Recently listed dream house. Sellers want $1,000,000-$1,100,000..

3migorengaday on 02/07/2020 - 23:22
Last edited 06/07/2020 - 10:59 by 1 other user

Hello ozbargainers.

I've been looking into the area for 2-3 years now.
I've always been outbid or just pushed out of the market due to the median price and high demand from international buyers. (I'm asian and not racist lol)

The house is located perfectly between my partner and family.

With supply going up, demand going down, whispers of "10%" or market crashes to property..talks of abolishing stamp duty…interest rates at an all time low..
What Would OZ Bargainers Do?

Background information.

South-east suburbs Melbourne.
Currently on 85k pa, partner is roughly the same.
We both currently already own a investment property.
Our jobs are quite secure with minimal turnover.
If we are unable to make re-payments we'd consider liquidating assets and being flexible.

I personally think for the land (250sq) it's quite small, however it's niche.
I'd hate to link the property incase a billionaire ozb user beats me to it.

Poll Options expired

  • 9
    Monitor the market.
  • 23
    Do not buy with a 10ft pole.
  • 34
    Consider a low-ballish offer.
  • 97
    Hold and take emotion out of the purchase.
  • 209
    Buy now, regret later.
Home & Garden

Comments

  • [Deactivated] on 02/07/2020 - 23:34
    +93

    $1.1m is a lot to spend on a house if your income is only $85k and household $170k.

    • 3migorengaday on 02/07/2020 - 23:52

      Have built up equity + savings.. Partner and I are pretty low-key.
      Trying to justify the current pandemic with no holidays and minimal spending haha

      • bohn on 03/07/2020 - 17:42
        +7

        Doesn't really matter how little you spend.
        Based on HEM (Household Expenditure Measure), the banks will bump up your spending to a level comparable to people earning a similar income. Also, the fact that you own an investment property means they will factor in higher rates on that in the future, and whilst you have equity in it, it it will still drag down your overall lending amount.

      • MementoMori on 04/07/2020 - 15:28
        +4

        Calculate the loan for 5% interest rates and see what those repayments are like, not the 2.x% we can get today.

        There is an argument for a 'new normal' of low rates but that's what everyone thinks before they get screwed.

        Long time interest rates are actually around 7% (according to my fin planner).

    • rambutann on 03/07/2020 - 09:30
      +1

      Yeah I was going to say, my partner and I are in a very similar situation to OP - household income is around $170k, 3 investment properties, equity in all places, and im like "hmm maybe we can look at spending $550k?".. which is really low for inner burbs of melbourne.. basically a 2 bedroom unit at best.

      In saying all this, if you can comfortably afford the repayments if one of you were to lose your job, or if you lost a tenant, and maybe throw a kid into the mix then sure why the hell not. You're buying to live in not to invest, if it drops by 10% who gives a rats.

      In my personal circumstances, I wouldn't spend that much money because of the following reasons:
      - Want to move overseas within the next 4-5 years, don't want a crap ROI if the property was rented out.
      - Both partner and I could lose jobs at any time (working in small businesses) - in fact my partner lost her job at the start of rona, and we felt zero financial stress.
      - Want to have a kid in 8-10 years, I value family time over everyone working like a maniac to pay for a house.

      At the end of the day it'll come down to your personal circumstances, if you have family that can bail you out if things go pear shaped, then why the hell not take advantage of that.

      • Ghost47 on 03/07/2020 - 11:17
        +42

        Wow, three investment properties and there are people out there who want to buy a house to live in lol.

          • Ghost47 on 03/07/2020 - 11:33
            +10

            @rambutann: Seems as though many people have to buy a house "uncomfortably" these days, i.e. taking out highly leveraged loans which could be risky if one loses income.

            It will be interesting, probably somewhat sad and frustrating too, to see how things go in the next few decades regarding property here.

          • serpserpserp on 03/07/2020 - 20:38
            +51

            @rambutann:

            and I still couldn't afford to comfortably buy a house!

            Garbage. Sell your investment properties and buy a house.

            • MementoMori on 05/07/2020 - 14:10

              @serpserpserp: Minus selling fees he'd probably be left with a sum equal to the stamp duty he paid…

        • lonewolf on 03/07/2020 - 20:38
          +23

          Thats the problem, a House should always be about someones Home, not for investment purposes. There are so many other things you can invest it.

          • 91rs on 03/07/2020 - 20:46
            +5

            @lonewolf: Exactly, things that should be available to everyone like the basic need for housing has been turned in to two things, a luxury item and also the way to generate your fortune via investment when many people are often barely holding on to maintaining those investments.

