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Old 11-06-2018, 07:43 PM   #601
Ben73
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Default Re: Australia housing bubble

Someone at work was telling me how he took all his super out to buy property and use that as his super.
I know property has always has an overall upward trend, but too bad if it goes through it's usually crash when you are planning to retire,
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Old 11-06-2018, 07:46 PM   #602
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Default Re: Australia housing bubble

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I wasnt suggesting that you were against it, i was just confirming that it has been setup in the correct manner so that she is free to claim the subsidy via rent assistance because it is an investment property and treated as such in the eyes of the tax dept on his behalf.
Im sure he would have an accountant who would be advising him of how best to make it work for them.
The best part of it is that he is able to sleep at night knowing that his investment property is free of the pitfalls that many investors face in terms of the continual cycle of tennants coming and going whilst avoiding the risks of damage to the property which he can visist at anytime he likes to keep on top of any maintenance issues.
From her perspective, her relatively small investment in the deal has provided her with hassle free accommodation partially funded by the Government, no risks associated with living in a strangers investment property, no agents keeping an eye on her and the balance from the sale of her property 15yrs ago is collecting interest and available if/when she needs it.
Nah, it's all good. It's a good strategy, ties in with benefits and taking advantage of the economics of the time.
The traditional save a deposit then try and get a loan isn't cutting it nowadays, so people need to think outside the square.
Getting family onboard isn't always 100% risk free, as you can't control what will happen in the future, but the thing is if you want to get ahead in life,
you always have to take risks, can't get around that one.
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Old 12-06-2018, 09:06 PM   #603
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Default Re: Australia housing bubble

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Someone at work was telling me how he took all his super out to buy property and use that as his super.
I know property has always has an overall upward trend, but too bad if it goes through it's usually crash when you are planning to retire,
Probably one of the most stupid financial moves one can make. Diversity is the key. High growth super funds have killed property over the last few years.
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Old 12-06-2018, 11:51 PM   #604
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Default Re: Australia housing bubble

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Probably one of the most stupid financial moves one can make. Diversity is the key. High growth super funds have killed property over the last few years.
If you buy property yourself using your own SMSF in an area you know well and you buy well, and you do not need to borrow money using a bare trust- I disagree with you. (ie- borrowing money gears you to have greater returns in good times but bigger losses in downturns- so the safest and most conservative way is to buy property with no borrowing-hence if a SMSF the safest and most conservative way is to not borrow money using a bare trust)

I bought a property using my SMSF. Had it for 2 years- has gone up almost 25% in 2 years. Is a small 3 bedroom house on torrens title 3 minute walking track to Lake Macquarie. I bought it at a good price- and the location -I will never loose. This is an investment.

But I agree if you hand over your super to a fund manager to invest in speculative real estate like in rural mining towns-that is gambling-not investing.
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Old 13-06-2018, 05:15 PM   #605
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Default Re: Australia housing bubble

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Someone at work was telling me how he took all his super out to buy property and use that as his super.
I know property has always has an overall upward trend, but too bad if it goes through it's usually crash when you are planning to retire,
The key is to move your investments to lower risk assets if you're nearing retirement.

After having half my super in a balanced portfolio and the other half in international shares most of my working life I recently moved everything to bonds and fixed interest . Two reasons for that (1) I think the sharemarket will peak soon after 18 months of solid growth and (2) I only plan to work another 5 years and don't want to risk a crash in the interim

Property has its place in any portfolio but I choose to have my property investments outside super. There are less rules and restrictions surrounding the how and what of holding property and the investment risk is the same whether it's held in or out of an SMSF.

