I earn $150K and my wife $40K (part -time) a year. We were thinking to buy a house, applied for a loan and got approved for $900k only. Is that what normally people get approval for with that income or should I shop around?
Just wondering how people purchase houses for $1.5 mil or above. They must be very rich or earning $300K+ (together) a year to buy anything for $1.5 mil or so?
Very sad at the moment.
With a Townhouse you got nothing but cardboard and strata fees and requiring permission to even make changes on your own property.
In NSW Town Houses can be Torrens Title.
I've just purchased an investment property, being mortgage free on my main home.
Our family income is similar to yours, and we also borrowed around $900k.
Trust me, with interest rates as they are, you don't want to borrow more. Even with rental income from the investment property, the payment gap is significant enough to make me wonder "how do people do it" while not being under constant mortgage stress. I fear for our Children's ability to every own a home.
Financial advisers and mortgage brokers were involved. In terms of amounts that they were willing to show were 'achievable', my main impression was that they were more interested in their income and commissions than my financial abilities or risk appetite.
Disclaimer: I'm generally a low-risk appetite person.
You forgot the magical Bank of M&D.
Good luck to you. With your income your monthly repayment on 900k is going to be an absolute killer.
I don't think my kids will have a chance to buy a house in 10 years time when they join the workforce.
It's pretty bad now, it will only get worse. Good luck, you will need to save a deposit too, 10%??
With a combined income of $190K, a $900K loan approval is fairly standard, as lenders typically approve loans up to around 4-5 times combined annual income, depending on debt levels, expenses, and deposit size.
Many buyers in the $1.5M+ range do have higher incomes (often $300K+ combined), larger deposits, or additional income sources. To explore higher loan amounts, you could shop around with different lenders, as some may offer slightly more flexible terms.
Asian migrant from the late 80s here.
Once I entered the workforce in the early to mid 2000s, saved whilst still living at home and maintaining a conservative social life. Bought in 2008, Sydney apartment. 2009, moved into apartment. Bought in 2010, Sydney apartment. Bought in 2012, Sydney apartment. Bought in 2013 Brisbane apartment. Sold a Sydney apartment, and sold Brisbane apartment.
Married in 2023, bought Sydney house.
Could’ve bought a house earlier but wanted to enjoy life more and also keep as much of the performing properties as possible. Also I thought of it as no point in buying a house unless I am married with a plan to start a family.
I thoroughly enjoy living in an apartment because of the luxuries and low upkeep but I also want a house so I can host social gatherings, have more space, and enjoy the privacy.
Nice boomer story but that’s impossible to replicate if you were to start again today. Prices astronomical in comparison to when you bought houses back then.
Nice boomer story but that’s impossible to replicate if you were to start again today.
Lets say pogichimoy was 20 when entering the work force in the mid 20s means he is far from being a boomer as anyone born after 1964 is not a boomer. Nice try but you fell well short.
Baby Boomers were born between 1946 and 1964. Generation X were born between 1965 and 1980. Generation Y, also known as Millennials, were born between 1981 and 1995. Generation Z, also known as Zoomers, were born between 1996 and 2012.
Prices astronomical in comparison to when you bought houses back then.
And in 25 years prices will be astronomical than there are know, so what's you point?
He might not be a technical boomer which I knew when I wrote the comment but I said it like that as this is the same story all the boomers have when they talk about properties. It’s a typical boomer story to hear them yap about to sound like they knew a lot or were intelligent. No you just bought at the cheaper times.
No, in 25 years prices will be higher but there has never been a price rise like we have seen in the past 4 years or so. You can see the curve has skyrocketed only really in the past few years before that it was a gradual incline.
@mustang87401: Call it what you want. But I knew to be financially disciplined since my teens. Most of my millennial friends pissed their money away in their 20s and still well into their 30s. I’m not trying to sound intelligent, I’m trying to sound disciplined. Don’t get upset about the boomer story, it’s a logical financial path to wealth creation.
Of course I bought in cheaper times relative to today. The Australia back then was different. Less population, different bank lending policies, less currency devaluation etc.
You can most certainly can try to replicate that today. A number of younger friends bought last year. They’re starting small of course, old 2 bedder in Hurstville.
Not sure what your point is, you could not do the same as you have done if you started now like the OP. Different times.
My point is answering the OP. How to buy a house in Sydney.
My friends in their 20s say different. They’re on the same path, starting small and working up.
Keep making all the excuses as you want whilst others your age or younger pass you by.
Good they are trying and starting but I feel right now it is very difficult as house prices are so high now and getting higher in a suburb closer to the city.
