How Are People Affording Properties?

Ljam-donuts on 18/05/2024 - 21:29
Last edited 19/05/2024 - 10:45 by 1 other user

I am genuinely confused and wondering if someone can explain to me how people in Melbourne and Sydney are affording properties. I rent in the eastern suburbs in Melbourne and see a near 100 percent clearance of houses sold at auction for at least $1.7mil+ around me in the Monash area. That is 11k in repayments over 30 years! You wouldn't be able to afford that even with a salary of $250k.

Where is all this wealth coming from? Is the average income of an Australian $400k or am I missing something? And is the only possibility of homeownership for an average OzBargainer (with a salary of $200k -$250k) to buy a property in crime ridden suburbs on the outskirts of Melbourne or Sydney?

Financial

Comments

  • spade16 on 20/05/2024 - 17:18
    +2

    Probably a combination of family wealth and existing equity. Sometimes people forget that if you bought and standalone house before COVID, your probably sitting on at least a couple of hundred grand in equity which you can put towards a new house.

    Not many people are buying $2m+ houses on income alone

  • drfuzzy on 20/05/2024 - 17:58
    +5

    I have about $6m-$7m in real estate and can give some tips how I did it as a single person, middle aged, no inheritance.

    1) Start early and start with a high income.
    2) Work multiple jobs - have a high paid full-time job plus 2-3 part-time/casual jobs and/or side hustles. Own your own business if you can.
    3) Manufacture capital growth via property development, renovation, building a business, etc
    4) Structure to minimise tax for as long as possible
    5) Maximise super contributions
    6) Live like a pensioner and save 90%+ of disposable income
    7) Outperform the market with good investment decisions
    8) Maximise tax deductible debt
    9) Try not to burn out or have a break down

    It is possible but I would not recommend. Most people aren't interested or willing to make the kinds of sacrifice required.

    • mini2 on 20/05/2024 - 18:11
      +4

      6) Live like a pensioner and save 90%+ of disposable income

      I'd probably vary that slightly - limit the number of vices/outgoings you have, whether that's wasting money on cars, holidays, etc. Gotta live a little.

      You can't chase the latest iPhone, go on multiple overseas trips every year, buy an EV on novated lease and wonder why there's a bugger-all deposit saved up.

    • darkmoss on 20/05/2024 - 18:18
      +3

      you've missed yr best years, doesn't sound worth it.
      also, yr middle aged, so you bought at low (reasonable) prices… a single sub $1million dollar house from late 90s could be worth 6 million on it's own now

      • drfuzzy on 20/05/2024 - 18:24
        +2

        Agree with first statement to some extent.
        Started in mid 2000s not 1990s and bought an dud for the first one.
        Not many homes went from $1m to $6m in 30 years and certainly nothing I've bought. I don't know anyone who has achieved that.
        In 20 years time young people will look at first home buyers today and say in 2024 people had it easy as prices were "reasonable" back then.

        • congo on 20/05/2024 - 19:00

          $1m to $6m in 30 years is unrealistic.
          Property has doubled in 10-15 years is probably more like it.
          So it is more like $500K to $2M since 2000.

          You think that in 20 years time it would double again?

          • drfuzzy on 20/05/2024 - 23:29
            +2

            @congo: Look at it this way - it is not home prices that are rapidly rising, it is fiat currency that is depreciating rapidly.
            The dollar's demise is guaranteed to continue.
            The dollar's purchasing power will continue to drop because politicians won't change.
            Politicians will continue to promise new things the government can't afford to secure their own re-election.
            Politicians will never promote austerity as that is unpopular and won't win an election.
            Instead we will keep printing money and diluting the value of our dollars until they are completely worthless
            Well located land can't be printed and will continue to appreciate when priced in increasingly worthless dollars.
            Desirable art and classic cars are other examples of assets that will continue to rise due to the demise of the dollar.

            • aboogee on 23/05/2024 - 12:20
              +1

              @drfuzzy: I think people dont realise that its not purely property price going up, its partially value of money going down.

          • darkmoss on 21/05/2024 - 16:08

            @congo: x6fold certainly happened where i grew up.. Noosa

        • darkmoss on 21/05/2024 - 16:11

          x 6fold certainly happened where i grew up.. Noosa

    • Aerith-Waifu on 20/05/2024 - 23:09
      +1

      Disagree with many of the things, you might die tomorrow (tough wood) all of a sudden and not lived at all, rather just slaved.

      Need to live a little as who knows what life brings you in the later stages.

      • drfuzzy on 20/05/2024 - 23:37
        +2

        Agree. But you also might survive to retire in poverty.
        If you are prone to over work read "Die with Zero".
        I've decided to retire mid-40s-ish

        • JimB on 21/05/2024 - 14:11

          So you retired now? Well done.

