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

            • zoombie on 22/05/2024 - 17:58
              -2

              @ZloyKrys: LOL so instead of typing out a few numbers and the suburb, you tell me to scroll through hundreds of post to find it? We both knows that you dont have a leg to stand on when it comes to crunching the numbers 20 yrs ago vs now. but sure, let's pretend this is not a problem.

              • ZloyKrys on 22/05/2024 - 18:01
                -1

                @zoombie: I have provided data points you need, don't want to discuss then don't respond, I didn't ask for your assessment

          • tonka on 22/05/2024 - 19:43
            +1

            @zoombie: OK mate, I bought a 3 bed fibro unrenovated, no air con or anything at Casula, next to M5 around 2001 for $300k on a $50 k salary, then went and lived in a 3 meter x 3 meter pub room for the next 7 years so I could afford to pay for it. If I was in the same job now my salary would br $150k

    • tonka on 22/05/2024 - 17:35

      I'm a bit over it as well. Boomers had to live their childhoods in the aftermath of WW1 and WW2 and deal with a Vietnam draft. GenX had to deal with being raised and educated by Boomers, The Cold war and freaken 60 hour work weeks. For all we know current generations will live forever or have a staff of robot butlers or have their homes or assets increase a lot more.

  • Duckie2hh on 22/05/2024 - 15:33

    I am genuinely confused and wondering if someone can explain to me how people in Melbourne and Sydney are affording properties

    Just don't have smashed avo on toast for brunch mate. Eat a buttered toast at home instead.

    • hamroll on 23/05/2024 - 00:40

      It’s such a meme but to some extent it’s not wrong.

      I feel like eating out almost doubles your expenses or even more. If you can halve your living costs, over many years that really adds up quickly. Resulting in potentially a sizeable deposit/savings

      • Thinkscape on 23/05/2024 - 09:29
        -3

        😂
        Avg. eat out ~$20, 3 times a week = $3120 / year
        After 20 years you've saved a grand total of $62k, or round it up to $80k adjusted for inflation.

        Congratulations.
        You're now middle-aged and still can't afford the smallest deposit.
        btw: median 3-bed house in Sydney in 2043 is now $8m.

        • soulblighter on 23/05/2024 - 10:20
          +2

          there's something called as compound interest which they don't teach in this part of the world. look it up, and put the above amount you mentioned into a compound interest calculator over the same time frame ~20 years

        • tonka on 23/05/2024 - 13:28
          +3

          Mate people could take that add the cost of a couple of coffees and turn it into a property investment. $150-$200k will buy a unit in a regional area. Your take away bill and the rent would service the loan and bills. 8-10 years doubles it's value and you have $200 k equity for next purchase. Is how it is done!

        • Duckie2hh on 23/05/2024 - 14:52
          +1

          Avg. eat out ~$20

          Doubt

        • hamroll on 24/05/2024 - 18:01
          +1

          lol 3 times a week, I think people who don’t live at home with parents eat out much more than that.

          We had a newborn recently and sometimes it’s just too hard to cook, and we are eating out more than 3 times a week, whether it’s lunch or dinner.

          I would say a good estimate would even be someone is eating out at least one meal a day.

        • hamroll on 24/05/2024 - 18:06
          +1

          Let’s just say it’s 7 days X $20 (pretty low estimate if you ask me) it comes to 7k a year,

          Over 5 years that’s $36.4K, simply put, this would increase your budget to buy a house by $180k (assuming you’re borrowing at 80% lvr and haven’t maxed out your borrowing capacity)

          This calculation is just taking into account for just food, I think people are actually spending more on other luxuries which would actually make a big difference over those 5 years.

  • Yoo05 on 22/05/2024 - 20:38

    Lot of people upgrading in that price range, using $500k-$700k deposits with $1m loans. People who bought early 2011-12 have gained substantial equity, so lot of them use equity or sell and upgrade. Next batch would be buying with cash, business owners.

  • jaimex2 on 22/05/2024 - 21:13

    To migrate to Australia you need to be extremely wealthy and we've dialed that right up.

    If you're earning more than $180k a year you're investing in real estate or paying 45 cents to the dollar in tax. You don't really care what the house costs.

