Author Topic: Property in Australia  (Read 37648 times)

GT

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Re: Property in Australia
« Reply #150 on: August 24, 2016, 05:42:26 AM »
Thanks, checked out http://www.onthehouse.com.au/ and it's definately on the high side in comparison to the other sources.

Might just average them all out :)

deborah

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Re: Property in Australia
« Reply #151 on: August 24, 2016, 06:33:42 AM »
Thanks, checked out http://www.onthehouse.com.au/ and it's definately on the high side in comparison to the other sources.

Might just average them all out :)
I cannot believe what it thinks my house is worth! I suspect that it is on the high side, and it is interesting to see the variation it has for the properties in my street.

Freshwater

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Re: Property in Australia
« Reply #152 on: August 24, 2016, 05:14:02 PM »
On the house values properties in my area way under! One big fancy one that just sold was valued at about 500k under. I think in my area there is such variation in quality from fibro shacks to new build palaces that it's impossible to get it right.

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Re: Property in Australia
« Reply #153 on: August 26, 2016, 12:04:09 AM »
OTH is on the low side for my property compared to other sources. There's a $50-$60k difference between some of them (and that's about 20% in my case!).

deborah

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Re: Property in Australia
« Reply #154 on: August 26, 2016, 04:44:53 PM »
Well, I've just been checking out the prices in my area against OTH. They seem to be consistent - all the ones that have sold relatively recently are within about $20,000 of what they got! So I guess they might be right about my place. However, it's amazing that houses in the same (short - I've counted and there are 50 houses) street vary by $300,000 in price.

Freshwater

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Re: Property in Australia
« Reply #155 on: August 26, 2016, 05:50:25 PM »
Interesting articles I saw today:

http://www.smh.com.au/money/ask-an-expert/the-downside-to-investing-in-property-for-retirees-20160819-gqwoqh.html

It's helpful when I am debating this with DH that Noel has chimed in.

http://www.domain.com.au/news/the-result-of-sydneys-property-boom-a-city-of-millionaires-on-the-verge-of-a-class-divide-20160826-gqwc1z/

This makes me all the more certain that although we could downsize and retire elsewhere today, unless we keep property in Sydney we'd never be able to come back.

marty998

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Re: Property in Australia
« Reply #156 on: August 26, 2016, 05:57:47 PM »
My fear in a few years time too... selling up and never being able to get back in. And then future kiddos not being able to get in.

arebelspy

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Re: Property in Australia
« Reply #157 on: August 26, 2016, 08:39:49 PM »
My fear in a few years time too... selling up and never being able to get back in. And then future kiddos not being able to get in.

Prices increasing faster than inflation is unsustainable in the long run.  Think about compound interest, and the difference a few extra percent make.

Now say inflation is 3-4% and house increases are 7-10%.  Run that out for a few decades, and see what would happen.  No one could afford to live anywhere.  It doesn't make sense.

Reason from first principles to see what will have to eventually happen.
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deborah

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Re: Property in Australia
« Reply #158 on: August 26, 2016, 09:37:32 PM »
My fear in a few years time too... selling up and never being able to get back in. And then future kiddos not being able to get in.

Prices increasing faster than inflation is unsustainable in the long run.  Think about compound interest, and the difference a few extra percent make.

Now say inflation is 3-4% and house increases are 7-10%.  Run that out for a few decades, and see what would happen.  No one could afford to live anywhere.  It doesn't make sense.

Reason from first principles to see what will have to eventually happen.
Sydney currently has a housing shortage. One of its problems has always been that it has limitations in where it can expand - especially with it being surrounded by the harbour, National Parks and a World Heritage area, but the geography of Sydney itself has always provided a number of limitations because it is full of cliffs.

But it cannot sustain the growth of the million dollar suburbs as per that graphic Freshwater posted. Something has to give at some point.

However, if you move somewhere else, surely you would do so because you liked your new place better. Every capital city in Australia is extremely worth living in. In some international livability comparisons Melbourne comes first, some have Sydney first, some have Canberra first (when it is included)... but all the capitals come very high in every comparison that includes them all - for instance, one I was looking at recently had every Australian capital in the top 16 in the world.

We are very lucky that we have so many wonderful places to live in Australia. Why would you want to go back to Sydney once you had left it? As a mad keen cricketer, there are a number of options for you!

marty998

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Re: Property in Australia
« Reply #159 on: August 26, 2016, 09:50:38 PM »
My fear in a few years time too... selling up and never being able to get back in. And then future kiddos not being able to get in.

Prices increasing faster than inflation is unsustainable in the long run.  Think about compound interest, and the difference a few extra percent make.

Now say inflation is 3-4% and house increases are 7-10%.  Run that out for a few decades, and see what would happen.  No one could afford to live anywhere.  It doesn't make sense.