    • Grunntt on 21/05/2024 - 09:42
      +1

      full-time job plus 2-3 part-time/casual jobs and/or side hustles. Own your own business if you can.

      This is one of the things very rarely ever mentioned in this type of thread.
      Many seem to complain they can't afford 'anything' in their current circumstances but overlook the obvious - actively try to change those circumstances.

      Quite a few migrant families do exactly this, whilst making significant quality of life sacrifices. But, according to the media (and many here), they are the ones 'taking our houses'.

  • darkmoss on 20/05/2024 - 18:14
    -2

    boomers, and children of dead boomers… for the most part

  • congo on 20/05/2024 - 18:47
    +4

    You cannot start at $1.7mil+

    Both of us work 2 jobs each, and we brought an run down apartment in cheap areas.
    We DIY fixing/reno in our spare time and sold it and upgraded to a bigger apartment.

    We need to move again, as the public school in this area is "no go" and we are finding it very hard (almost impossible) to find anything within budget in the Sydney inner city.
    We don't buy any fashion wear or have nice furnishing and don't go on holidays, but we do eat out once a week.

    You have to make some sacrifices and work 24x7.
    The only time you get to wind down is after 11pm each night…

  • buckethat on 20/05/2024 - 18:52
    +1

    Most people buying those, unless internationals, are not first home owners. They probably got a siginificant chunk of cash from the capital growth of their previous PPOR.

    First home buyer wouldnt be going for a 1.7m property.

    • Grunntt on 21/05/2024 - 09:44

      First home buyer wouldnt be going for a 1.7m property.

      But many of them are first home buyers looking at the $1.7m property they won't buy and them blaming everyone else for it.

  • SupeNintendoChalmers on 20/05/2024 - 20:26
    +3

    For myself, got in earlyish.

    How did I do it?

    never really did sat night clubbing/pubing during my twenties, not my scene.

    Rarely ate out during those early years. Lots of Indomie + small cans of corn.

    Didn't do the whole Kontiki tour thing, once again, not my scene.

    Dont smoke.
    Don't drink.
    Don't gamble.
    Apart from video gaming, no big vices.
    Had a low budget wedding.
    Drove a super old but reliable car for as long as possible.

    In between all this, saved as much as possible.

    Bought a dive of a home to start of with and went on from there.
    Learnt to DIY a lot of things for said house.
    Once we paid enough of it, rented it out and bought another home.

    • SydBoy on 21/05/2024 - 07:59

      easy to say this for those got on board early on…

      try doing everything you said now and start again and don't use money use saved before and you won't be able to repeat what you repeated in past.

      sure if you are in government job with 35hr per week pay or doctor or plumber then you can but not those working retail sector standing on their leg for 10hr shift earning 280 a week before tax or those working for cash in hand in the fruit & veg. market at 100 per day cash.

      • Grunntt on 21/05/2024 - 09:55
        +2

        try doing everything you said now and start again and don't use money use saved before and you won't be able to repeat what you repeated in past.

        On that note it's not just the first home buyer with this problem.

        While the overall divorce rate in Australia has declined, there's an upward trend in separation among baby boomers and older gen X….

        …a record number of older renters because of post-divorce across many Western societies, not only in Australia," she said.

        …because older divorcees are less likely to be able to buy new homes and get mortgages."

        Like your above comment - try starting again post-divorce with minimal assets and limited time left to earn enough whilst fighting ageism in employment.

      • SupeNintendoChalmers on 21/05/2024 - 16:59

        easy to say this for those got on board early on…

        Of course, was earlier than the newer generations, but still tough.

        My first "real" job paid $40K in 2004 (exact money is hazy), better half was earning around $27K at the time.

        Our first home cost us $260,000, not including things not in the price, like major appliances, curtains, blinds, landscaping etc. Was probably closer to $300,000.

        You might scoff, but I can assure you a $300,000 mortgage on around $60K seemed insurmountable at the time, but both our careers flourished and we saved shrewdly.

        • SydBoy on 21/05/2024 - 18:49

          A very good example here. So you were having combine income of 67k to buy a home worth 260k so that is 4 times your total income. If a couple earns 100k by doing minimum wage job then they won't be able to find anything in 400k for similar size or suburn you talking about.

          the point is affordability is lost in this property investor greed and lower interest rates.

          there are many article written about how many time of average income is the property in metro city in australia and multiplier has simply sky rocket over last 3 year in particular.

          • SupeNintendoChalmers on 21/05/2024 - 19:38

            @SydBoy: Devil in the detail.