You don't even know how old I am. The only property I am thinking of buying now is a plot where I can be buried. Sure they can pass me by.
That said, the op never said how old he was either.
@fredk1000: You started with it could not be done now to it’s very difficult.
Good, now you admit it isn’t impossible.
People need to understand that if you’re starting from scratch ownership let alone a house in the most competitive and expensive city in Australia, Sydney, will always be struggle.
My advice: Become a politician, so you can afford a 4.5 million seafront mansion and build a portfolio of various investment properties.
While getting upgrades for nothing in return just for the goodness of their heart.
Why do people think they need to live in metropolitan areas?
It's a wild guess but I think proximity to where the work is is a good reason.
Some also want to be in specific school zones for their children
Because if they were born there they have a right to.
Try the Central Coast.
Commute is just over an hour by car or 1.5hr by train.
This doesn’t have to be a forever thing.
2022 Central Coast homebuyer here. 720K house.
Regularly take the 3hr round trip train to Sydney.
15 mins to beach, wouldn't change a thing.
Much better than penrith/comparable "sydney" suburbs.
Thats a small salary and wife not even working full time and you want to live in Sydney? You are 20 years too late buddy. Buy on the central coast and get a Tesla and put it in FSD mode and commute for a few years
Without getting into the whole "housing prices are too high" discussion, as it won't help you on a personal level, I'm just curious why you are "sad"?
I mean, without getting into the morals of it all, if you're going for a standard 80% LVR, you'll be able to purchase a $1.1-1.2m property, which is literally the median house price in Sydney (e.g. see https://propertyupdate.com.au/the-latest-median-property-pri…), not to mention that your money would go further if you were willing to relocate to another city (as a potential alternative option). Why would you be "sad" about being able to afford a median property in one of the most expensive cities in the world?
I feel like social media and the "keeping up with the influencers" have created this mindset that everyone needs a McMansion, luxury SUV, eat at fancy restaurants, with twice annual holidays to a seaside resort in Greece to be happy, and this is just completely unrealistic for the vast majority of people.
You can literally afford 50% of properties in Sydney - you have no shortage of choice. Pick something that you are happy with, enjoy your life, focus on paying down the mortgage quickly, working on getting a higher income (or perhaps your partner can consider full time work), and you'll find that in 5 years time, the horizon of properties you can afford will be a bit broader.
Save and wait for a correction. Find other 'positive' people doing the same thing. The opportunity will present itself. Need to be ready to commit and certain. Eg. If this house goes to this price, 15 - 20% off I will buy it. Seen it happen in some "hype"/hot suburbs in Brisbane. Prices corrected in 2016 and much higher now. Advice is from Valuetainment on YouTube.
yeah I know a few of those types waiting for the market crash since 1996.
thankfully they qualified for pension and public housing now
It’s different to the past though. The last few years have seen prices go up higher than in any period in modern history. There will be a correction no one knows how big but we are already seeing affordability ceilings reached in may cities including Sydney where prices are falling in some suburbs. Prices always go up but not at the level we have seen which was mainly due to the COVID disruption. You could say a bubble within a bubble.
and that's the same things they've said with each price cycle. cyclical corrections, yes, "bubble bursting" or housing crash - unlikely. the fundamentals have not changed
@May4th: It can’t be going up as it has forever. Price ceiling have been reached and salaries are completely stagnant in comparison to the past. Have a look. 10 years ago people spend much less on housing related costs than now. At this point it’s reached somewhat of a ceiling with two people full time professional salaries. This situation wasn’t like that in the past. This is also what most economists are saying including core logic.
@mustang87401: we're not going to see the astronomical increases like the last 2 decades but tell me one economist who predicts a housing crash/consistent downward trend. we are not japan, the fundamentals are very different
@May4th: The fundamentals have changed. There is a housing shortage on top of excess credit from 0% interest rates washing though the economy until it settles in inflated asset prices. House prices no longer outpace rents, they pull rents up with them.
I would love to see a house price crash, I want my neighbors to be able to afford good housing not worry about being car jacked at the lights. But the fundamentals point towards increasing wealth inequality.
People who say otherwise don't understand why house prices increased in the first place, it wasn't due to higher wages.
When's that going to happen? Next year and the year after when interest rates would be cut? That'll result in cheaper money and we know what happens to prices in that environment. Compound that with easing of lending restrictions apparently being touted and old mate could be waiting a while for that correction.
At this stage, the government doesn't give a SH1T about you, despite you paying $45,000 in tax per year
The government is just keen on increasing immigration which inadvertently increases housing demand.
