Cant afford a house: Consequences/bad luck?

Well hubby and I had kids, rented, paid a mortgage and paid bills on a low income before buying our first house. We were able to purchase in the outer south east of Melb in 2008, we bought land, waited two years for equity to grow a bit then we built. Total cost was just under 300k. We were a one income lowish income family with two kids. It was hard but we managed and got used to paying a mortgage on our land and our rent while we built. We were also paying 8% interest rates too. Fast forward to taday we have just bought our first IP in Melbs north.
I'm 29, so I don't think my generation have an excuse.
We don't live in a hip trendy suburb, but we live in the nicest place we could find for the money we had.

 

Thank you. Great post about expectations adjusted to meet reality.... if only more people could do this one simple thing they'd be off to a flying start. Well done & keep pushing forward.

 

My brother and fiance are looking to buy but won't consider traditional 'first home buyer' houses. The want 4 bedrooms and move-in ready. They also want it cheap enough to have enough left over to go on holidays. Hubby and I didn't go overseas for a decade after buying our first house. Times have changed????

 

Prices in Melbourne have increased by around 60% since 2008. Do you think wages have increased by a similar amount over the same time frame or would you agree it's probably more difficult for someone in the same position you were in at the time of your first purchase to buy now?

It's not about excuses. Many who highlight how expensive Australian homes are can buy or already own their own home. That doesn't take away anything from the fact that housing affordability is poor (particularly so in Sydney and Melbourne). Have rental yields in these cities ever been so low?

Maybe they're expectations are too high, maybe they aren't. We can all cherry pick examples, but it doesn't really prove anything.

Re overseas travel, yes times have changed. I recently booked flights from Adelaide to Bali for $300 return. I can get flights to Europe for >$1000 return. Overseas travel isn't always an example of opulence anymore. For many it is a cheaper option than an equivalent length holiday in our own country (once all costs of a holiday are taken into account).

 

Surely that this place is much better potential than a house at Elizabeth ......

 

No I don't agree
You can still buy for around 300-350k in my suburb.

 

The same type of brand new property you did?

So prices have gone nowhere in 8 years in your suburb? Care to name the suburb?

Is that an exception or the rule in Melbourne?

 

In my actual estate no, prices range from 550-650k
But my mum recently built a 3+2+2 in an estate 1km away from me. Land was 165k, house 160k through Simonds.
She has stone benches, and things as standard that were upgrades when I built.
My house is 4+ study and does have an extra living area to hers but you can pretty much build very similar. My point is first home buyers can very easily get 3+2+2 here got under 350k brand new, smaller land component yes.
Established in an older part of Pakenham even cheaper. If I was a first home buyer I would be buying where I could afford, not expecting more than that. There a lots of outer suburbs where this is possible to get a foot in the door. We commute all over the city for work and we are used to it. People need to stop looking in the suburb they want to live and buy where they can afford.

 

Woohoo! I can afford to holiday in Oz!!! Maybe I should save some $ and go OS for holidays.

 

So @Otie, with prices in your estate having roughly doubled, would you suggest affordability has gotten worse or is around the same as when you bought in 2008?

People can always continue buying further out or a worse property if they save a deposit. No I one is denying that...

 

i think the issue is not so much affordability more that you can't get the same quality estates now. We were lucky all the blocks in our estate are 800-1200m2 blocks and it's well planned with strict design covenants and lots of parks and fitness tracks etc.
After we bought they began reducing block sizes in the new estates and cramming more houses onto smaller blocks. I think most blocks now average 300-400m2.
Having said that the older areas have still had decent growth. The old 3+1+2s in the older areas that are around 300 now were about 180k from memory when we bought our land.
Keeping in mind we bought the land in 08 and built in 2010.

 

for me, less affordable is a very ambigous term,
if you ask a 3 year old what it means they will have an answer,
ask an adult and its still pretty clear, but break it down and it gets more com;icated

less affordable compared to what?

parents?
your expectations?
your friends?
a certain multiple of disposable income?

 

Looked up some medians and IR's for the last 20 years. Surprisingly, when adjusted for inflation, we're only repaying $7k more a year for the median house that was 1/5th of the price back in 1995.

• In 1995/1996 the median was $200k we had 10% interest rates. $20k in repayments and when adjusted for inflation, it's $33k pa.

• In 2000, median was $340k with 8% IR, $27k in adjusted for inflation is $40k in repayments.

• In 2009, median was $500k and IR was 9.45% so $47k pa in repayments.

• In 2016, median is a gobsmacking $1m with 4% IR so $40k pa in repayments.

Regardless of generation, wonder how many bought their first PPOR and thought 'wow, this is affordable!'

 

That's they way I look at it- It always seems like a lot of money and slightly out of reach at the time. But you have to bite the bullet and its surprising how quickly you get used to the larger repayment etc, and before long its really manageable. I remember a relative saying to us when we first bought about how they would never fork out $1500 a month for a mortgage repayment, (they were already paying about $1100 or 1200 a month in rent, fast forward to today they are still renting, and I think paying approx 350 a week rent. They still complain about how they missed the boat to this day, though at the time they were saying how they'd missed the boat then too.

 

Reminds me of 'Josh and Charlotte' from one of the series of 'The Block'.
They won $810,000 tax free dollars and still "Can't afford to buy a house". WTF.
Link: http://www.news.com.au/entertainmen...e/news-story/4f599ec27f3535d50eca77802713066e

 

Like thay haven't learned any lessons from the block nor can they afford to borrow as much as they want (not need), maybe they simply don't qualify for a loan - $810k is not genuine savings. Poor FHB, and they don't qualify for the FHBG.

 

Me. My first home (unit) was $211,000 in 2005. I thought that was affordable.

 

I wonder why first home buyers think in a hot market that they can buy a development site for their first home? I saw an article about first home buyers being priced out of the market and they were trying to buy development sites.

In this story, "a Ryde couple in their 20s have had their dreams of a home for their young family dashed at the last minute by a property developer"

The property sold for $1.51 million. Not really first home buyer territory IMO.

Developer destroys young couple's dreams in Ryde

 

Im talking about Sydney everywhere else is affordable

 

Except Melbourne...