*shortage of affordable housing in Melb and Sydney
ah. So the gas one then.
Consider this, the average household income is 88k for a family right now, or there abouts. So around 1400 per week. To get a deposit of 10% which is most lenders minimum people would need to save between 60-80k to guy an average house 30+ Ks out of the melboune CBD. They would be currently renting so probably spending around 550 a week there, may have kids in childcare 300 a week there, food 300, utilities 60, car 100.
It doesnāt leave a lot for saving if they donāt have ārich parentsā
Donāt let people get access to Super, it is supposed to be there to assist with retirement not buy a home.
If you want to solve the deposit problem all it will take is an enterprising bank (or government) that thinks a bit outside the box and long term.
Lets say Frank wants to buy a house worth $500,000 but cant save for a deposit, he pays rent every week and has done so for the last 3 years, that shows an ability to repay.
So an enterprising bank puts up 20% of the deposit for a 20% equity share of the property and Frank borrows 80% thereby avoiding having to pay the exorbitant mortgage insurance costs and gets a house.
In the future Frank can either pay out the bank based on 20% of the current value OR when he sells the house. The bank takes the risk along with Frank. Win/Win for the bank because it gets another home loan on the book and if property continues to increase in value then there is payout at the end.
The problems are going to arise with the regulators and the risk weighting of loans & the assets the banks will now have to include on their balance sheets but I also have a potential solution for that which I wont bore you all with.
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Well Benny, I always have a great issue with this average house business, and expectations of those wanting to buy a house.
If people want to buy a house then buy one where they can afford it; sure it may be 30+ k from the CBD, but it is not $600.000 to $800.000 either. My daughter has bought a large five year old 4 bedroom home at South Morang; 32 kms from CBD. It cost $485,000 and is a very nice place near shops and schools and not far from the train lineā¦ There are smaller cheaper ones around there as well.
I didnāt get to buy my first house where I wanted as I couldnāt afford it, so I got a house in a place a could afford. That was a long time ago, and maybe my generation, who is copping all the crap from current generations didnāt have unreal expectations of what we were to entitled to have.
There are great houses for sale here in Bacchus Marsh for $300,000 and it is a quick train trip to Melbourne. You can rent a very new three bedroom house in the Marsh for about $350 a week as well.
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Yeah that works too
Yeah thatās good too, but some people will still struggle to come up with 40k while renting.
Itās about 300 bucks a week for three years. A lot of families would find that hard.
Access to Super for home buying with no other measures to remove investors is just dumb in the extreme.
All it will do is get more buyers into an already overheated market, ramp up demand, & force prices even higher.
Boneless has to find some balls and get a plan to scale back negative gearing & cool down property investment, it really is just that simple.
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Thatās why Iām saying it has to be linked to building. There is an economy benefit to that.
Plus they are never going to scale back negative gearing.
I think waiting for government to do what they should be doing with that is only letting the problem worse. Time for alternatives that help people get into the market. This is peopleās homes we are talking about.
I am all in favour of stopping negative gearing, and changing CGT , and not allowing foreign nationals to buy houses or actually any property, and giving first home buyers more money or less tax, but I go to auctions and see people going crazy with bids. If Banks curtail lending; then prices will stabilize; and we need to increase wages by 100% as well.
Agree with all of that, but it doesnāt have any short term benefits to first home buyers. Also, pretty much none of it would happen under this government.
Sadly mate, it probably will not happen under the alternative Government either.
Hence why the solution needs to come in the form of helping the people who need it, whilst not impacting the market and investors. Which brings us back to why the super solution is something that addresses the immediate need. Iād rather a 30 something have 30k less super when they retire and own their own home than have that extra year or so of super and no assetts.
All for getting rid of negative gearing, not allowing foreign investment on houses and bringing back a decent first home owners grant. But it wonāt happen.
I think it needs a condition on it, like Canada. You borrow money from your super and have to pay it back with interest inside 15 years. Still not in favour of using super for anything but its original purpose, and iād also toughen super to all but abolish lump sums. Max 10% at retirement. It means re-introducing maximum annual pensions so you canāt withdraw it all and then double dip on the OAP.
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Something as simple as you can only draw on 10% of what you have would keep it well in check.
If you take out $10,000, the compound loss over 40 years is $89,900 (@5%).
Compound interest has itās biggest effect at the start (i.e. when you are young) not when you are old. Allowing the use of superannuation to buy a house pushing the issue of affordability elsewhere.
When they get to retirement in 50 years how do they cover that gap?
Also not affecting the market and investors is also not true. Most people are invested in a ābalancedā portfolio in superannuation so between 50% / 70% in shares. When they withdraw their $10,000/$15,000 for the deposit it will directly affect the sharemarket. 100,000 people use this scheme, thatās $1 billion gone from the share market.
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What if at the time of retirement they are still renting because they never were able to enter the housing market?
Even 90k only rents a flat for a few years, doesnāt even get a third of the way towards assisted living cost
Assuming a 30 year old working for 10 years on $60,000 thatās super of $54000 + interest ( lets say a generous $4000), 10% of that as you suggest is $5,800. Not exactly house deposit money