Inflation is rampant because there's too much money thrown around and cost of products need to go up, hence inflation.
Add foreign investment and you have a pot of bad crap luck at getting into the market…
SO…here are some tips to make more money and buy a $2M house and your wife a G63 AMG:
These are a few to start you off…
increasing immigration which inadvertently increases housing demand.
This is true.
Immigration = creating more customers for land, food, services.
Those people that own those items just get richer, and use those riches (and influence) to dominate more and more public policies, eg. toll roads, etc.
Also, multi-racial immigration also creates rifts in a society, and those societies are then 'easier' to control, because those kind of "divided societies" will not tend to work together and unite against the ruling class.
This!
The reality is far more banal, there isn't a grand plan to use immigration to prop up GDP. The politicians have no plan at all.
The ALP knows excessive immigration is bad for their image, they didn't intentionally increase immigration, they didn't change immigration policy at all, it is the exact same as it has always been. Student visas have always been uncapped … unlimited. They assumed the high figures were due to existing visa holders that were locked out of the country all returning at once when the borders reopened. They were blind to the fake degree industry, just like in Canada. They were wrong, but they will never say that in public.
Corporations own politicians and ensure the fair work commission is stacked in their favor, they ensure immigration is on the table to keep wages low, and wage increases are below inflation, but that has been the case for the last 30 years.
They aren't trying to actively destroy society, they literally don't care.
Corporations own politicians
The employees are always choosing their middle managers every 3 years (in AU), whereas the CEOs remain unelected but continue using middle managers to progress the CEO's control over the employees. When the time is right, CEO uses the messaging (news, radio, social media) to subvert and convince the employees, that the time is right to change middle managers.
Basically, the people who currently "own" the world don't care which ruler you choose.
They care only that you keep choosing to be ruled.
They aren't trying to actively destroy society, they literally don't care.
Total agree.
In times of apathy, telling the truth becomes a revolutionary act.
It's the apathy of the society that is breeding hopelessness.
For a turnaround in the trajectory, one generation needs to pay the price, for all of the future generations to prosper, but no one wants to be 'that generation'.
Immigration = creating more customers for land, food, services.
Those people that own those items just get richer
Correct -
Let's say the average Joe owned a standard 500sqm home in a decent area (not necessarily affluent) in early 2010 for ~$600,000
Rampant immigration over the last 10-14 years has triggered a demand for land and this demand has rose the home prices articiially.
Consider the example with the price of Toilet Paper rolls during COVID. DEMAND = PRICE POWER. It could be Toilet Paper or a House.
This house is now worth $1.6M and rising, next year when the interest rates drop a little, it'll be worth $1.8-$1.9M.
Multiply this factor and you have a recipe for disaster, and people still argue immigration is not contributing to increased house prices.
Let's say the average Joe owned a standard 500sqm home in a decent area (not necessarily affluent) in early 2010 for ~$600,000
This house is now worth $1.6M and rising, next year when the interest rates drop a little, it'll be worth $1.8-$1.9M
I have seen this with my own eyes.
It took 100 years, for a house to go from around $10,000 to $600,000
Then, between 2010 - 2020, that house price is about $1.2M - 1.5M (ie. it took 10 years, to double the amount which took 100 years).
Between 2020 - 2024, it's worth about $2.4- 3M.
It doubled in 4 years.
The economic reaction to a 'medical pandemic', from a deadly air-borne virus, made property prices jump up.
100+ years after the U.S. Federal Reserve... Economists gotta be economisin' !
Then, if you put a nice, architecturally designed house on it, … you can fetch $4M or $5M.
I. have. seen. this. happen.
"mUh iNFlaTIon" has been a boom for real estate in some parts of Sydney, whereas wages remained flat most of this time, but very slowly improving.
However, obtaining property is now simply a difficult endeavour, if a person/couple had not got into this 'game' before c0v!d.
I read someone, a couple of years ago say:
" when I was young, I always dreamt of living in a million dollar house in Sydney. I'm still in that house, but now I'm living that dream ".
SO…here are some tips to make more money
Haha
After reading such OzB posts, I need to change the username to 'whyimakemoney' !
Inflation is rampant because there's too much money thrown
Many central banks got together (during c0v!d times) and agreed to print trillions of dollars worth of money, so there's excess amount of money everywhere.
Just like you need a sponge to soak up a spill of water, conflicts are then needed to be 'engineered' for those monies to be "soaked up" and/or distributed under the guise of "foreign aid" or whatever the reason is, ie. over-invoicing the cost of things, donations, hedge funds buying up property, etc. etc.
