As it stands, housing affordability is one of the most talked about topics of conversation in Australia. For every person who says the market is now an impossible one to enter, there’s an investor or developer telling us to simply try harder.
But rarely is the issue summarised as perfectly as it was by a high school student named Charles on Monday night’s edition of Q&A.
“I am 14 years old, in Year Nine and live in Sydney. The median house price in my area is $1.75 million,” Charles began.
"In my commerce class, we calculated how long it would take save for a deposit and pay for a mortgage. It would take me roughly 18 years to save for a deposit, and if interest rates stay at current rates, the principal and interest over the entire life of the loan would be $3.25 million dollars. At current income tax rates, it would take me approximately 165 years to pay off this mortgage."
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Living out of area is not cheap anymore. Even the outer suburbs of Sydney are ridiculously expensive and the quality of homes are not what you'd call "forever homes",which require costly renovations just to make them habitable and or energy efficient. Then you have the horrendous daily commute which eats up at least 2-4 hours each day, (after you've put in your 8-9 hours at work), if you're lucky. You then have to consider road tolls, fuel costs & wear and tear on your car. Or alternatively the rising costs and unreliability of our public transport system. This is an untenable situation for all of us. Do we put a stop on ALL overseas investors for a period of time, (2years)? Do we put a stop to the ever increasing EMPTY investment properties? Something has to give. I just wish I had the answer.
Genuine question; what can most people afford?
We bought a two bedroom house in Elsternwick (Melb) for $680k last year. It's old school and needs a bit of work, and it's not our ideal suburb, but hey, we needed a house. That seems totally affordable to me.
Our deposit was the usual 10%. The mortgage repayments are the same as what we were paying for a rental apartment in st kilda - about $2300 per month, which my husband and I split. What am I missing here?
Is $1500 on accom per person really that unaffordable?
Those numbers don't add up. 680k minus 10% is 612k. Monthly repayments on 612k won't be 2300 - unless your loan term is 40 years or something.
680k is out of this world for a family on less than 100k a year.
2300 a month would send many into poverty. Which is why there is a housing issue......
Our loan was around $700k from memory to include stamp duty, and the interest is 4%. Regardless, our interest is around $2300 (it may be slightly lower due to the money we put into our offset account, which reduces the interest owing, I just know we pay $2300 jointly per month).
Is $1500 per person a month really that unaffordable? The average Aust income in 2016 was $78,832.
That's the average income for full time employees, the Australian average is about $57k (taking home abot $46k)... which means lots of people earn less (I assume "average" as reported by the ABS is the mean, which is prone to being skewed by a few ultra high earners).