Sydney housing crisis tv show on tonight

Buy and hold in golden triangle, plan on buying around 6 properties in the next 12 months max purchase price $400K.

In 8 years pull as much equity from them as I can and purchase IP's in Sydney, hold until next boom cycle is over in Sydney.

Sell down Sydney and some QLD properties and pay out IP loans in QLD, hold as many as I can.

Residual income.

Because I pay so much of my salary into mortgage payments (like 5 times what my scheduled payment is) In order to retire, I only "need" $500 a week of passive income to get by in today's money. Once I no longer have debt to pay each month, I still only need my salary minus current repayments to continue my current lifestyle. This is why this will work, my financial needs are low.

And whilst yes, it may not have been the smartest move to pay so much on my mortgage for these years, it has gotten us used to living on this amount. We don't have kids and our life is not particularly expensive.

 

I guess that is because they are in to buy a dream house and not an investment property. Look at it this way,
- they want to get a 20% deposit, so that they dont pay LMI,
- they have to factor in stamp duty and other purchase costs
- they have to get the 'least' possible loan to be able to service it as well as live comfortably

Their requirements are different from an investors or seasoned buyers.

my 2c

 

Golden triangle?

 

Sunshine Coast to Brisbane to Gold Coast and back up to Sunshine Coast, anything in that triangle that fits my requirements for area (demographics, suburb yield, possible CG etc etc).

 

Denise Brailey has been investigating it (and has made various submissions to Parliament) on the various types of fraud that goes on - http://www.bfcsa.com.au/

 

I have nothing against investing in property but reading most of the comments on here it's pretty disrespectful to slag off the FHB on the show and it's this arrogant attitude of investors that is exactly what most FHBs are probably annoyed with.

It's pretty weak to dismiss her as a Gen Y want-it-all because owner occupiers want a quality house for their money where as investors minds don't care about quality. I think the FHB isn't unreasonable in wanting a decent affordable 3+ bed family home that's not out in the sticks. I broke the bank to fund my home 8 years ago which I'm currently raising my family in in Sydney but now I feel so lucky because there would be no chance of me affording my house now if I was in the same position.

 

I thought it was a good overview of the situation. First home buyers being outbid by investors with tax breaks backing them is a real thing. Those buyers then becoming tenants because they can't buy is true also.

As with anything so complex, they couldn't dig too deep into any part of it. The loan application fraud section deserves a deep investigation but thus far hasn't gained much traction. Actual proof has been presented to Parliament and committees and somehow criminal prosecutions haven't come out of this, which is a great shame.

I don't think in the past our society would have said their vision of the future was house prices at scary multiples of wages, people commuting one-two hours just to get to work, young people not being able to buy a family home because a speculator with tax breaks can outbid them and valuable land taken up with apartment blocks owned by foreign investors who leave them empty.

That's not a vision but rather a nightmare!

 

Thanks for the link. I did not realise that it was so widespread.
Not only is our national property debt extremely high, it is also based on lies. The AAA rating and the costs of funding will change for the worse once the risk ratings are reviewed against these fraudulent applications.
IMHO, it is not going to end well for banks, investors or the economy. Royal commission might be the medicine the banking system needs.

 

Reminds me of this hilarious skit from last year

 

In my industry (tech), not even close to double. There is more opportunity though.

Maybe we're looking in different places or at different property types. I'm at open homes for inner starter homes every Saturday & almost everyone I see is under 35 or 20s with an older person present (presumably a parent offering their opinion). There are a few older investor types, but not many and I pretty consistently see the same faces.

 

Why?

I live in the west in a townhouse (my first home), if I went further west I could have a house, further west again I could have a McMansion (which I don't want).

Point is I purchased within budget and chose the smaller place in the less west area, I simply couldn't have it all so I lived within my means. I sacrificed a house for a townhouse to be in a nicer area and closer to the city.

I could have been closer in a unit but i didn't want that. I would have loved to buy a 3br house in the inner west, I couldn't afford it (I still can't) so I sacrificed that idea.

Personally I think it is a little unreasonable. We have all (everyone who bought a first home) had to realise what we can and more importantly what we can't afford, we don't have to like it but it's "unreasonable" to not understand this and look to buy a first home.

First home is not about buying the house you always wanted, it's about getting on the ladder, you can climb up a rung down the track.

 

Yeah I hear ya. my industry is not Tech but my career is (coder / reporting and segmentation analyst). geographic location is not going to push my salary up or down. edit: upon rereading this, I might possibly be mad choosing to live in Syd when my salary would be the same anywhere lol oh well, it got me on the Syd property ladder .

I would imagine at open homes you would see them, they are the ones who are doing it instead of whinging it can't be done (otherwise why would they be at an open home??).

The ones who rent inner city and complain about how it's impossible to save a deposit and it's too expensive to buy, they wouldn't be at open homes .