Reason from first principles to see what will have to eventually happen.

We have run it for a few decades. It is still going up. You may think no one can afford to live anywhere but the city carries on. The median house price here in a city of 4.5 million is over $1.1million and climbing. It's not just a small pocket.

I disagree with you that house prices exceeding inflation is unsustainable. A better argument would be house prices exceeding real wages growth is unsustainable, because real wage growth has always been higher than inflation in the long run.

The wildcat is foreign investment, which neither cares about real wages, nor plays by the same rules.

Freshwater

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Re: Property in Australia
« Reply #160 on: August 26, 2016, 09:56:14 PM »
There isn't enough land in Sydney for the amount of people that want to live there. There are people who want to buy that can't physically find a place in my suburb, people just don't sell. It was like that when we bought our current place in 2013 and it's the same now, our place has increased in value 50% in that time, I am not exaggerating. So obviously the temptation is to sell up and move out of Sydney so that we can retire right now. Obviously I don't think there'll be another 50% increase in prices, but it's such a risk switching asset classes. What if down the coast is just too....quiet ;)

Even where there is land release in Sydney, developers won't sell too many lots each year so as to maintain their profits so there will be no dramatic correction in Sydney without some economic catastrophe. There will be plateauing of prices at certain times, possibly a drop of 5%, maybe 10% one year in certain suburbs if the NSW economy or population growth slows. But I still think the general idea in the article is true - inequality in Sydney is growing. 

I understand that if we put $1m in a fund we'd have a good chance with compounding that we'd keep up with the median house price growth in Sydney, but even if we weren't withdrawing on that fund for retirement there's no guarantee I'd be returning in ten years my suburb or somewhere as desirable because there will always be someone with more money than me that will pay more for something so scarce. Like you say, Marty, that person could well be from overseas. That was me a while ago, I wasn't born here. Of course we could live somewhere a bit less desirable in Sydney or in an apartment if we really needed to come back for certain services or something.

Anyway, I doubt we'll leave. Although we could be happy anywhere near the coast or in the mountains, this place has everything and is practically paradise. I love you, Sydney, and I'm glad I bought a bit of you when I did.

urbanista

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Re: Property in Australia
« Reply #161 on: August 26, 2016, 10:30:38 PM »
One can move out of Sydney, but one can't move out of Melbourne. Not when one's DH is a devoted Collingwood supporter. Our radius of retirement is 30 min drive from the MCG. Median house price 1M.

deborah

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Re: Property in Australia
« Reply #162 on: August 26, 2016, 10:38:30 PM »
One can move out of Sydney, but one can't move out of Melbourne. Not when one's DH is a devoted Collingwood supporter. Our radius of retirement is 30 min drive from the MCG. Median house price 1M.
Go Pies! (as my brother would say)

There are 14 games per year that the Pies have at the G this year. Assuming that is representative for each year, and a motel room for the weekend in the middle of Melbourne (for instance Hilton on the Park - where he can walk to the G) is $400 (it's actually $309). That would be about $5000 per year. You can live anywhere!

An uncle was a member of the MCG, so they always had tickets to the final. They lived in Albury, traveled by train and stayed at the Windsor whenever they went to a fixture there.
« Last Edit: August 26, 2016, 10:55:06 PM by deborah »

arebelspy

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Re: Property in Australia
« Reply #163 on: August 27, 2016, 12:45:58 AM »
Quote
I disagree with you that house prices exceeding inflation is unsustainable. A better argument would be house prices exceeding real wages growth is unsustainable, because real wage growth has always been higher than inflation in the long run.

Sure, I use them almost interchangeably when talking about housing, because real wages are mostly flat over the last few decades, so inflation and wages have been the same, save for the top 1%, but technically correct, wage growth is the more important factor.

We have run it for a few decades. It is still going up. You may think no one can afford to live anywhere but the city carries on. The median house price here in a city of 4.5 million is over $1.1million and climbing. It's not just a small pocket.

You understand how compound interest works.  It kicks in fierce at the back end.  That's why someone at 60 who has been stocking away since their 20s (40 years) versus their 30s (30 years) has SO MUCH more.  That extra 10 years on the back end.

Yes, it may have grown for decades.  But it's not sustainable.  1.1MM (the current amount) really isn't that much.  But if the houses increased 10% this year, that's another 110k higher (say, about double the average annual wage).  Then 10% next year. Then the next year.  And the next year.  Keep going and soon it gets silly.  It's literally not sustainable.

