Home ownership

[droenn]

A lot of news at the moment about trying to make the housing market more accessible, including members of government debating about allowing you to tuck into your super etc. And on the other side, some prominent economists saying that young Australians shouldn't bother buying now, just stick with renting.

I'm a millennial - just approaching my mid 30s, and I'm now leaning towards not buying a house, but looking at other ways of investing (any ideas?). But that feels so wrong to say - I guess we get told from a young age thats how it is - you get a job and then you get a house and you pay off a mortgage over a number of years and then you give that house to your kids.

Just wondering if anyone else is in the same boat: thinking that the few good arguments for renting (not being tied down, landlord fixes all the broken stuff) look more and more attractive compared to shit like 10% house price increases in the last 12 months (Syd and Melb).

Also, dipping into your super seems about a solid financial decision as a harvey norman store card.

 

[Kerplunk]

I'm not in your shoes as I have owned a couple of places in Melb.. I can tell you one thing for sure, there is a huge chunk of people who never intend to pay off their home loans. That's why they will take on a tonne of debt that isn't sustainable long term...

 

[ktastrphe]

I sold up my 3 properties about 7 years ago and have been renting since. Living in places I could never dream to afford to buy for a pittance. I probably spend more on wants and impulses, but also save a reasonable amount.
I'm a bit past mid 30s with two young kids and moving every 1 or 2 years by choice is an adventure .
So no real sound investment advice apart from make sure you still put savings away, don't blow it all on e-bikes and Lycra.

 

[fimpBIKES]

if you dont overcommit then you should be able to buy a cheap house for about the same money you pay in rent anyway.

live in it for a few years, paint some stuff and tidy up the garden and you will still be out in front.
(this depends on where you live, the definition of "cheap house" varies wildly....
https://www.pedestrian.tv/news/arts...tbox/01a57ebc-d06d-4656-959e-7cf4451d65b4.htm )
you could still do your other investing plan on the side as well, win-win

I wish i did this 10yrs before I did buy my first place, I added up all the money I had paid in rent once and it was a kick in the guts



people fuck up by borrowing 95% and not having any margin in case interest rates or circumstances change (get sick and cant work a few months, car needs fixing etc etc)

 

[stirk]

There has been many articles written about buy versus rent and my take on the data is that you can end up in the same financial position either way, obviously depending on the property and investment market, but renters must be strict on how you manage your extra cash. If you live it up and don't continuously​ invest spare cash you'll be worse off. Are you disciplined with money?

 

[rowdyflat]

Depends where you live and whether you have a reliable income.
If Melbourne or Sydney =rent, if elsewhere eg rural that is reasonably priced =buy.
The superannuation thing is just a stupid thought bubble.
Prices cannot go up at 10-15 % per annum for ever when inflation is 2.5% and wage growth is so low.
It will only take an increase in interest rates , decreased migration or increased unemployment for prices to drop back.

 

[rangersac]

The problem with renting in Australia is the conditions as a tenant suck arse here if you want to stick some roots down. Landlords can give short notice to vacate, long term leases are hard to come by and conditions are way to stringent. Fine if you are happy to live an itinerant lifestyle, not so good if you are thinking family etc. And my student rental experiences from days gone past were that getting a landlord to fix anything was a bit of pot luck. Mind you dunno what the alternatives are these days if you are in Melbs or Syd. Heck I'm only a few years ahead of you, and both me and my partner earn good salaries (o.k. not six figures but well above the median), and we'd be buggered trying to buy anywhere within cooee of the city. My only piece of advice is do what we did and get the hell out to somewhere affordable.

 

[steve jobs' pancreas]

There has been many articles written about buy versus rent and my take on the data is that you can end up in the same financial position either way, obviously depending on the property and investment market, but renters must be strict on how you manage your extra cash. If you live it up and don't continuously​ invest spare cash you'll be worse off. Are you disciplined with money?

what extra cash ? Resi yields are higher than interest rates.

 

[Kerplunk]

Before commenting more where do you plan to live? As mentioned country smaller town = buy. Cities, it depends..

 

[stirk]

what extra cash ? Resi yields are higher than interest rates.

I'm gonna a buy shares in Hot buttered

 

[droenn]

Cheers for all the responses

I sold up my 3 properties about 7 years ago and have been renting since. Living in places I could never dream to afford to buy for a pittance. I probably spend more on wants and impulses, but also save a reasonable amount.
I'm a bit past mid 30s with two young kids and moving every 1 or 2 years by choice is an adventure .
So no real sound investment advice apart from make sure you still put savings away, don't blow it all on e-bikes and Lycra.

Yeah, being able to move cities (and countries) easily is a real bonus of renting, and probably why I'm also thinking all the stress of insane amounts of mortgage debt and losing that freedom makes buying a house not be worth it overall. But settling down somewhere sounds nice in theory too, and moving constantly can take its toll too (like having to meet new people all the time..)

There has been many articles written about buy versus rent and my take on the data is that you can end up in the same financial position either way, obviously depending on the property and investment market, but renters must be strict on how you manage your extra cash. If you live it up and don't continuously​ invest spare cash you'll be worse off. Are you disciplined with money?

My partner is slowly getting me to be more disciplined - we're not too bad (no credit cards etc) but could be better. We're actually thinking about getting a financial planner to help us out a bit with some ideas of what to do beyond "saving money".

Before commenting more where do you plan to live? As mentioned country smaller town = buy. Cities, it depends..