            We rented for while whilst we saved, then after the 1st year of renting we were lucky enough to be able to live with my MiL for the next 2 years where we could save better.

            That's not to say we mooched off my MIL, we paid board and I did all the "man" work like gardening and handyman work.

            When we were renting, we saved around 12,000 in that first year, that was us literally eating packet noodles most days and even at times volunteering at food kitchens where we enjoyed a meal after serving others.

            After we moved in with MiL, we started saving 20K per annum over the next two years.

      • infinite on 25/05/2024 - 23:40

        or those working for cash in hand in the fruit & veg. market at 100 per day cash.

        You'd obviously quit that job and get a full time role getting paid a normal wage if you were someone looking to save and buy a first home. Cash in hand market jobs are for students, teenagers and illegal immigrants.

        but not those working retail sector standing on their leg for 10hr shift earning 280 a week

        Soooooo……….. work more than 1 shift a week then?

    • Grunntt on 21/05/2024 - 09:48

      Had a low budget wedding.

      Read an article recently that stated "the average couple in NSW will spend around $35,993 on their perfect wedding".
      This is the average - ie half spend more.

      Can't save a deposit but can blow $30k and more in a single day.

      • SupeNintendoChalmers on 21/05/2024 - 16:49

        When I got married, average was around $15,000. We spent ~$6000

        • Invited the people who actually meant something to us
        • Did our own wedding invites and reception decorations
        • Wedding was on a Sunday
        • Old friend did professional photography
        • Sibling organised booze cheap at venue
        • Older Ladies in our lives organised desserts, so reception $$ per head was smaller
        • Both of us got 2nd hand wedding attire
        • Went local(ish) for our honeymoon
      • drfuzzy on 22/05/2024 - 20:49

        I thought most photographers charge $10k-$15k alone

        • freedomofspeech on 24/05/2024 - 11:30

          BS.. Photographer was less than $1000 for wedding in April 2020.

        • pogichinoy on 24/05/2024 - 23:59

          $7k January 2023

          Photographers and videographers plus albums

        • infinite on 25/05/2024 - 23:43
          -1

          You can get a TAFE photography student for $300 cash. Print and frame what ever you want from the originals they give you on a USB drive later on.

          What kind of person is paying thousands for a wedding photographer ?

    • JumpingUnicorns on 21/05/2024 - 13:29

      Genuine question, what did you actually do with your time if you didn't do anything as you're making it sound?

      • SupeNintendoChalmers on 21/05/2024 - 16:52
        +1

        lol, yeah sounds like I was doing sweet FA, but during this time I was finishing my first Masters, whilst also working 2 casual jobs. I got married 1 month before graduating, so after honeymoon I started my first "real" job.

        My better half had already graduated, but hated her career choice, so had just moved into an entry level admin job, so neither of us was full of cash in any case.

  • fullmetal on 20/05/2024 - 20:44
    +1

    born early definitely helps.

  • Bii on 20/05/2024 - 21:44
    +1

    Another covid or similar and it will hit $2m mark

  • Trying2SaveABuck on 20/05/2024 - 21:55
    +2

    Depends where I'm in western Suburbs of Melbourne loads of sub 1m even sub 800k properties down.

    South-Eastern Melbourne i have 'no idea' im going to assuming parents or inheritance most people i know that own houses down that way have had a large handout from family.

    Cant Speak for NSW but there are certainly affordable places in Melbourne - it just depends on where and the life style expecation you have….

    ill admit life style wise the western and probably even northers suburbs arent the best but i brought what i could afford - in the end of the day we all want a Ferreri but most of us got to just rock a Camery

    • SydBoy on 21/05/2024 - 08:00
      +1

      where in melbourne you can find 4 bhk house/villa around 650K ? within 50km from CBD with low crime rate and not the junkie suburb full of bogans.

      average school is Okay.

      • Trying2SaveABuck on 21/05/2024 - 08:27
        +3

        Going to say even the rich areas like St Kilda, Richmond' etc are raft with junkies, bogans etc ….

        You can buy in Melton or Werribee for the 600-700k

        But there will be bogans and junkies they are literally everywhere….i dont really understand what you're moaning about Melbourne has a fairly wide variety of peoples regardless of wealth class

        • JohnHowardsEyebrows on 21/05/2024 - 09:50
          -1

          Ridiculous to suggest there aren't bad suburbs in Melbourne, just because there are pockets of housing commission among the nicer suburbs. The denialism in this thread really illustrates how self-interested many on this site are.

          • Trying2SaveABuck on 21/05/2024 - 10:13
            +3

            @JohnHowardsEyebrows:

            Ridiculous to suggest there aren't bad suburbs in Melbourne, just because there are pockets of housing commission among the nicer suburbs. The denialism in this thread really illustrates how self-interested many on this site are.