I mean, say house prices go up by 10%, and inflation/wage growth is 3%.  Prices go up by 7% real then.  Run that out another, say, 30 years, when you'll be in your mid-60s.  The median price will be 8.37 million in today's dollars.  That's nonsense.  The median wage will be the exact same (since we're talking in real dollars.. in nominal, it'll be 2.43x higher, but then the housing prices in nominal dollars will be 17.45x higher, at 19.19MM).  Even if one put down 50% (so the mortgage balance was 4.18MMM) and got a 5% rate, their monthly P&I (ignoring taxes, insurance, and all other costs) would be $22,439 (in real dollars).  Annual? 270k.  Literally 1% of the population could afford to buy, and no one would--it wouldn't make sense to buy.

That clearly is not sustainable, right?  If the prices today were 8.37MM for the median house price, with all wages staying the same (which is what we're comparing when we use an increase above inflation/wages, and then run it out a few decades), would you agree that such a situation couldn't be sustainable?

Now add another decade, to put it out 40 years.  Suddenly home prices are 16.4MM in real dollars.  Another decade? 32MM (we're about doubling every decade, with a home value growth of 10% and inflation of 3%, so roughly 7% real, using the rule of 72).  10 more (so we're at 60 years out, maybe about the time your future kids are in their 40s or 50s, since you mentioned being worried about them being able to buy in) and we're at 63.7MM.  At that rate, even if one won the lottery of 50 million dollars (in real, 2016 dollars) and use that as an entire down payment, their monthly payment on the remaining 13.7MM balance would be 73,765 per month!  Someone winning 50MM in the lotto and putting it all down on the average house, and still having the monthly payment be higher than the median annual wage is obviously crazy.

Like I said, run scenarios out where increases are above inflation/wages.  It just doesn't work.

Worrying about your kids, decades from now, "not being able to buy in" is a crazy worry, IMO.
« Last Edit: August 27, 2016, 12:47:36 AM by arebelspy »
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Freshwater

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Re: Property in Australia
« Reply #164 on: August 27, 2016, 01:01:16 AM »
Real wages haven't been flat in real terms, though? 4% wage index vs 2% CPI.

arebelspy

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Re: Property in Australia
« Reply #165 on: August 27, 2016, 01:11:33 AM »
Real wages haven't been flat in real terms, though? 4% wage index vs 2% CPI.

I think you're right, absolutely.  But I also think it's irrelevant (see the bottom of this post as to why, because I'll veer slightly to answer that question)

Of course, a key question, is always: over what time frame?

I google "real wages australia," and the first link is a blog post Real wages falling in Australia

From the intro:
Quote
The Australian Bureau of Statistics published the latest Wage Price Index, Australia for the December-quarter yesterday and annual private sector wages growth fell to 2.0 per cent (0.5 per cent for the quarter). This is the fourth consecutive month that the annual growth in wages has recorded its lowest level since the data series began in the September-quarter 1997. Real wages in the private sector are now in decline. In the Mid-Year Economic and Fiscal Outlook published in December, the Government assumed wages growth for 2014-15 would be 2.5 per cent rising to 2.75 over 2016-17. They also assumed real wages (the difference between growth in the nominal Wage Price Index and the Consumer Price Index would be positive (0.5 per cent in 2016-17). On current trends, neither assumption will be realised

From the conclusion:
Quote
Nominal wages growth is now at the lowest level since the Wage Price Index data series began (September-quarter 1997).

Depending on how we measure inflation, real wages growth is slightly negative or slightly positive at present but on any measure it is well below the labour productivity growth rate.

But yes, I agree with you that real wages are up, slightly, over most time frames.

But here's why that doesn't matter: in no way have they grown as fast as property values over most any timeframe you look at (1 year, 10 year, 30 year, etc.).  And that's what we're discussing, when property values outstrip real wage growth.  It's not sustainable.

Even if real wages are up 4%, if property values are up 8%, or 10%, or whatever, it just doesn't work when you run that out a few decades, because of how compounding works.  You can have growth like that for awhile, but eventually it can't work, because of exponential growth.
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Anatidae V

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Re: Property in Australia
« Reply #166 on: August 27, 2016, 01:12:11 AM »
Wouldn't apartments be what would become the "affordable" housing, though? So you might buy your house, sit on it, and have it become a very pretty piece of real estate, while developers produce apartments that the next wave of buyers can afford because they're cheaper than the now impossibly expensive houses? What effect does that have?

arebelspy

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Re: Property in Australia
« Reply #167 on: August 27, 2016, 01:34:43 AM »
Wouldn't apartments be what would become the "affordable" housing, though? So you might buy your house, sit on it, and have it become a very pretty piece of real estate, while developers produce apartments that the next wave of buyers can afford because they're cheaper than the now impossibly expensive houses? What effect does that have?

Exactly.  This is one (of many) mitigating factors that keeps limits on unsustainable growth, and something that acts as an eventual cap on housing prices (people can argue they're different, and they are, but if you literally can't afford a home, and need somewhere to live, you live where you can afford it).
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Freshwater

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Re: Property in Australia
« Reply #168 on: August 27, 2016, 01:51:10 AM »
Wouldn't apartments be what would become the "affordable" housing, though? So you might buy your house, sit on it, and have it become a very pretty piece of real estate, while developers produce apartments that the next wave of buyers can afford because they're cheaper than the now impossibly expensive houses? What effect does that have?