What people need to consider when buying property in an SMSF these days is that the returns/yields are low while capital growth will be flat at best for years to come if you listen to some of the experts which over the past 2 or 3 quarters in certain cities/towns has proven correct . Then on top of that you still have to go through all the negatives of holding the real estate – complaining tenants, damage to property, insurance, owners corporations etc. With all that in the mix I see no real tangible benefit in using super to buy property. If we were talking back in 2014 or 15 then my opinion would be 180 degrees different. Back then we had spiralling rents and the capital growth cycle just starting.
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Old 13-06-2018, 05:53 PM   #606
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Default Re: Australia housing bubble

Wish dave289 was still on AFF to add to this discussion.
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Old 14-06-2018, 07:30 AM   #607
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Wish dave289 was still on AFF to add to this discussion.
He probably is but under a different name
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Old 14-06-2018, 12:30 PM   #608
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Bought our block for $165K 3 years ago, paid cash for it, so no loan, had the choice of three blocks at the time, one next door and one across the street, we picked the best one of the three blocks, best shape, most level, best aspect, no restrictions, no bush fire zones etc.

At Christmas time block next door sold for $379K, this week block across the road sold for 400K.

Now tell me I am better off paying rent, to pay someone else property off.

By the way the first house I bought I paid $179K and sold for 380K a few years later, plus I got to live in it for that time, paying about $250 per week into the loan for a 3 bedroom double garage two bathroom in Sydney

Next house cost me 420K and sold for 550K a few tears later...wish I had been paying rent all these years.

25 years after buying my first place I am still waiting for the bubble to burst, but all I see is prices going up.
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Old 14-06-2018, 12:39 PM   #609
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Default Re: Australia housing bubble

XB, what size are the blocks ?
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Old 14-06-2018, 12:42 PM   #610
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XB, what size are the blocks ?
1 hectare or 2.5 acres or 10,000 square metres, all the same thing.
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Old 14-06-2018, 01:07 PM   #611
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Default Re: Australia housing bubble

Quote:
Originally Posted by XB GS 351 Coupe View Post
Bought our block for $165K 3 years ago, paid cash for it, so no loan, had the choice of three blocks at the time, one next door and one across the street, we picked the best one of the three blocks, best shape, most level, best aspect, no restrictions, no bush fire zones etc.

At Christmas time block next door sold for $379K, this week block across the road sold for 400K.

Now tell me I am better off paying rent, to pay someone else property off.

By the way the first house I bought I paid $179K and sold for 380K a few years later, plus I got to live in it for that time, paying about $250 per week into the loan for a 3 bedroom double garage two bathroom in Sydney

Next house cost me 420K and sold for 550K a few tears later...wish I had been paying rent all these years.

25 years after buying my first place I am still waiting for the bubble to burst, but all I see is prices going up.
all you guys who speak like this focus on one thing. yourselves!

you don't seem to be able to grasp that the price of a house has risen at a much steeper rate than wages. the cost of living is also quite a bit higher.

For a young person these days to buy a house, it is substantially harder than anyone who bought into the market more than 20 years ago, or even 10 years ago.

Some people don't want real estate as some kind of investment. they just want a house to live in and have a family and raise them, like so many other Australians were able to do in years gone by.

So much chest beating in here about how 'I was able to so anyone can if they really want it'.

and yes, I did buy my house before the prices shot skyward, and I consider myself very fortunate. since buying my first house real estate has probably quadrupled in value yet my wages have risen by about 50%. I would hate to be a young person today looking to buy my first home for the sole purpose of living in it and raising a family. a house in Australia shouldn't be a luxury item.
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Old 14-06-2018, 01:08 PM   #612
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Default Re: Australia housing bubble

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25 years after buying my first place I am still waiting for the bubble to burst, but all I see is prices going up.
Because all you've seen is interest rates heading to the floor.

Guess what will happen when rates start moving back up to their long term norm? A bloodbath... but if you priced that in and can afford it regardless, its not an issue. It will however be a huge issue in Sydney and Melbourne.
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Old 14-06-2018, 01:47 PM   #613
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Default Re: Australia housing bubble

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Originally Posted by XB GS 351 Coupe View Post
Bought our block for $165K 3 years ago, paid cash for it, so no loan, had the choice of three blocks at the time, one next door and one across the street, we picked the best one of the three blocks, best shape, most level, best aspect, no restrictions, no bush fire zones etc.

At Christmas time block next door sold for $379K, this week block across the road sold for 400K.

Now tell me I am better off paying rent, to pay someone else property off.