            What is a 'bad' suburb?

            Richmond is a expensive suburb inner city, however has a meth injecting room and a plethora of social issues from it? good suburb or bad?

            Doncaster East land of the wealthy - recently had a Dr robbed and killed in his house?

            Ballarat quite country town/city has a Uni and affordable housing with large blocks has had 3 women murdered this year? Good or bad?

            Brighton, Land of the ULTRA wealthy but be careful someone will rob you or jack your c63 from your drive way?

            Williamstown beach side close to the city, however loads of social housing with domestic and social issues ? good suburb or bad?

            • infinite on 23/05/2024 - 22:03

              @Trying2SaveABuck: To be fair, most of those murders and attacks were committed by repeat offenders that the Victorian courts refused to take any action against, or just kept letting them off with a slap on the wrist because they ticked the right diversity boxes. A good number of the attackers didn't reside in the area they committed the offences in either, they simply targeted people in those areas because the authorities let them get away with committing crime there over and over again. I don't think that reflects poorly on a suburb, it just reflects poorly on the Victorian government, their corrupt police force and equally useless legal system.

              One of the murderers of the Ballarat woman for example is having additional unrelated charges added against him each month while waiting trial, because the police & courts there are too incompetent to do anything in a timely fashion. That same clown was allowed to walk free the next morning after crashing a motorbike while drunk driving & then a few weeks later out the next day again after crashing a car while high on drugs. I don't think that's Ballarat's problem, that's just once again a problem of the Victorian legal system.

        • SydBoy on 21/05/2024 - 18:51

          well, the reason i talk about bogan or junkies is how much your kids will be influenced in the school with similar kids. see if you live in Richmond then there might be few here and there but not many but if you live in Werribee then there will be plenty. In Sydney if you live in parramatta then you will find them but not as many as what you could find in st mary or mt druitt etc.

          • tonka on 23/05/2024 - 13:23
            +1

            @SydBoy: You think kids in poorer suburbs can afford drugs? You got things backwards. The main difference is wealthier suburbs can afford lawyers, so they don't get the random searches and if they do get caught they go home. What you do get a lot of in poorer suburbs is hard workers, who understand what money costs and are determined to raise kids to do better. The real criminal very often live in expensive houses.

            • May4th on 23/05/2024 - 15:08
              +2

              @tonka: yep they just do different drugs.. cocaine is rife in IB/surgeon circles

      • ZloyKrys on 21/05/2024 - 08:30
        +1

        My mate moved to the East a few months ago and sold his great condition 5 bedder in Werribee for like 650k exactly, wtf you're whinging about

      • Powershopz on 21/05/2024 - 10:19
        +1

        Just searched on Real Estate.com -

        There are ~1055 properties in Melbourne that fit that criteria.

        You're shopping in: Wyndham Vale/Tarneit/Werribee, Melton, Craigieburn/Roxburgh Park, Wollert/Mernda.

        Buy within your means…. If you don't like it, downsize and buy a 2-3 bedroom in a slightly nicer/closer area.

  • kaleidoscope on 20/05/2024 - 22:10
    +3

    I rent in the eastern suburbs in Melbourne

    That’s your problem. Start looking elsewhere, stop living someone else’s life because you want to look “posh” among your peers.

    I know I might get hard negged here for that, but that is not far from reality…

  • foolsgold on 20/05/2024 - 22:23
    +8

    I'm in melb, 30s, house valued a bit under what your saying

    I graduated uni mid 20s (ie later than my peers)
    my colleagues all lived inner city, south yarra, fitzroy, collingwood, south melbourne
    ten minutes from work, all bought lunch, all went regular international holidays, regular snow trips, out to fancy bars on weekends, etc

    meanwhile the first place I rented, I used to bus -> train -> tram (1 hr 30min each way)
    until I could afford to buy a shitty 2 bedroom unit that was a 45min train ride which at that time would have been roughly same as their rent
    I leveraged bought an additional property as investment property when I married my wife, sold my unit after 4 years, moved into investment property, renovated that, sold that and bought a family home

    I went from 450k unit to purchasing a 1.45m house which is now worth about 1.65m in period of 8 years
    yes I used to have to hear the snears how they would rather rent than live in some shithole an hour away from the cbd, and that theyre only young once etc.

    now they're hitting 40 and renting still and have had it too good, nice leafy areas, good night life, are suddenly expensive v what they were paying 10 years ago, and the 'shitty areas' they used to be snear at and were able to afford are now too expensive.
    think about prices 7-8 years ago of preston, resevoir, pascoevale, ascot vale, etc.

    my only regrets is that I didn't save a bit more and buy a house as a PPOR i would have been in a much better position thanks to capital growth.

