Author Topic: Property in Australia  (Read 40380 times)

potm

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Property in Australia
« on: September 09, 2014, 12:16:42 AM »
Hello my fellow Australians,

I've noticed a distinct difference in attitudes to property on these forums and other financial sites and blogs compared to Australian specific forums when it comes to property discussion.
I thought it would be good to have a discussion on property, both for a ppor and investing with other rational mustachians instead of the heated emotional debates which usually occur.

My situation is that I'm looking for an apartment as a PPOR ideally in the Melbourne CBD. Whenever I mention this to anybody, they are always quick to tell me what a bad idea that is. That has me even more interested, the more everybody thinks it's a bad idea, the cheaper it must be and thus a better idea. Conventional wisdom is that you should invest in houses with land in desirable suburbs but of course that's where the free markets come in and price things accordingly. People don't seem to understand this though.

In terms of investing, I'm quite happy to stick to shares. I know more about them and there's a lot more information and tools available to research. Just trying to do research on apartments in the Melbourne CBD atm and am struggling to find any useful information. I wish there was some sort of database where I could download a list of all apartment buildings in the Melb CBD and filter by size and have recordings of all past sales.

It's a lifestyle consumption decision though and the biggest expense so not one that I'm taking lightly. With all this talk about new developments coming up and the glut of apartments, I figure that the next few years will present a good opportunity to acquire an apartment. Just monitoring prices from what little information is available, it seems like the last few years the prices have been pretty stagnent after a surge from 2009-2010. I am hoping that with more supply coming online that prices will decline in nominal terms and give me a better opportunity.

Any advice on researching property, specifically apartments and insights into the Melbourne apartment market would be appreciated.
Feel free to share your own situation and views regarding property.

deborah

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Re: Property in Australia
« Reply #1 on: September 09, 2014, 01:26:17 AM »
Where do you regard as the Melbourne CBD? This is not a trick question, as it could be the golden mile, or include Southbank, or include St. Kilda Road, or some other variation. I haven't looked into Melbourne real estate for some time, but at one stage I worked in a place on Victoria Parade, and one of my friends had a warehouse conversion they had done about a block into Fitzroy - it was one of the most beautiful homes I have ever visited. Several people I knew also lived just inside North Melbourne (a picture from their back gate included the Queen Vic Market). But none of these were in the CBD.

I do know some people who had an apartment in the golden mile, and exchanged it for another in the golden mile, because the first was too cramped, and the lift didn't work as well as it could have. The first was a conversion of a 4 story building (one apartment per floor, and the second and 8 story building (the same). Both had parking, which is somewhat rare in the smaller conversions. They had a child, and one of the problems at the time was trying to find schooling in the vicinity.

Primm

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Re: Property in Australia
« Reply #2 on: September 09, 2014, 01:32:39 AM »
I wish there was some sort of database where I could download a list of all apartment buildings in the Melb CBD and filter by size and have recordings of all past sales.

=Sell&PriceMin=Any&PriceMax=Any&Type[]=Unit&BedsMin=0&BedsMax=10&BathsMin=0&BathsMax=10&CarsMin=0&CarsMax=10&Activity=0&Layout=combined&AddRecentSearch=true&MapZoom=15&MapCenter=-37.8146,144.9703]Listing of past sales of Melbourne CBD apartments.

Now, your other two wishes were...?

marty998

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Re: Property in Australia
« Reply #3 on: September 09, 2014, 01:43:11 AM »
Don't know too much about Melbourne, only to stay the hell away from Docklands.

Up here the rule was to invest where the Chinese are buying. Now that the Chinese are buying everywhere it doesn't hold as true anymore!

You are right though, the best time to buy is when everyone says not to. Watch out for strata fees - the new high rises will crucify you with fees for pools, gyms, spas, 24/7 security guards, lifts and management fees.

HappierAtHome

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Re: Property in Australia
« Reply #4 on: September 09, 2014, 01:59:59 AM »
I live in an apartment on the edge of the Perth CBD, so I'm commenting on the apartment versus house issue rather than the 'is an apartment a decent investment' issue. Personally I don't think any real estate in Aus is a fantastic investment right now.

Things that bother me about living in an apartment in the CBD:
Family/friends can't just park in the driveway/on the front verge. It's paid parking with a two hour max stay outside my building, six days a week. That's if there's any parking available in the first place.
The walk to and from your car bay may be surprisingly long. This is only an issue for me when I'm carrying something awkward or heavy, but YMMV.
If your neighbours smoke on their balconies (or inside their apartments with the windows open) and your windows are open, it will be like there's someone smoking right inside your lounge room.
Limited ability to garden.
Limited ability to be outside without being visible to neighbours (I miss being able to sit in the backyard in PJs with my morning coffee, sigh).
Drying clothes is harder.
DIY stuff is harder because you typically don't have a big enough outdoor space to build furniture etc.
If you have kids / plan on having them, it's really annoying to get prams etc in and out of an apartment building compared to a house.
People use your building's free visitor bays as their all-day parking while they're at work (seriously, I see people drive in to our visitor bays, go to work in the city and then come back and collect their car at the end of the day - so not cool. This generally means there are no visitor bays for my visitors during the week).
Strata fees are a bitch and our strata is useless as anything.
Lift works maybe 70% of the time.

Things that are completely amazing and so worth the above listed negatives:
Short commute, short commute, short commute.
Close to all possible amenities, including infrequent but cool things like fancy takeaway, or being walking distance from home at the end of a big night.
You can walk everywhere! Well, a lot of places.
When you do have to go out to the 'burbs, it's a relatively short trip by car or public transport.
In Perth, the central suburbs have free public transport.
Very little maintenance work / gardening.

happy

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Re: Property in Australia
« Reply #5 on: September 09, 2014, 03:41:50 AM »
I don't know much about Melbourne so this is generic advice which has stood me in good stead.

