Is Sydney unaffordable? Reality or expectations.....

So i have to ask the community.

Please note this is just my opinion so dont bite.

Is Sydney affordable?

Like many investors we help friends look for property. I guess once you have the bug it doesn't matter if you are buying for yours self or others.

My friend was surprised as he felt with all doom and gloom that everything was over 1million dollars. He almost was not looking because he was so paralyzed with news of property being unaffordable.



So in my search over the last 3 weeks. I have found although Sydney is expensive but their are alot of livable and amazing places.

Now i guess i have to ask?

What is affordable is
Is it 600K ,400K or 1 million.It will be differnt but im looking the average.

How big is your family.

But lets say a couple 2 adults 1 child. This would mean a 2 bedroom 90sqm apartment is sufficient.

We can assume 2 incomes now days. So median income lets say $120,000 per house hold. Net lets say $80,000

Repayments on a $600k mortgage are About $3400 P &I

So all assumptions aside.

I went looking.

I found nice split level apartments with courtyards and balconies 120sqm + for $620k in carlton and Kograh minutes walk from rail line and Westfield shopping center.

If you want land, houses around Liverpool area for $650k

Apartments in Caringbah by the train line for $650k


The above are all nice areas within a 30-60 minute commute to the city in established suburbs.

I grew up in apartment so i feel its perfectly acceptable for others too.
I feel a couple can save $65,000 for a deposit over time and can meet repayments on a $600k mortgage.So all without sacrificing making smashed avo (At home)

So my questions is ..........................

Are peoples expectation just unrealistic or is Sydney just too tough. I mean i want a For ranger Wildrack but settled for a used Triton (a few years ago ) Wildtrack had more power better safety more room for kids better towing capacity. I still bought a used Triton.

I appreciate you can get a house for a cost of the apartments in Brisbane and Perth.

But too me thats the price of a City with more opportunities 3.92% unemployment rate and more competition. It is also not unaffordable because something is cheaper.




















Median full-time adult worker earnings are $1,421 per week, or $73,892 per annum. as per attained ABS docs

Sydney ranked 10th best city in the world for quality of life

Unemployment rate | City of Sydney | economy.id

 

Why expect a family to live in a 2 bedroom apartment?

That sounds luxurious.

Do the sums on a large caravan or motorhome parked in a friends driveway and we can get Sydney appearing even more affordable. Other people have grown up in these conditions, so this is a perfectly acceptable living situation for other families.

 

By the way, based on your $600k mortgage with $3400 repayments, that mortgage is eating $40,800 of their take home salary of $80k. That leaves them $39,200. Would the banks even lend based on these numbers in the current environment?

You've said they're a dual income family, so we're going to need childcare costs thrown in, let's be generous and say they are only out of pocket $50/day for 48 weeks in the year. That's $12,000, leaving them $27,200.

Strata fees won't be cheap in the apartment complex.. let's say $1,200/pq for strata/council/water. Leaving a family of 3 with just over $22,000 a year for their remaining expenses... that's going to be tight.

 

Illegal pallet granny flat?

Sydney builder finds granny flat made out entirely out of pallets | Daily Mail Online

 

As I seem to get older, my priorities seem to change over time. I feel that Sydney properties are affordable in some areas but feel that the costs of living and quality of life is not as good as it used to be. Maybe if you asked me if I was willing to relocate 5 years ago, I would have def said that I wouldn't move anywhere. Of course there's still many activities that's free such as the beaches, hiking, parks and etc, but feel that there's better value for money, quality of life and work/life balance somewhere else.

 

I personally prefer life style of Brisbane and the properties of Adelaide..... But both cities employment opportunities are far too tight

I totally agree with some of the comments above, Sydney is not as unaffordable as the media showcase however, I hated Sydney's livability. For the cost of a unit in Sydney you could buy a really nice house in Adelaide and Brisbane. Without the terrible traffic jam too......

 

Sydney and Melbourne's prices are what they are for a very good reason. It aint gonna change dramatically anytime soon. Personally I don't think its bad or good, it just is, like many things in life. You can get an older 2 bed unit 12km from the CBD for 560k. Do a reno, make it lush and call it home until you plan for a better place. All the whinging and whining in the world aint gonna change supply and demand laws. I've been hearing the same whinging for 18 years of investing. Even before the most recent boom people were saying prices are way too expensive to buy anything. Um, yeah ok. You can wait for the 70% crash.

