A letter to the young people in Sydney and Melbourne

Don’t worry about my grammar and writing. I am writing quickly on an iPad without doing editing, due to a lack of time. Dealing with the mistakes an iPad introduces is also painful and it’s just an informal forum.

Rather think about the fact that kids leave school here at age 16 and work till 10pm and even later at a woolies or Maccas instead of sleeping or learning. Something that’s illegal in many countries as a crime against children. Then again with 17 cases of just the worst kind of child abuse confirmed in Australia everyday, I would suggest you and I have a bigger problem to worry about and that’s the fact that Australia cares very little about the well being of families and children. I would like to see a referendum for instance on canteens at schools providing healthy lunches and as part of their development afternoon activities for children at school so that parents can work. I don’t think we will have that kind of a referendum will we. All other kinds but not that.

 

Because I think property investment needs to reform in order to be far more profitable to a smaller group of professional landlords in a system that is a free market that is unconstrained by the government meddling and monopolies they maintain, resulting in higher quality assets with lower maintenance costs and happy tenants.

 

Yes I have, and they can take their books and paint brushes with them, they will be employed and living truly affordable lifestyles, not Joe Hockey fantasies, and they can pay down their loans sooner and have retirements. I challenge anybody to try and finish paying their home loan in Sydney before they retire.

 

Most half successful people on this forum aspire to or finish paying their loan years before retirement

 

I worked from the age of 14 and 9 months .

Loved it made great friends.

I came from a poor family and if it wasn't for may additional income I would have gone without many things that made me happy .

No needs @Ald to tell a 16 year old how to make extra money. Many 16 years Olds Start apprenteappren at 16. I would love you tell an apprentice plumber he isn't allowed to work.

Your views are very dictorial almost draconian.

 

i've seen young people work and singlehandedly buy a property in melbourne, and . if they have a partner and delay having kids they can do very very well.
I worry about large mortgages though needed these days even for large apartments.
some apartments are really spacious with lifts and near parks so quite livable with kids. I have heard a friend say taht they are not keeping alive the impossible dream of a house and large garden. They prefer an apartment in a good location and there are parks everywhere. I was raised in a small apartment 5 minutes walk to school and friends, and i never realised even that i lived in a tiny apartment because i had my own bedroom , had friends over, games, played outside, went on outings and had a great childhood. Maybe large apartments rather than houses is the way to go especially if they are near nice parks

 

Similar argument for Brisbane. With housing costing so much in Sydney and Melbourne it does bring significant lifestyle challenges

 

Rentvest is still an expensive strategy in sydney and Melbourne. Rent is not cheap either unless you live far from the city. In which case someone might be better off in bne or perth closer to the cbd. Lakemba is not nicer than red hill in bne. Same price though

 

I'm trying man

 

Ald I think you make some good points. I agree that there are massive lifestyle benefits to be had by living somewhere cheaper. Paying extreme amounts for a property is a real impact on someone's life. And if you live far from the city in Melbourne or Sydney there's not much point. Outer suburbs are generally relatively unattractive, commuting time has been scientifically showing to have a negative effect on mental health and it's not easy to access the nice areas. You don't get the benefits of the beauty. So you may as well live in a premium suburb in a cheaper city. But you seem to be really angry to prove a point. Are you really that happy in Perth?

 

Tell me more about the Pareto principle as it applies to property

 

Well according to Michael Yardney he sees Sydney and Melbourne out performing all the other cities in the next 26 years due to a majority of people wanting to live in these cities due to the economic opportunities these cities have over the rest of the country. Whether he is correct or not time will tell. He sees that it is futile to go against the trend.

 

You wont see a referendum on that as a referendum is only to change the constitution, plus schools are a State responsibility.

Probably also safe to say you haven't been in a school canteen for quite a while. They are not perfect, but they don't sell the junk food that used to be available when I was at school.

Home | Healthy School Canteens

In fact, I will be volunteering in my kids' school canteen this coming wednesday, after I teach Primary Ethics. You should check out the Primary Ethics curriculum @Ald - it teaches critical reasoning.