That article I originally posted said we're shifting to a more european system of a smaller proportion of property owners and a larger proportion of long term renters but I guess if enough apartments are built then we will avoid that in a way.

With more apartments people might still get to own, but inequality will still increase in the long term I guess because house appreciate faster than apartments.

Australia has less space between the top earners and bottom earners than many other western countries. There are various trains of thought I suppose but I'm of the belief that low income inequality = less crime, generally a better place to live. I wish I hadn't posted my comment that I'm worried about moving away now... I'm much more concerned with the nation's wellbeing than my own rich-person's problems :)


urbanista

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Re: Property in Australia
« Reply #169 on: August 27, 2016, 02:27:06 AM »
One can move out of Sydney, but one can't move out of Melbourne. Not when one's DH is a devoted Collingwood supporter. Our radius of retirement is 30 min drive from the MCG. Median house price 1M.
Go Pies! (as my brother would say)

There are 14 games per year that the Pies have at the G this year. Assuming that is representative for each year, and a motel room for the weekend in the middle of Melbourne (for instance Hilton on the Park - where he can walk to the G) is $400 (it's actually $309). That would be about $5000 per year. You can live anywhere!

An uncle was a member of the MCG, so they always had tickets to the final. They lived in Albury, traveled by train and stayed at the Windsor whenever they went to a fixture there.

True but if one is a Collingwood supporter, one wants to raise his son in the same spirit :) so Auskick since 6y.o., taking junior to the games etc. Can't move even to the South Eastern suburbs of Melbourne. It's North and North East for us.

alsoknownasDean

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Re: Property in Australia
« Reply #170 on: August 27, 2016, 02:49:05 AM »
One can move out of Sydney, but one can't move out of Melbourne. Not when one's DH is a devoted Collingwood supporter. Our radius of retirement is 30 min drive from the MCG. Median house price 1M.
Go Pies! (as my brother would say)

There are 14 games per year that the Pies have at the G this year. Assuming that is representative for each year, and a motel room for the weekend in the middle of Melbourne (for instance Hilton on the Park - where he can walk to the G) is $400 (it's actually $309). That would be about $5000 per year. You can live anywhere!

An uncle was a member of the MCG, so they always had tickets to the final. They lived in Albury, traveled by train and stayed at the Windsor whenever they went to a fixture there.

True but if one is a Collingwood supporter, one wants to raise his son in the same spirit :) so Auskick since 6y.o., taking junior to the games etc. Can't move even to the South Eastern suburbs of Melbourne. It's North and North East for us.

Go Pies!

Ah, that's easy, buy in somewhere like Greensborough for 4-500k and take the train in. Driving to the G is folly. :)

I see housing here as a case of the following:

Affordable. Spacious. Close to the city/in a nice area. Pick any two.

I'm probably going to buy next year and I'm trying to find a good balance between the above. I don't mind being a half hour train ride from the city if I can walk to the station, and a two bedroom unit is plenty. If I wanted to live in Brunswick or similar, I'd be buying a one bedroom. If I wanted a house, I'd be out in woop-woop.
« Last Edit: August 27, 2016, 02:52:33 AM by alsoknownasDean »

urbanista

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Re: Property in Australia
« Reply #171 on: August 27, 2016, 03:45:43 AM »
I have just sold in Greensborough (haha). Nothing to be found for $500K any longer. 800K if walking distance to the station.

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Re: Property in Australia
« Reply #172 on: August 27, 2016, 04:30:08 AM »
When I bought my PPOR, I knew the value at the time by comparing all below:
- Check realestate.com.au that gives the median sale price
- Check the sold price recent from nearby properties
- price per sqm - for the land
- Ask the agent for rent or check rents for similar properties and divide by rental yield of the suburb

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Re: Property in Australia
« Reply #173 on: September 02, 2016, 10:22:19 PM »

alsoknownasDean

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Re: Property in Australia
« Reply #174 on: September 18, 2016, 12:19:33 AM »
I'm in a position where I'm looking to buy a place around the middle of next year.

Would the suggestion be to get a minimum of 10% before looking seriously?

I've got an idea of what places I could afford and be reasonably happy with are going for.

Of course, the next six or twelve months are anyone's call. The area could go up by $100,000 or down by the same amount.

marty998

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Re: Property in Australia
« Reply #175 on: September 18, 2016, 05:49:01 AM »
You can always start looking now. Took me a year to find the right place for me.

Will you get a stamp duty concession? If not, 10% won't be enough. On top of that, budget for $3,000 for loan application fees, conveyancer costs, strata report (for a unit) or Building & Pest report (for a house).