    • Powershopz on 20/05/2024 - 23:19
      +1

      think about prices 7-8 years ago of preston, resevoir, pascoevale, ascot vale, etc.

      These areas + Glenroy/Fawkner/Niddrie/Airport West have been gold mines. Anyone who bought in these areas around 2013-2015 made an absolute killing.

      I'm mid 30s with just our PPOR after 9 years valued at $800K.

      A few of our older friends who bought a few years earlier than us made an absolute killing.

      e.g.

      -Block with a run down 3 bedroom house on it in Fawkner for $400K. Paid it down, then refinanced with the equity and spent $150K on a renovation. Place was recent valued for 880-900K.
      -2 bedroom unit in Glenroy for 350K. Spent 60K renovating. Flipped it 5 years later for 575K.
      -3 bedroom old house in Niddrie for $550K. Spent ~$250K renovating. Now worth ~950K-1M.

      The housing market in Australia is insane and once you're on the ladder, it feels like you're playing life with a cheat code.

    • kaleidoscope on 21/05/2024 - 11:22

      Good on you, that’s the way to go

  • Aerith-Waifu on 20/05/2024 - 23:04
    +10

    Not everyone are:

    Ordering McDonald 4 times a week on Ubereats (I known at least 3 people who does that regularly)
    On paid streaming services
    Travel overseas 4 times a year
    Buying the latest cars and gadgets whenever something new comes out
    Spending money they dont have
    Going out all the time and spending at restaurants and pubs
    Getting divorced every few years
    Have expensive hobby which only worth 1/10 of its value

    Shall I go on?

    • Some Human on 21/05/2024 - 02:24
      +3

      Im glad more people are starting to see this now. The ones who complain the most about housing are those who value "having a life" over having a place to live. Then complain when they can't have both.

      • Jaduqimon on 21/05/2024 - 07:23
        +5

        yeh exactly this. and also the excuse mentality.

        "investors with 100 properties driving up the price"
        "immigration driving up the price"
        "need to get rid of negative gearing"
        "pensioners must be forced to downgrade their house"
        "the ones buying are from bank of mum and dad"

        instead of working out how to save and work towards getting better job/higher income.

      • Trying2SaveABuck on 21/05/2024 - 13:32
        +2

        Im glad more people are starting to see this now. The ones who complain the most about housing are those who value "having a life" over having a place to live. Then complain when they can't have both.

        yep the ones that moan 9 out of 10 times are the ones who refuse to make the required sacrifices to own their own place

    • SydBoy on 21/05/2024 - 08:02

      those who can afford what you saying won't complain about housing issue because to do 4 holiday per year one need to be in high paid jobs.

    • 1r4n14n on 21/05/2024 - 20:06

      Well said. Social media has turned people into very reckless spenders. My mate is a mortgage broker for Aussie and says the majority of his clients are living well beyond their means. Everyone is trying to flex in designer clothing, financing AMG's and M series BMW's, taking photos at fine dining restaurants, getting unnecessary tattoos, buying a new iPhone every year, etc. Apparently, the façade of appearing wealthy and struggling to get by is more important than actually being wealthy. #YOLO

  • MeesusEff on 21/05/2024 - 01:23
    +4

    My parents got me a house, but the cost was 30+ years of emotional abuse + a good few years of caning when report cards came out 🤔

    • May4th on 21/05/2024 - 09:44
      +2

      where do I sign up? beats 30 years of mortgage..

      • MeesusEff on 21/05/2024 - 12:26
        +2

        Haha, if you're Asian, educated, not fat (I've been called fat ever since I passed 60kg), able to keep your mouth shut when you're blamed for everything, and yet sweet talk them after getting insulted, then you stand a pretty good chance. Another 20-30 years to go…

        • SydBoy on 21/05/2024 - 18:55

          That is almost like Kdrama !

          • MeesusEff on 21/05/2024 - 20:16
            +1

            @SydBoy: Funny, my dad JUST had a 'talk' with me about how I was upsetting my mum by defending myself and that out of respect should just be her bitching bag for the rest of her life. I didn't even know how to f'n respond LOL

            • SydBoy on 21/05/2024 - 20:27

              @MeesusEff: Netflix has plenty of K-drama which are worth watching to learn the trick of the trade ! You can learn traditional trick that your parent would have used as well !

              • MeesusEff on 21/05/2024 - 20:32

                @SydBoy: Time to contract a life threatening disease and watch the tide turn, then make a miraculous recovery.

                But it's more likely that they'll drive me to the grave earlier 😂😂

      • qwijibo on 22/05/2024 - 00:28
        +1

        beats 30 years of mortgage.

