Anyone else looking at buying their first home, but just can't stomach paying the ridiculous asking prices?

thord on 13/03/2017 - 15:12

I just want to get a sense to see if there are many others in a similar position?

We have money, we save and invest wisely. The deposit and repayments aren't an issue (for now), the problem is I just can't fathom the idea of dumping a decades worth of savings and investments into a single very overpriced asset.

I also hate the idea of taking out a million dollar loan which I then just give to someone else who just happened to be lucky enough to have been born a decade or two before me. Then I'm in debt for the next 30 years paying it off hoping and praying that the record low mortgage rate that we currently are experiencing remains and doesn't rise.

We could in theory keep a portion of our savings, and simply take out a cheap 1 or 2 bedroom apartment in an undesirable suburb - which in theory would be fine. BUT we're not keen on a cheaper apartment and I've seen first hand the absolutely horror of strata living with massive defect rectification bills, special levies out of no where, and stupid maintenance costs that I wouldn't incur if I had my own place as I'd do it myself. Also we consider the apartment market to be much much riskier than the freestanding house market.

Moving to a regional area is also out of the question due to the jobs my wife and I have, not to mention we'd also incur a lot of additional costs as we currently don't spend much in the way of transportation, but we would in a regional area.

It feels like we are backed into a corner with absolutely no way out.

I feel like it's affecting both of our mental health and we both feel pretty depressed over the whole thing. We're putting off kids because we can't raise them in a rental without any stability or certainty, and there would be the ever present threat of being forced to move and then what do you do with the kids school? It's just a multitude of potential problems.

We just feel totally burnt out and unhappy. How are other people coping with this shitty time?

Should we just bite the bullet and buy something, wasting our entire life savings and hope that everything is ok? Do we stick it out? Buy a cheap apartment and take all the risks that come with it?

Home & Garden

Comments

        • mskeggs on 13/03/2017 - 21:44
          +2

          Agree. But coast towns north of the central coast, south of where, kiama? (i.e. not affected by commuters) are stable because of the stable welfare income and still absurd prices for places near the beach.
          Propped up by Sydney retirees, not by their own economic success. An overflow of Sydney prices (as are where I live, or the southern highlands).
          We have boxed ourselves into a national corner of high property prices that really benefits nobody (well, possibly the fictional baby boomer downsizer) but it has become so extreme and we are so leveraged, we can't cope with a return to a more sane property price landscape.

          PS- if I am wrong and you know a beach side town with modest prices, let me know. My family would love a beach house like plenty of my friends enjoyed in the 1980s when I was growing up, of peanuts prices a few hours from town, a few blocks back from the sand. Even in 1987, $80k got a pretty flash beach house a bit further away.

        • Stewardo on 13/03/2017 - 21:47

          @mskeggs: you can buy a beach house 350k block from the beach in Hervey Bay

        • mskeggs on 13/03/2017 - 22:07
          +1

          @Stewardo:

          Tea gardens/hawks nest is also reasonably affordable, compared to nearby alternatives.
          an apartment is conceivable under $400k. Port Macquarie too.

          But $350k for a beach apartment is only affordable if you accept 12 times income city prices are acceptable.
          When I was a teenager, a beach house was about 2x avg annual wage, maybe less.

        • cannedhams on 14/03/2017 - 10:50
          +3

          @Stewardo: Yeah, but in 2000 I bought an old house 2 blocks back from the beach in Hervey Bay, for $69,000.

  • airal3rt on 13/03/2017 - 21:10
    +2

    Capitalism in all its glory.

  • anonymous8 on 13/03/2017 - 21:31
    +1

    I live in a rental property western suburbs melbourne. When I first moved in 2 years ago a Sydney investor bought the place for 360,000. A year latter he offered it to me for 410,000 but had no deposit and Chinese guy bought it at that price. All the homes here are identical ex commission homes on blocks of around 700m. Yesterday the neighbours home was bought by a Chinese investor for 550,000. From $360000 to 550,000 in two years. Crazy.

    • zealmax on 13/03/2017 - 21:39

      Not talking about Broadmeadows? My friend went to an auction there. Last house to be sold on the street went for $370K and 1.5 years later house sells for $546K. Apparently the winner was Chinese.

      Edit: Broadmeadows is North, not western suburb.

      • anonymous8 on 13/03/2017 - 21:44
        +1

        Sunshine West spoke to the auctioneer and even he couldn't believe it. It only takes one moron to pay that price and the sheep follow.

        • zealmax on 13/03/2017 - 21:47
          +2

          Almost bought a house couple of suburbs up from there, St Albans. I was the highest bidder, but auctioneer was upset that I didn't go up in 2K increment and bid $500. He rejected my bid and decided to go with the second highest bidder. I am sure the vendor would of enjoyed the extra $500.

        • anonymous8 on 13/03/2017 - 22:03
          +1

          @zealmax: They guy that bought the home in sunshine went from 500000 to 550000 in one bid. Auctioneer said he thought the bid was 500 like yours. He just laughed and putted off in his new Skyline GTR.

        • zealmax on 13/03/2017 - 22:05
          +1

          @anonymous8: These days, $100K doesn't even sound like money, until I see my pay slip and I become depressed.

        • anonymous8 on 13/03/2017 - 22:16

          @zealmax: 100k can get you a lot just not a a home. I'm just going to become some old windows toy boy and pull a Rose Porteous. Just need a good lawyer to handle the kids.

  • frostman on 13/03/2017 - 21:51
    +2

    Blame the government on their piss-weak policies which allow overseas investors to buy droves of property.
    Apartments selling before a hole is dug because these idiots just want to safe-harbour their dirty money. As a result builders price their property up because they know they will sell. At the moment in Sydney, properties are inflated by 30%
    Only recently have their been new policies to stop this but too late.

  • Alpacino299 on 13/03/2017 - 22:00

    "hoping and praying that the record low mortgage rate that we currently are experiencing remains and doesn't rise"

    Here's your problem right here, for this to be the case our economy would have to never improve. You see, when the economy is on the up-turn which believe it or not will happen eventually with all the investment capital pouring in, interest rates rise to control borrowing (imo they certainly should have risen more by now, housing investment is one of the few pillars holding us up from recession) hence increases mortgage repayments.

    It is unfortunate that our liberal government would rather pursue their own interests in property investment and insist that the insane handouts and investments re property is healthy for the economy. The reality is, all that capital is going into non productive assets and at huge cost to the tax payer. It's screwed us all and a recession is now inevitable.
    I dread the time it comes for me to consider buying, if thats a possible reality.

  • kyle on 13/03/2017 - 22:44
    +2

    Sounds like you just want to be a winner every time.

    • echelon6 on 14/03/2017 - 22:31

      exactly

  • fantombloo on 13/03/2017 - 22:46
    +9

    $40K stamp duty on a median priced ($1M) home in Sydney.

    Median Australian annual household income = $80K.

    If you can save a quarter of that annual income (how likely?) you're working for the state for two years just for the right to buy into the market.