Take your time and understand the local market where you are buying. For example my local market is driven by a)the Sydney market, when prices go up lots of people come looking since they can get more for their money  and b)local geography which limits much further development i.e. more demand with limited supply. Our market has been hot hot hot for the last year, and coming into spring when things normally start moving fast we have the lowest number of houses on the market I've ever seen: so I suspect it will just go up even higher. You need to understand what drives the market in the part of Melbourne you have your eye on.
You make  money buying low so you want to know exactly what you are looking for is worth. When you see a good deal move quickly. You have to watch the internet and see plenty of properties to know what a good deal is.
I create a standard search of postcodes I'm interested in on the most used real estate websites. I search the same way each time, so I can monitor how many properties are on the market, how quickly they turn over etc, and what they actually sold for.

If you are buying an apartment, at least in NSW, its possible to ask to view the body corporate minutes which will give you some idea if there are huge issues that you don't want to buy into.


Journalling at Happy Aussie Downshifter

potm

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Re: Property in Australia
« Reply #6 on: September 09, 2014, 04:43:52 AM »
Thanks for the replies all,
I've seen that site along with a couple of others but the data is very incomplete and says contact agent half the time. It seems like it's up to the agent whether they want to report the sale at all.
What I need to do I think is create a short list of apartment buildings so I can monitor the sale prices and pounce when the right deal comes along.
I don't think there's any hurry at the moment though, prices aren't going anywhere and the more I save the better off I am.

AustralianMustachio

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Re: Property in Australia
« Reply #7 on: September 09, 2014, 04:52:37 AM »
These are recommendations I was given from this very forum which have proven very useful to me so far:

http://somersoft.com/forums/ - a forum surrounding investment property in Australia.

http://petewargent.blogspot.com.au -

As for investing in the CBD itself - that is something that investors are generally wary of. A lack of height restrictions means that there is no limit on supply, which leads to oversupply and poor capital growth. The inner ring of suburbs are generally considered better investments for this reason.

Personally I live in Melbourne, but I'm considering an investment property in Brisbane. The entry points are lower and it's been a while since there has been capital growth there, which usually means it is still to come.

happy

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Re: Property in Australia
« Reply #8 on: September 09, 2014, 05:28:12 AM »
Thanks for the replies all,
I've seen that site along with a couple of others but the data is very incomplete and says contact agent half the time. It seems like it's up to the agent whether they want to report the sale at all.
What I need to do I think is create a short list of apartment buildings so I can monitor the sale prices and pounce when the right deal comes along.
I don't think there's any hurry at the moment though, prices aren't going anywhere and the more I save the better off I am.
It does seem to depend on the local real estate agents how much they report sales on the internet. Often the sales reported are the ones where an outstanding figure is reached. Some areas I notice whats on the internet is quite incomplete.
3 ways to get sales info:
1. on realestate.com.au, when you look at a particular property, down the bottom you may see a list of recent sales in your area. It takes a week or 2 for properties to appear and they disappear a few weeks later. You can track sales prices this way. I'm not sure this appears everywhere, but it does in my local area and a few  of the others I'm keeping an eye on.
2. Try Allhomes.com.au, and go to the research section. You can search the sales history of a property or a street. You can find out when a property last changed hands, and for how much. It takes a couple of months after a sale for the price to appear
3." Finger on the pulse method". Attend auctions and you'll know what it sold for, or if passed in what the bidding went to. Go to open houses and chat to the agent. Ask them if they know what a particular property went for. You can often pump them for quite a lot of info, since there may be a story behind the price reached. Agents worth their salt usually know what something sold for even if its not their listing.
Journalling at Happy Aussie Downshifter

agent_clone

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Re: Property in Australia
« Reply #9 on: September 19, 2014, 04:48:34 AM »
My understanding of the centre of Melbourne is that there have been a lot of apartments being built and there are still more to come.  A lot of the apartments being built are also quite small (i.e. 1b 40m2 apartments).  I know that the rental prices for a 2 bedroom in Essendon dropped by about $50pw+ between 2011 and 2014 (i.e. I was looking at moving to Melbourne around April 2011 and April 2014, but that is not in my current plans).  I would assume that the rental prices have been affected by the availability of apartments coming online.

Personally I am not a fan of purchasing into high rise apartments, however that is more to do with the fact that after about 30-40 years the maintenance for them can be quite significant as things like plumbing and electrical wiring can become issues.  The lifts also increase the amount of body corporate you need to pay.

If I were to be looking for an apartment in a high rise building, my preferences would be to look at something about 5 years old, that has a body corporate/strata report (builders are particularly dodgy in Canberra, I'm not sure about Melbourne).  I would be looking at the size of the unit, e.g. I found a 60m 2 bedroom apartment that I used to live in an ok size, but due to the layout what was meant to be the lounge/dining area was not functional in my opinion so this may or may not be suitable for your purposes.  I would be buying something at least 50m2, it is easier for potential purchasers to get finance at this size, though probably as its the Melbourne CBD.

Personally I don't think that the Melbourne CBD is necessarily a bad investment, however I would probably pick carefully what you purchase.

I remember there being a site that is meant to have accurate sales price data but you have to pay for it.  I think it is: http://www.myrp.com.au/ but I cannot be sure.

marty998

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Re: Property in Australia
« Reply #10 on: September 22, 2014, 02:36:38 AM »

I remember there being a site that is meant to have accurate sales price data but you have to pay for it.  I think it is: http://www.myrp.com.au/ but I cannot be sure.

www.onthehouse.com.au is another with past sales price data. you just need to register with an email and password (another bloody password to remember lol).

My understanding of the centre of Melbourne is that there have been a lot of apartments being built and there are still more to come.  A lot of the apartments being built are also quite small (i.e. 1b 40m2 apartments).  I know that the rental prices for a 2 bedroom in Essendon dropped by about $50pw+ between 2011 and 2014 (i.e. I was looking at moving to Melbourne around April 2011 and April 2014, but that is not in my current plans).  I would assume that the rental prices have been affected by the availability of apartments coming online.