            • lonewolf on 03/07/2020 - 21:00
              +8

              @91rs: Thats right, It is a basic need and should be treated as such. Everyone should be entitled the opportunity to have their own home instead of some people ( who have 30-50+ investment properties), every investment property means someone else lost an opportunity to own it as their home.

              • MementoMori on 05/07/2020 - 13:51

                @lonewolf: 30-50+ LOL

                Don't think those extreme cases exist in any significant numbers.

                How many Australians own 1 investment property?
                The ATO data states that 1,494,837 own one investment property, which is equal to 6.2% of the population. This also means that 71% of property investors own a single investment property only. This seems to be where most property investors get stuck…

                1.6% of Australians own 2 investment properties
                A total of 395,924 Australians are fortunate enough to have two investment properties, which is a fairly sharp decline (1,098,913 less to exact) from the 6.2% with one investment property. This also equates to 18.9% of all property investors.

                How many Australians own 3 investment properties?
                A grand total of 122,639 own 3 investment properties meaning that 0.5% have 3 investment properties… you read that right, less than half a percent.

                Now for the small numbers…
                When we get to 4 and more investment properties, the percentages start to get really small. There are only 45,162 (0.19%) people with four properties; 18,863 (0.07%) people with five properties and 19,967 (0.08%) with six or more properties. This means that there are less than 100,000 people Australia wide with four or more investment properties.

                • lonewolf on 05/07/2020 - 14:05

                  @MementoMori: Actually most of my friends have at least 3 investment properties and at least 3 of them have 30-50. In a lot of their cases they just kept buying more and more it got easy once you had a couple under your belt

            • RefusdClassification on 05/07/2020 - 04:08

              @91rs: Housing is a human right. Redistribute from the wealthy landlords to the immiseriated lower class folk who are unable to get loans for massively overvalued assets.

              In Communist countries nobody is homeless. The government provides everyone with basic accomodation. Surely Australia can do better than that.

              • MementoMori on 05/07/2020 - 13:53
                +3

                @RefusdClassification: Why not go live in a Communist country?

                That's right, because they're collapsed failures.

                I agree things are far from perfect - but Communism is NOT the answer.

                Debt + placing Australian property on the global market via mass migration IS.

                Both massively increase dollars available on the demand-side (and one also places downwards pressure on local wages).

          • mrvaluepack on 04/07/2020 - 08:59
            +9

            @lonewolf: You know why this is happening? Look at the portfolios of all the politicians and you will know why ;) They all have a vested interest in policies to keep home prices at high levels.

          • oO0Dam0Oo on 05/07/2020 - 06:17

            @lonewolf: I tend to agree they should limit investment and negative gearing to commercial properties. Unfortunately I think the reality is that doing so would negatively impact the rental market supply and cost of renting.

          • SelfMade on 27/08/2020 - 17:43
            -2

            @lonewolf: This is likely a comment from someone who doesn't invest much or know much about finances I assume?

            There aren't many investments comparable to property when it comes to leverage and risk. That's why so many people invest in it.

            • lonewolf on 27/08/2020 - 18:31
              -1

              @SelfMade: You know what they say about people who assume….

        • dufflover on 03/07/2020 - 22:40
          +29

          I'm gonna be the unpopular and obviously bitter guy (though luckily have almost paid off my one and only home) and say you investors with all your equity and property need to take a perspective pill if before whinging that you can't buy a home - you obviously bloody can, but chose not too.

            • jayzee on 04/07/2020 - 00:50

              @rambutann: Are you after the income stream from investing in one bedroom units? Don't think one bedroom unit would provide good capital return, although return on rents should be good, when it comes to sell, the return would be lag well behind a villa or a townhouse which has a land.

              • rambutann on 04/07/2020 - 13:33
                +1

                @jayzee: Correct, i feel no financial strain from having them either. One day they will be paid off and life will be gr8

            • dufflover on 04/07/2020 - 00:53
              +1

              @rambutann: FWIW didn't neg you, and at least you're positively geared and investing for the rent.
              You're spot on where it's all the other people (I think it's way beyond just boomers), who's only real investment outcome is the capital gains ponzi scheme method. Cos yeah good luck getting rent to pay off million dollar loans …

            • Ghost47 on 04/07/2020 - 13:22

              @rambutann: 1 bedroom apartments? Are they in Melbourne? If so, where? Just wondering.

              • rambutann on 04/07/2020 - 13:34

                @Ghost47: West footaz (apartment), Essendon (apartment) and Pascoe Vale (villa).