    "Lucky country!"

  • brotherfranciz on 13/03/2017 - 23:01
    +8

    In times like these, you need to think positive. The most important thing is that you have savings. I have colleagues whom I know for a fact are in well-paying jobs but are sadly living pay cheque to pay cheque. A combination of HECS debt, car loan and refusal to change lifestyles/habits (e.g. annual overseas holidays, buying 3 cups of coffee a day, eating out every night, Friday night drinks, etc.) have contributed to this. You should count yourself lucky that you have an excellent mentality of saving, and also have a partner with the same mentality. * Thumbs Up * :D

    On the other hand, I know a lot of people with a similar attitude as you towards regional living. I would argue that it's the best place to raise a young family. The time and money spent on commuting is the sacrifice that you'll have to make if you want to own property, which I'd say is not a huge sacrifice in the grand scheme of things.

    What I'm about to say next might not help with your depression but… a sobering way of looking at your life is that at least you don't live in Greece, Spain, Nigeria, North Korea, Colombia, Ukraine, Syria or any number of countries going through tumultuous times!

  • sunnyc on 14/03/2017 - 00:05
    -4

    Start a business. Make money then buy a home. Work hard and you will do much better than people your senior.

  • VoodooDoctor on 14/03/2017 - 00:38
    +6

    Go on a holiday out of Sydney.

    If money isn't the issue then maybe your environment is affecting you poorly and a break might just give you some perspective. The Sydney sider mentality broadcast by local media is enough to stress even a Zen master.

    Go to a beach, go rural, it doesn't matter. Spend time with your partner and cherish what you have in your life. This thought process you've portrayed of you against the world leads only to heartache and resentment.

    What does your partner think? If the goal is to start a family in your own home, then buy a home. Tell your children with pride you worked hard, show them how to succeed in getting what they want through honest grit. You don't know the previous owner, making out like you're handing over money to some lazy sod who has never worked is pretentious and toxic.

    Care for your family, not your bank.

  • neon crossing on 14/03/2017 - 01:08
    +5

    Solution 1 : Move to Adelaide.

    Solution 2 : Start working out how to take advantage of the current conditions.
    I am a real estate agent by trade in my late 20's but I too can't believe what people pay for property and I feel sick most of the time paying "full retail" for anything (which is why I love this site), that is including houses.

    My first purchase was an investment, large site, awful house in a mid-range suburb, rented the existing house temporarily while I had plans drawn up to divide into three. Built three, kept one for investment and sold two.

    That gave me enough capital to buy my PPOR which was an existing house desperately in need of renovation with land on the side. Once again in a 'mid-range' suburb.
    Renovated the existing property, divided off a block on the side. Sold the existing property, built and moved into the new build. Now I've just purchased another property and divided it into two that I will build and move into both in succession as my PPOR avoiding all capital gains tax.
    On average making about $60k net profit per property. It really isn't hard and allows you to get a leg up each time you do it.

    Even for a lot of my friends who feel like the above is too risky or time-consuming I have simply had them buy larger blocks then sub-divide the land and maybe keep the 'lions-share" (For instance buy a 900sqm block divide off 350sqm, keep 550sqm to build on) and it can seriously subsidise what you would pay for the larger allotment (often only owing the same about they sold the retail amount for the smaller block) build on the bigger block then you are left with instant equity. This can help you avoid a longer term LMI situation or to simply give you some buffer should you need to sell out and move on!

    • zealmax on 14/03/2017 - 09:43

      What do you think about living in Playford council area? Seems like houses are dirt cheap there and has all of the major infrastructure you would expect from the suburbia.

    • boomramada on 14/03/2017 - 13:07
      +1

      Everyone want a house in Sydney, next to a family and friends, area that they grow up. Basic supply and demand
      Waiting for house price to crash is like waiting for lottery win, maybe not the same amounts of odds.
      -Movie to different city.
      -Get a different job.
      -Get a small house, away from CBD, then slowly build your portfolio.
      -Buy a house and rent it.
      So many options than just waiting…

    • llllllllllllll on 14/03/2017 - 14:13

      When you say subdivide and build, do you have the capital for the building as well, or it's constructing loan from the bank?

      It sounds easy to do but I'm just curious about the borrowing power.

  • [Deactivated] on 14/03/2017 - 01:29
    +1

    I think you should just bite the bullet. If you think the price is too high, that is the market, you just don't earn high enough to buy the market.

    Unfortunately the market price is set by not only Aussies, but also foreigners. In this world, we earn too little to afford our home.

    You can always rent, but population will keep increasing and earth is only so big. While there is hope of bubble, it is still trading upward.

    I think you shouldn't live in a suburb that you are not comfortable with.

    Building a family on rental accommodation is not much different that permanent. It is all in ur mind. The only difference is rental payments don't go into asset. But you have the flexibility of moving.

    Apartment is not any riskier that house. Buying apartment in sydney cbd is not risky.

    Good luck and keep calm.

    • JohnHowardsEyebrows on 14/03/2017 - 01:49
      +6

      If you think the price is too high, that is the market, you just don't earn high enough to buy the market.

      This isn't about perception - the reality is our houses cost more than double what they used to as a function of income. It's also not income that dictates who buys - anybody who doesn't earn $150k+ is locked out of decent housing in Melbourne or Sydney - it's existing equity. Those fortunate enough to be born 20+ years younger have made a lazy killing on the backs of hardworking young families.

      • [Deactivated] on 14/03/2017 - 08:44

        Its not about perception, the fact is the average income of people of the world can afford that, hence price goes up because market can afford. Unfortunately some under the market don't.

        10 years ago, I said to myself about those lucky older people, but now I'm in it, I'm luckier than those younger than me.

        This is the situation in any country, the middle class can't afford property, because the upper class buys everything. Why do they buy? Because they are rich and they need a secure investment. And property is most secure in any country compare to whatever assets in that country.

        We are in transition, we are in the mark when some citizens can buy, some can rent. In Singapore, hongkong, new York, you have to be billionaire to own an apartment.

        • JohnHowardsEyebrows on 14/03/2017 - 09:58
          +2

          Tell that to Japanese home buyers ca. 1990.

        • [Deactivated] on 14/03/2017 - 10:45

          @JohnHowardsEyebrows: Sorry no idea what happen to them.

        • tomleonhart on 14/03/2017 - 10:58
          +5

          @JohnHowardsEyebrows: It's hard for people who have not seen a recession for 25 years to get a grasp of what happened in Japan in 1991.

        • tomleonhart on 14/03/2017 - 11:00
          +3

          @fm: Their property price has been declining since 1991 in short.

        • [Deactivated] on 14/03/2017 - 13:23

          @tomleonhart: Hi Tom and John,

          I agree it is perhaps harder.

          However I'm not sure if it is relevant to compare OP's situation and what happened in Japan.

          OP's dilemma is to whether purchase or rent in order to continue living in the suburb that he wants.