40sqm is tiny. A lot of banks won't finance anything under 50, at least without great difficulty. It's not that they're unliveable, it's more a case of who are you going to sell it to and/or what sort of tenant are you going to attract (itinerant uni bludger etc)

Chicken

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Re: Property in Australia
« Reply #11 on: September 22, 2014, 05:18:05 PM »
Can't you just rent the same or similar apartment for 1/2 the monthly cost?

AustralianMustachio

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Re: Property in Australia
« Reply #12 on: September 25, 2014, 11:44:29 PM »
Hey guys, don't know if this should go in the Australian Investing thread or this one on property, but I have a couple of questions about Australian REITs.

I want to invest in real estate but the high prices and my aversion to borrowing are keeping me out of the market at the moment. On MMMs blog he mentions how REITs are a passive way of accomplishing the same thing as real estate. However from what I've read Australian REITs are only invested in Australian commercial property.

1) Are there any Australian REITs that invest in residential property?
2) How correlated are Australian commerical and residential property?
3) If property prices go up, but rents don't, does the price of the REIT benefit in any way? Or are they simply tied to rental prices?
4) Are there any Australian REITs that move in line with the prices of Australian property?

Pretty much, I'm wondering if there an investment out there that gives me something similar to Australian investment property, which I don't have to pay hundreds of thousands of dollars for.

agent_clone

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Re: Property in Australia
« Reply #13 on: September 26, 2014, 03:53:42 AM »
I'm not sure about REITs as I haven't investigated them.  But, commercial properties in Australia get better returns than residential property.  However they are probably subject to more risk in that if there is a down turn in the economy it may take a while to relet the property, I'm not sure how REITs are affected by this.

marty998

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Re: Property in Australia
« Reply #14 on: September 26, 2014, 06:07:32 AM »
I thought there was a company called RUN that tried it a few years back (resi REIT). Maybe I'm dreaming it.

Staff Only

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Re: Property in Australia
« Reply #15 on: October 04, 2014, 12:07:16 AM »
I agree a lot with what happy said earlier about taking your time and doing your research.

I purchased my principal place of residence (ppor) in 2010 in an area where I had rented previously.  This meant that by the time I was ready to buy I already knew the pros and cons of the area.

I bought a 2 bedroom unit which is one of 10 in a 30 year old block of units situated at the end of cul de sac in a suburb approximately 12 kms from the Brisbane CBD.  The body corporate was low and as happy suggested earlier, I checked the minutes of the body corporate to see what the issues were, if any.  After buying the unit, I also joined the body corporate, which has been helpful in many ways.

Although the unit is my home, I have kept resale in the back of my mind from the very beginning.  If you have this mindset it will hopefully keep the emotion out of it when buying (and renovating) a home.

Even though my partner and I do not have children, I wanted a 2 bedroom unit because I wanted a flatmate to help pay the bills.  This has worked out really well for us BUT make sure you wait for one year after you move in before renting out a room.  You risk losing your ppor stamp duty concession if the Office of State Revenue find out.

Because having flatmates has been important to me, I caught public transport to my first viewing of the unit.  This meant I had a first-hand understanding of what the bus schedule was like before I even saw the place.  The excellent public transport in the area has turned out to be a great selling point when renting my spare room.
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Deano

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Re: Property in Australia
« Reply #16 on: October 04, 2014, 05:21:35 AM »
I'm not sure why anyone would buy property in Australia right now. Aus, like Canada, is in the midst of a fairly large property bubble.

Don't buy an apartment-rent one.

agent_clone

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Re: Property in Australia
« Reply #17 on: October 05, 2014, 12:31:34 AM »
My understanding is that there is some debate as to whether we are actually in a property bubble or not.  There are issues with supply and demand that cause the prices of property to be so high.  This is also another reason that Sydney is so much more expensive than Melbourne property wise.  Melbourne has built a lot of new apartments in the CBD area, but I don't think Sydney has built as many.

That being said, Australia does have a property price issue and I'm not sure how things will go when interest rates begin to rise again.

Edit: I should also note tha the supply and demand thing is from people moving to/being born in australia, not from overseas investors.
« Last Edit: October 05, 2014, 12:37:40 AM by agent_clone »

deborah

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Re: Property in Australia
« Reply #18 on: October 05, 2014, 01:45:32 AM »
Edit: I should also note tha the supply and demand thing is from people moving to/being born in australia, not from overseas investors.
It is not only Australians who talk about the supply/demand thing. It's a while ago, and I cannot remember the exact authors of the international studies I refer to but:

1. I think it was the OECD who did a study about supply/demand in different economies around the world that decided that house prices were strongly related to the amount of regulation on the release of land. Australia was at the top of the list in this study, while I think the US was about the lowest. The study concluded that Australian house prices wouldn't go down until there was much less regulation, and from the graphs it appeared that there wasn't really a bubble.

2. "The Economist" has done several studies over the years which tend to be interpreted in a variety of ways by other media commentators (some say there is a bubble), but the attached commentary usually appears to say that Australian supply and demand is actually causing the bubble, and it won't disappear until this changes. 

Staff Only

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Re: Property in Australia
« Reply #19 on: October 05, 2014, 01:54:13 AM »
I'm not sure why anyone would buy property in Australia right now. Aus, like Canada, is in the midst of a fairly large property bubble.

I literally cannot remember a time in my adult life when there hasn't been someone somewhere saying this.  My first home ended up being my springboard into wealth when I sold it 4 years later for a whole lot more than what I originally paid.  It was a townhouse.

Property is like any other investment choice.  Do your homework before you buy and invest when you are ready. 
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arebelspy

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Property in Australia
« Reply #20 on: October 05, 2014, 04:20:01 AM »
My understanding is that there is some debate as to whether we are actually in a property bubble or not. 

Some said the same thing here...
« Last Edit: October 05, 2014, 04:24:53 AM by arebelspy »
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agent_clone

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Re: Property in Australia
« Reply #21 on: October 05, 2014, 04:40:19 AM »
In Australia they have been predicting a burst of the bubble for my entire adult life (12 years, and I would assume longer).  Property prices have continued to climb throughout this period.