                • Ghost47 on 04/07/2020 - 13:35

                  @rambutann: Ah cool, thanks for the info.

                  • the4thzodiac on 04/07/2020 - 19:29

                    @Ghost47: well done rambutann! not sure why you got negged there!

                    3x props at mid-20s would take a lot of discipline. even if you did get some family assist (IF, assumption).

                    PS sorry incorrect reply to!

                    • rambutann on 04/07/2020 - 20:12
                      +2

                      @the4thzodiac: Thanks! I am a tightass. No family assistance or inheritance, just got very lucky on my first property, appreciated to a point that i could withdraw equity to buy the second. Partner saved up and bought hers.

                      Yeah im not sure why i got negged about not being able to afford a house.. its difficult out there, most people just settle for moving further out of the city, id prefer to live in a smaller space in the inner burbs until one day i can afford a house where i want to live..

                • serpserpserp on 05/07/2020 - 21:41

                  @rambutann:

                  Pascoe Vale (villa).

                  Well that would be at least worth 400-500k now.

                  • rambutann on 06/07/2020 - 08:56

                    @serpserpserp: Nah its smalll. Really only for one person. Low 300's at max, just wouldnt sell it because that type of property is becoming harder to come by.

      • 3migorengaday on 03/07/2020 - 12:40

        How did I completely miss this comment?
        Cheers for the support.

        Have you guys decided location in terms of overseas? :P

        • rambutann on 03/07/2020 - 13:54

          We're both in business related jobs, and we would prefer to stay in our industry instead of working in a cafe or something like that… so we basically have to chose Amsterdam or London because they speak enough english in the workplace..

      • ass3ts on 03/07/2020 - 20:41

        Three investment properties but wouldn't spend over 1 mil?? Where are these properties?

        • rambutann on 03/07/2020 - 23:55

          Clarity in a comment above #notaboomer

          • ass3ts on 04/07/2020 - 14:59
            -2

            @rambutann: Also for clarity, I'm not a boomer and I own houses.

    • Brucegonemad on 15/08/2021 - 23:22

      Sad how many upvotes this comment had… listening to this type of advice keeps you poor. Purchasing that property…now a year later would be worth at least $100k more without having to lift a finger.

  • activ8newbs on 03/07/2020 - 00:02
    +25

    Wait 250sqm for $1.1m?!???!

    Am I reading this correctly?!

    • 3migorengaday on 03/07/2020 - 00:02
      +1

      Yup. It's a 3 storey house. :(

      • activ8newbs on 03/07/2020 - 00:03
        +2

        @Mod please delete my comment. Don't want to make it too easy to give away Ops dream home. Sorry for asking

      • RotundPolarBear on 03/07/2020 - 00:13
        +10

        I think I found it. You must really like football.

        • 3migorengaday on 03/07/2020 - 11:36
          +1

          I can barely bounce a footy nor support the Hawks. :)

        • richmond12 on 04/07/2020 - 21:47

          Hawks supporters dream

      • pa33w0rd on 03/07/2020 - 17:52
        +1

        If I've guessed it right that the property you're interested in is on a main road then I'd suggest think twice even if it's near to a good public school ;-)

        If my guess is incorrect then I suggest go for it. It's going to be your dream home, nothing will beat that :-)

        All the best!

      • dny on 04/07/2020 - 00:06
        +1

        I'm pretty certain I know the listing and I drive passed it every time I leave the house. But it I do remember seeing a sold sticker the last time I drove by.

        Welcome to the neighbourhood?

    • [Deactivated] on 03/07/2020 - 00:07
      +1

      You can easily pay double that in high end suburbs of Melbourne and Sydney.

      • SnoozeAndLose on 03/07/2020 - 00:11
        +14

        Low end suburbs in Sydney also asking for 2M now

        • Ghost47 on 03/07/2020 - 11:37
          +1

          Lol.

  • Dlw on 03/07/2020 - 00:26
    +1

    If it's your dream home, I say go for it.

  • AustriaBargain on 03/07/2020 - 00:38
    +4

    If you make 85k a year then five years from now you could be making 200k a year. I'd buy two of these houses whilst they are still only a million each, you'll regret it later if you don't buy as many million dollar houses as possible.

    • Travis J on 03/07/2020 - 02:26
      +67

      Do people double their income every 5 years? I must be doing something wrong.

      • 87percent on 03/07/2020 - 07:42
        +20

        Ozbargain community seem to

        • BobCobb on 05/07/2020 - 08:14

          Just the Ozbargin elites.