          Supposed he spends all his saving and lock into a 30-years mortgage. And supposed that in a few years time our bubble burst, and the price drop say 50%.

          My question is, what does the OP's or other Owner Occupied home-owner lose? Half the value of their property? But they live in it anyway? And unless they were homeless before, they need somewhere to live anyway, right?

          Of course everyone will suffer due to the lost of jobs, which a result of the dominoes from Investors that losing money.
          But it isn't because he bought a property, he would suffer the same recession whether he rented or buying

          The other scenario for OP to keep renting. But in this scenario then the money is lost and spend without going into an asset.
          Which is perfectly fine if he is hoping that one day the property bubble will burst, and he can buy at 50% cheaper.
          However at that time, during such recession, he has to be very wealthy and secure with multi-currenty and multi-types of assets to be able to survive that bubble and purchase a property.

          The other, imho more likely scenario is that the buble won't burst, perhaps a downturn of 10-20%, or perhaps a lack of growth for a few years which we have seen in 2008-2014, but it will catch up eventually (which was in 2015&2016).

        • [Deactivated] on 14/03/2017 - 13:24
          +2

          @tomleonhart: Anyway read a little bit about Japan 1991, from what I gather it wasn't caused by property.

        • [Deactivated] on 14/03/2017 - 13:29
          +1

          @fm: Just to add a little bit more.

          To add into perspective, the growth that our property experienced in the past few years is nothing in the eyes of foreigner.
          If you remember correctly, our AUD drops from $1.0x per USD to know around $0.7x. This is 30% off for those that hold USD.

  • adzzz on 14/03/2017 - 01:53
    +11

    Want my opinion?

    Don't listen to all the people on here saying… "Just buy you will never regret it", "Houses Houses Houses never go down!", "It was tough for us too! But that one time we had 17% interest!!!".

    The reality is, you obviously have a good grasp on the state of the economy @thord, if you didn't you would have already bought something, and taken the medicine so to speak when fed all the bullshit from your older friends and real estate agents about how the whole game works.

    Put pure and simple. There are two types of people on here; those with skin in the game, and those without. If you ask anyone here who has recently bought, or currently invests in real estate as a hobby/career, the answer will always be "look it's never gone down ever! ever! ever! ever!" etc… Economics 101 = Past performance is not an indicator of future performance.

    Sigh. The most annoying part of all this is, they are right in the strictest most technical sense. It has not ever really had a sharp downturn that wasn't corrected quickly with even faster gains. So you will need to ignore the white noise that these people continually drone and make your own decision.

    The other half of the coin, my Gen X and Y friends and Baby Boomers who are re-entering the market (yes there are those of you who have also rented your whole lives and have now decided to buy a house). Need to decide if given the current market situation, will you be more financially well off as a renter or a buyer?

    Sydney property prices are completely off the charts. 12-13x salary at the current interest rate is just madness. You need to realise that an interest rate cycle is roughly 7 years, if you cant repay this mortgage at 7% - 10% possibly at the cycle high, you will be doomed later unless your earnings catch up. Life is not predictable, and at current prices there is NO room for a) you were recently made redundant, what now? b) Mum needs a carer, so my other half needs to take a sabbatical. c) insert any other random act of life that requires us to take time off work, reducing our earnings.

    If you don't think the amount you are borrowing gives you the breathing space necessary to vary your life plan in 5, 10, 15 years. Then you are borrowing too much money. Period. By my calculations. 2x Average Sydney wage earners , approx. 80k each per year, cannot service the average 1mil+ property and adequately have this breathing space.

    Long rant over, but don't think of renting as wasted money. Think of it as hedging against the market. Your short term forfeiture of capital gains from purchase of your first home = Freedom to walk away from potentially a bad situation in the future should things turn out as 50% of you predict. Overall it isn't the most expensive insurance I could think of…

    Want to read more? Go and see a thread I started a few years ago.. https://www.ozbargain.com.au/node/207783

    • mskeggs on 14/03/2017 - 07:45
      +10

      This is the philosophy I have lived by, so I can't disagree.
      But there will be plenty here who ignored this, pretended there was no risk and bought a house a few years ago who have paper gains of $300k.
      They were right/lucky.
      It turns out for the last 20 years the right move was to buy property at the highest LVR you could get a lender to agree to and keep doing it again and again. I do note for all the posts saying you will never lose on real estate that this particular strategy would have only worked in the last 20 years. It was impossible earlier.
      Price growth has been unbelievable.

      But repeating that trick again seems twice as hard, and I don't see how there can be capital gains ahead. Look at this discussion. Literally everyone posting who does not own a house is saying they can't afford to buy one. If nobody here can afford to buy, are we reliant on Chinese buyers sneaking around their country's laws on cash transfers? It doesn't sound like a recipe for long term success.

  • Jamie007 on 14/03/2017 - 03:07
    +2

    I've given up. At this point even if I could afford to somehow save up for a deposit whilst paying rent, I dont think I want a debt that big on my back. I dont want to be scrimping and scraping and worrying for the next 30 years of my life.

  • tonyaldo on 14/03/2017 - 03:19
    +4

    My 2 cents on this. I enjoy discussions here. I don't live in Australia. Visited on holidays.
    Property prices will continue to increase at ridiculous rates so long proximity to cbd is a driver. Having read numerous housing threads here, access to cbd is always a major issue for people
    I currently live in Dubai. We have hospitals, shopping malls, schools and business parks all over the city. Naturally people reorganize and live closer to where they work. Most people who work and live in Dubai experience 30 minutes commutes tops. This imo contributes significantly to quality of life. This decentralized model has allowed for property pricing to be driven by property itself rather than its proximity to 'downtown'. Just thinking of the pressure of moving masses in one direction puts on the infrastructure blows me away

  • LustStarrr on 14/03/2017 - 04:52
    +4

    The Sydney Morning Herald's chief economis, Ross Gittins, wrote an article recebtly which may be interesting in relation to this decision - it's called 'Politicians Have Worked Hard To Make Houses So Dear'.

    • ItsMeAgro on 14/03/2017 - 11:28
      +3

      I will always upvote The Git.

  • Tasmaniac on 14/03/2017 - 06:51
    +2

    Sounds as though your in a good position OP you just gotsta get yourself out of Sydney.

    Having spent time in all of Australia's capital cities I can safely say that Sydney was the most unlikable place anyway.

    Australia is full of leafy, well maintained, affluent suburbs. Why people pay so much for a standard house in Sydney is an honest mystery to me.

    • mskeggs on 14/03/2017 - 07:51
      +6

      There is a comment up thread giving the example of a country town with only two Thai restaurants to choose from, and two IGA's with rip off prices.
      That sounds a fair bit like Cobar, a town of 4000 people hours from anywhere else. It doesn't sound like Dubbo or Wagga or Newie or Wollongong or Bathurst or Port or Orange or Goulburn or the vast majority of country centres where people actually live outside the capitals.

