS in country towns, so even though you can buy a house there quite easiily, you can't earn the money to afford the repayments, and that's entirely without taking all the lifestyle, proximity to family/friends/etc issues into account.
Outer suburbs are similar, though not as extreme. I bought in the outer suburbs last year, but even though I'm quite close to a railway station it's still over an hour each way to work. I can deal with that fine now (I knew what I was getting into) but I'm single and childless - if kids come along ... well, it'll probably get much harder. And in my line of work, there's basically no real alternative to working in the CBD/St Kilda Rd area. It works for me, but I can see why some people wouldn't find the sacrifices justified.
Northcote. We just had the Melbourne Ukelele Festival, it's really put the place on the map.
Just bought in Northcote (Sumner Estate pocket) after 20 years in Clifton Hill.
We are fussy buyers, so chose to sell 1st & rent while looking.
Sold just as the market was rising in late 2012, but have endured the pain of watching it accelerate through 2013.
Of course it is ideal to sell & buy in the same market, but then you risk having to settle for something you will be unhappy with (sell price or next house depending on which way round you do it).
Sell 1st or buy 1st? There is no right answer, just different risks.
Yep, we are selling first with a realistic expectation on what we will get for our current place. More than likely will get more than we are planning for so we will be in better shape. We are just fortunate we are moving from a smaller house in a great area to a bigger house and full block of land in a cheaper area. Dollar wise it should be pretty close to a 1:1 ratio.
So the idea that people should be able to escape from the rent trap, that they are more than just rent fodder there to provide dividends for landlords and international investers is "entitlement mentality". You could get yourself a job writing copy for Gina, I hear she'll pay 2 bucks a day if you're lucky.
Since when is Cheltenham a country town or outer suburb? Frankly your 10 year anecdotes are well past the use buy date. My experience of outer suburbs is that they're asking 350k+ for sheetheaps in dumps like Hastings that were fetching less that half that 12 years ago.
P.S. Fascinating to see the new buzz word "entitlement" morph before our very eyes.
Northcote. We just had the Melbourne Ukelele Festival, it's really put the place on the map.
Just bought in Northcote (Sumner Estate pocket) after 20 years in Clifton Hill.
We are fussy buyers, so chose to sell 1st & rent while looking.
Sold just as the market was rising in late 2012, but have endured the pain of watching it accelerate through 2013.
Of course it is ideal to sell & buy in the same market, but then you risk having to settle for something you will be unhappy with (sell price or next house depending on which way round you do it).
Sell 1st or buy 1st? There is no right answer, just different risks.
Nice area that.
We bought first and sold quick. Fortunately the GFC was runnin hot and we bought at least 150k below market value. Sold below too, but still waaay in front.
People can still get good apartments too if they want.
Northcote. We just had the Melbourne Ukelele Festival, it's really put the place on the map.
Just bought in Northcote (Sumner Estate pocket) after 20 years in Clifton Hill.
We are fussy buyers, so chose to sell 1st & rent while looking.
Sold just as the market was rising in late 2012, but have endured the pain of watching it accelerate through 2013.
Of course it is ideal to sell & buy in the same market, but then you risk having to settle for something you will be unhappy with (sell price or next house depending on which way round you do it).
Sell 1st or buy 1st? There is no right answer, just different risks.
Nice area that.
We bought first and sold quick. Fortunately the GFC was runnin hot and we bought at least 150k below market value. Sold below too, but still waaay in front.
People can still get good apartments too if they want.
Well done. Timing is everything.
Killer is, transaction fees are so high (stamp duty, agent fees etc) it can easily cost $100k to move to an identical house around the corner. You just can't afford to turn houses over every couple of years. So you really need to put in the leg work to make sure your choice of property is right for the long haul.
Northcote. We just had the Melbourne Ukelele Festival, it's really put the place on the map.
Just bought in Northcote (Sumner Estate pocket) after 20 years in Clifton Hill.
We are fussy buyers, so chose to sell 1st & rent while looking.
Sold just as the market was rising in late 2012, but have endured the pain of watching it accelerate through 2013.
Of course it is ideal to sell & buy in the same market, but then you risk having to settle for something you will be unhappy with (sell price or next house depending on which way round you do it).