Cheers,
Inertia

 

Really? 'Cause all you seem to do is pontificate and proselytize. I would love for you to provide some actually information on your successes (sanitized for privacy of course) and combine that with your analysis of the current market and economic situation and offer suggestions on how to progress.

you critique things, you don't educate. Again, please, instead of just bagging everything, provide something of substance and some actual, constructive suggestions.

Cheers,
Inertia.

 

Perhaps could be true but goes against the very long term trend of all capitals rising by the same percentage. Sydney and Melbourne have always had relatively more economic opportunities generally speaking. But other cities have good economic runs too from time to time Why now are Sydney and Melbourne different?

 

For people actively building their portfolios (which I assume is most), the whole " this place will out perform in the next 26 years etc etc is mostly useless information. People need to be able to choose good deals NOW, in the short to medium terms, leaping from one to another to another expanding their wealth. Doesn't do most ppl any good knowing that in 26 years a certain place will outperform, regardless if its true or not.

This is were DD skills comes in. Most never take the time to learn how to do this methodically and extensively imo.

 

To answer your question all I can say is that I'm passing on stuff I heard recently on Michael Yardney's podcast on 10 year future trends. He talks a lot about the demographic trends in Australia and in particularly population growth and economic drivers. He sites the success of Melbourne and Sydney and to a lesser extent Brisbane as cities that have moved into the services and financial sectors and it is these industries that attract the highest incomes which in turn allows these people to pay more for their properties.
He sees Sydney and Melbourne prices continue to continue to outperform the rest of the country in the next 10 years.
Is he correct?

 

Someone could have said exactly the same thing 80 years ago based on more or less the same observations including about financial hubs but you can't get a house in adelaide in 2018 for $5000. It's grown by the same percentage over the long run. I don't see why the future would be different. But like you, I don't know.

 

One way of looking at it is to say that Sydney and Melbourne are like two suburbs in the same city that each have a train station. They start today at a premium price to the other suburbs (Perth, Adelaide and Brisbane etc) and continue to increase in value from that premium. .The other suburbs (or cities) each increase at the same rate, say 3%, 5% or whatever, but over time the dollar difference grows higher in the train station suburbs compared to the ordinary suburbs.

Same comparison as the under 10k from CBD suburbs vs the over 10k from CBD suburbs.

We dont all have the disposable income and we cant all get the finance to buy inner ring suburbs. We aren't all Leos, that's why he is so far ahead financially than say myself. I listened to Yardley and a few others years ago before we bought our first IP. He preached the virtues of Holland Park and surrounds, but I believed I could only afford to buy in Moreton Bay. The house we bought has increased from its low-cost base, but similar properties in HP and around there have increased a lot more.

I believe that Sydney and Melbourne offer excellent long term growth potential, but then, using Pareto, about 80% of the population going forward cannot afford to purchase and hold there.

 

“I believe that Sydney and Melbourne offer excellent long term growth potential, but then, using Pareto, about 80% of the population going forward cannot afford to purchase and hold there.“

So if that is the case that people can no longer afford to purchase and hold there, where is the growth coming from?

Many people in Sydney and Brisbane and Melbourne are now holding property that is worth less than they paid for it.

Australians generally speaking forget to calculate how much a property costs them.

They buy a property for $800000 they sell it for $900000 and they say that they made a profit of a $100000.

They forget to subtract, interest paid, stamp duty, buying costs like inspections plus buying fees and selling fees. The real value of the property at the time of purchase is what the bank values it at, minus 20% as they only ever buy properties at 80% value and then rent it out to you for say 30 years and then let you keep it. What people don’t realise is that banks are in a competition amongst themselves and against other home buyers, to buy the most number of properties at the highest possible value, that somebody can manage to pay them a monthly instalment for. It is totally in the banks interest to ensure property prices are continually at the bleeding edge of affordability, as that increases their profits. It’s the collusion between banks and governments that is where the crime against the people occurs. Banks and governments collude to sell money at an expensive rate to the unthinking population that the banks got very cheaply or in cases for free.

Now if the young want to be smart, they would all reject the idea of buying houses for more than 3x annual salary (long term sustainable number derived from hundreds of years of mortgages being paid) and just saving and invest elsewhere and eat popcorn as property prices crash.