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Re: Property in Australia
« Reply #176 on: September 18, 2016, 06:18:31 AM »
You can always start looking now. Took me a year to find the right place for me.

Will you get a stamp duty concession? If not, 10% won't be enough. On top of that, budget for $3,000 for loan application fees, conveyancer costs, strata report (for a unit) or Building & Pest report (for a house).
+1, the LMI rises a lot if you don't have at least 10% deposit plus money to cover stamp duty and other purchasing costs.

marty998

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Re: Property in Australia
« Reply #177 on: September 18, 2016, 03:36:51 PM »
Auction clearance rate hit 85% in Sydney over the weekend.

Clearly, there is still a lot of pent-up demand being unleashed... scary territory some of the medians being bandied about.

alsoknownasDean

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Re: Property in Australia
« Reply #178 on: September 24, 2016, 02:15:07 AM »
scary territory some of the medians being bandied about.

Yeah it's crazy what some people are prepared to pay. I'd hate to have their mortgage.

You can always start looking now. Took me a year to find the right place for me.

Will you get a stamp duty concession? If not, 10% won't be enough. On top of that, budget for $3,000 for loan application fees, conveyancer costs, strata report (for a unit) or Building & Pest report (for a house).

I'll get a 50% discount on stamp duty. I'd also be eligible for a FHOG if I wanted a new build, but I'm not interested in new builds because they're probably either an overpriced tiny apartment or in some housing estate in woop woop.

I've kept an eye out looking for what's available, but I haven't gone to inspections yet. I've found a few places online that I'd be happy with (reasonable area, scope for improvement to the place, walking distance to a train station, etc) and could afford.
« Last Edit: September 24, 2016, 02:18:48 AM by alsoknownasDean »

my2c+61

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Re: Property in Australia
« Reply #179 on: October 21, 2016, 12:51:59 AM »
An article from the ABC (aussie version).

Why Gen Y should hold off buying a home

http://www.abc.net.au/news/2016-10-21/gen-y-should-consider-delaying-home-purchase/7951922

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Re: Property in Australia
« Reply #180 on: October 21, 2016, 02:27:32 AM »
scary territory some of the medians being bandied about.

Yeah it's crazy what some people are prepared to pay. I'd hate to have their mortgage.

You can always start looking now. Took me a year to find the right place for me.

Will you get a stamp duty concession? If not, 10% won't be enough. On top of that, budget for $3,000 for loan application fees, conveyancer costs, strata report (for a unit) or Building & Pest report (for a house).

I'll get a 50% discount on stamp duty. I'd also be eligible for a FHOG if I wanted a new build, but I'm not interested in new builds because they're probably either an overpriced tiny apartment or in some housing estate in woop woop.

I've kept an eye out looking for what's available, but I haven't gone to inspections yet. I've found a few places online that I'd be happy with (reasonable area, scope for improvement to the place, walking distance to a train station, etc) and could afford.

In 20 years time the woop woop housing estate will be the highly desirable spot.

I thought Schofields in Sydney was end of the world, but with the expansion of the Hills district, suddenly this suburb 50kms from the CBD is the next booming area.

There are plans for massive housing developments south of Macarthur in the south west... up to 75kms from the city centre.

It's all getting ridiculous.

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Re: Property in Australia
« Reply #181 on: October 21, 2016, 02:36:58 AM »
The town of Pakenham got swallowed up by the suburbs of Melbourne a few years back, it's 62km from the city centre.

alsoknownasDean

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Re: Property in Australia
« Reply #182 on: October 21, 2016, 03:12:13 AM »
In 20 years time the woop woop housing estate will be the highly desirable spot.

I thought Schofields in Sydney was end of the world, but with the expansion of the Hills district, suddenly this suburb 50kms from the CBD is the next booming area.

There are plans for massive housing developments south of Macarthur in the south west... up to 75kms from the city centre.

It's all getting ridiculous.

Yeah, Melbourne has a lot of land out west and north that's likely to be swallowed up by housing over the next 30 years or so. There's plenty of development in the Geelong area, and I bet some of it's made up of Melbourne commuters.

My view is that for the money I'm prepared to comfortably spend, I've got three options:

- A one bedroom inner city apartment within 5-10km of the city.
- A two bedroom unit/townhouse maybe about 15km out.
- A house in the new developments or suburbs 30km+ from the city.