I do think that there is currently potentially a perfect storm with historically low interest rates, huge mortgages, and a potentially slowing economy/increased job losses (exactly how much of this is media hype I don't know in regards to the economy however I do not think that the current governments policies will help, though the lowering of the Australian Dollar to the US Dollar may).  How much of a dip this would cause I don't know.

I am wondering how many people have overcommitted themselves in purchasing their PPOR and investment properties, and the ability of those people to repay the loans.  Personally prior to purchasing I worked out as to whether I could repay the loan at 10% interest rates, the banks are required to figure out if you can repay it at 7%.  10% is doable for me, but would probably be slightly uncomfortable.  From a personal point of view I would definately appreciate it if interest rates stayed low for the next 3 years or so while I am devloping a base for my offset account.

deborah

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Re: Property in Australia
« Reply #22 on: October 05, 2014, 04:54:40 AM »
My understanding is that there is some debate as to whether we are actually in a property bubble or not. 

Some said the same thing here...
48% of Australians were born overseas. We are a nation of immigrants, and, unfortunately, housing has not been built as quickly as the immigrants have arrived. I don't think any other country has this challenge. If it stopped, there would be more fundamental problems than a housing bubble bursting.

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Re: Property in Australia
« Reply #23 on: October 05, 2014, 08:59:12 PM »
My understanding is that there is some debate as to whether we are actually in a property bubble or not. 

Some said the same thing here...
48% of Australians were born overseas. We are a nation of immigrants, and, unfortunately, housing has not been built as quickly as the immigrants have arrived. I don't think any other country has this challenge. If it stopped, there would be more fundamental problems than a housing bubble bursting.

Canada's not a nation of immigrants?

If you think there is no bubble then there is no bubble. Until it pops......

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Re: Property in Australia
« Reply #24 on: October 05, 2014, 10:47:45 PM »
My understanding is that there is some debate as to whether we are actually in a property bubble or not. 


There is always debate in a bubble if it is a bubble or not.  If everyone agreed there was a bubble, people would realize property is overvalued and prices would crash.  You can always find someone who's livelihood depends on prices going up for forever to argue that there isn't a bubble.  If it costs twice a month to buy as it does to rent it seems like a pretty stupid investment.  Whether it crashes tomorrow or 5 years from now, or is stagnant for 20, eventually prices will come back. 

AustralianMustachio

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Re: Property in Australia
« Reply #25 on: October 06, 2014, 12:37:39 AM »
From what I've read, property in Australia is probably more like property in the UK, than anywhere else.

Yes there was a price correction in most of the country. But it was the regional areas that got hit the hardest.

Was there a price correction in well located suburbs in London? Nope. People there had well paid jobs nearby, and therefore had the money to keep paying a premium to live close to their well paid jobs. Look up the performance of places like Mayfair. The returns on investment property there have blown all other investment competition out of the water, all the while the country has been in economic recession.

There may be a correction overall in Australia, but IMO* well located property in the capital cities won't be very badly affected. People living in the nicest areas of Sydney are going to have multiple income streams and the means to continue to pay a premium to live in the areas they wish to live.

*don't stake anything important on the opinions from random people on the internet

agent_clone

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Re: Property in Australia
« Reply #26 on: October 06, 2014, 01:11:32 AM »
Personally I would be happy with prices stagnating for the next 20 years.  Prices dramatically falling would cause a number of issues (both with taxation and with people being underwater).  However as AustralianMustachio has indicated, part of the issue is that people earn enough to pay for the mortgages and so long as people can afford it they will continue to do so.  To have a price correction in our major cities there needs to be a major recession in Australia, or something seriously needs to be done about supply in the inner city areas.  From what I can see there was a bit of a correction in 2008/9 however prices have simply risen since then (particularly with the lowering of the interest rates)

This indicates some of the economies around where people want to live, and why businesses want to be there in Australia: http://www.abc.net.au/radionational/programs/counterpoint/cities/5719632


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Re: Property in Australia
« Reply #27 on: October 06, 2014, 03:21:43 AM »
My understanding is that there is some debate as to whether we are actually in a property bubble or not. 

Some said the same thing here...
48% of Australians were born overseas. We are a nation of immigrants, and, unfortunately, housing has not been built as quickly as the immigrants have arrived. I don't think any other country has this challenge. If it stopped, there would be more fundamental problems than a housing bubble bursting.

Canada's not a nation of immigrants?

If you think there is no bubble then there is no bubble. Until it pops......
Canada has a lot of immigrants, but significantly less than Australia.

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Re: Property in Australia
« Reply #28 on: October 11, 2014, 02:41:14 PM »
My understanding is that there is some debate as to whether we are actually in a property bubble or not. 

Some said the same thing here...
48% of Australians were born overseas. We are a nation of immigrants, and, unfortunately, housing has not been built as quickly as the immigrants have arrived. I don't think any other country has this challenge. If it stopped, there would be more fundamental problems than a housing bubble bursting.

Canada's not a nation of immigrants?

If you think there is no bubble then there is no bubble. Until it pops......
Canada has a lot of immigrants, but significantly less than Australia.

Permanent residency in Canada runs at about almost a quarter million people per year, the number is about 100k less for Australia. Furthermore, Canada's peak immigration year was 400k, Australia's was about 170k. Start with Wikipedia, move on from there to government sites, they all say roughly the same thing.

Canada has significantly more immigration than Australia. We have a housing bubble that will not be propped up by immigration. You have a housing bubble that will not be propped up by immigration. I'm sorry to tell you, but I think it's pretty clear.

deborah

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Re: Property in Australia
« Reply #29 on: October 11, 2014, 03:33:46 PM »
My understanding is that there is some debate as to whether we are actually in a property bubble or not. 

Some said the same thing here...
48% of Australians were born overseas. We are a nation of immigrants, and, unfortunately, housing has not been built as quickly as the immigrants have arrived. I don't think any other country has this challenge. If it stopped, there would be more fundamental problems than a housing bubble bursting.