Canberra at the moment, not sure where I'll end up - depends on work. Canberra is still way overpriced though - but it has jobs and mountain biking so maybe I'll stay.

if you dont overcommit then you should be able to buy a cheap house for about the same money you pay in rent anyway.

live in it for a few years, paint some stuff and tidy up the garden and you will still be out in front.
(this depends on where you live, the definition of "cheap house" varies wildly....
https://www.pedestrian.tv/news/arts...tbox/01a57ebc-d06d-4656-959e-7cf4451d65b4.htm )
you could still do your other investing plan on the side as well, win-win

I wish i did this 10yrs before I did buy my first place, I added up all the money I had paid in rent once and it was a kick in the guts

people fuck up by borrowing 95% and not having any margin in case interest rates or circumstances change (get sick and cant work a few months, car needs fixing etc etc)

main issue is getting that 20% deposit together to avoid the risks of borrowing too much - its a fair while off for us as we only just moved back to Aus with nothing in the bank (working in a developing nation etc.). I've got a decent job - partner is well qualified and making inroads, but it all takes time and the prices just keep going up and up.

 

[Chriso_29er]

I was lucky in that I got into the market early in Melbourne at age 25, I'm 37 now.
I look at the current prices and think 'if I didn't already have it no way in hell I would hock myself up in the sort of debt people are doing these days'. Just crazy.
Would rather rent and invest elsewhere.

 

[ktastrphe]

Everyone says that when you have a family you need to settle down in one place. My kids are 3 & 5 and currently telling me they can't wait until we move into our next house (even though they love the current one we rent).

I'm living in a mansion with 6 bedrooms, 3 bathrooms, indoor pool, massive block, great suburb. To buy the exact same house with a 20% deposit I would be paying the banks a bit over double what my rent is just in interest, no principal!

To be honest, we initially sold everything up to move overseas, but then the missus got knocked up and plans changed.

 

[pharmaboy]

Lots more talk ATM about a housing bubble, and while it can't go up forever, I thought the same thing 10 years ago, so predicting the market is a fools game.

Ideally, you can rent and buy at the same time - so invest in housing and rent it out to someone, then at least you pick up the tax advantages of the rental in terms of maintenance and interest deductibility.

The downside is, you want to try and find a house you like and one that is owned by a permanent landlord of means. That can be tricky, but you certaonly don't want to rent from someone who hasn't been doing it long : they are likely to suddenly sell if want to move in, but if you rent from a rich person, chances are they have no interest in ever living in their rental, and selling just brings the tax man to town so they are long term holders

 

[uglybob]

To be honest, we initially sold everything up to move overseas, but then the missus got knocked up and plans changed.

sorry about that

 

[rowdyflat]

pharmaboy speaks wisely.
Def you want to rent from someone who is not likely to sell.
If you earn enough money the govt is giving you a present w negative gearing so buying something affordable and letting it is good.
Even better if you live in it in the future .

 

[Tubbsy]

Dunno what everyone's complaining about.

This has a "potential kitchen" for $1,250,000

http://www.belleproperty.com/listings/500256/139-mullens-street-rozelle-nsw-2039/

 

[dej]

Wife and i bought 2.5 years ago in melb (12km east of cbd), we are in our early 40's now and it was our first place.
I still question whether it would have been better to just keep renting which we had done for the previous 12-13 years. The last place we lived/rented, was 1km up the road, was bigger, had a garage and (at the time) was $800 a month less. The price gap has come down due to interest rates dropping etc but it's still more expensive for us to own our current place than what rent is for the last place we had.
We did move a bit during the renting years, twice due to work and twice due to being kicked out by owners who a) gave the place to their kids, b) gave the place to their elderly parents. That part of renting sucks. The part where something breaks and you call and someone fixes it without you paying, kinda doesnt suck.

We basically started saving back in 2008 after i got a decent bonus at work. We did a few OS trips between then and 2014 but overall were good with saving.
Our rule was 20% deposit, enough to cover the stamp duty scam and 6 month of mortgage payments left over. That really determined our price and what we could buy. We had 1 definite suburb we both agreed on and 2 maybe's. We bought in the definite, we'd already been living here for 8 or so years.

Also i found the thing about being able to do what you want with the place when you own it (even we used to say it), is kinda bollocks. Maybe if its an old place? Ours was new, we havent done a fucking thing, no pictures on the walls, no modifications. I'd like to keep it that way.

On the superannuation thing, if we had access to it back in the mid 2000's, i could have bought something, maybe even a house when they were in the 300k range. Now they're 1.5mill for places in the same suburb.
If i had access to it now, i have enough in there to pay off my mortgage completely and be debt free. It gives me another ~20 years of building the super back up for retirement, i'd even be able to contribute more instead of storing it in offset.

TL;DR - should you buy or rent? it depends..
good luck whatever you do!

 

[schred]

Using Super for housing? How could that not be several times worse than what the FHB allowance did for prices.

Sentiment appears to have turned and at least people are slightly cautious that maybe things aren't quite sustainable, even tone of the RBA has turned today.

But, if nothing else it has pitched my 2 least favourite rent-seekers against each other - Super vs. Housing. & there can be only one.

 

[steve jobs' pancreas]

My partner is slowly getting me to be more disciplined - we're not too bad (no credit cards etc) but could be better. We're actually thinking about getting a financial planner to help us out a bit with some ideas of what to do beyond "saving money".

Don't waste your money or time, you may as well get advice from my dog. Note tax advice is seperate from financial advice.