By the way the first house I bought I paid $179K and sold for 380K a few years later, plus I got to live in it for that time, paying about $250 per week into the loan for a 3 bedroom double garage two bathroom in Sydney

Next house cost me 420K and sold for 550K a few tears later...wish I had been paying rent all these years.

25 years after buying my first place I am still waiting for the bubble to burst, but all I see is prices going up.
I was a staunch critic of Dave289 all those years ago, but things are different now. Back then we hadn't seen property prices rise above CPI since 2003, so a boom was overdue . The boom happened between 2014 and 2017 and now we are seeing a reversal of sorts driven by APRA telling the banks to tighten lending practices. Investors have left the market and those trying to sell are having to lower their pricing expectations. I don't see a "bubble burst" happening but the days of rising prices are on hold for now, especially in Melbourne and Sydney.

Auckland, the largest city in NZ but with a population the size of Perth and Brisbane has seen prices double in 5 years and even the government there have taken measures to curb foreign investment but the boom continues. Even if you have a million in your pocket that's still not enough to buy any inhabitable house in that city, even in the lower socio economic suburbs.
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Old 14-06-2018, 03:37 PM   #614
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all you guys who speak like this focus on one thing. yourselves!

you don't seem to be able to grasp that the price of a house has risen at a much steeper rate than wages. the cost of living is also quite a bit higher.

For a young person these days to buy a house, it is substantially harder than anyone who bought into the market more than 20 years ago, or even 10 years ago.

Some people don't want real estate as some kind of investment. they just want a house to live in and have a family and raise them, like so many other Australians were able to do in years gone by.

So much chest beating in here about how 'I was able to so anyone can if they really want it'.

and yes, I did buy my house before the prices shot skyward, and I consider myself very fortunate. since buying my first house real estate has probably quadrupled in value yet my wages have risen by about 50%. I would hate to be a young person today looking to buy my first home for the sole purpose of living in it and raising a family. a house in Australia shouldn't be a luxury item.
Heard on the news this morning how there's talk of an interest rate rise followed by a story about up to 60% of the younger generations are not finding permanent work, are only offered casual short term employment and lumbered with education fees to pay off.

Doesn't look like a good formula to qualify for a massive home loan to live in the cities.

As far as the cities are concerned, a lot of us were very lucky to have long term employment and have the opportunities to purchase land or houses where we wanted to live.
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Old 14-06-2018, 03:44 PM   #615
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Default Re: Australia housing bubble

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Originally Posted by prydey View Post
all you guys who speak like this focus on one thing. yourselves!

you don't seem to be able to grasp that the price of a house has risen at a much steeper rate than wages. the cost of living is also quite a bit higher.

For a young person these days to buy a house, it is substantially harder than anyone who bought into the market more than 20 years ago, or even 10 years ago.

Some people don't want real estate as some kind of investment. they just want a house to live in and have a family and raise them, like so many other Australians were able to do in years gone by.

So much chest beating in here about how 'I was able to so anyone can if they really want it'.

and yes, I did buy my house before the prices shot skyward, and I consider myself very fortunate. since buying my first house real estate has probably quadrupled in value yet my wages have risen by about 50%. I would hate to be a young person today looking to buy my first home for the sole purpose of living in it and raising a family. a house in Australia shouldn't be a luxury item.
So what are you offering? What's the solution according to yourself? What should young people do?

Might be some chest-beating from our side but all I'm seeing is "we're doomed, it's pointless, just give up" from the counter position.

I'm all ears, really
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Old 14-06-2018, 04:20 PM   #616
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Default Re: Australia housing bubble

What should young people do?

Get practical skills, trade or grey collar. Stay out of debt and dispense with ego preening passport stamps. Avoid pointless degrees and live within your means.

Yes, casual and temp work is more prevalent than ever.
Yes, excess immigration has created a labour oversupply and stagnant wages.
Yes, credit creation and a cgt discount has spawned a massive property bubble.
Yes we are regularly top of the pops in the developed world for income to debt ratios.

Despite that, this is not the time for boomer/xer self congratulation if you've ridden an asset boom. Nor should millenials spend it all on travel and consumables because 'housing is too expensive'.

Myopic defeatism and assumed victim status will get you precisely no-where.