      • 3migorengaday on 03/07/2020 - 11:34
        +2

        Shoot for the moon. Even if you miss, you'll land among the stars.

        • kaitoivan on 03/07/2020 - 18:19
          +19

          It's really bad saying, it really meant: you'll be stuck alone in space, suffocating!

          • Giraffe on 03/07/2020 - 21:20
            +7

            @kaitoivan: I hate this saying because it implies that the stars are closer to us than the moon.

        • the4thzodiac on 04/07/2020 - 19:31

          supposed to be soft landing on the clouds, I thought…

    • Ghost47 on 03/07/2020 - 11:18
      +2

      Lol. This nearly went over my head.

    • Dotherightthing on 03/07/2020 - 17:35

      oh man.. this is totally on a different level altogether..

  • p1 ama on 03/07/2020 - 01:58
    +41

    You're not buying to invest, you're buying to live in. If you're happy with the price, then you buy it, live in it and never look at the valuation again.

    • 3migorengaday on 03/07/2020 - 11:34
      +1

      Honestly.. THIS comment. Thankyou!

    • jace88 on 04/07/2020 - 15:06

      This is how I approached it when I bought our place. It was a bit pricey at the time and there's always talk of a crash. Didn't eventuate and now smaller units in same building go for the same price (24 months after we bought).

    • StickMan on 07/07/2020 - 18:25

      Right but then you'll be wondering why your neighbour with the same house is paying 2/3rds of the repayments you are, for the same result, for 30 years.

  • Travis J on 03/07/2020 - 02:25
    +2

    If you like it and can afford it. Go for it.

  • TheMindsetTraveller on 03/07/2020 - 08:05
    +3

    Do you NEED this house?

    We, including myself 100%, often buy things that we want over what we need. Buy things which superficially make us feel good because it is nicer than what our friends have. Unfortunately it is the deadly game of comparison that we are in.

    Will buying this house get your closer to your dream life? What is your dream life? How would it look like? Will buying this house push you further away from your dream life?

    To many people, a dream life will likely involve some high degree of freedom, to be able to do what you want, when you want.

    I am working my way there, it is hard as hell, but having less can sometimes mean having more.

    • Ghost47 on 03/07/2020 - 11:20
      +2

      My dream life is to eat tuna on toast for every meal, never go on holidays again, never consider kids (could be a good thing to help save the planet). I would leverage myself out the butt to buy that house.

      I mean, it's a HOUSE!! It's like buying oxygen to live! Would you not buy oxygen to live?? Buy more houses everyone!!!

      • TheMindsetTraveller on 03/07/2020 - 11:39

        If that is what you want to do in your dream life, go for it ;) You live your best life to your set of circumstances, don't live it to mine or anyone elses.

        • Ghost47 on 03/07/2020 - 11:39

          I will, everyone should do this. Buy now otherwise the house you want will cost 5x in 5 years.

          Listen to me everyone, buy it now!

    • 3migorengaday on 03/07/2020 - 11:44

      You raise a good point.
      I think 99% of people don't really need anything materialistic in life.

      For the location, I guess it's a yes. I'd hate to live away from where I've grown up and distance away from family and extended family.

      Ideally, I would still continue going on international travels (when resumed) once every 2-3 years.
      Have family over and gatherings once a week. Recreational fishing with a boat maybe in future?
      Garage has sufficient space to convert into a man cave/garage with a hoist.

      Will buying this property put me into the red? From the numbers it looks Green, From the market, it looks red.
      Will I get this opportunity again in 2-3 years? Most likely, I just don't think my goals will align up in that time frame.

      This personal goal was set probably 5-6 years ago. Hope this inspires others to work harder, hustle and to keep striving to improve themselves.

      • ass3ts on 03/07/2020 - 20:21

        Are you sure you don't want international travels (when resumed) 2-3 times or more per year instead of once every 2-3 years? 99% of people don't need what? :)

  • Melb69 on 03/07/2020 - 08:22

    Look at other issues as well. Is it close to good schools, transport, not the best house in street, bedrooms for growing family, good location, close to shops, north aspect backyard.

    • nomoneynoproblems on 03/07/2020 - 08:37
      +2

      If 250sqm is fetching over a million, I think it's safe to say it's probably in a decent area with all the amenities.

      • 3migorengaday on 03/07/2020 - 11:53

        Has everything from primary, secondary, transport and access to freeways. The lifestyle exercise and shops are a bonus.. but the most important thing is it has:

        7/11 nearby for the cheeky GPS lock-ins.