        I initially mis-read that as "beats 30 years of marriage", and I thought "this guy gets it".

        Then I thought "30 year mortgage .. yeh, they're bad too"

  • xavster on 21/05/2024 - 10:43
    +1

    They are upgraders.

    Your problem is you're trying to buy outside your borrowing capacity, you should buy a cheaper property, upgrade when your income increases, that way you'll still get capital appreciation on your existing property while you save up for the upgrade.

  • Yaren24 on 21/05/2024 - 11:20

    Hi OP, what happened if you lose your ft job meanwhile paying your mortgage?

  • dontboopthesnoot on 21/05/2024 - 12:14
    +1

    Most people earn a lot more than you think. Also dual income, investments, family contribution, buying with family…. etc

  • drprox on 21/05/2024 - 12:33
    +1

    People are couples for one.

  • Arkan on 21/05/2024 - 13:57
    +3

    Buy a worn down house with good land content. Improve it over time with renovations. Hold for minimum 7 years. If your life circumstances improve, you can sell it and upgrade homes/location and sell it CGT free.

    Think of real estate as a game of Monopoly, but you've joined late and have to pay a lot more than previous generations. However, you know there will be more people joining later with more money plus the bank will keep printing money.

  • PerthMan96 on 21/05/2024 - 14:20
    +1

    double incomes - paycheck to paycheck in new suburbs far from work or tiny apartments- working fulltime from 17 and having no bills or board to pay and saving 500 a week by having no life until you can afford a deposit- help from mum and dad- nonna and nonna…. and all the properties they purchased when they moved to australia…… now, in 20-40 years time, these answers will be alot different. because we will be the grandparents with no inheritance. i feel greatly sorry for anyone who gets a chronic illness at a young age in the future for example with no family to rely on forever. it happens now for sure, but the numbers in 20-40 years will be depression numbers

    • JohnHowardsEyebrows on 21/05/2024 - 15:21

      Yep. The selfishness of our bogan culture is destroying the families of the future.

  • opt on 21/05/2024 - 15:53

    There are still plenty townhouses, smaller houses and units in Monash/Clayton area for well under a million. You don’t buy a 1.7+mil 4Bed house in a 500sqm block as your first home with an average household income. Start with something small.

  • Arkan on 21/05/2024 - 16:57
    +1

    If your looking at the Monash area, you can buy into Mulgrave for $1m (sometimes a touch under). Otherwise there is Springvale, Noble Park North, Dandenong North that you can get a house for ~$750k. If your budget is less than 2 bed units are available for ~$450-550k. People end up buying what they can afford and building up from there. Each house purchase is a compromise on size of house, land, location. Find your max budget, search on REA map what you can afford in surrounding areas and then decide. It's very daunting and big sums of money but your better buying sooner then paying more later. Later you will be thankful you made the decision.

  • gougou8 on 21/05/2024 - 17:58
    +1

    Simple. People only pay the bank what they can afford. If the repayments have become higher than what you can afford you call the bank and enter into a 'payment plan'. There are no repossessions or forced sales happening. How they got the loan in the first place is a whole other issue.

  • 1r4n14n on 21/05/2024 - 19:45

    Are we all just going to ignore the fact that the Chinese have increased house prices? You can thank your government for allowing foreign investment and making it unaffordable for Australian citizens. They're purchasing property in expensive areas and pushing residents further out into the shit-hole areas of Melbourne & Sydney. If you aren't earning at least a 1/4 mil, you're better off renting the same foreign investors' property who didn't allow you to purchase it in the first place.

    • May4th on 21/05/2024 - 20:15
      +4

      somehow I doubt those chinese are looking in the same price range as you. and most of the 'chinese foreigners with cash' people stereotype at auctions are australian-born chinese korean singaporean malaysian etc etc

      • aboogee on 23/05/2024 - 16:22

        agree with those chinese looking at much higher price range, but would argue that those who got a windfall from selling their properties to chinese then would provide financial support to their kids, who in turn look to compete with you in the so-called lower price range suburbs

        the money has to go somewhere right?

  • qwijibo on 21/05/2024 - 19:58
    +1

    It doesn't matter how people are affording property - if you don't buy one, you'll be a lot poorer in 10 years time.

    With mass immigration, combined with lack of housing supply (we're building less than we were before covid) means property prices are doubling every 5 years now.

    So your average $1.5million property now will be worth a minimum of $6million in 10 years.

    Wages in 10 years will be much lower in real terms than they are now - AI is going to destroy 99% of office/services jobs. If you buy a property now, in 10 years time it will be making much more from property appreciation each year than you ever will at a job (that is the reality now in Sydney).