  • soulblighter on 22/05/2024 - 22:43
    +3

    Shows the entitlement/feeling of entitlement the OP has when he/she talks about 1.7+mil houses and outer suburbs being crime ridden. Seems like a classic case of a postcode povvo mixed with a failed private education for nothing.
    Unless you get your head out of your backside or sand if you prefer it that way and the crime ridden suburb where you're renting, no one can help you.

    • isthisreallife22 on 29/05/2024 - 15:11

      How is wanting to live somewhere safe having your head in your backside?

      • soulblighter on 31/05/2024 - 09:49

        sure, only 1.7+ mil suburbs are safe - hope that answers your question

        • isthisreallife22 on 31/05/2024 - 12:22

          Realistically crime is at levels I've never seen before in my 40+ years in Australia, especially property/vehicle crime, so understandably people are nervous

          But I'm sure there is a lot of postcode povvo problems in the sentiments amongst those asking questions like the OP, not disagreeing with this

          • tonka on 31/05/2024 - 22:36

            @isthisreallife22: Cars used to get ripped off constantly 70's,80's and 90's. Plus the cars radios constantly being nicked. There's a reason every car had a car lock. Used remove and sleep with your coil lead or even the distributor cap to try and keep the car safe.

  • centrelink on 23/05/2024 - 00:35

    Just took out a second mortgage that still going to be paid by me because friggin in laws from China don’t want to work here to pay me rent… I just made a bot with crypto and took out its profit. I’m hoping to make more next cycle and pay off both houses in one go

    • mini2 on 23/05/2024 - 10:57

      Could be worse, like a divorce. That's what my leeching ex-outlaws did, amongst other things that their kent of a daughter have done.

  • Bludgeman on 23/05/2024 - 09:15
    +4

    I bought recently in the very council area you are referring to and also in the price range.
    The wealth is coming being smart with your money and investing early on.
    You can't just assume everyone has the same starting position and because the bank calculator tells you its 11k repayments, that everyone is doing that.
    I bought a craphole PPOR 10+ years ago, reno'd it and sold it in 5 years & repeated the process a couple times. Each time made 400k+ and moved to a nicer area. Never taken a handout from the bank of m&d & barely have a mortgage.
    I'm still in my 30's invest in shares, ftx, property, memorabilia and general side hustles. Just gotta keep making your money work for you. If you're just renting and saving for a deposit, then expecting to have a massive mortgage for the rest of your life, its not gonna work. Everything around you will outpace you. Good luck & keep hustling!

    • freekay on 23/05/2024 - 12:59

      Username does not check out

    • eek on 23/05/2024 - 14:53
      +1

      Same here. Partner and I both had to work and save every cent ourselves. Never been gifted anything from parents or helped in any way from anyone. Purchased my first place at age 21 straight out of uni (lending rules were more relaxed back then too!). Rented out 2 spare rooms for a few years to help cover mortgage payments at the time. Currently in late 30's, two kids under 5 and have 3 properties between. Net value is north of $2M somewhere. Looking to leverage and take on another rental or may consider looking into commercial properties.

      By no means easy, bit it is achievable!

  • autolux on 23/05/2024 - 09:28
    +3

    i've looked around a decent radius from inner sydney, almost every weekend for about 3 years. countless inspections & auctions. the biggest things i've noted:

    1) from mid to late 2022 where interest rates had just begun rising and people were still frazzled from lockdowns - this was the last point before already nutty prices left sanity entirely.. end 2022 you saw places approaching $2m+ but you could kinda see why, huge, semi-decent rennos… after that utter rubbish was consistently going for about $300-500k more than better places mere months before. people started pannicking and this has continued through 2023 to now…

    2) out of countless sales i've seen, i don't think i've seen a SINGLE first home buyer, or someone who was going for it on their own. the majority of people have been 50+ who were clearly cashed up and not their first property and a majority of that followed up on have been immediately rented out at crazy weekly rents. out of the younger people i've seen win and we're talking 2-3bedroom mediocre homes between $1.7-$2.5+m, it was all clearly cashed up parents.

    it is not a free market. it's a hyper bubble.

