Cant afford a house: Consequences/bad luck?

I'm not sure it's solely generational, has a lot to do with peoples mindset.

When I was saving for my first deposit I was living at home and cut out all unnecessary expenditure, I bought at 21yo, I did get some parental help though.

My GF is 25, we are bidding on her first house at an upcoming auction. She worked through school and uni while living at home, paid cash for her cars and set spending limits for holidays and weekends with friends. Since working after Uni she has made the most of share accomodation.
The house... it's a 2x1x1 on over 700 sqm block in need of a little renovating, the perfect first house, a stepping stone into the property world and sweat equity to be had. None of this 4x2x2 brand new crap expectation, and she's made it on her own.

 

Okey dokey- "The average income of Australia’s 9.3 million households is $145,400, up 2.4% from the same time last year according to the ABS."
CHART: The Average Australian Household's Income Is $145,400, Here's What They Spend It On

And from that most recent ABS link "In the twelve months to May 2016, Full-Time Adult Average Weekly Ordinary Time Earnings increased by 2.1% to $1,516.00 per week."

=> $78k pa for one person, not a household.

 

Prices are high in lower demand areas also. This is the issue. People still have ti get to work etc.
I agree that people need to get real and make a sacrifice but I'm quite convinced we are well past a point where low skilled low income well meaning people are locked out.

 

I think the old Herny Ford quote "whether you think you can, or you think you can't, you're right." rings true to this situation.

 

I agree mate not for ALL fhb, but that's only 11.5km from the CBD most Sydney ppl want to live near (personally I wouldn't but its what ppl want). So they may have to go to 15 or 20 or 25km from the cbd. Its doable imo.

The main thing for me is I don't see any change happening soon where high demand areas will just go down 40% in value. I don't see it happening. So the reality is ppl need to explore the 'nest best' options.

 

Income and skills are two things that can always continuously be improved if a conscious effort is made to do so. Not doing anything about either is hardly going to improve their ability to buy.

Sounds like common sense to me! The partners sister and lover are looking for their first home. With 2 kids they can't afford where they want so with very little complaint they're looking at Jordan Springs/Marsden Park kind of areas, 50km from the city.

Both on very average incomes and they weren't even going to look until I informed them they can buy with less than 20% deposit.

 

Average and medians differ and suspect the household stat you provided may include superannuation and other income types that can't be used (typically) for servicing a home loan. Maybe you think that's a fair measure to use. I beg to differ.

Furthermore using full time wage statistics does not reflect the employment reality for a lot of households.

If your argument is that a professionally employed/skilled couple, both on average full-time wages ($156k combined) could reasonably manage to buy a $600k unit, then you are (probably) right. It just doesn't reflect the reality of a median household (let alone an entry level one which this unit is supposedly accessible to).

 

just using a few examples that ive pulled out of my rear
male salary $85k,
female $65k,
thats 1200 and 1000 per week respectiveiyl

live in a share house thats $250 per week in rent, $100 per week in travel/car, $200 per week for food, $100 entertaintment $100 for bills, thats $750 per week in expenses

$250/$450 per week, or $13k/$23k per annum

Isuppose to get to a 10% deposit on a $500k property does seem quite difficult,
3.5yrs/2.2 years

or are my figures a bit generous in terms of living a high life

 

Addendum: is the standard of living just got far higher over the years or are our exepctations got higher,

we now have flash tvs that are dirt cheap, we have phones, tables, laptops, and expect to go out weekly at a minimum with a oversesa holiday every year

 

You don't even need to go that far back.

These same threads were on Somersoft 4 or 5 years ago regarding Sydney properties and people crying about affordability. Wages have hardly moved since then but the prices almost doubled, still the same thing, people crying. I look back at some of those old prices and think if people couldn't afford it then, they never will. Was no problem getting a house in many areas under 500k then, units for under 300k and still...

 

So what's the difference between the average and median in housing? If you suspect that stat includes Super and other sources of income, why would your stat exclude it? You'd need specifics before assuming other sources of income can't be used for servicibilty.

Of course it doesn't reflect the employment reality but given twice as many are in FT work, it's more useful to use stats that are relevant to the majority.

The ABS has given $145k as the average household income. Whether you want to accept it or not is up to you but the there's no way the household income you gave to use in your affordability measurements is correct.

 

Another one from today: Buying a home when single is unattainable in most of Australia, data shows

Article is written to bend the stats to fit the story, that's a given. But anyone who actually thinks like this just reeks of entitlement mentality. A median-priced house is a luxury, not a right, especially for a single average income earner.

 

There is a vast difference between people being unable to afford a house.....and being unable to afford the house they want!!
Marg

 

And there's another difference between affording a house and affording a home! Apartments are great; they're happily snapped up by home buyers who have chosen not to be affordability whingers.

 

Would you believe similar comments were made when we purchased our first home, and this was a 1 bedder in a large ugly block of flats because that is all we could afford.

Just need to start small and grow.

Current interest rate environment is brilliant.

MTR

 

+1 for expectations absurdly too high....

If I bought a circa $1M PPOR I'd be in the financial hurt locker too.... instead of semi-retired!

I have zero empathy for the ridiculous expectations many people have... it is their choice. Not the market, not generational oppression, not their employer's pay rate.... their choice!

Live somewhere affordable, commute & suck it up princess... it's called living within your means.

Enjoy the journey

Indi

 

I've lived in some pretty average digs but haven't seen any median rentals

 

@House, the bottom line is that neither median, average nor version of income really matters. I have seen price to income ratios expressed for Australia at 4.5x and 7x (using different data, published around the same time), that's a huge difference, but largely irrelevant. When you compare income vs home prices over the decades there has been an extraordinary rise no matter the data sets used providing you keep it consistent (past vs present). That is the point. Do you deny that?

Now we are agreed there has been a substantial rise in prices relative to incomes. Phew.

This larger quantity of debt is serviceable once deposit is saved (more difficult than in the past) mostly due to lower interest rates, but the buyer is taking considerable more risk in taking this on & in my view that means it is less affordable for reasons outlined in the articles I posted earlier. If you disagree with my interpretation of affordability, we'll have to agree to disagree.

 

Wouldn't it have to actually be unaffordable first? Plenty of people are buying homes. The ones that aren't either have poor saving habits or have expectations that are too high.

 

@D.T. by your definition the homes purchased by those with no income and no jobs at the peak and madness of the US housing bubble were also "affordable". I disagree with that for the reasons outlined in posts I linked. If you think something is affordable just because you can borrow to buy it, then like @House we will have to agree to disagree.