There will be opportunities in the future. I cannot tell you where they will be. Nor do i know when to sell to avoid a crash.

Nothing lasts forever. But you have to be ready when opportunities arrive. They won't wait for you. Nor will they wait if youre not quite ready, or able to take advantage of them.
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Old 14-06-2018, 05:00 PM   #617
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Originally Posted by XB GS 351 Coupe View Post
Bought our block for $165K 3 years ago, paid cash for it, so no loan, had the choice of three blocks at the time, one next door and one across the street, we picked the best one of the three blocks, best shape, most level, best aspect, no restrictions, no bush fire zones etc.

At Christmas time block next door sold for $379K, this week block across the road sold for 400K.

Now tell me I am better off paying rent, to pay someone else property off.

By the way the first house I bought I paid $179K and sold for 380K a few years later, plus I got to live in it for that time, paying about $250 per week into the loan for a 3 bedroom double garage two bathroom in Sydney

Next house cost me 420K and sold for 550K a few tears later...wish I had been paying rent all these years.

25 years after buying my first place I am still waiting for the bubble to burst, but all I see is prices going up.
You bought that boat yet?
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Old 14-06-2018, 05:57 PM   #618
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Old 14-06-2018, 11:41 PM   #619
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You bought that boat yet?
No I have cars to finish first, no time for a boat but will get around to it when the time is right.
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Old 14-06-2018, 11:46 PM   #620
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Originally Posted by prydey View Post
all you guys who speak like this focus on one thing. yourselves!

you don't seem to be able to grasp that the price of a house has risen at a much steeper rate than wages. the cost of living is also quite a bit higher.

For a young person these days to buy a house, it is substantially harder than anyone who bought into the market more than 20 years ago, or even 10 years ago.

Some people don't want real estate as some kind of investment. they just want a house to live in and have a family and raise them, like so many other Australians were able to do in years gone by.

So much chest beating in here about how 'I was able to so anyone can if they really want it'.

and yes, I did buy my house before the prices shot skyward, and I consider myself very fortunate. since buying my first house real estate has probably quadrupled in value yet my wages have risen by about 50%. I would hate to be a young person today looking to buy my first home for the sole purpose of living in it and raising a family. a house in Australia shouldn't be a luxury item.
It was never easy to buy a house, even when houses were a lot cheaper, problem is kids these days want to start with a McMansion, the latest iPhone, and travel overseas every year, and buy brand new cars every few years.

I busted my balls to be in the position that I am in, and I had no pay out's inheritances or the like. I started pushing trolleys at Franklins, to doing factory labouring for $200 per week.
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Old 15-06-2018, 12:37 AM   #621
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problem is kids these days want to start with a McMansion, the latest iPhone, and travel overseas every year, and buy brand new cars every few years.
is this what you tell yourself rather than admit that it is substantially harder now than it ever has been? just tar all the young kids with the same brush?
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Old 15-06-2018, 12:51 AM   #622
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It was never easy to buy a house
It was never this hard.
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Old 15-06-2018, 01:41 AM   #623
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is this what you tell yourself rather than admit that it is substantially harder now than it ever has been? just tar all the young kids with the same brush?
Its a common theme amongst many of those in their position, to paint the picture that the problem lies with the young person rather than acknowledge that it is some of those already on the ladder that have pushed the bar way higher than necessary for what should be a staple of human existence and available to anyone who makes a reasonable effort without foregoing many of the things those who went before them took for granted.
Its always the same excuses, phones, cars, smokes, latte's, alchohol, gambling and drugs, its never the price of the house, the deposit or servicing the loan.
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Old 15-06-2018, 07:54 AM   #624
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Default Re: Australia housing bubble

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So what are you offering? What's the solution according to yourself? What should young people do?

Might be some chest-beating from our side but all I'm seeing is "we're doomed, it's pointless, just give up" from the counter position.