Canada's not a nation of immigrants?

If you think there is no bubble then there is no bubble. Until it pops......
Canada has a lot of immigrants, but significantly less than Australia.

Permanent residency in Canada runs at about almost a quarter million people per year, the number is about 100k less for Australia. Furthermore, Canada's peak immigration year was 400k, Australia's was about 170k. Start with Wikipedia, move on from there to government sites, they all say roughly the same thing.

Canada has significantly more immigration than Australia. We have a housing bubble that will not be propped up by immigration. You have a housing bubble that will not be propped up by immigration. I'm sorry to tell you, but I think it's pretty clear.
As everywhere I had looked had said that the overseas born percentage of the current population is greater for Australia than for Canada, I was quite surprised by this post, so I looked it up. The 400,000 figure was for 1912, and I suspect that very few of these people are members of the current Canadian population. The huge influx in Australia started in the 1950's  so most of these people would still be alive. It has also been more sustained. Also, Australia only has 2/3 of the population of Canada. So, while Canada might have more immigrants per year currently, Australia still has a greater percentage of overseas born people.

Deano

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Re: Property in Australia
« Reply #30 on: October 11, 2014, 09:41:02 PM »
My understanding is that there is some debate as to whether we are actually in a property bubble or not. 

Some said the same thing here...
48% of Australians were born overseas. We are a nation of immigrants, and, unfortunately, housing has not been built as quickly as the immigrants have arrived. I don't think any other country has this challenge. If it stopped, there would be more fundamental problems than a housing bubble bursting.

Canada's not a nation of immigrants?

If you think there is no bubble then there is no bubble. Until it pops......
Canada has a lot of immigrants, but significantly less than Australia.

Permanent residency in Canada runs at about almost a quarter million people per year, the number is about 100k less for Australia. Furthermore, Canada's peak immigration year was 400k, Australia's was about 170k. Start with Wikipedia, move on from there to government sites, they all say roughly the same thing.

Canada has significantly more immigration than Australia. We have a housing bubble that will not be propped up by immigration. You have a housing bubble that will not be propped up by immigration. I'm sorry to tell you, but I think it's pretty clear.
As everywhere I had looked had said that the overseas born percentage of the current population is greater for Australia than for Canada, I was quite surprised by this post, so I looked it up. The 400,000 figure was for 1912, and I suspect that very few of these people are members of the current Canadian population. The huge influx in Australia started in the 1950's  so most of these people would still be alive. It has also been more sustained. Also, Australia only has 2/3 of the population of Canada. So, while Canada might have more immigrants per year currently, Australia still has a greater percentage of overseas born people.

Deb, we're talking housing here, the stat of percentage of foreign born residents doesn't matter-it's the number of immigrants coming in. 250k to 160k-roughly a third more than Australia, slightly more per capita. Canada has more coming in and you would expect that this would buoy the housing market-but you'd be wrong. Both markets will crash. Australia has fewer immigrants coming in-so you'd be right in guessing that there is even less protection for the housing market.

happy

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Re: Property in Australia
« Reply #31 on: October 12, 2014, 05:28:52 AM »
Well this bubble v lack of supply debate has been going on for quite a while here: time will tell. I really thought the Sydney market wouldn't go too much higher, but last year went up 15%, and still going up this year. 

We all still need a place to live, so for PPOR I personally think one should do ones own rent v buy calculation.  For me, already bought in, it was cheaper to stay put and pay the mortgage, than rent and sell. But definitely YMMV.
Journalling at Happy Aussie Downshifter

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« Reply #32 on: December 02, 2014, 08:07:42 PM »
buying a ppor is probably worth doing for most people, because of the tax benefits.  And the govt will struggle to cut these benefits, because they will get voted out.

make sure you do your reasearch, get educated, and buy a place with good capital gains potential.

But it is a very emotional/lifestyle decision, and these factors can take higher precedence in some people.  But don't let your emotions trick you in to buying a financial lemon :)

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Re: Property in Australia
« Reply #33 on: February 27, 2015, 07:24:03 PM »
We currently own our PPOR but we are looking to move out soon and rent.

The tax man will subsidise the rent to the tune of several thousand a year if we rent, and rent out our place.

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Re: Property in Australia
« Reply #35 on: March 05, 2015, 01:22:16 AM »
If I'm 'stashing cash at a rate of 80k+ per year, with a rent of 26k, is it more beneficial for me to buy a PPOR now and pay it down quickly or wait until I have the full amount and buy it outright? If there's benefit to carrying a mortgage balance, what's the optimum deposit for me to put down? 25%? 50%? Are mortgages under 50% of the home value even a thing?

I dunno, it just makes more sense to me to take 'living situation' year by year rather than locking myself into the one place. That's not even thinking about the opportunity cost of all that money tied up in one place. Also stamp duty seems ridiculous, tens of thousands of dollars for the privilege of making a transaction, I can't see myself ever wanting to pay that particular gouge.

happy

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Re: Property in Australia
« Reply #36 on: March 05, 2015, 01:41:29 AM »
The answer depends on a lot of factors, so no-one can just give a yes/no answer on this.

If you don't have long terms roots in an area its probably not worth buying PPOR, unless you buy something you could easily rent. What makes a good rental, is not always what you'd choose for your own longterm home, so its wise to work out what you are doing and why beforehand. Buying and selling houses is expensive and you can lose a lot if you buy and sell quickly.

If  the housing market you are interested in is rising rapidly and you think thats likely to continue, then buying PPOR is a good move.  On the other hand if you think your market of interest has peaked, or not likely to rise greater than inflation then the figures stack up differently.