      People in Sydney are constantly told in the media and by other residents that living anywhere else is just camping out (thanks PJK), but the reality is almost every other place in Australia is a better place to live when you consider Sydney prices, traffic, over crowding and day to day hostility. But Sydneysiders suffer advanced Stockholm syndrome, and can't see that.

      • ItsMeAgro on 14/03/2017 - 11:32

        But Sydneysiders suffer advanced Stockholm syndrome, and can't see that.

        There's also a bit of this:

        Rich people living in the city and Sydney's most expensive suburbs are the ones who decide where they want to work, because they are wealthy CEOs and company owners.

        They don't seem to care that their 20-minute commute to that city office is a 75-minute commute for their 50 employees.

      • tryagain on 14/03/2017 - 16:08
        +1

        People in Sydney are constantly told in the media and by other residents that living anywhere else is just camping out (thanks PJK), but the reality is almost every other place in Australia is a better place to live when you consider Sydney prices, traffic, over crowding and day to day hostility. But Sydneysiders suffer advanced Stockholm syndrome, and can't see that.

        This x1000 I remember when living in Sydney but headed out for a holiday it was amazing the different perspective you would get on things.

  • [Deactivated] on 14/03/2017 - 07:02
    +1

    Just think about where and what you want for your life, The market may crash and it may not but if you are willing to live somewhere long term (10+ years) then it won't matter how much it is really and if you can't stomach the loan amount move out as far as you can to lessen the load. There is never a good time to buy if you are not constantly playing the game. As for Sydney being the best place to live with diversity and opportunity, they may have been the case in the past but everything is slowing being made the same through buyouts and franchising.

  • Starcraftmazter on 14/03/2017 - 07:10
    +2

    What's the problem with renting? So you get kicked out, just find another place in the same suburb.

    If you live in an apartment suburb there will be heaps of options. And if there are problems with the apartment - at least you don't own it!

    • fozzie on 14/03/2017 - 08:04

      Well if you have kids each time is very stressful. I only rented once since moving away from parents and hated it.

      • scrone on 14/03/2017 - 22:40
        +7

        -Owning a house that is in hundreds of thousands of dollars of negative equity is stressful
        -Having interest rates double after taking out a million dollar loan is stressful
        -Losing your job with a million dollar loan is stressful
        -Filing bankruptcy is stressful

        Why people would roll the dice with their lives on a sliver's chance the prices will go up another 10% (and stay there) I can not fathom. I'll rent until I die before I buy into a property market that looks like it does today. Madness.

        • fozzie on 15/03/2017 - 07:24

          Oh well only time can tell if is a good choice or not. If I lost my job I'd still need somewhere to live anyway. I bought before obviously for much less (overseas) and that's been the investment of my life.

          My parents have always rented and now in their 70s still pay rent, when they could had been rent free years ago if they had bought. I suppose your past influences your choices too.

        • TimApple on 15/03/2017 - 10:32
          +2

          @fozzie: You're comparing Apples and Oranges.

          If you lose your job, you still need somewhere to live, but if you haven't paid off the mortgage, the principal + interest repayment will definitely be higher than rent cost.

          If you are in your 70s and still renting, it begs the question of what you did with your savings from your 20s till now. If you invested it on regular economic activities (shares, ETFs, bonds, etc), it should be enough to pay off a whole house right now. The growth of the economy from 50 years ago outpaced the growth of property from 50 years ago. It's only in the past 20 years that property has been booming, but Australian economy has been booming for longer than that.

    • FatBlanket on 15/03/2017 - 20:48

      You're implying being kicked out of your home is not a big deal. I disagree.

  • DrDollar on 14/03/2017 - 07:28
    +1

    You are not alone! It is comforting to hear someone else feels the same. My partner and I are in the same situation.

    We are very hesitant to be buying in Sydney as the prices far outweigh the true value. It is frankly very risky at the moment. Our economy is at risk at, although most want to deny this and hope nothing happens.

    We are considering buying regional or in Melbourne.

    We've been depressed with the grind in Sydney as it seems there is no way we could ever afford to purchase anything remotely close to where we work. It all feels pretty demoralizing.

    We too are putting off kids.

    We're thinking of moving to Melbourne before the prices get ridiculous there too. It's just a matter of time with stamp duty exemption now coming into play in Victoria, this will push prices up. Unless the economy tanks before then in which case we have other things to worry about.

    You're not alone, most first home buyers feel the same.

    If you're good at number crunching, run some "what if" scenarios so you know what you are getting into. This comforts me a bit in that you can make a purchasing decision so that should things go south, you are not drastically affected by it with your investment. It's all about weighing up how much risk you are willing to live with.

  • fozzie on 14/03/2017 - 08:01
    +1

    We did about 9 months ago. I hated renting and we put down 20℅ so no savings left, but I don't regret. I love my home now, it also needs work but it's ours (as long as we pay mortgage). Also one day when me and husband will be old, we can sell and move in a smaller place and we should be able to even make some money. Why would you rent when you can buy?

    • garetz on 14/03/2017 - 17:32
      +1

      If you owe even $1 to the bank through the mortgage, then its not yours, its the banks. That is why they keep the deed and you got jack.

      • fozzie on 14/03/2017 - 17:42

        Yes, but if you are renting you are paying someone else's mortgage…At least in a few years house will have equity in it so you can relocate and be mortgage free. If you rent what are you left with?

        • garetz on 14/03/2017 - 17:45
          +2

          You are left with your money not being tied up in something that may become impossible to sell, investing that money can give you returns much greater than keeping it tied up with a mortgage.

          As someone else said earlier in the thread

          "Long rant over, but don't think of renting as wasted money. Think of it as hedging against the market. Your short term forfeiture of capital gains from purchase of your first home = Freedom to walk away from potentially a bad situation in the future should things turn out as 50% of you predict. Overall it isn't the most expensive insurance I could think of…"

  • amazonaddict on 14/03/2017 - 08:33
    +11

    Lol. I just bit the bullet. In my opinion it is very overpriced house. But, could not wait any longer. I now owe bank a whopping 600K after paying 20%.

    I have been searching for a house in western suburbs since November.

    I had few requirements.
    Max 10 mins walk to station.
    Max 1 hour to city.
    Should be brick / brick-veneer.
    3 beds
    Max 30 yrs old
    Silent street
    Interest should be less than my current rent.

    All the houses which fell into that category were full during open houses. Lots of offers (as per agents). And, they show up as "Under Offer", the next Monday. However, if you go farther away from stations there are not many people for inspection. And, they stayed in market for many weeks.

    I was in the same situation as OP, tired and exhausted. It was driving me nuts and sucking the juice out of my life. Finally, we decided to buy something which is 11 mins away from station, located in main road, 37 yrs old house which had medium offers for that price. (rest of the requirements were met). Of course, Agent lied, threatened and pulled another 10/20k out of our pocket as usual (The only creatures I hate more than cockroaches right now. He just lied looking right into my eyes).

    Anyways….