 

My version is from 2012 (just the copy I've got saved), but the RBA used to do a quarterly report called "Dwelling Price and Household Income" which had some really interesting graphs like this one, that may give you some insight into OS pricing:


The supporting text is:

"The United States, which has often been used as a comparison for Australia because of easy data availability, has an unusually low ratio of average dwelling prices to incomes in comparison to most other advanced economies, as does Japan.[9] The price-to-income ratio in Japan was quite high in the late 1980s, but since the collapse of the asset price bubble there in the early 1990s prices have fallen almost continuously. The United States has had an unusually low and stable price-to-income ratio over the entire sample. In part, this is likely to reflect the relatively dispersed nature of the US population, which is spread across the country over a large number of cities, in contrast to Australia where the majority of the population live in just a handful of coastal cities. Land prices, and therefore dwelling prices, tend to be higher in larger cities, a phenomenon that is amplified in coastal cities, which are limited in their capacity toexpand (Ellis 2008). Related to this, the responsiveness of housing supply to changes in prices appears to be higher in the United States than a lot of other developed countries. For example, Sanchez and Johansson (2011) estimate that the United States had, by a considerable margin, the most responsive (or ‘elastic’) housing supply in the OECD, while Glaeser and Gyourko (2003) estimate that dwelling prices were quite close to construction costs in many US cities."



The conclusion to the report is also quite interesting:

This article has analysed trends in dwelling prices over the past four decades using price-to-income ratios. The appropriate price-to-income ratio to use depends somewhat on the economic question being analysed, although those considered here all show broadly similar trends, albeit with differences in levels. In particular, price-to-income ratios in Australia were relatively stable over the early to mid 1980s before rising over the late 1980s, the 1990s and the early 2000s. From the mid 2000s, price-to-income ratios have fallen a little. The earlier rises corresponded with a period of financial deregulation and falling nominal interest rates, both of which increased households' borrowing capacity. It appears that households used this extra borrowing capacity to bid up dwelling prices, which is perhaps not surprising given the earlier period of financial regulation and the fact that households appear to be prepared to spend proportionally more on housing as their incomes rise.

Comparing similarly defined price-to-income ratios across countries, the price-to-income ratio in Australia appears to be broadly in line with those of other advanced economies, although substantially higher than the ratio in the United States or Japan, both of which appear to have unusually low ratios.

• Housing is more expensive vs income now
• financial deregulation & cheap interest = prices went up
• Households are willing to spend a % their income on housing as their income goes up higher
• Housing affordability is an issue in other comparable countries like UK, Germany, France, Ireland, Italy, Canada, Netherlands, Denmark, New Zealand, Norway. Japan are exceptions because of their bubble popping / ****** long term economic performance across most industries & asset classes, USA is also an exception because of how many cities they are dispersed over and other factors (cheap labour, cheap fuel, etc)

 

incorrect. For a lot of industries and jobs, sydney wages are only 10-15% higher than brisbane.
Before the GFC, the rough standard was 20%. Post GFC they have tightened that to 10-15% and not many have increased back to even 20%.
So a fair number of people i know and have heard in the industry say **** it- brisbane and mlbourne are better value. More tougher to get a really good gig in these places with respect to sydney- yes..but if you can.. take it ( and keep it) as housing affordability advantes outweigh salary disadvantages by a long margin.

 

It's reasonable to want a 3+ bed family home, but whether or not that's realistic for a particular individual (FHB or not) is an entirely different issue.

Sensible buyers stay within their limits and climb the ladder. Others whinge and complain until their ambitions come down and/or their buying power goes up.

 

Win the vendor's heart, whirlwind romance, shack up, knocked up, break up, avo and family court.

@datto - have I missed anything?

 

Mekong Delta? Heroin hotspot??

 

Sorry one more graph, I love graphs. This highlights why investing in Japan especially in property, it went full on crazy bubble mode in the 80's / early 90's.. If banks are starting to offer 99 year loans on resi prop - you're probably buying in a bubble.



Japan also supports my theory that property as an asset class, while influenced by a few factors such as globality (overseas $$), town/master planning & lending practices, broadly tracks other market performance. If the country's stock market booms & GDP goes through the roof, property should go up in value. If it stagnates, goes backwards or is just in a period of uncertainty, consistent price rises are a warning sign that something is wrong.

 

But you're not getting the whole point. Some people don't want to invest and go into massive debt on the property ladder to wait years and pick booms to get a decent house to live in, some just want to find a decent home to live in and raise a family. They aren't looking for trendy close-to-city pads or McMansions out in the suburbs. It must be very deflating for her to know her $150k deposit could have got her a very decent house only 4 years ago and now to be forced further out.

Its all well and good slagging off FHB when investors have been lucky because of a biggest boom in history over just 2 to 3 years.

 

I've never heard that area referred to the Golden Triangle. The Golden Triangle in Brisbane is the area of Eagle street where all the banks & law firms were traditionally located. Its not super accurate anymore (because Suncorp is spread out over multiple offices across the city & their main office is now George Street? I believe) I would also argue that the next block down on eagle street is included now, because waterfront place is a $600m+ building with a tonne of legal/banking in it.

Bloody good spot to own apartments though. Low end of market stuff has consistently high demand from young bankers, lawyers & consultants who are grinding out huge hours and want to be 5 mins or less walk from work. Top end of the market has plenty of interest from senior people sequestered to Brisbane for a while (with no intentions of permanently settling here..) or for local senior folk who are toward the twilight of their career & want to downsize to the CBD for the last few years or just want a pied-a-terre expensed to their employer.