    • Thinkscape on 23/05/2024 - 09:30
      -1

      💯 THIS

    • infinite on 25/05/2024 - 23:15
      -1

      2) out of countless sales i've seen, i don't think i've seen a SINGLE first home buyer, or someone who was going for it on their own.

      Why would you make up nonsense like that? Obviously you haven't been to any auctions at all.

      https://www.abs.gov.au/statistics/economy/finance/lending-in…

      29.2% of all approved owner-occupied mortgages in March of 2024 were for First Home Buyers. This number represents a gradual annual increase of 4% over an 18 year period, since March of 2006.

      • boretentsu on 26/05/2024 - 08:25

        He did say inner west Sydney unless those abs stats are filtered for that lga

      • autolux on 27/05/2024 - 13:33

        whats so hard to understand for you? you can be classed as a first home buyer in a broad govt statistics table and anecdotally out of 100+ auctions tracked in a particular catchment around the inner city; i can tell you any time i have seen anyone that would claim that demographic, it's been more than clear parent or parents have been behind them fronting the cash. its not absolute and im not everywhere but a very simple point being made which is calling into question avg persons abilities to be first home buyers is being cutout at the legs. the value in the market has disintegrated and the % of people especially <40 even on solid dual 6figure incomes, able to afford the mortgagees on them without intergenerational handouts has also, disintegrated. markets quite visibly melting up and forcing people without these things outwards.

        while i'm on the topic of my anecdotal tracking sheet, the % of auctions in this area i've seen where it is literally <3 bidders has been the majority. most of the time actually 2, if not one person bidding the price over market rate themselves. fyi; families been in construction 40+ years, seen plenty of crazy in my time but never anything like what i've seen last few years and don't expect it to end anytime soon.

    • lknight on 15/06/2024 - 14:16

      @autolux this is great and thanks for sharing. im curious to know what is driving you to go use up all our weekend for the last 3 years to be on top of the market? do you do this for living? I cant imagine anyone going through this as when i did it i just didnt have the patience and it took me i think around 6 months of almost non-stop weekends before i got fed up and bought something. i dont know how anyone can do this continuously for 3 yrs!

  • Dack Smith on 23/05/2024 - 12:06

    Some people are rich, bank of mum and dad, then you got construction workers and unionists earning over $250,000 a year

    For them this is a piece of cake

  • Trying2SaveABuck on 23/05/2024 - 22:16

    well some bloke won 150m tonight from South Australia so buying property is a hobby for him/her

    • infinite on 25/05/2024 - 23:17

      Not a gambler here, so forgive me for the ignorance, but was that a state or national lotto?

      Did they get $150mil, or did they get half of that after tax and then have it paid out monthly over a 50 year period, like they do in other places?

      • Trying2SaveABuck on 25/05/2024 - 23:25

        National lotto and it is tax free

        Paid in one hit

        Unless you play set for life we don't have paid out over time lottos in Australia

        We also don't have tax on winnings in Australia

        • infinite on 26/05/2024 - 22:49

          Thanks.

  • Salternative on 24/05/2024 - 01:16
    +2

    Brought my first property mid 300 $ks , 35 kms from sydney , when i was 27 yrs old, similar properties go for $550-600k now , 70 sqm 55 year old unit , fun times having bogans set off fireworks at night and do burnouts .
    2nd property 50kms from the city , $700k , 45kms from city, 35 years old , similar properties go for $900-$950k , 120 sqm 45 yr old brick veneer house needing work , this time middle eatern bogans doing burnouts .
    3rd property 15 kms from city , $2 million , 40 years old, sold above 2 properties to finance .
    Came to aus, a country i lovingly call my own now with $ 3000 in my name .
    Stop whinging and get to work, if you think you should be able to buy your first property in marrickville/newtown/dee why just because you grew up there , unless you have rich parents and generational wealth , it aint happening bud . Swallow a bitter pill and buy in liverpool/parramatta wherever you can afford, a free tip is it will give you an outlook in life that will help and give you a boost all your life , something an entitled and victim mentality will never do. the above property path can be done by anyone on an average income even now, but they think they should be able to get to stage 3 first .