I'm not confident that buying a one bedroom apartment is a good longer-term option, but I really don't want to live in a car-dependent 'estate' with such a hefty commute, so I'm looking at the middle option. I can deal with a half hour train ride :)

I'm renting an inner suburbs one bedroom apartment now, and while I'd happily continue to rent one, I'm reluctant to buy one, especially given the glut that's likely.
« Last Edit: October 21, 2016, 07:09:34 PM by alsoknownasDean »

limeandpepper

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Re: Property in Australia
« Reply #183 on: October 21, 2016, 07:03:26 AM »
Don't think I've posted in this thread before, but just got back from a trip to Melbourne with my partner (where we used to live) and did several inspections while we were there for studios and 1-bedroom apartments. I kind of don't mind the idea of renting indefinitely but he likes the idea of our very own place. So we're looking. We're back in Perth now (where we currently live) but we are most likely moving back to Melbourne sometime next year. Some of the places we looked at seemed alright, like - "we could work with this". But I don't think we'll commit to anything while we're still in Perth, given none of them were of the "this is awesome let's snap this up before someone else does" level. I'm sure there will still be viable options when we eventually return to Melbourne again.

marty998

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Re: Property in Australia
« Reply #184 on: October 23, 2016, 05:44:10 AM »
Perth is still falling no?

The rest of WA isn;t too flash either... the carnage in Port Headland must be tough to swallow for a lot of investors who did not sell out. Down 60-70% and counting?

alsoknownasDean

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Re: Property in Australia
« Reply #185 on: October 23, 2016, 11:58:44 PM »
There's an awful lot of apartments being built in Melbourne right now, it's expected that there'll be a glut, especially in the CBD.

Although I personally would rather a larger kitchen than places like this offer:

https://m.domain.com.au/listing/2012756767?sp=3&adtype=standard

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« Last Edit: October 24, 2016, 12:02:46 AM by alsoknownasDean »

limeandpepper

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Re: Property in Australia
« Reply #186 on: October 24, 2016, 12:09:40 AM »
Perth is still falling no?

I haven't been monitoring, but having looked at it on and off recently, the prices do look quite reasonable by Australian standards. Cheaper than Melbourne, at least.

There's an awful lot of apartments being built in Melbourne right now, it's expected that there'll be a glut, especially in the CBD.

I've been hearing a lot about this "apartment glut" situation lately, too... wonder when it'll start to show in the prices?

deborah

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Re: Property in Australia
« Reply #187 on: October 24, 2016, 01:49:31 AM »
There has recently been an article in most newspapers about over 65's and all their spare bedrooms - see http://www.stmarysstar.com.au/story/4244557/where-20-years-of-housing-is-tied-up/?cs=1256 (I'm sure it is the same story I read in Fairfax). Basically, a study has looked at what percentage of households over 65 have 2 or more spare bedrooms in Sydney, and have drawn a map of the shires and the % over 65 with two spare bedrooms. It is an interesting map, and shows that there are a lot of spare bedrooms in the middle ring of Sydney suburbs.

However, I wonder just how many people under 65 have two or more spare bedrooms, and just what constitutes a spare bedroom. For instance, my parents recently bought a 4 bedroom house (they are downsizing - and the house is a lot smaller than their previous house). It has a spare bedroom for guests, and a study for mum (I think she will sleep in it when dad snores) and a study for dad, as well as their main bedroom. I know of many elderly couples were they sleep in separate rooms for similar reasons. Are all couples assumed to only need one bedroom? I know a lot of people under 65 who have studies and hobby rooms. And I think that many couples buy a house with more than one bedroom, and use the second as a study.

alsoknownasDean

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Re: Property in Australia
« Reply #188 on: October 24, 2016, 02:50:54 AM »
There has recently been an article in most newspapers about over 65's and all their spare bedrooms - see http://www.stmarysstar.com.au/story/4244557/where-20-years-of-housing-is-tied-up/?cs=1256 (I'm sure it is the same story I read in Fairfax). Basically, a study has looked at what percentage of households over 65 have 2 or more spare bedrooms in Sydney, and have drawn a map of the shires and the % over 65 with two spare bedrooms. It is an interesting map, and shows that there are a lot of spare bedrooms in the middle ring of Sydney suburbs.

However, I wonder just how many people under 65 have two or more spare bedrooms, and just what constitutes a spare bedroom. For instance, my parents recently bought a 4 bedroom house (they are downsizing - and the house is a lot smaller than their previous house). It has a spare bedroom for guests, and a study for mum (I think she will sleep in it when dad snores) and a study for dad, as well as their main bedroom. I know of many elderly couples were they sleep in separate rooms for similar reasons. Are all couples assumed to only need one bedroom? I know a lot of people under 65 who have studies and hobby rooms. And I think that many couples buy a house with more than one bedroom, and use the second as a study.
I suspect the main issue might be that downsizing may affect eligibility for the age pension. I'm sure that there'd be a bunch of people who would consider it if they weren't going to lose the pension by downsizing to a smaller (and cheaper) house.