 

When my wife and I were earning very similar to this scenario, our comfort limit was 400k. 500k we could do at a stretch and 600k would have brought us to tears.

I would argue strongly that 600k is not affordable....and even if it is you're putting your family at financial risk.

 

Yes, this ^

The sooner people realise that supply and demand is the ultimate controller of property prices the better for all.
If you don't earn enough to keep up with the Sydney mob then move to Melb.
If you can't earn enough to keep up with the Melb mob, then move to Bris...
If you can't earn.......can anyone see where Im going?

I certainly can't earn enough to live anywhere near Sydney, Melb or Bris, but......I can afford to live 25 mins to the beach on the Mid North Coast NSW, on 8.5ac of total scenic overload and quiet bliss.

Its all relative eh!

 

I live where I live because I can.

As others point out, parts of Sydney are expensive by country SA standards but not If your comparison is NY, HK, Tokyo etc.

From my little corner of Sydney there's alot of unaffordable property in Sydney - it happens to be mainly 5 km from the harbour bridge.

There's plenty of affordable property too, more than 5km from the Bridge .

 

This is before interest rates rise, and you forgot they need to pay $25k stamp duty on purchase + have LMI capitalised, at the same time as paying rent while trying to save that 10% deposit.

Throw in $1500 for electricity (minimum), car insurance & repairs ($1500), fuel/tolls or opal fares (choose your poison) $4000. Health Insurance.... $3000(?)....

I haven't even got to food yet, putting aside the non-essentials like phones, NBN

What are we down to now?

 

Looks terrific. Where exactly are you located?
Unfortunately I feel many people are limited in their scope by employment opportunities, which invariably gravitates them to the big smoke.

 

I gave up trying to encourage my "friends" to get into property
It is out of reach, even after 20 years
Saving a deposit still And still not close !
They want a flash house "in town"
Not a villa/town house FOR NOW, and work up to a house
Or even RENTVEST
All those crying poor with the flash car, eating out/takeaway more than eating in, and lets not forget our annual holiday........
@Illusivedreams nailed it, it takes sacrifice today for tomorrows rewards

 

Sorry to the young people but i'm glad I got in. But it was after the millennium boom was done and dusted, so property was expensive. You used to be able to buy a house say in North Rocks around the year 2000 for maybe 270k. That money could buy you a very good property in Perth! Then North Rocks doubled to 600k around 2008. Then it's doubled again and more. So looking back, if you got in at 600k, you're very happy. But you'd think it's so expensive at the time.

 

Without bringing out the elephant in the room , if housing is affordable , why cant the RBA just start jacking up interest rates.
We keep on being told that if the RBA start jacking up rates it will possibly sent the country into recession, and many property owners would struggle to service the debt.
Are house prices overpriced ??
Do we need to see a big increase in wages ??
Or do people on average or median to low wages just need to realize that they have to rent for the rest of their lives ??

 

Economists have been saying more or less the same thing for a long time. I don't listen to them nor do I really understand (or want to understand) them. I just focus on making money in markets while they continue to say markets are all over priced. Its ok. They can stick to economics and I'll stick to making money.

Btw there are many, many other average income people buying real estate all over the place. They just power on.

 

Friend's position
First home buyer so no stamp duty
Saved just 10% a tad over $65,000 took over 4 years. No family money.
Income was Just above average.
Also strata is $850 per quarter.

In friends case It seems his perception was worse than reality. Yes we also moved another 10kms further out of initial search area.

 

+1! Delayed gratification for future reward, but how many will do it? Most will complain as it may be easier to complain then to practice delayed gratification?

 

@Gockie
You are 100% right.

North Rocks evolved alot since 2000 both as an area and perception.

Sydney 2000 Homebush went from literally a swap to an Olympic venue.

Sydney is now a much larger city.

How many prople had the nerve and courage to biy in 2008 amongst the GFC and 8+% interest rates.

You were and area a smart and brave women.
Question what is your suggestion for now would be buyers? PP in Sydney