First Time Homebuyers Priced Out of the Market, 90% Can't Afford

The idea that Australia is exactly like other countries is utterly absurd.

 

Working your whole life for an employer, sacrificing the best years of your life only to hopefully retire at 70 and live on the poverty line, just getting by until they bury you six feet under, is beyond absurd to me.

This is not an exaggeration or fear mongering. It's reality for many, many people.

 

Isn't this what the gamblers and lotto-buyers tell themselves each week?

There is nothing wrong with being analytical and trying to understand/predict the market. Educated decisions are the foundation of any investment decision. Throwing caution to the wind and blindly following the herd is gambling.

 

My parents.

 

Can you give an example of a 'nonproductive' asset with debt on an IO loan?

 

Sometimes all you can do is shake your head with the ******** these guys print....

http://www.domain.com.au/news/firsthome-buyers-are-beginning-to-get-lucky-20150924-gjsa4z/

Pay particular attention to how they describe how sub 750K markets such as Castle Hill are an "affordable" part of Sydney attracting first home buyers, along with Blacktown. .... Now, for those who don't know Castle Hill - you would have a tough time finding a 2nd hand townhouse for 750K, let alone a brand new home.

Also note where Northmead now resides - Upper North Shore/North West.

 

To be fair their job is to market property. Adelaide's market has been slow atm and in today's paper there were a couple of articles from the real estate industry talking about how it's a seller's market (Adelaide listings are down) and how now is the perfect time to sell instead of waiting for late spring LOL!

Edit- I wouldn't call 750k affordable though unless it was for DINKS with a combined salary of 150K+

 

Unfortunately it's many people's parents @THX ...

 

I buy Saturday Lotto every week, in fact I just got home from the newsagent. I also invest in property. And hell, every now and then on a blue moon I'll go completely crazy and throw a tenner through the pokies. I agree that blindly buying a property just to be in the "Investment Property" club with the Jonses and hoping for the best is a bad move. 2 out of my 3 "habits" may be considered gambling, maybe all 3. But retire at 30 or 75 you still have to live a little along the way.

 

Wow. Before kids, my wife and I earned a fair bit more than 150k. A 750k PPPOR seems insane to us. We watch some real estate shows on Foxtel and gasp at the high prices people pay.

 

When did I ever say to have a gamblers approach? When did I ever say not to make educated decisions? When did I ever say to follow the herd?

You've obviously absolutely no idea of my attitude and approach to investing which is documented pretty clearly in my 1000+ posts.

 

Also

I'm in that category and I don't define that as affordable.

It's more than 30% of pay and therefore by definition unaffordable.

 

I guess affordable is usually considered 5x income. With the way the Sydney market is (it's always the most expensive in Australia) that's just a sacrifice you've got to make if you want to get into the market. If I was a first home buyer in Sydney on 150k combined I wouldn't spend 750k though. I'd look for a free standing house at around 500-600k (pretty hard to find in Sydney). When I lived in Sydney I was working in insurance and the only place I could find to buy was Campbelltown/Minto/Macquarie Fields. I decided it wasn't worth it so I took a considerable pay cut (30k) and moved back to Adelaide but my quality of life is a lot higher here. I honestly don't know how young people put up living in Sydney unless they've comforted themselves with renting for life.

 

The 30% rule is such ******** because it doesn't take into account how much people earn. The more you earn the more you can set aside for paying mortgages without it effecting your quality of life.

 

Agreed. But it does meet the definition of unaffordable.

But the issue is that it minimises the ability to look at different investments. The current Sydney property market is having a negative long term economic effect in this regard imo.

Hence why a plateau for a while is likely. Plus little wage growth.

 

It's below median in Sydney ...

 

A house is a nonproductive asset. An investor buying an established house and doing nothing but hold it during credit expansion contributes zero productivity or wealth growth.

 

I note that you do not engage with what I said to you. Do you honestly believe ZERO can be learned from the Irish property bubble that perhaps applies to Australia?

 

There is this phenomenon in economics called the wealth effect. If you feel wealthy, you are more likely to spend. Lets say your house increases in value $100k this year. You can't realise the gain until you sell, and then you have to buy into the same market, but people will spend that $100k (borrow, pull the equity out the house etc).

 

It's different in Australia. Also the UK has higher house prices now than it did prior to the GFC. You can't beat property