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« Last Edit: October 24, 2016, 02:54:35 AM by alsoknownasDean »

misterhorsey

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Re: Property in Australia
« Reply #189 on: October 24, 2016, 04:54:43 AM »
I was reading that article the other day. It made me think how my parents live in a 4 bedroom house, their adult son (me) lives in a share house of 4 people.  Meanwhile, my grandparents would have lived 4 to a room! My example isn't necessarily representative of most people, but I was thinkingWe can't seem to get the balance right.

I don't think the oldies should be forced to move from their houses, but we definitely seem to have a problem of underutilised housing stock.  An investor driven apartment industry doesn't build well designed multi occupancy dwellings that cater to families in different stages of the life cycles.
 
The idea that retirees should make financial decisions based on preserving their entitlement to the pension is absurd.  To sit, cash poor, in a $1.5m+ house, that costs a bomb to insure and maintain, to ensure that the Commonwealth pays you a pittance, seems a waste of capital and resources.  Sure get the pension if you need it. But those who don't need it, but are entitled to it due to PPR exemptions, put undue pressure on the system for all those in genuine need.

It's a tricky problem. Retirees in multi-million dollar houses wouldn't have necessarily wished for the huge price gains. And given how conservative and risk averse the general population is in relation to financial matters, it would be a big ask to expect cash poor pensioners to suddenly become financially astute and nimble and adopt volatile investment strategies with greater returns.  But it's frustrating that so many of the older generation are sitting on housing that they don't need, meanwhile everyone else is bidding up property to crazy prices.



BattlaP

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Re: Property in Australia
« Reply #190 on: October 24, 2016, 05:45:40 PM »
It's a policy problem. Assets need to be included in pension assessment so that wealth can't be hoarded. Then oldies would liquidate those million dollar properties because the government shouldn't be buying their fucking groceries when they've got networth in the millions.

arebelspy

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Re: Property in Australia
« Reply #191 on: October 24, 2016, 05:49:43 PM »
There's an awful lot of apartments being built in Melbourne right now, it's expected that there'll be a glut, especially in the CBD.

Although I personally would rather a larger kitchen than places like this offer:

https://m.domain.com.au/listing/2012756767?sp=3&adtype=standard

Agreed on the kitchen, but that location!

Hard to justify 300k on a place like that for me though, when it could be in rentals grossing 6k (netting 3k) per month.  Presumably you could rent for cheaper than 3k/mo?

But man, I would love to live in Melbourne right there near Chinatown.  Probably one of the few major cities that we've visited that we would live in.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with a kid.
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misterhorsey

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Re: Property in Australia
« Reply #192 on: October 24, 2016, 06:29:12 PM »
There's an awful lot of apartments being built in Melbourne right now, it's expected that there'll be a glut, especially in the CBD.

Although I personally would rather a larger kitchen than places like this offer:

https://m.domain.com.au/listing/2012756767?sp=3&adtype=standard

Agreed on the kitchen, but that location!

Hard to justify 300k on a place like that for me though, when it could be in rentals grossing 6k (netting 3k) per month.  Presumably you could rent for cheaper than 3k/mo?

But man, I would love to live in Melbourne right there near Chinatown.  Probably one of the few major cities that we've visited that we would live in.

Hmmm, I think $6k a month rental ($1,384 per week) might be overstating it for a one bedder in the cbd. Did I read this right?

This one bedder with one car park is going for $2080 per month.

http://www.realestate.com.au/property-apartment-vic-melbourne-412600467

Assuming it is valued at $400k, that's a 6% gross yield.

But don't forget the heinous strata levies these complexes tend to have. Someone has to pay to clean the gym and pool and polish all the shiny.

Meanwhile, $1k per week gets you this in East Melbourne - walking distance to the CBD and much nicer. Although no shops or really anything for that matter!

http://www.realestate.com.au/property-terrace-vic-east+melbourne-418520838

deborah

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Re: Property in Australia
« Reply #193 on: October 24, 2016, 06:46:37 PM »
It's quite close to Gertrude St. and the Fitzroy shops, and YOU CAN WALK TO THE G!

arebelspy

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Re: Property in Australia
« Reply #194 on: October 24, 2016, 06:48:58 PM »
There's an awful lot of apartments being built in Melbourne right now, it's expected that there'll be a glut, especially in the CBD.

Although I personally would rather a larger kitchen than places like this offer:

https://m.domain.com.au/listing/2012756767?sp=3&adtype=standard

Agreed on the kitchen, but that location!

Hard to justify 300k on a place like that for me though, when it could be in rentals grossing 6k (netting 3k) per month.  Presumably you could rent for cheaper than 3k/mo?

But man, I would love to live in Melbourne right there near Chinatown.  Probably one of the few major cities that we've visited that we would live in.

Hmmm, I think $6k a month rental ($1,384 per week) might be overstating it for a one bedder in the cbd. Did I read this right?