    Now, I feel peace. I am even ready to sell the house for a loss or call bankruptcy if the interest rate goes to 18%. I have convinced myself to do that. It is just money. I did not suffer to save that 20%. Reading these articles about popping house prices from 2012 and seeing them go up made me suffer. I saved few hundred dollars by awesome bargains here and gave an extra $20/$30K for an agent's lie. It is the nature of real estate.

    But, once you buy it, you will reach that monk state and will feel peace. I assure you that. Just buy it.

    • Ghogger on 14/03/2017 - 14:40
      -1

      Sounds like you needed a lawyer

      • amazonaddict on 14/03/2017 - 14:57
        +2

        To drag the Agent to Court? For lying about offers? I don't have anything as a proof. I did not record anything. First he said, he had offers around $730. I offered $731. He called me later and said there were 3 offers more than what I made. Then, when I raised the offer to $740, he said there were still two more above me. I told him, that's all I could afford and did not want to go above. Then an hour later he called back and said, if I can sign the contract the same day vendor could agree for $740. After two weeks, during a conversation, he spilt that "we were lucky that no one was serious enough with the offers. But, had he waited for few more days, he could have sold it for $750". I was furious. But, could not do anything as the cooling off period was done. He was very helpful with the rest of the procedures. But, I could not bear that fact I fell for someone's lie. I think these agents are the one of the main reasons for this price mess apart from naive desperate first home buyers like myself.

        • Ghogger on 14/03/2017 - 15:02
          +2

          Real estate agents are scum, I would never hire someone with it on their CV.

        • amazonaddict on 14/03/2017 - 15:18

          @Gozzhogger:

          Anyway, I am now over with it as I saw the same agent sold another property which is not good as mine for $750K. We just compare ourselves with the lucky ones who got into the market an year earlier and keep regretting. The guy who bought the above $750k house would feel the same looking at me, while I envy my relative who bought a house in Pennant hills for $700K in 2014 which is now valued in millions. He was comparing his purchase price to 2007 sales data and was regretting not buying earlier. Humans with saving mindset are not meant to be happy. We need a lot of reading on how to let the attachment to money go.;)

        • garetz on 14/03/2017 - 17:41
          +1

          That's entirely your fault for believing a real estate agent, you have to assume every word out of their mouth is a lie. That's the best way to deal with them.

          Never make a firm offer, he will use that offer to his benefit by shopping it around to other perspective buyers, when you do make an offer, always include a caveat that this offer will last x amount of hours, and if the vender refuses then the offer is rescinded. That way the real estate agent doesnt have weeks to shop that offer around to other people to outbid you.

          Learning how to deal with real estate agents requires patience and experience. Above all never believe a word they say. When i hear them saying we have had offers around or over a certain amount, i would offer 10k-20k less than that, cause i know its bullshit.

          Unless you are desperate and happy to pay over the market value, there will always be another house waiting for you to buy, they want you to think you have no choice in the matter, so they harry you and try to hurry you to bid up to what they want you to. Never fall for those tactics, the buyer almost always has the majority of the power even in current market conditions.

        • amazonaddict on 14/03/2017 - 18:30
          +1

          @garetz:

          If i ever buy another property, I would treat the agents like blood thirsty animals. Wish I knew that they just don't give a thing about laws or pain the buyer will go through. I also did not know that agent gets a big cut on the extra amount that he manages to sell over the market price he agreed with the vendor. Simple lesson, but cost me like a uni degree.

    • fozzie on 14/03/2017 - 17:46
      +1

      Congrats! Sounds similar to me (we owe $650.000 and paid 20% deposit). We pay just a bit more than rent, but we are opposite National Park in a massive house (2 floors/4 beds and two lounges, under house a room and lots of storage ). Close to station, quiet road.

      • amazonaddict on 14/03/2017 - 18:35
        +1

        Thank you and congrats to you too. It seems like you've got a bargain there. :) thats a very good price ( in this market) for a 4 bed room house. Wish you good luck with repaying it soon. :)

        • fozzie on 15/03/2017 - 07:29
          +2

          Bavan we think we did , we are in the Shire and love it here (45 mins to the city by train).

          I am fairly sure we both did a good investment, many people on here are saying better to rent. For me is nonsense, there could be a property bubble but if we are living in it that really doesn't affect us. I'm planning to live in it for at least 20 years if not for the rest of my life…..

    • King Tightarse on 18/03/2017 - 18:15

      Why the maximum 30 years old specification?
      To be free from asbestos?

  • HeWhoKnows on 14/03/2017 - 08:38
    +3

    There is no logical justification for current prices in Sydney and Melbourne and also increasingly more places. Investors are not even taking rental yield into account any more because there is none. Market is being driven purely on Greed. If an investor cant achieve a measly 5% gross return its not worth buying. On the other hand this means rents are very CHEAP compared with buying a property.
    So at least one can afford to rent a place where they want to live.
    so in a nutshell - YES they are ridiculous prices

  • Hotchips on 14/03/2017 - 09:19
    +3

    Not being born into a family with wealth at all, and being raised in Sydney, I faced a similar scenario a decade ago.

    How the hell could I possibly get into a house - unless I moved out Penrith way, or further! (or much rougher)

    My missus is casual part time, I have a decent "technical profiessional" income. Living around Beverly Hills (born and raised in Roselands) - so inner west, we were never going to afford a house even back then. Even then Duplex little boxes of a house were selling for north of $600k.

    I applied for and was fortunate enough to get a transfer to Brisbane with my company.

    And if that is a route at all possible to you, I couldn't recommend it enough.

    Within a year, we had a house for under $300k on a 890sqm block, 35mins from SouthBank. It's situated 7mins from Springfield - the fastest growing region in Australia. It has gone up since then, but there are still great value proerties on good size blocks. New houses in our area start at just under $400k on pissant sized blocks, but already established large blocks can be a bargain with an older house on it.

    So, since your current options all involve a lot of stress and risk, consider the move IF you can organise employment.

    it is not just housing affordability that lowers stress and improves lifestyle, in general I find living up here MUCH better.
    Roads/traffic: much better. People: more relaxed. Work life: more relaxed. Climate: (for me - a sun lover) a vast improvement.

    It is worth thinking about. If it takes time and work to even make it a possibility, put the work in.

    I visit Sydney for work and its a great town to visit. I love it. I do NOT miss living there though. We have our house, dog, no stress mortgage, and Brisbane/Gold Coast/Sunshine Coast is a playground for us and our kids.

    I cannot comment on the economics of the housing bubble that is the Sydney and Melbourne reality except to say I find it impossible to believe this can be sustained on an upward growth path indefinitely. It's already insane. I agree with previous posters that a shock can potentially bring the whole house of cards down.

  • giventofly on 14/03/2017 - 09:35

    Everyone is different, but why does the first home have to be the final home? I garnered that from reading the OP. You're talking about levies coming out of nowhere, and strata fees. Fair enough the fees are bad, but buy in a block of units that is well maintained and has good body-corp and you won't have levies coming out of nowhere asking to fix the place up.