The more you minimise interest repayments on a mortgage  the better….whether thats by borrowing less, or paying down fast. Yes <50% mortgages certainly exist (I have one): the more equity you put in, the more favourably the bank will look at your request, since in the case of default they have a proportionally smaller amount of debt to recover.  In Australia the pay the mortgage vs invest equation still probably leans on paying the mortgage down, unless you are a very good investor, and in a lower marginal tax bracket. There's still some discussion about this amongst the Aussies on this board, but mortgage rates are not as low as US and tax structures are different, so the numbers more clearly favour investing there.
Journalling at Happy Aussie Downshifter

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Re: Property in Australia
« Reply #37 on: March 05, 2015, 01:46:04 AM »
BattlaP, I would ask yourself where you want to live and retire.  If you want to retire to somewhere else, how long until you retire, and if it is a long timer away, are you planning on staying in the same location until you do so.  Plugging in a yearly mortgage repayment of 25k into How much can I borrow on https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/mortgage-calculator returns 350k.

Ultimately my mother (and a number of other people) say that you don't need to buy until you retire, it is also a lifestyle choice rather than necessarily a sound financial decision.  My mother initially bought a place because of the scarcity of rental properties around at the time.

If you don't feel the need to buy at the moment, why bother, or if your thinking about buying but still happy renting you could try the lazy approach to buying (i.e. what I did).  I set myself a price range, stuck to it, went to the occasional house inspection when I was in the mood, and bought something about 1.5 years after I started my randomish looking.  This way I didn't get sick of the house inspection process and I bought something that I am happy with.

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Re: Property in Australia
« Reply #38 on: March 05, 2015, 02:05:40 AM »
Remember that it costs about 30% to sell a place and buy another. It really is much better to buy a PPOR if you are going to stay in it for a long time, and rent if you are not.

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Re: Property in Australia
« Reply #39 on: March 05, 2015, 04:10:50 AM »
48% of Australians were born overseas. We are a nation of immigrants, and, unfortunately, housing has not been built as quickly as the immigrants have arrived. I don't think any other country has this challenge. If it stopped, there would be more fundamental problems than a housing bubble bursting.

Let's see what the ABS http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/3412.0Chapter12011-12%20and%202012-13 has to say...
At 30 June 2013, 27.7% of the estimated resident population (ERP) was born overseas (6.4 million people). This was an increase from 30 June 2012, when 27.3% of the ERP was born overseas (6.2 million people). In 2003, ten years earlier, 23.6% of the ERP were born overseas (4.7 million people).

Persons born in the UK continued to be the largest group of overseas-born residents, accounting for 5.3% of Australia's total population at 30 June 2013. This was followed by persons born in New Zealand (2.6%), China (1.8%), India (1.6%) and Vietnam (0.9%).

If 48% of the population was born overseas, that would mean every second person you meet was born somewhere other than Australia...
« Last Edit: March 05, 2015, 04:23:08 AM by SU »

deborah

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Re: Property in Australia
« Reply #40 on: March 05, 2015, 10:33:41 AM »
I remember thinking when I read that figure that it was HUGE - now where did I get it from? Thanks for that - maybe it was "have a parent born overseas" - which would be about right.

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Re: Property in Australia
« Reply #41 on: March 06, 2015, 04:46:29 PM »
Overall Australia is overpriced. Australia boomed on Chinese commodities demand. That demand is waning. So will the price of RE.

RE prices = money supply to buy. If money supply goes down (recession, lower population, higher interest rates, etc.) then prices drop.

There will be some areas that will do well - again based on demand. Here is San Diego the closer to the ocean the less likely to fall in value as the wealthy buyers' money supply is more constant (or rises during a recession if they hold cash).

With savings deposit interest rates approaching 4% in Australia the return on an RE deal would have to be pretty good.

I miss the near 8% days. Life was easy thanks to Aussies.
I retired at 40. Have been having / raising kids since.

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Re: Property in Australia
« Reply #42 on: March 07, 2015, 10:51:45 AM »
There was an interesting article in fairfax media yesterday, which has a graph showing that I had the worst time paying for a house and that people currently don't have it so bad (she says tongue in cheek) - http://www.canberratimes.com.au/business/comment-and-analysis/gen-x-and-y-its-time-to-toughen-up-20150306-13wjy2.html

agent_clone

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Re: Property in Australia
« Reply #43 on: March 07, 2015, 10:15:44 PM »
The issue I see with house price affordability currently is not what people are currently paying out of pocket, but what will happen when interest rates rise.  I am of the opinion that part of the reason that house prices are so high is that interest rates are so low.  The other thing is that putting a bit extra onto the mortgage doesn't go as far now, as it would if the house prices were lower with interest rates higher.  However there are now some nice features of loans like offset accounts.

On the deposit aspect I think it somewhat depends on what your income is.  For example, it took me about 7-8 years to save the money I had for a deposit for the city I'm currently living in.  But about 2/3 of that was saved in the last 2.5 years prior to me buying.  The difference being the income that I was earning.  I closed to doubled what I was earning prior (which was a crap amount) by a new job.

I have had some discussion about financial challenges now vs in the past with my parents (who are I think a few years older than the oldest baby boomers not sure what generation name was given to those born during the 2nd world war).  From memory we decided that each generation has their own financial challenges.  As an example it used to be that food was the majority of peoples household budgets rather than accomodation.  I do think there is more disposible income now (or at least more flexibility with what you do with it).  However if you are on a lower income then it is probably harder now than it used to be (because greater inequality and said disposible income making rents higher, and the fact that the public housing system has been seriously scaled back over the last 20 years or so).

This_Is_My_Username

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Re: Property in Australia
« Reply #44 on: March 09, 2015, 01:54:18 AM »
Quote
If I'm 'stashing cash at a rate of 80k+ per year, with a rent of 26k, is it more beneficial for me to buy a PPOR now and pay it down quickly or wait until I have the full amount and buy it outright? If there's benefit to carrying a mortgage balance, what's the optimum deposit for me to put down? 25%? 50%? Are mortgages under 50% of the home value even a thing?