I'm all ears, really
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Its a common theme amongst many of those in their position, to paint the picture that the problem lies with the young person rather than acknowledge that it is some of those already on the ladder that have pushed the bar way higher than necessary for what should be a staple of human existence and available to anyone who makes a reasonable effort without foregoing many of the things those who went before them took for granted.
Its always the same excuses, phones, cars, smokes, latte's, alchohol, gambling and drugs, its never the price of the house, the deposit or servicing the loan.
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is this what you tell yourself rather than admit that it is substantially harder now than it ever has been? just tar all the young kids with the same brush?
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It was never this hard.
so...



Yeah. That's pretty much what I thought you'd be able to offer...
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Old 15-06-2018, 08:48 AM   #625
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Default Re: Australia housing bubble

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It was never easy to buy a house, even when houses were a lot cheaper, problem is kids these days want to start with a McMansion, the latest iPhone, and travel overseas every year, and buy brand new cars every few years.

I busted my balls to be in the position that I am in, and I had no pay out's inheritances or the like. I started pushing trolleys at Franklins, to doing factory labouring for $200 per week.
In all honesty I think some have just simply given up on home ownership and are spending their hard earned on overseas holidays and new cars instead
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Old 15-06-2018, 08:51 AM   #626
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Default Re: Australia housing bubble

Hi guys, here's a interesting link on housing affordability -

https://thenewdaily.com.au/money/fin...ative-gearing/

Tweaking capital gains tax & negative gearing would be a good start in reigning in surging house prices.

cheers, Maka
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Old 15-06-2018, 10:43 AM   #627
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Default Re: Australia housing bubble

Affordability and location also come into this. All you older guys saying it was hard back then as well, of course it was, no one is denying that, but now it is harder than ever, that is fact.

My folks bought a house 31 years ago 15 minutes from Melbourne for (once converted with inflation to match todays price) $220,000. Find me a 3 bedroom house with 2 bathrooms, a double garage and a 600 square block for $220,000. You wont find one. Even for a 3 bedroom townhouse with no backyard is pushing 500-600k 15 minutes from Melbourne.

If you want a 3 bedroom house now anywhere near a city you will be travelling 1-2 hours to get to work for something affordable.

So please keep telling me hard it was for you back then.
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Old 15-06-2018, 10:50 AM   #628
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Default Re: Australia housing bubble

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so...
so what?

this isn't a problem for young people to fix. its a policy problem EVERYONE needs to fix, but too many have profited and refuse to see their paper wealth reduce, the pollies especially. we need major CGT and negative gearing reform, but its never going to happen.
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Old 15-06-2018, 11:15 AM   #629
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Default Re: Australia housing bubble

I'm alright Jack, stuff the rest of you....
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Old 15-06-2018, 12:14 PM   #630
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Default Re: Australia housing bubble

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Affordability and location also come into this. All you older guys saying it was hard back then as well, of course it was, no one is denying that, but now it is harder than ever, that is fact.

My folks bought a house 31 years ago 15 minutes from Melbourne for (once converted with inflation to match todays price) $220,000. Find me a 3 bedroom house with 2 bathrooms, a double garage and a 600 square block for $220,000. You wont find one. Even for a 3 bedroom townhouse with no backyard is pushing 500-600k 15 minutes from Melbourne.

If you want a 3 bedroom house now anywhere near a city you will be travelling 1-2 hours to get to work for something affordable.

So please keep telling me hard it was for you back then.
You're right mate. It's way tougher now. I'm 55 now and bought my first place in 1988. There was a property boom that year and everyone was going nuts back then because, for example, a 2 bedroom unit at Bondi that was worth $115,000 in 1987 was selling for $150,000 6 months later. Vendors were pulling out of deals because another buyer would offer $5,000 more the next day. That’s when the anti gazzumping laws were introduced . Having a mortgage of $100,000 at that time was considered high. Rates were around 15% and rising. The average salary was $25,000.

Fast forward 30 years and that same property would sell for around $1.0M today and the average wage in 2018 is $84,000. The property has increased 6.7 times while wages have increased by only 3.3.

From that $84,000 you need to put enough away to save a 20% deposit , or $200,000 . After tax on $84,000 you're left with about $65,000 so even if you spent none of that it would take you 3 years to save the deposit.. Then having saved the deposit you need to sign your life away to borrow $800,000 which is probably not achievable on a $84k income.
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