    My girlfriend and I (now wife) had ~$100k in savings. Total combined income back then was ~$120k. So we bought a 2 bedroom unit for $290k ($230k loan, as we borrowed up to the limit) and stayed there for 7 years and then sold it for $348,500k. A decent return that exceeded our expectations, so we did lucky there.

    We then bought a 3 bedroom house, which is much bigger than the unit for $530 and now have a $230k loan. We're in the same amount of debt we were 7 years ago, but earning more.

    I don't understand how home ownership for couples is untenable. Don't buy the million dollar home first up. You do not need it.

    I am not suggesting that there isn't an issue with the housing market in this country, there is. But you have to make it work for you.

    • thord on 14/03/2017 - 14:13
      +1

      Oh, it's not like we're after a dream home or anything. I absolutely want a fixer upper anyway.

      One of the things I should point out though is a realisation I had, and you just reminded me of it.

      You said you've upgraded from your previous place, and people often give that advice "Buy small now, upgrade later" - but this doesn't ring true to me. Essentially what you're doing is turning a 30 year mortgage into a 40 year mortgage, or a 50 year mortgage.

      I mean, functionally, there's no difference in buying small with 30 year mortgage, selling after 15 years, refinancing, getting a bigger place with another 30 year mortgage and;

      buying the bigger place with a 45 year mortgage; and

      delaying the purchase for 15 years, and buying the bigger place first at a later age.

      It's only if you expect there to be big capital gains that you'd win by buying the small place first.

      Not that it matters or that those thoughts affect me, it just annoys me when I see that silly advice from people or from government. Buying a studio apartment to "get on the ladder" isn't really helping people out unless they're unable to save due to self control issues. In fact if the market is flat they'd end up losing due to stamp duty, lmi, fees, etc.

  • dogboy on 14/03/2017 - 09:50
    +1

    The other main problem for first home buyers is that the segment of the market they are targeting is also the segment that investors are targeting. Find something that you like and start negotiating and next thing you know it gets snapped up by an investor for asking price without even viewing the property. I lost count of the number of places I missed out on because of this. Needs to be fairer rules on investing to help first home buyers get into the market over investors just padding out their property portfolios.

  • DaptoDog on 14/03/2017 - 09:51
    +1

    If you are buying a home to live in you can't look at it as an investment. It is shelter, pure and simple.

    Buy something you can afford. What I mean by that is factor in interest rates moving 3-4 percentage points higher and the time that you will be relying on one income when you do have kids. Unfortunately this may price you out of a detached house within 1 hour of the city but so be it. Then consider townhouses, apartments, longer commute etc. If you are not willing to make that compromise then you just have to suck it up and keep renting. You can't get everything you want in life.

    I'm interested to hear what sort of job you do. I work in financial markets and commute from north of Wollongong to the city since that's where the jobs are. It takes 1 hour and 20-25 minutes door to door into work. But I live quite close to the beach on a big block of land close to all our family. I enjoy time to myself on the train ride. Oh and I work from home one day a week. That's a pretty good trade in my mind.

    If property does fall in value, as long as you can afford to keep the house then who cares? You are there to live in it. Eventually, over some time period, prices will recover if that's what you care for. I for one do not.

  • ebayer007 on 14/03/2017 - 09:53

    Just be careful about borrowing heavily, trouble is brewing. From AFR- More than 1 million Australians face mortgage strife

    • Grayfox on 15/03/2017 - 00:03

      True! from what I've seen… Most kids these days want to build a new home in the new estates with a fancy builder with all the bells and whistles. To achieve this they are up to their neck with debt. We bought a small unit 2 years ago. Have one kid and another one on the way. The unit does us fine and we do not live with the stress of having high debt.

  • jellykingdom on 14/03/2017 - 10:03
    +1

    You may have to define “undesirable” suburb. I’m not sure if you said Sydney or Melbourne (its definitely implied that it is Sydney). There are plenty of suburbs out there with <$1m houses, just not near Sydney CBD. I used to live in Wollongong, that’s a big(ish) city with house median of $700k, or there’s Newcastle with house median of $700-800k I think. And they’re both beautiful places to live, with beaches, far far far nicer than most inner city suburbs! But that would require you to commute a bit or try to change jobs and relocate. But there are still loads of options around Parramatta as well. And if you start looking at apartments, there are even more to choose from. I’m not going to be one of THOSE people and say “why don’t you live in Wagga Wagga or Albury Wodonga? Its so cheap blah blah blah” cos those people are idiots, but you have a pretty decent range of places to choose from.

    Also, you may have to define “cheap”. If you say that the deposit and repayments aren’t a problem, then perhaps do some sums and consider how long it will take to actually pay off your $1m home and how much interest you’ll pay. Then compare that if you saved really hard for a couple years. For us, and granted this was due to a bit of luck and a very cheap 1st apartment, we have a $700k home and would be on track to pay it off entirely in the next 4 years and that is without even really trying. That will be somewhat hampered by near-term children but my point is, we won’t be paying it off for 30 years. Also, as someone else has pointed out, if its equal to your current rent (which it very well could be), then who cares??

    In my opinion (informed but hardly an expert), I don’t really see the risk in apartments. I know there’s a lot of talk about a crash etc etc but if you google some of these keywords, you’ll see the media has been predicting a massive implosion since early 2015 and since then the prices have gone up by around 30-40%. Its only a short term fluctuation really, so if you intend to live there for a few years (like 5+) then I don’t really see the risk? It’s not drastically different to buying shares really – if you expect to make a killing in a couple years, then you also have to accept the risk. If you expect a reasonable long term return, you have to bide your time

    Perhaps you need to get your foot in the door with a basic apartment, like one of the $400k 2 bedroom places in Blacktown for e.g. You’ll get used to the concept of the mortgage, repayments, and you’ll also hopefully have made a bit of cash to channel into your next purchase. This is all kind of related to when you conceivably would want (or need, if biology is working against you…) to have kids though.

    I wouldn’t be completely against rent if you arent’ comfortable with apartments and can’t find the right house. We had family friends when I was a kid who used to rent out of choice. They were very wealthy but just preferred to not have to do the maintenance, security, upgrades, etc and just rented a nice house instead. And landlords really won’t tend to boot you for any reason if you’re a decent tenant, they are craving decent tenants who won’t trash the place and pay on time.

    Final point: although it’s depressing, this is all a volume game. As in, hit as many houses as you can in a single weekend if you’re looking. We have friends who have gotten really depressed while trying to find a house for 2 years. But not only are they being SUPER picky, they only look at 1 house every fortnight or so. In this market, you need to be doing more like what I did and hit 10-15 houses per weekend. The sheer weight of numbers means you’re more likely to find what you want and at a price you’re willing to pay

  • jaimex2 on 14/03/2017 - 10:18
    +1

    Yeah just bite the bullet. The best time to buy is always asap.