The corporate profits needed to be maintained and you can see their profits are going higher and higher, while they forced everyone to stick to the language: "cost of living crisis".
Many central banks got together (during c0v!d times) and agreed to print trillions of dollars worth of money, so there's excess amount of money everywhere. Just like you need a sponge to soak up a spill of water, conflicts are then needed to be 'engineered' for those monies to be "soaked up" and/or distributed under the guise of "foreign aid" or whatever the reason is, ie. over-invoicing the cost of things, donations, hedge funds buying up property, etc. etc. The corporate profits needed to be maintained and you can see their profits are going higher and higher, while they forced everyone to stick to the language: "cost of living crisis".
Hi whyisave. From those comments, I can see that your background is in IT/related, etc. (we chatted yesterday) … and not economics/finance (moi's).
COVID was unprecedented times. No central bank had a crystal ball on how things would turn out. Yes, monetary policy went too far with hindsight. All the other points after are conspiracy theories! :)
Hello ihbh
No central bank had a crystal ball on how things would turn out.
If they cannot 'predict' the future,…they will assist in creating the 'settings' for that future.
Yes, monetary policy went too far with hindsight.
So many graphs now, show parabolic and asymptotic trends, with steep gradients.
Every parabolic rise before, pales in comparison to the last 5 years.
It's actually scary.
Even if you look at how much USD-Tether was pumped very suddenly and 'secretly', you will ask questions too, about where all this came from.
It's done surreptitiously.
All the other points after are conspiracy theories! :)
Well, people can see how conflicts are used to get money in/out of a country, and even back into the country too.
This is not a conspiracy nor a theory.
If you see how much a debt-ridden USA "gave" to Ukraine (with the attached conditions), then you can see how the USA is getting their 'printed money' back, via the loans given out, military invoicing, etc.
AU government gave more than AU$ 1B too, towards Ukraine efforts,…and such amounts were never given out before.
That's a lot of tax dollars.
There's a reason why such assistance is called the generic term: "aid" or "military aid" or "<insert word which won't ruffle feathers> aid".
Sometimes, it's even given only to people…and that money doesn't go anywhere, except line the pockets of some people only.
Blakcrock then visited the country and agrees to buy up assets or assist in rebuilding the country.
So, that country gets infrastructure, but a foreigner ends up owning their assets (eg. electricity, water, real estate, roads, etc.)
That term "rebuild" obviously involves invoicing the country,…so that US money, will end up back to the USA.
This was done 20 years ago, with Iraq, etc.
It's how wars work, these days, ie. there was a time when weapons were manufactured for wars, but you'll find wars are being manufactured to sell weapons.
After I watched the The International movie (with Clive Owen & Naomi Watts), about 15 years ago, … I started to view wars or conflicts differently, as it showed how banks are involved.
Consider moving interstate for greener pastures.
Aim for something smaller, further out, older or all the above. My first was an apartment, paid mortgage insurance because i had less than 10% deposit and was putting in about 70% of income to the repayments. Had milk crates for a table and chairs. The only luxury was a brand new mattress with no bed frame. Ate brocolli, chicken and two minute noodles for about 2 years straight. No holidays, no nights out. Years later, no mortgage, brand new 5 bedder in an inner suburb on a 600sqm block. Effort and patience.
"about 70% of income to the repayments"?
Hard to believe this figure but no wonder they needed an enquiry into lending practices.
Don't. New Shanghai (previously known as Sydney) is a major sh1thole and not worth the effort to try and buy a house.
Leave.
It's New Mumbai now!
Fair enough. On my last visit, it was a game of spot the non-Asian.
that's tough. you'd need to travel about 30years back to go back to the white australia you miss.
@May4th: Probably 50 years actually.
I don't miss that. I was just flagging the reality of Sydney in 2024.
that's tough. you'd need to travel about 30years back to go back to the white australia you miss.
Where can you find this White Australia now ?
I mean, they must be somewhere, right?
Are all 'those' people still here or have they emigrated out?
@whyisave: depends on how terrified you are of a bit of ethnic mix I suppose. if you hang in places like kirribili/cremorne you'll see a lot more anglos but also well off italians/greeks/Jews etc
I suppose if you are a closet racist and just want to get away from the Asian/Indian/Arab/black mix you can just go to Byron
Where can you find this White Australia now ?
They are all still there.
People like @R4 have selective goggles - the idea that you would struggle to spot a non-Asian in Sydney is laughable. Just the silly views of an internet crank who has never needed to be accountable for their opinions.
To just see how blatantly false this is, see any FOV view of walking through Sydney - e.g. https://www.youtube.com/watch?v=3-276V_mfJM.