I dunno, it just makes more sense to me to take 'living situation' year by year rather than locking myself into the one place. That's not even thinking about the opportunity cost of all that money tied up in one place. Also stamp duty seems ridiculous, tens of thousands of dollars for the privilege of making a transaction, I can't see myself ever wanting to pay that particular gouge.

no one has mentioned yet, you need to be a skilled property investor to buy a PPOR that goes up in value strongly in the long term.  You need to know all about location, history, research, the council, construction, building alignment, town planning,  noise, etc. all sorts of shit. 

you don't need any intelligence or knowledge to buy a REIT or a shares index fund.

deborah

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Re: Property in Australia
« Reply #45 on: March 09, 2015, 02:17:32 AM »
If I'm 'stashing cash at a rate of 80k+ per year, with a rent of 26k, is it more beneficial for me to buy a PPOR now and pay it down quickly or wait until I have the full amount and buy it outright? If there's benefit to carrying a mortgage balance, what's the optimum deposit for me to put down? 25%? 50%? Are mortgages under 50% of the home value even a thing?

I dunno, it just makes more sense to me to take 'living situation' year by year rather than locking myself into the one place. That's not even thinking about the opportunity cost of all that money tied up in one place. Also stamp duty seems ridiculous, tens of thousands of dollars for the privilege of making a transaction, I can't see myself ever wanting to pay that particular gouge.
Because you pay an enormous amount to change your PPOR (sell the old and buy the new), it makes a lot of sense to STAY in your PPOR for many years. If your housing situation is flexible, rent.

The fees I am referring to include stamp duty (costs the buyer - there are a couple of other fees that are associated), real estate agents fees (which are expensive for the seller) and conveyancing (both).  On a $300,000 PPOR stamp duty and associated costs can be up to $13,628, but the when I sold and bought I recall the auction fees being a lot more. So, you are losing 10% just by changing from one house to another - without including moving costs and mortgage fees.

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Re: Property in Australia
« Reply #46 on: June 15, 2015, 07:36:40 AM »
Hello my fellow Australians,

I've noticed a distinct difference in attitudes to property on these forums and other financial sites and blogs compared to Australian specific forums when it comes to property discussion.
I thought it would be good to have a discussion on property, both for a ppor and investing with other rational mustachians instead of the heated emotional debates which usually occur.

My situation is that I'm looking for an apartment as a PPOR ideally in the Melbourne CBD. Whenever I mention this to anybody, they are always quick to tell me what a bad idea that is. That has me even more interested, the more everybody thinks it's a bad idea, the cheaper it must be and thus a better idea. Conventional wisdom is that you should invest in houses with land in desirable suburbs but of course that's where the free markets come in and price things accordingly. People don't seem to understand this though.

In terms of investing, I'm quite happy to stick to shares. I know more about them and there's a lot more information and tools available to research. Just trying to do research on apartments in the Melbourne CBD atm and am struggling to find any useful information. I wish there was some sort of database where I could download a list of all apartment buildings in the Melb CBD and filter by size and have recordings of all past sales.

It's a lifestyle consumption decision though and the biggest expense so not one that I'm taking lightly. With all this talk about new developments coming up and the glut of apartments, I figure that the next few years will present a good opportunity to acquire an apartment. Just monitoring prices from what little information is available, it seems like the last few years the prices have been pretty stagnent after a surge from 2009-2010. I am hoping that with more supply coming online that prices will decline in nominal terms and give me a better opportunity.

Any advice on researching property, specifically apartments and insights into the Melbourne apartment market would be appreciated.
Feel free to share your own situation and views regarding property.

Hi there,

Long time MMM reader but only just found this post!

I currently live in Melbourne CBD (Docklands) and have been here for about 7 years, and have seen things around here change a lot.
We Own 2 properties here and a few in the Melbourne 'burbs. And aiming to retire MMM style within a few years in my mid 30s.

Despite media doom and gloom I read every week about Melbourne apartments, I personally feel that apartments (established ones anyway) currently offer great value for money.
Try looking at houses around inner Melbourne : Albert Park , South Yarra, Port Melbourne, etc. the areas everybody wants to live, and the prices are astronomical. Also look at Sydney apartments, $1m is buying something very normal.
Melbourne Apartments seem really cheap... You can buy great apartments with 2 bedrooms and parking starting for around $500k? And large ones for $700k+. You should be asking Why do people spend so much on a house to live far far away from jobs and everything else?

As someone who has travelled the world, I feel that Melbourne city is very underdeveloped. There is low rise and undeveloped sites everywhere, including in the middle of the city. We are not oversupplied.

Docklands itself has always had an "over supply" name to it. This is because when the suburb first started being developed about 2000, there was not much around the area and people did not want to live here compared to Southbank or other areas. The world has moved on however, the place is great, surrounding by everything you could ever need.
Whenever I have rented my apartment I have had no such issues and command a very decent rent with long term tenants and the prices have increased plenty!
What gives? I think people just have no idea what is truly going on, particularly the media!

Lastly in regards to future "over supply". Apartments themselves cost a fortune to build with the cost going up every year.
Think about the land, the infrastructure, the basements, the lifts.
If you purchase a $500k 1 bedroom off the plan, it probably Cost the developer $450k to build it for you! There is no great profit margin there. I feel that this will only get worse and the prices for new apartments will keep creeping up making the whole market increase.

Anyway I hope I give you some fresh thinking.
If you want to buy in the CBD then go for it.
Try to stick to established buildings where you can fix up or renovate to add a bit more value

« Last Edit: June 15, 2015, 07:40:04 AM by nath »

alsoknownasDean

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Re: Property in Australia
« Reply #47 on: July 22, 2015, 06:29:37 AM »
Hi there,

Long time MMM reader but only just found this post!

I currently live in Melbourne CBD (Docklands) and have been here for about 7 years, and have seen things around here change a lot.
We Own 2 properties here and a few in the Melbourne 'burbs. And aiming to retire MMM style within a few years in my mid 30s.

Despite media doom and gloom I read every week about Melbourne apartments, I personally feel that apartments (established ones anyway) currently offer great value for money.
Try looking at houses around inner Melbourne : Albert Park , South Yarra, Port Melbourne, etc. the areas everybody wants to live, and the prices are astronomical. Also look at Sydney apartments, $1m is buying something very normal.
Melbourne Apartments seem really cheap... You can buy great apartments with 2 bedrooms and parking starting for around $500k? And large ones for $700k+. You should be asking Why do people spend so much on a house to live far far away from jobs and everything else?