    • It's not going to get any cheaper, the government has no interest in fixing this mess and there's no shortage of cash splashing around.
    • This isn't a problem isolated to Australia, other desirable countries are the same.
    • While it seems like a stupid amount of money, and it is; You are locking the price when you buy, 20 years from now the average wage will be around $150k
    • If there is a housing crash and my houses price goes to shit… like more than the loan, I would simply liquidate, leave the country and let the bank deal with the mess it created. If governments can bail banks out, the bank can bail me out.
    • thord on 14/03/2017 - 10:38
      +1

      "If there is a housing crash and my houses price goes to shit… like more than the loan, I would simply liquidate, leave the country and let the bank deal with the mess it created. "

      Problem is like I stated, we spent 10 years saving and sacrificing hard. If we did the above we'd literally be throwing away 10 years of our lives that we worked very hard for.

      • tidie on 14/03/2017 - 10:45

        pay interest only.

      • tomleonhart on 14/03/2017 - 11:08

        Then I hope that you don't keep your saving in cash or share because when the house bubble pops, none of your asset will be safe.

        Apart from gold.

        • thord on 14/03/2017 - 11:20
          +1

          It's pretty diversified. But we generally stay away from Australian stocks. There's nothing that great and most are obsessed with dividends which in my mind means they're bad at running their businesses.

          Most of what we have is in a 3% savings, US stocks, or some gold. But yeah, it's a wide mix.

        • tomleonhart on 14/03/2017 - 11:23

          @thord: Then I think you are in a good position.

          I know it's hard but I hope you can change your feeling toward renting, i don't think any landlord wants to kick you out every 12 months.

          As a renter for 12 years, I only had to move 3 times. :)

        • hahaboy on 15/03/2017 - 22:28

          @thord: on your diversified portfolio, how much of your savings do you put into investing? For example, if you had $200k savings, what's a reasonable amount you invested and kept in the bank? Are there any guidelines for it?

        • thord on 16/03/2017 - 12:27

          @hahaboy:

          We have about 1/6 in savings, which IMO is too much, but I'm slow to fix it up. Will get onto it soon.

          I'd like to get it down to about 1/8 in cash savings. Just a healthy emergency fund really.

      • jaimex2 on 14/03/2017 - 12:04

        I was talking more about early into the loan, If you're 10 years in you're at a point of no return.

      • ebayer007 on 14/03/2017 - 13:38

        Im guessing lot of migrants would do the same.

  • [Deactivated] on 14/03/2017 - 10:25

    BUT we're not keen on a cheaper apartment and I've seen first hand the absolutely horror of strata living with massive defect rectification bills, special levies out of no where, and stupid maintenance costs that I wouldn't incur if I had my own place as I'd do it myself

    It's very difficult to objectively compare the cost of strata living vs free standing house.

    People easily forget that houses need maintenance too and if you asked a home owner what they spent maintaining their property in a given year, they'd probably have no clue.

    I'm not saying that strata is 'cheaper', just impossible to compare objectively.

  • edy4eva on 14/03/2017 - 10:29
    +1

    A major reason behind all this inflation in prices is that a good proportion of properties are bought by 'investors' who own several. This whole phenomena came on the back of a wave of 'consultants' advertising ways to build a multi-million dollar portfolio (read massive loan with little value) out of ~$100k, and accelerated by the FHBG that meant whoever got their foot stuck into the door will be eyeing a second property within few months of their first.

    The FHBG and stamp duty waivers should have come with a condition, must not buy a second/investment property within 10 years otherwise the grant must be repaid along with a penalty/interest.

    And couple that with a doubling of interest rates on investment properties then we all shall see a market swamped with properties being offloaded.

    When 1-2% of home owners hold about a third of all the properties…

  • payless69 on 14/03/2017 - 10:30

    Since the GFC the US has been printing literally "zillions" without any backing. They directly own 48% of the big 4 and on all good stocks same thing. Australia's worst performing bank has "only" made sort of 25% gains in profit it is time somebody goes out and opens "season" on bankers!

    All this is done to stem the money flowing out of China. And guess what? Europe is also printing with this wonderful word "Stimulus".
    Some countries they charge 0.7% average penalty interest for deposits as nobody wants "clean" money any more.
    As we breed more lawyers to find the way to bring greed to new levels one has to see a graduation ceremony to see what we are up to in the future.

    Of course this is really no news but given the still strong power religions have in finance suddenly one wonders.

    If you ever have time to deeply read into history suddenly you will even find a reason for terrorism. Sort of a valve of how some societies gone mad.

    China is cool about that, literally run by a lean government they print unlimited money too and have all the man power they need.

    Here is where Chinese money goes starting from the largest sums:

    1 Japan. Despite being technically more "broke" than Greece people still work hard and have little time to complain and are an old un-forgiven enemy anyway.
    2 South Korea. Has a working internet and still a bashed up population unwilling to voice despair. Lots of goodies coming out of there.
    3 Philippines. Crazy TV addicted silent population with corrupt govt, easy to be manipulated and conveniently close to China.
    4 The UK. Still a force and they provide cheap language courses as well as ways to do business, schemes both legally and corrupt.
    5 Canada. Huge place with small population but good reserves and hammered population that spends on both stubborn French and natives.

    after this the list is constantly changing. Australia is said not even to be in the first 10. There is more key infrastructure to be bought from Chinese elsewhere.

    My brother used to say: Selling the boat proved to be the best day of his life. Buying he claimed the second best.
    With houses it can be similar. Most people buy to show off who they are. So greed has no boundaries. Buy big and get a rate shock.

    Bricks and mortar are nice to have. Queensland still has no body corp regulation that works. So American firms force buy into body corps and squeeze owners dry.

    Just look around and get as much land with a house made of bricks that needs no insurance. Sort of still a worthwhile investment!

    Best of luck!

  • darkchoc on 14/03/2017 - 10:39
    +3

    I own my place in South East Melbourne. Timing wise, we were fortunate to buy 4 years ago when it wasn't insane like now.

    Prior to that, we were renting for ages. It was the best and i miss it so much. Lived in a fantastic location, no rates to pay, very low transport costs (walked and used PT). Would happily have continued renting and really miss the days. And before that, my wife and i lived with parents to save money ourselves and help parents with their mortgage.

    People complain about the stress of renting e.g. bad agents, poor repairs, having to move. But most landlords want a good tenant there for ages. Find a well maintained place in a good area whilst having savings and good jobs meant we were quite often top of the pile for landlords to choose. Even with that in place, we would have to apply to every place that was close to suitable as agents are rubbish!

    The stress of moving every few years is nothing on the stress of having a huge debt, having to do the repairs myself and deal with dodgy builders, paying so many bills, transport costs, car ownership, gym membership!

    We bought at that time as it was marginally cheaper then renting and the house we bought was undervalued compared to our budget when we were dabbling with the idea of buying. We'd casually go to open houses, auctions and enjoy the experience. We saw houses we loved to go for hundreds of thousands above advertised prices. Being just completely flexible (together with fortunate timing) meant we weren't stressed about whether we bought or not.