  • Realsteel on 03/07/2020 - 08:46
    +1

    Factoring in deposit, what percentage of your income would the repayment comprise? Also re the investment property, is that cash flow neutral? If the tenants, stop paying rent for a bit, do you have enough in the kitty to stay afloat?

    Have you considered impact to lifestyle? A large proportion of your income would go into servicing the loan - there would be little left to play with.

    • 3migorengaday on 03/07/2020 - 12:14

      Cash flow neutral/positive.
      Probably about a 50% of income would go into repayment ontop of existing loans.

      No mi-goreng for breakfast lunch dinner with expenses considered for the occasional meal, a lot of wiggle room.

      If tenants stopped paying rent I guess insurance would help a slight bit. Area and location for investments are in high demand.
      Have enough savings to leave them vacant.

      Lifestyle would be +100 happiness.

      • Jebus on 05/07/2020 - 19:50

        50% of net income going toward your mortgage is veeery high, especially if that's at the current record low interest rates. From the research I've done anything above say 40% is considered mortgage stress territory.

    • Aids on 04/07/2020 - 13:57

      BuT prOpeRty onLy gOeS uP

      • Gerry H on 04/07/2020 - 23:57

        real estate with land in your average suburb does indeed only go up. you can wait like the morons who have been waiting for the stock market to crash down since the bounce from march 23rd, or you can jump on the train by btfd and watch your portfolio go up.

        prices only go up is not a joke. houses and stock market are two great examples.

  • DannyC on 03/07/2020 - 09:10

    At the moment, the supply is actually fairly low considering a lot of people are re-considering that selling in a Pandemic environment hurts their chances of selling for a good price. That being said with interest rates being at an all time low there is demand from buyers hoping to take advantage of this, less supply with actual slightly higher levels of buyer demand. We are seeing a slight dip in prices here in Melbourne yes but not to the ridiculous levels predicted from some, what 15-20%?

    The question ya gotta ask yourself is this… is this goin to be your forever home? If the answer is no, then 1.1 mill for a 250 sqm property regardless if it is 3 storey won't make much sense as an investment. Perhaps look into getting advice on up and comming areas and plan on it from there. But if this is a yes as your forever home, if you love the property then go for it.

    Mod: Private selling not allowed.

    • 3migorengaday on 03/07/2020 - 11:50

      Your messages are closed for DM about the house in North East xD

      Yeah, I completely agree. 15-20% "Bubble" crashes and those hoping to get into the market with no movements or decisions to actually go ahead and buy is all speculation and should be taken with a grain of salt.

      I've heard this from many individuals in the industry that the only thing driving property prices is obviously a demand. Infrastructure overall in Australia in comparison to other countries regardless of COVID levels are lacking. i.e NBN

      • DannyC on 03/07/2020 - 12:06

        should be activated now :-)

  • dstar012 on 03/07/2020 - 09:16

    Man 250sqm, I hope it's in Malvern, Glen Iris, Caulfield or something similar for that price

    • [Deactivated] on 03/07/2020 - 21:12
      +1

      Zero chance you'd get 250sqm in Malvern for $1.1m.

  • Ghost47 on 03/07/2020 - 11:19
    +2

    Springvale?

  • T1OOO on 03/07/2020 - 19:07

    Imo u don’t earn enoug to be buying that expensive property with so little land. Just my opinion. Go less $$ buy ur dream when uve worked hard and both earn over $150k

    • serpserpserp on 03/07/2020 - 20:41
      +16

      ur dream when uve worked hard and both earn over $150k

      You realise that most Australians never earn over 150k let alone two in the same household.

      • eek on 04/07/2020 - 01:43
        -7

        I'd say a lot of people do, particularly business owners who can reduce their taxable incomes more effectively than straight employees.

  • sibyl on 03/07/2020 - 19:37

    Just curious since it was left out of the OP, but roughly what age range do you fall into OP? Considering that you've been looking for 2-3 years already I'd place you into the late 20s range but still I guess a lot of job security and career progression can be inferred when age is provided. Like others, relative to the suburb/location I still find that amount of land questionable with the current pandemic market, in normal times I could definitely see that purchase price being listed but still not favourable.

    Apart from that, all the best with your intentions on good luck on the potential acquisition! Hope you keep us updated on a potential outcome

    • 3migorengaday on 03/07/2020 - 19:41
      +1

      Hello, 25/M/South-east.

      I guess it's a lifestyle choice when people spend relative to $400k-$550k on an apartment with high body corporate fees and just brick and motor with no land.

      Yeah, the media and the whole market of property listings right now even from the real estate agents are super shady.

      Thank you for the kind words, will keep this updated.

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