You read it right, but my opportunity cost is not properties in Australia.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with a kid.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."

misterhorsey

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Re: Property in Australia
« Reply #195 on: October 24, 2016, 06:58:21 PM »
There's an awful lot of apartments being built in Melbourne right now, it's expected that there'll be a glut, especially in the CBD.

Although I personally would rather a larger kitchen than places like this offer:

https://m.domain.com.au/listing/2012756767?sp=3&adtype=standard

Agreed on the kitchen, but that location!

Hard to justify 300k on a place like that for me though, when it could be in rentals grossing 6k (netting 3k) per month.  Presumably you could rent for cheaper than 3k/mo?

But man, I would love to live in Melbourne right there near Chinatown.  Probably one of the few major cities that we've visited that we would live in.

Hmmm, I think $6k a month rental ($1,384 per week) might be overstating it for a one bedder in the cbd. Did I read this right?

You read it right, but my opportunity cost is not properties in Australia.  :)

Oh yes. Yields on property in Australia are terrible. Don't quite understand why people bother, as an investment. But ah yes,  capital gains will continue indefinitely.....

misterhorsey

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Re: Property in Australia
« Reply #196 on: October 24, 2016, 07:00:28 PM »
It's quite close to Gertrude St. and the Fitzroy shops, and YOU CAN WALK TO THE G!

True true. I love East Melbourne.  I live in Fitzroy currently and East Melbourne is extremely sedate, peaceful and luxurious.  But there's no immediate amenity - apart from a great library.  As well as that sports ground you mentioned.

But some people prefer to be perched 30 stories up. Press a button on a wall. And seconds later be slurping up ramen/laksa/dumplings.  I can see the appeal of that.

alsoknownasDean

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Re: Property in Australia
« Reply #197 on: October 24, 2016, 07:02:31 PM »
There's an awful lot of apartments being built in Melbourne right now, it's expected that there'll be a glut, especially in the CBD.

Although I personally would rather a larger kitchen than places like this offer:

https://m.domain.com.au/listing/2012756767?sp=3&adtype=standard

Agreed on the kitchen, but that location!

Hard to justify 300k on a place like that for me though, when it could be in rentals grossing 6k (netting 3k) per month.  Presumably you could rent for cheaper than 3k/mo?

But man, I would love to live in Melbourne right there near Chinatown.  Probably one of the few major cities that we've visited that we would live in.
For reference, you'd probably pay $1500 a month to rent it, although you'd get more for your rental dollar by going into the suburbs a bit :)

The suburbs themselves can be hubs as well, and if the city is a short tram or train ride away :)

I suspect our not having had a recession since the early 90s probably contributes to our views on capital growth of residential housing.

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« Last Edit: October 24, 2016, 07:04:06 PM by alsoknownasDean »

my2c+61

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Re: Property in Australia
« Reply #198 on: October 26, 2016, 10:02:40 PM »
There's an awful lot of apartments being built in Melbourne right now, it's expected that there'll be a glut, especially in the CBD.

Although I personally would rather a larger kitchen than places like this offer:

https://m.domain.com.au/listing/2012756767?sp=3&adtype=standard

Agreed on the kitchen, but that location!

Hard to justify 300k on a place like that for me though, when it could be in rentals grossing 6k (netting 3k) per month.  Presumably you could rent for cheaper than 3k/mo?

But man, I would love to live in Melbourne right there near Chinatown.  Probably one of the few major cities that we've visited that we would live in.

Hmmm, I think $6k a month rental ($1,384 per week) might be overstating it for a one bedder in the cbd. Did I read this right?

You read it right, but my opportunity cost is not properties in Australia.  :)

Oh you are so polite.


One thing I have wondered about, is if Australian property is such a good deal/proposition why isn't big business in the game of owning and renting property.

I feel the whole sector has a gold rush feel to it.
Businesses will get you to the fields, sell you shovels, pans and food but won't take the risk of prospecting.

arebelspy

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Re: Property in Australia
« Reply #199 on: October 26, 2016, 10:23:33 PM »
One thing I have wondered about, is if Australian property is such a good deal/proposition why isn't big business in the game of owning and renting property.

I feel the whole sector has a gold rush feel to it.
Businesses will get you to the fields, sell you shovels, pans and food but won't take the risk of prospecting.

That's an astute observation.  Same thing here in the US, during our crash, was often people buying extra properties as rentals and counting on appreciation.  The big businesses hurt were the construction companies, and the banks lending the money.

Then at the bottom of our crash, 2012-2013, that's when what I bolded above happened.  Feb 2012 Warren Buffett says "I'd Buy Up 'A Couple Hundred Thousand' Single-Family Homes If I Could.   The major hedge funds came in and starting buying up properties by the thousands.   They spotted that our markets had overcorrected, and rentals were a good deal again.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with a kid.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."