    • eek on 24/05/2024 - 10:07

      One of my worst tenants had a motorbike engine in the middle of the dining room rebuilding it, and the rest of the motorbike in pieces on the back deck! I was kinda impressed, and glad he put cardboard and tarps down. He eventually semi-trashed the place, was late on rent and set my rangehood on fire they fell asleep whilst frying chips in hot oil on the stove. Had to take them to court to recover costs above the paid bond. Fun times. Also watched neighbors 3 doors down from rental property get raided by police one late afternoon. Stereotypical bogan. Had 4-5 Holdens parked all over the lawn. Occasional burnouts, but always fun to chat to. Apparently was being arrested for traffic infringements and firearms.

  • payless69 on 25/05/2024 - 07:21

    QLD has all the solutions:
    https://www.youtube.com/watch?v=IRY8fRRmM0s

  • tonka on 25/05/2024 - 14:12
    +2

    'Crime ridden suburbs on the outskirts of Melbourne or Sydney????' Bugger off, did you edit that to give your troll post more legs. The difference in these crime ridden areas is the lack of access to good legal. So Police have a free reign to search people and cars etc. I don't believe for a minute that young people, subjected to random searches in richer areas wouldn't get caught with drugs just as often. And likely more than a pot baggie. There's been an estimated 1 Billion a year in wage theft in Australia, you reckon working class suburbs instigate that, or more likely weathly people not even held accountable and that entitled they don't even see it as stealing.

    • infinite on 25/05/2024 - 23:35
      -1

      "Wage theft" is almost entirely accounted for by payments of withheld tax and super at the wrong times or reporting periods. Less than 1% of that billion dollar figure is ever a case of earnings being outright stolen or not paid out to the employee / employee super fund. Only two companies in Australia have ever faced severe penalties for intentionally withholding payments and benefits to employees - both were Chinese/Taiwanese hospitality companies who simply brought over foreign workers on the wrong type of Visas and then paid them the incorrect salaries. They couldn't locate the workers because the underpayments happened 10+ years prior, so were fined as a company, despite cooperating with the ATO every step of the way and attempting to pay back every last cent with interest, once the tax office realised the mistake they'd made. Wage Theft has no meaningful impact on the first home buyer market at all.

      • tonka on 26/05/2024 - 01:34
        -1

        Wow, you have no knowledge on this at all. I've seen the payrolls of prob approaching 100 companies. And I've never seen one that everyone was getting paid correctly. And what rock have you been hiding under that you missed the Coles, Woolworths, 7Eleven, CBA, Qantas, and many many more. A very long list that I have no idea how you are unaware of considering the media coverage.

        • infinite on 26/05/2024 - 22:56
          -2

          It appears you are ignorant to the law.

          https://www.dentons.com/en/insights/articles/2024/march/15/u…

          Did CBA engage in wage theft?

          No.

          Leaving aside the fact that CBA were not being prosecuted for wage theft, the Court also did not find evidence that the underpayments by CBA or Commsec were deliberate or intentional. Significantly, the words “theft” and “stealing” do not appear anywhere in the Federal Court Judgment or in the Fair Work Ombudsman’s press release following the Federal Court decision. The term ‘wage theft” was only (mis)applied to the story in the media after the fact.

          • tonka on 27/05/2024 - 08:05
            -1

            @infinite: Manslaughter=also not deliberate, also still a crime. And intentionally holding pay is not the issue either, although I have personally seen it happen several times, more than several. These companies create work conditions where employees are not re-imbursed according to the law. Then pay them according to those conditions. So yes they are deliberately 'saving money at the employees expense, but they consider it not stealing as is a 'mistake'. As I said no accountability. I have personally worked for 4 companies, 3 that are large where I have been instructed not to pay wages due by management. But the these other employee contracts where OT , shift penalties, unfair averaging, wage bracket creep, leave loading etc are deliberately avoiding awards is also deliberate savings at expense of employee.

            • tonka on 27/05/2024 - 09:20
              -1

              @tonka: Just remembered another one that will be a biggie when it gets found. Very big gov't department not paying casuals overtime, yes it was deliberate, no, the courts will never ask me if I advised it was illegal. And it well get called accidental.