    The truth is that each situation calls for being fluid and compromising. If i was in OPs position today, i would rent in the best place possible which is financed by a landlord, move overseas (London, Vancouver, Toronto, NYC) or move to Melbourne. At the same time, i would create wealth and security by building a larger and larger amount of money that could be deployed in 2-3 years time if interest rates start rising up. And if they didn't and prices were still so high, I'd keep renting!! Could always buy an investment property to hedge against increasing prices.

    The media and populations obsession with home ownership had created huge opportunities for investors and for savvy renters!

    OP.. You've presented your situation as binary: either you buy a place to call your own, saddle yourself with huge debt and start having a family; or be an unhappy renter and delay having a family.

    I'd recommend changing your mindset and become a happy renter with the view that you may have to move every few years. But you'll be free of the stress of debt, have a huge war-chest of funds to deploy when opportunity presents itself and not tie having a family to home ownership. Or even suck up the debt and buy and find ways to reduce the debt quickly (e.g. airbnb, rent out rooms in your new house, buy as investment property, second job).

    Easier said than done. But in a less than ideal situation, we have to find the best possible route to enjoy life and make sacrifices along the way.

  • [Deactivated] on 14/03/2017 - 10:41
    +1

    I feel your pain OP. We were fortunate enough to enter the property market in 2014 and got in under $500k for a 350sqm duplex rougly 60km from the Sydney CBD. Tiny bit of equity now but we would like to move to the Hills of sydney. Gifting someone $1M becuase they got in before me and living with $1M of debt scares the crap out of me.

    We are also not sure what to do. I can feel long term stress also.

    Properties in sydney are now 10-12 times the average salary. Somethings gotta give….

  • thedarkhalf77 on 14/03/2017 - 10:43
    +2

    This

    I feel like it's affecting both of our mental health and we both feel pretty depressed over the whole thing.

    I moved to Melbourne around 2013. A lot of my friends advised me to buy my own house. I've had the funds but I decided to wait until I was sure Melbourne is the place that I want to call home. Fast forward 4 years, my investments have shrunk in dollar value. I will have to move almost 30 minutes further to afford something decent.Its very depressing, I don't enjoy Melbourne as I used to before. I've thought of moving to other states or even leaving as I just cant digest whats happening.

    My naive view is that majority of Australians are invested in keeping the property prices higher, since a large number own properties. It seems greed is the driving factor. 2-3% price growth is a healthy growth, but 60% in 4-5 years is not healthy no matter the facts/figures or logic.

    The only mistake we made was trying to be sure before buying a property and this costs us dearly.

  • joelmuzz on 14/03/2017 - 10:54

    Falling prices dont matter to your home unless you sell. It is only a feeling of disappointment that you could have got more for your money if you had waited but you are actually in the same position as if prices were stable or doubled. The value change is only theoretical since you arent selling regardless.
    Of course if forced to sell it does matter, but a million bad things can happen in life and there is no point living in paranoia of that.

    Interest rates are what you have to be careful of. You have to anticipate that rates will rise at some point and you need to ensure you can survive the repayments for that period.

    • goms on 14/03/2017 - 12:51

      This is a fine advice. I felt the same as OP where I thought I would never be able to get the home that I wanted and was afraid to buy because the price is too high. However, I did bite the bullet and bought a house last year. The interest at 3.94% currently is only $30 more a week more than what my rental was. The total repayment is substantially more ($200 more) to pay the principals, but it's not a problem because I have been putting away more than that for savings. So at the end, I got a bigger place to live without much changes in terms of lifestyle which is great and the extra savings would go towards the house which technically will beat any cash interest rate in the long term - but this is not my main purpose of purchasing a house.

      I wouldn't worry too much if the house price collapsed as I wouldn't be selling anytime soon. When you buy a house, you would prepare to live there for at least 5-10 years. Yes if you waited and buy when the house price collapsed, you would get more bang for your buck, but who can predict when that will happen?

      The only slight worry that I have now is only if the interest rate goes up substantially. This is probably something that you need to think about, will you be able to serve the loan if interest rates were to go up for x%. With my situation, I still have extra savings for these rainy days and I'm prepared to change my lifestyle should I need to pay extra for the interests.

      If you don't have enough deposits yet, you are not losing out either because rent is relatively cheap these days, but that doesn't sound like your situation OP. I'd say if you can afford it now and it will take away the stress of renting, do it!

  • cannedhams on 14/03/2017 - 10:54

    Gross returns on Sydney real estate at the moment are 3.4%. Rents have come up but nowhere near as much as capital values.

    Eventually the prices stop going up. At that point, people start looking at the returns. Once you take out rates, water, maintenance, water, sewage and letting fees, the real return is probably barely 2%.

    Thats a pretty crappy rate of return, and doesnt even wipe its nose with cash.

    When that happens…

    • tomleonhart on 14/03/2017 - 11:08

      and 2% before tax too :P

      • cannedhams on 14/03/2017 - 11:59

        Well you pay tax on whatever returns you make, whether its property, shares, bonds, etc. But 2% would be a pretty ordinary rate of return on a share that wasnt priced for growth.

  • bes on 14/03/2017 - 10:55

    This has been the most draining discussion I've read about money here in ozbargain and I have to put my opinion on it. Your replies shows that you are really stressed out about your situation.

    I'm looking at land and house in my area and I know there's no way I can afford a house if I was to buy today (We bought 3 years ago and no regrets with our decision). This time might not be the best to buy a property but the main point here is that you want to have a home you can call your own. Trust me once you find the house you want and live in it, you won't even think of the part "give to someone else who just happened to be lucky enough to have been born a decade or two before me". That is not really important compared to the stress you put yourself in. What are you gonna do with all your life savings if you are unhappy?

    The house you live in is not really an investment.You're not gonna gain income from it and expense will only go up once you own one.

  • tomleonhart on 14/03/2017 - 11:11

    For those who are interested

    Australian property bubble is on the scale like no other

  • Cluster on 14/03/2017 - 11:18

    The prices are high and it all seems ridiculous to spend every last cent and then be in debt for 20 years or more. I went through the same feelings back in 2011, but I now have a house and don't complain about house prices. And you won't too, once you have one.

    That's the key problem with the house price debate in Australia. Only about one third of us are paying a mortgage, so we'll always be in the minority compared to the home ownership class. That means real solutions to the house price problem are simply not possible. No government in their right mind is going to rapidly boost housing supply and crash prices by 30%. They would be voted out at the next election.

    "Moving to a regional area is also out of the question due to the jobs my wife and I have"

    ^^^ This is the key reason house prices will not fall in Australia, unless the cheap/free money spigot is switched off due to an economic crash. We have millions of city residents all sitting there saying 'I can't move to a regional area!', so prices will remain high in places where people want to live: the place where millions already are.

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