Sell 1st or buy 1st? There is no right answer, just different risks.
Northcote. We just had the Melbourne Ukelele Festival, it's really put the place on the map.
Just bought in Northcote (Sumner Estate pocket) after 20 years in Clifton Hill.
We are fussy buyers, so chose to sell 1st & rent while looking.
Sold just as the market was rising in late 2012, but have endured the pain of watching it accelerate through 2013.
Of course it is ideal to sell & buy in the same market, but then you risk having to settle for something you will be unhappy with (sell price or next house depending on which way round you do it).
Sell 1st or buy 1st? There is no right answer, just different risks.
So the idea that people should be able to escape from the rent trap, that they are more than just rent fodder there to provide dividends for landlords and international investers is "entitlement mentality". You could get yourself a job writing copy for Gina, I hear she'll pay 2 bucks a day if you're lucky.
Since when is Cheltenham a country town or outer suburb? Frankly your 10 year anecdotes are well past the use buy date. My experience of outer suburbs is that they're asking 350k+ for sheetheaps in dumps like Hastings that were fetching less that half that 12 years ago.
P.S. Fascinating to see the new buzz word "entitlement" morph before our very eyes.
Well, on your first point, I'm saying yes people can break out of that "rent trap" if they want, because we did it.
If you think Cheltenham is a decent suburb, then the fact we bought in Cheltenham further proves my point doesn't it? You don't have to buy a place in Hastings, that would be a worst case scenario but if you really wanted to be a home owner well that option is still available to you. From what you are saying you would have made a tidy profit if you'd bought in Hastings some years back.
I'm saying people shouldn't feel so entitled, you seem to think you are entitled.
What do you feel you are entitled to? Tell me the suburb, the size of the house and the features (rooms, land size etc), and how cheap you think you should be entitled to buy it for?
I understand that having kids or being single or having a low income adds to the difficulty factor, but when compared to other countries (e.g, most of Europe) where most people rent for life and never even bother to save for a home loan, Australians still have it pretty good in comparison.
So the idea that people should be able to escape from the rent trap, that they are more than just rent fodder there to provide dividends for landlords and international investers is "entitlement mentality". You could get yourself a job writing copy for Gina, I hear she'll pay 2 bucks a day if you're lucky.
Since when is Cheltenham a country town or outer suburb? Frankly your 10 year anecdotes are well past the use buy date. My experience of outer suburbs is that they're asking 350k+ for sheetheaps in dumps like Hastings that were fetching less that half that 12 years ago.
P.S. Fascinating to see the new buzz word "entitlement" morph before our very eyes.
If your point (or a big part of it) is "Melbourne has grown a crapload", then...
The whinging thing has become part of being Australian.
We used to be larrikins, no worries mate, the lucky country.
Now we are just whinging farkers.
We've had it real good for a long time, generally speaking, and now things are getting more competitive it's getting harder.
I'm not saying it's easy at all (saving up for houses), though I know I blew a heap of cash between the ages of say, 18-25 that would have gotten me into the property market a lot sooner.
Well apparently the whinging disease has spread to both Canada and Hong Kong (that hotbed of entitlementism) where governments have taken direct visa and tax action to curb the impact of O/S investment on local housing affordability. Anyway rather than engage in anecdotes and hyperbole at 20 yards I offer this data from The Australians for Affordable Housing (no doubt a pack of whingers too)
"The majority of Australians aspire to own their own home – but it‘s getting harder
In the last ten years house prices increased by 147 per cent, while incomes in comparison grew by 57 per cent.
The rate of home purchase among 25 to 44 year olds has declined 15 per cent in the last 20 years.
In 1991 the median house price was five times the average income. In 2011 it is seven times the average income.
The average first home loan has gone from three times the average annual income in 1996 to six times the average annual income in 2010.
One in four Australians aged between 24 and 35 now live with their parents. This has been increasing over the last 20 years.
Every year the Federal Government gives out $8 billion in tax breaks to property investors but we still have high rents and low vacancy rates." housingstressed.org.au
No wonder you old "larrikins" never whinged.
Note: Most of this data would not include the full negative impact of the accelerated rate of O/S housing purchases of recent times.