As someone who has travelled the world, I feel that Melbourne city is very underdeveloped. There is low rise and undeveloped sites everywhere, including in the middle of the city. We are not oversupplied.

Docklands itself has always had an "over supply" name to it. This is because when the suburb first started being developed about 2000, there was not much around the area and people did not want to live here compared to Southbank or other areas. The world has moved on however, the place is great, surrounding by everything you could ever need.
Whenever I have rented my apartment I have had no such issues and command a very decent rent with long term tenants and the prices have increased plenty!
What gives? I think people just have no idea what is truly going on, particularly the media!

Lastly in regards to future "over supply". Apartments themselves cost a fortune to build with the cost going up every year.
Think about the land, the infrastructure, the basements, the lifts.
If you purchase a $500k 1 bedroom off the plan, it probably Cost the developer $450k to build it for you! There is no great profit margin there. I feel that this will only get worse and the prices for new apartments will keep creeping up making the whole market increase.

Anyway I hope I give you some fresh thinking.
If you want to buy in the CBD then go for it.
Try to stick to established buildings where you can fix up or renovate to add a bit more value

Honestly I don't think $500K is cheap. That's what, seven times the median income? Isn't the generally accepted practice to spend no more than three times (or was it 5x) one's income on a place?

Then again, I think about whether a price is reasonable or not based on how many times my annual income it is.

I'm looking to buy (probably a two bedroom unit) in a couple of years, and looking at spending somewhere in the $300k range (maybe going up to $350k), once I get a 20% deposit together. If it means buying in a less fashionable suburb a little further out, then so be it. :)

alsoknownasDean

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Re: Property in Australia
« Reply #48 on: September 20, 2015, 09:07:46 AM »
Hi there,

Long time MMM reader but only just found this post!

I currently live in Melbourne CBD (Docklands) and have been here for about 7 years, and have seen things around here change a lot.
We Own 2 properties here and a few in the Melbourne 'burbs. And aiming to retire MMM style within a few years in my mid 30s.

Despite media doom and gloom I read every week about Melbourne apartments, I personally feel that apartments (established ones anyway) currently offer great value for money.
Try looking at houses around inner Melbourne : Albert Park , South Yarra, Port Melbourne, etc. the areas everybody wants to live, and the prices are astronomical. Also look at Sydney apartments, $1m is buying something very normal.
Melbourne Apartments seem really cheap... You can buy great apartments with 2 bedrooms and parking starting for around $500k? And large ones for $700k+. You should be asking Why do people spend so much on a house to live far far away from jobs and everything else?

As someone who has travelled the world, I feel that Melbourne city is very underdeveloped. There is low rise and undeveloped sites everywhere, including in the middle of the city. We are not oversupplied.

Docklands itself has always had an "over supply" name to it. This is because when the suburb first started being developed about 2000, there was not much around the area and people did not want to live here compared to Southbank or other areas. The world has moved on however, the place is great, surrounding by everything you could ever need.
Whenever I have rented my apartment I have had no such issues and command a very decent rent with long term tenants and the prices have increased plenty!
What gives? I think people just have no idea what is truly going on, particularly the media!

Lastly in regards to future "over supply". Apartments themselves cost a fortune to build with the cost going up every year.
Think about the land, the infrastructure, the basements, the lifts.
If you purchase a $500k 1 bedroom off the plan, it probably Cost the developer $450k to build it for you! There is no great profit margin there. I feel that this will only get worse and the prices for new apartments will keep creeping up making the whole market increase.

Anyway I hope I give you some fresh thinking.
If you want to buy in the CBD then go for it.
Try to stick to established buildings where you can fix up or renovate to add a bit more value

Honestly I don't think $500K is cheap. That's what, seven times the median income? Isn't the generally accepted practice to spend no more than three times (or was it 5x) one's income on a place?

Then again, I think about whether a price is reasonable or not based on how many times my annual income it is.

I'm looking to buy (probably a two bedroom unit) in a couple of years, and looking at spending somewhere in the $300k range (maybe going up to $350k), once I get a 20% deposit together. If it means buying in a less fashionable suburb a little further out, then so be it. :)

I keep on flitting between 'yeah I might buy in a year or two' and 'nah fuck that, renting is better' all the time.

At this point, I might buy in 12-18 months. I figure if I've got 10-15% deposit (which shouldn't be too hard to get by then), I might still have to pay LMI, but it'll at least be pretty small (compared to the folks buying with 5%). I've identified that there are some areas around that look alright, aren't too expensive, and aren't too far from the city (I'd be OK with 15km) that might be worth looking into.

Is buying (as a PPOR) with under 20% deposit universally considered a really bad idea?

nath, I disagree on the idea of apartments costing $450K to build in order to sell for $500K. I see plenty of new apartment buildings going up around here and one bedders have often started under $300K. Although, I'm north of the river, prices are a little more sensible up this way :)
« Last Edit: September 20, 2015, 09:12:34 AM by alsoknownasDean »

Anatidae V

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Re: Property in Australia
« Reply #49 on: October 02, 2015, 07:17:56 AM »
We're looking at buying at the moment, and the low interest rates are a big factor. Until now, I had been assuming an 8% interest rate because it was conservative and decided we didn't have enough money to buy more than a slice of land to peg a tent. We've been DINKS for nearly a year now and with our available cash above $100k, we're thinking of buying in the $450k - $600k range, which should give us a 3 by 1 house or unit in the not-too-far-out suburbs. Or we move somewhere cheaper and rent, since rent has been dropping here too. How much contingency should I build into my calcs? We should manage a deposit >10% even with stamp duty by my calculations. Does anyone have advice for how we work out how much to offer the seller? Obviously we will look around to see the general market value, but how much below asking price is reasonable? I see a mix of "from $XXXX", a given range or just a number...