    • 1r4n14n on 21/05/2024 - 20:02
      +2

      Well said. At this point, just purchase anything, it doesn't matter what and where. Particularly given how the line for inspecting a property to rent is longer than a fcuking nightclub.

    • clipperroo on 22/05/2024 - 21:00

      If property prices double every 5 years, then no one could even afford buying one. Which means less demand. Less demand means prices will lower.

      • qwijibo on 23/05/2024 - 18:27

        They said the same thing 30 years ago, but prices have historically doubled every 7 years - so in those 30 years some locations are now close to 20x what they were back then.

        And people keep buying.

        It's partly due to now having two people working full time to afford a house, mass immigration, smaller block sizes (300 sqm now vs 1000sqm back then), and the loosening of lending constraints in the banking system, and the switch to longer loan terms - they used to be 5 years (and most people paid them off in that time), then 10, then 15, 25 and now 30 years is common. With a 50 year loan term your monthly payments will be even less.

        When you take out a home loan, the bank creates deposits (i.e. money), which means there is an ever increasing amount of money chasing the same number of goods and services - which increases home prices, salaries, etc. Same thing happens when you borrow against your home equity - the money gets created out of thin air, then goes into the economy, pumping up the prices of goods, services and assets.

    • dave999 on 24/05/2024 - 07:52

      Let's be clear. Housing has not gone up more than the sharemarket. Invest in property or invest in shares and you will get the same return. The only thing that actually matters is you save money and invest - or you will definitely be poorer in ten years time.

  • hamroll on 22/05/2024 - 05:38

    1.7m property

    80% lvr home loan = 1.36m (deposit $340k)
    Repayments = $8902/m (6.84% interest using nab calculator)

    Take home pay = $13000/m using the 250k salary mentioned above

    Leaves them still a decent chunk to have a comfortable lifestyle. (Sorry I made a mistake with the repayment call, this is a little bit tighter to have $4000 give or take to cover everything else but it’s still a good amount to work with) if anything, increasing the down payment and reducing the overall loan amount would help tremendously

    I think the key here is savings, and it’s very possible for couples with double income, no kids to build up wealth early on while they are working as well as while they were also single and living at home. Even if that is saving $40k a year for 10 years, they would be able to get that deposit together.

    Very doable with some of the mentioned circumstances above.

    • gromit on 22/05/2024 - 15:30

      $4k really isn't a good amount to work with on a property of that value, once you add in rates, insurance and maintenance, utilities you are probably left with under $3k a month for transport, clothing, food, health etc. definitely would be in huge mortgage stress and I doubt many (if any) banks would approve that loan at that salary level as they would be using a rate calculation of around 9%

    • zoombie on 22/05/2024 - 17:00
      +1

      your calculation is backward. you assumed that the bank allows you to borrow that much. using the same nab calculator, dual income, 125k each. 340k as deposit, the max you could borrow is a little over 1m. max house price is 1.28m.

      you could increase that deposit to 500k, same income, max house price is 1.43m. still 300k short.

      • hamroll on 23/05/2024 - 00:36

        Fair enough if the bank doesn’t allow it. It’s mainly just hypothetical in response to OP, actually the point is that people are able to afford it because they have a big savings. And typically savings grows like crazy if people live a bit frugally, live with parents, eat at home, and once married, having that dual income/combined savings can give them a substantial amount to the table before getting a loan

        Also the OP made the point that the repayments would be 11k which is ridiculous

        • Thinkscape on 23/05/2024 - 09:25

          Simple maths mate.

          ~$11k is a repayment on $1.7m mortgage at 6.22%
          (i.e. $2m property, 300k deposit).

          Also, to get loan for $1.7m from any bank here you'd need to be earning around $400k/year (progressive income tax rate).

  • freekay on 22/05/2024 - 10:52
    +5

    If you're relying solely on your 9-5 income to build a deposit for a 2m home, then you're doing it wrong. The money you work for will never go as hard as the money that works for you. If you're not investing your money, making it work for you, for a solid 10+ years, good luck. The market is always going to outpace your level of savings—you need returns and compound interest on your side. Stop using the term "deposit" it has connotations of money just sitting there, doing nothing. Build up your EQUITY. Buy other, smaller investments first—watch it grow. Build up your equity. Then, when you've built enough equity, you can take on the 2m purchase, because you've got a 45-50% deposit. But what do I know? I'm just a guy who owns 2m home in Sydney.

    • drfuzzy on 22/05/2024 - 20:51
      +1

      Didn't know you could get a freestanding home for only $2m in Sydney
      Good find!

  • xdivino on 22/05/2024 - 11:55
    +5

    Kinda wanna rage caps on this but won’t.
    There’s this expectation owning property is the bees knees and it’s all just a place to put money really. There’s countless YouTube videos that show renting is prob better in the higher price city living side of things provided you put aside money in some sort of investment.