They are all still there.
I just know that in some suburbs, 40 years ago, were very Anglo-dominated in terms of home ownership.
Nowadays,…those suburbs have become dominated by non-Anglo, with the shop-signs in another language sometimes.
The non-Anglo types have injected a hustle and a bustle to the quiet streetscape, and if you go down there on a Public Holiday, you'll see that it's very lively, festive and boisterous.
see any FOV view of walking through Sydney - e.g. https://www.youtube.com/watch?v=3-276V_mfJM
Thanks for this video.
I needed this, to show a relative of how the city centre looks like.
(for touristic reasons and not for any racial demographic judgement reasons! )
Did you play spot First Nation as well? Or did your white googles stop you from doing that?
Call Alan Joyce seems to be handing out to favors
Lots of people also have a massive deposit OP
Just be very cautious of how much you borrow. My partner and I always budgeted that we can still afford the mortgage and to live off the lowest income in the household. Otherwise if there is an impact to the bigger income we can get by.
That served us well this year as we were knocked back to single income (lowest of the 2) for almost 6-months, this was completely unexpected. The part-time partner would make it impossible to buy using this method, but the same thing could happen to you, and home ownership is not worth the stress that can put you through.
Borrowing 900k with 190k incoming sounds like a death sentence.
This. Regardless the amount an idiot banker will lend you, you should stay within your means. A good rule of thumb is to not borrow more than 4 times your combined salary.
If you need to borrow more than that. Stop. Save more or look for a smaller place. Simples.
There were numerous occasions when any party mentioned anything remotely to the change of negative gearing and/or capital gain tax, they got shot-down and the party lost the the election. So now every party refuses to talk about the elephant in the room.
Rather than asking whether or not someone will lend you more money, start with your ability to service the loan.
A $900k loan will run you somewhere around $66k a year to pay off on a P&I basis. Do you feel comfortable coming up with this from whatever your post-tax salary is?
I will say that a loan of around 4.5 times your combined gross income and that I'll estimate is around 40% of your combined after-tax income is probably about the limit of what someone will lend you.
Everyone's situation is different. Be very careful about buying apartments and townhouses as you could be stung with strata/body corporate and lower capital gains over the years especially around high density areas. There are houses in Sydney (South West) area around the 1.1-1.2mil already 900k loan with a 20% deposit. However these might be older houses 3bed 1 bath with quite dated interiors but on a nice 450sqm block. We bought around 1.4mil for a 3bd 2 bath house with a 2bd granny flat. Fully renovated. Lived in the brand new granny flat while renting the front house out. The additional cashflow helps drive up our yield while reducing mortgage stress. However this might not be for everyone but when Sydney's median house price is around 1.4-1.5mil a budget of 1.1-1.2mil means you have make sacrifices somewhere.
Is that what normally people get approval for with that income
Unfortunately that sound about right with current interest rates, If you had applied a few years ago, when the interest rates were below 3%, you might have been able to borrow close to 1.2~$1.3 mil with your salary, and you may have been able to get a house that costs 1.5mil now for that price back then. But not anymore.
or should I shop around?
You may be able to get another $50~$75k at most by closing your credit cards, paying off any other loans if you have any, and possibly going with a lower-tier lender. However, that still wouldn't even take you over $1 mil let alone $1.5mil.
It all comes down to serviceability (i.e., your ability to pay back the loan). Banks typically calculate serviceability at a 3% higher interest rate than the current market rate. This means you should be able to comfortably repay a monthly mortgage of around $12.5k after accounting for living expenses if you are to borrow 1.5mil @ 9.3%. Unfortunately, your take-home pay is not enough.
What’s wrong with starting with an apartment or small house instead of going straight to a $1.5M house? Especially when both don’t work full time? Expectation adjustment?
Checkout Suburb Data on YouTube. They offer the best advice for the Aussie property market. They have so much info in their podcasts.
Loan approvals depend on more than just income. Lenders look at your expenses, existing debts, and the deposit you’ve saved. $900k does seem in line with your combined income, but it’s worth speaking to a mortgage broker to see if you can get a higher limit.
Yeah obvs owning land is a better option, but increasingly townhouses etc will be sought out by buyers because they are cheaper than houses but in many cases just as comfortable of not more so. Also lower maintenance.
I hate gardening and am in the process of selling our house which has quite a large front garden and a pool that my kids no longer use as they've got older. So we've bought a very well designed townhouse with none of that maintenance while also being able to reduce debt. In my area stuff in the townhouse price range is moving much quicker than houses that are in a higher price bracket.