          • tonka on 27/05/2024 - 18:06
            -1

            @infinite: Just gonna mention the CEO of CBA when the wage theft happened went on to become CEO of the company writing this article. Might just explain the bias in it.

      • Grunntt on 31/05/2024 - 13:09
        -1

        "Wage theft" is almost entirely accounted for by payments of withheld tax and super at the wrong times or reporting periods. Less than 1% of that billion dollar figure is ever a case of earnings being outright stolen or not paid out to the employee / employee super fund.

        Payroll Scandals: 24 Big Australian Mistakes

        From that article - (listed for your own research - I'm not doing it)

        Domino’s Pizza set to face trial over wage theft
        Unity ordered to pay a $250,000 ‘contribution payment’ for underpaying their staff over $7.3 million
        Din Tai Fung payroll underpaid 17 workers more than $157,000 and payroll team faked wage records
        85 Degrees Cafe exploits visa workers and is fined $475,000
        Melbourne University coughs up $22 million to backpay 15,000 current and former employees
        Merivale faced with a class action that could cost millions
        Qantas underpaid some up to $8,000 per year and overpaid others up to $12,000
        Cafe Baci fined $250,000
        ABC to pay back thousands
        Lush Australia owes as much as $2 million
        Super Retail Group owed a whopping $43 million
        Maurice Blackburn underpaid staff up to $1 million
        Rockpool Dining Group pays back $1.6 million
        7-Eleven operator fines $335,000 in wage scandal
        Michael Hill underpaid workers by millions
        George Calombaris lost MasterChef job after underpaying by $7.8m
        Shangri-La Hotel in Sydney owed up to $250,000
        Subway went under investigation
        Fair Work Ombudsman investigated Rockpool again, $10 million in potential backpay
        ‘Breach on a massive scale’: Woolworths reportedly underpaid staff by up to $300 million
        Grill’d in hot water (again)
        Endota Spa underpaid employees on 457 working visas
        Crown under investigation
        Coles underpaid over 7,800 employees more than $115 million

        • infinite on 31/05/2024 - 21:52
          -1

          You clearly failed to read the article written by the solicitor:

          The term ‘wage theft” was only (mis)applied to the story in the media after the fact.

          Your trying to fob off accounting and taxation errors resolved after the fact as "wage theft", when wage theft is something entirely different. You literally just proved the writers point by doing the same yourself. So, thanks for proving my point. Again.

          • Grunntt on 31/05/2024 - 22:13
            -1

            @infinite:

            You clearly failed to read the article written by the solicitor:

            Not sure how you can determine that exactly - or do you believe you are the only one able to understand what they read?
            Are you trying to make the point that none of those listed cases are wage theft as they are all related to accounting/tax errors and that not a single one was deliberate?

            • infinite on 01/06/2024 - 18:17
              -2

              @Grunntt:

              You clearly failed to read the article written by the solicitor

              Enough said, really.

              • tonka on 01/06/2024 - 20:04

                @infinite: Why are you still trying to sell that opinion piece by the law firm. Their CEO was the CBA CEO when the wage theft happened. That was exposed several comments ago. Wage theft is when a boss doesn't pay you your correct wages. The slimy wordcraft in the article where they are trying to salvage their reputation is irrelevant. There are legal requirements on how people are paid. When your compliance fails you have broken the law. This is the point it is wage theft, the breach of law is evidenced by the courts hearing the case. Whether it is intentional and whether it is a criminal offense is irrelevant to the definition of wage theft as defined by many of the relevant government bodies as well as common accepted usage.

                • infinite on 04/06/2024 - 13:31
                  -1

                  @tonka: Read the article and educate yourself.

                  Screeching about it serves no purpose.

  • Yaren24 on 30/05/2024 - 08:45

    There are a lot of unemployments atm though.

    • infinite on 05/07/2024 - 13:55

      Most of them are unemployed because they've chosen it as a lifestyle.

  • easternculture on 11/10/2024 - 14:34
    +1

    I risked all my money in a new unknown developer in 2013 and was able to buy and fully pay my home in greenacre in 2021. By buying a home, ive literally saved over $150k+ in rent so far (more if take into account the 30% tax as you pay rent from taxed income).
    If my second risky investment goes well, ill be able to knock down and build my dream home.

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