    I have a colleague that complains time and time again they can’t afford anything in Sydney cause it’s all 1.x million for what he determines is his minimum expectation for living which is 3-4 bed house beach side. Its wild.

    I feel lucky but I also worked and skipped schoolies and didn’t drink and saved everything I could working multiple jobs. Regrets sure. But I’m comfortable now.

    I feel that given the rise of remote work and how the economy is now you’d be silly to focus on city if you don’t have anything tying you down. Go live in affordable few hour away towns. It’s easier now than it ever has been. Even with a pay cut comparably it still prob works out.

    I just keep getting the feeling everyone’s complaining about high prices for city property and life, when this country is huge and there’s affordable living outside that comfort zone that can be a starting ground.

  • stickingly on 22/05/2024 - 14:33
    +3

    I'm also tired of the "woe is me" stuff today from the latte brigade and hearing how lucky I was to be able to buy property in the late 90s as it was "so easy" then when I bought my first house.

    Yes in retrospect it probably was easier than today but at the time my wife and I were earning 65k between us in "professional" jobs and scrimped and saved to be able to buy a 250K house. Even then we couldn't buy what and where we wanted, so had to compromise. It was stressful at the time and we felt very vulnerable and overextended, and forewent things like new cars and overseas holidays. At the time all the profits of doom were predicting price crashes etc etc and plenty of people weren't buying because they were "waiting for the crash". We had no idea that property would increase as it has

    Then when we started to get ahead we took a risk and dived back in and bought another one….and then another to build ourselves a nest egg
    Now we are being made the enemy because we are evil landlords taking advantage of all these poor renters

    • zoombie on 22/05/2024 - 17:20
      +1

      this is such a BS post. you think the young generation are complaining that they have to make sacrifices in order to get a house?? NO! they are complaining that even with the sacrifice, mathematically, they CANNOT buy a house.

      The maths for buying a house is impossible. Even if you spend $0 and save every dollar you get from your job! Sure, it's possible to buy a poorly built apartment 1 hr drive away from your job and parents but why should the price of an essential needs be so out of reach for so many. I bet if the price of some essential items that the older generation needs like medicines are astronomical they would complaints. But when it comes to houses, the young should just take it on the chins.

      BTW: the price of an apartment is 'affordable' for now, but what happens in 20 yrs time? 1m for a 1 bedroom unit 1 hr away from the city? we keep letting the price runaway and dont think about the consequences of it in the future.

      • ZloyKrys on 22/05/2024 - 17:38
        +2

        Idk what makes this generation such precious snobs but as I stated elsewhere in this discussion, while I live in a house potentially worth about $2M now, 20 years ago I started with a rundown 1br apartment even further than 1 hr from the city and didn't pour crocodile tears and just worked my way up through 4 different properties. What makes you think you are special and have a right to own something without putting any effort in? I provided maths and a similar apartment now can be bought even faster with less cash outlay and less interest paid than 20 yrs ago, and people still complaining it's too hard. Start somewhere.

        • tonka on 22/05/2024 - 17:46
          +1

          I did the same mate, and many years with multiple jobs to get my first deposit, then years with a 10 hour day and 3 hour commute with an ahole boss, an unreliable car, no holidays and very little time or energy for fun. It's bs having people tell you you had it easy, while at the same time rejecting that same path as too hard for themselves.

        • zoombie on 22/05/2024 - 17:52
          -3

          alright, lets the do the maths. show me how much you bought your apartment for 20 yrs ago, we can calculate your affordability then vs now. i will double check your figures btw so no fudging. tell me the suburb and the price so i can double check.

          then we can extrapolate house price now and 20 yrs into the future to see how much the next generation will need to earn to be able to rent.

          theres this short term thinking about affordability. the argument made by the home owners is that you should make the sacrifice and jump on the ladder asap. sure, but what about the next generation?

          you said you bought 20 yrs ago, im old enough to remember in the early 2000s, there was already talk about housing affordability in Sydney. John Howard, dismissed it, he famously came back with a quip that 'well nobody stops me on the street to complaint that their house is worth more'. Imagine if him or the subsequent PMs had thought about the effects of prices keep rising in 20 yrs time and put a stop to it.

          we wouldn't be having this conversation right now!

          this is the exact same thinking that happening right now. people says, you should just buy it, sure, it's a good advice on an individual level but you need to think what if prices keep rising in the next 20 yrs. What will it be like for that next generation?

          • ZloyKrys on 22/05/2024 - 17:53
            -1

            @zoombie: Do the effort and find my post in this discussion, all data points you need are there.

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