I’m 24 and just completed my university studies finally obtaining my Bachelor of Business (Accounting major).
I’m from Burekup WA (Just outside of Bunbury).
My question is as per the subject line “is the great Australian Dream finally dead for and a large part of my generation”
I just read a report that the median house price in Perth (where I come from its even more expensive) is $490K or over 12 times my gross income!!!!!!!!!!!!!!!!!
How are we ever meant to afford THAT!!!!!!
Traditionally (way back in the boomers day) it has usually been between 4 – 7 times the average annual gross income.
I’m on $40K as a Banking Officer at Elders which is ment to be quite good for someone fresh out of university.
The average wage in this country is around 50K.
Is it any wonder why kids of today “just don’t care”?
Part of the ethos of the country is the dream of owning your own home.
Now that appears for the most part taken away.
And all we seem to get for it in return is garbage:
– Back in my day……….
– You kids don’t have the drive…….
– When I was your age………….
– You don’t know how good you got it………WHAT A LOAD OF CRAP!!!!!The HECS Debts…….
The unaffordable housing……..
The attitude of the older generation…….We’re staying at home longer in order to try and save some money so we can make a life for ourselves, and all we get is more crap for that too. You move out of home early and all of a sudden you “have a bad attitude”
Is it any wonder why drugs are such a problem???? “There’s no point in working your ass off so you might aswell so smoke some dope, inject some ice etc” you may not be with it but hey i’m sure in your own little world you were having a good time sure you’ll screw your life up as you get older but who cares you haven’t got much to look forward to anyway.
Your going to have till your much loved parents pass away till you can make a life for yourself……………..hang on nowadays its trendy to spend all of the kids inheritence on yourself!!!!!!!!
Here we are generation X & Y everything the previous generation took for granted we have to work our butt’s off for and even then don’t stand much chance.
Houses are appreciating at a faster rate than peoples ability to save the deposit required.
WHATS THE POINT!!!!!!!!!!!!!!!!!!!!
Hi Peter,
I hear what your saying.
What you need to realise is it’s easier to invest than to buy your own place. This is because you only pay a fraction of the morgage and the tenant does the rest. There is little wonder why so many people are renting their residence in order to invest. When your investment goes up in value, you can use the equity as a deposit to keep investing. Then it all snowballs from there. It may not be as simplistic as this, but it’s not that difficult either.
Cheer up!!
Lena
That’s fair enough Lena but where do you live while your renting your property out?
Peter
With an attitude like that, you are right, there probably isn’t much point. The world doesn’t owe you anything,and if you want something from life, you need to go out and make it happen, not just bitch and moan.
Tools
Peter,
I can see where you’re coming from but, you should be a little more positive and optimistic, as what you beleive is what you’ll become.
Markets, whether they’re property, shares, bonds, interest rates, whatever run in cycles, so take a step back and look at what is happening, do some historical research and you’ll be able to see where to invest next, and soon enough your house will become reachable. Have a look at http://www.ezycast.com/index.cfm?type=education&article=economic_cycles
Oh you poor little thing.
Do you need a tissue?
If you want to earn an AVERAGE wage then continue to complain about how tough you have it. The only thing stoping you having the life you want is you.
The baby boomer generation made sacrifices to get where they are and deserve the right to do with their money as they please.
Put down your mobile, ipod, lap-top, diesel clothing, turn off the foxtel and work your back-side off, start small and work upwards. If not stay where you are and rent my place hey!
I am only a few years older than you and can’t stand cry babies.
Hi Peter
It’s never been easy.
I’m one of the much despised baby boomers. We had no mobile phones, credit cards or access to easy finance, no first home buyers grant or subsidised stamp duty, if you wanted something you saved for it.
Housing finance would only lend 66% of valuation – yes you had to save one third before they would even talk to you. Then we went through the late eighties/early nineties with up to 18% interest rates. Lots of people lost their houses and had to deal with negative equity (owe more than the house was worth). We rented for 3 years before we were able to get into our own home. a fairly basic 3 bedroom brick box.
Some suggestions?
Median pricing is the half way mark, half the houses are below that figure. Why not start out with something cheaper – say a smaller unit, not a flash new one with gym and pool but something you can do up a bit.
You can do it if you want to.
(and by the way, we also had to deal with
“You kids don’t have the drive…….
– When I was your age………….
– You don’t know how good you got it………
– seems to happen in every generation.I just checked out realestate.com, and in Bunbury there were 15 homes listed at under $300,000, also a 2 bed unit for $188,000. So there are cheaper properties out there.
Marg
Just searched the internet and there are places in your area under $300K. I have no idea what you are on about.
My first wage at the age of sixteen was $10,000 pa + board(rent) and keep(meals) so maybe grossed $16,000pa, worked 10-12 hour days ,6 days a week. Got pissed and chased girls on the 7th day.
20 years later and only starting investing 10 years ago, 1.8 mil in property and growing, LVR 70%. Wife(not working) and child. Income from salary $100,000.
Work hard, don’t blow to much money. I wish I had saved $10 every night i went out. Make mistakes and learn from them.
The best advice I can give is Invest now! I wish I had started sooner
Originally posted by emptypockets:Just searched the internet and there are places in your area under $300K. I have no idea what you are on about.
[biggrin]
I did the same thing..
Bunbury Prices (and the rest of WA) have been crazy of late..however, if your looking at purchasing somewhere to live rather than rent, then IMHO : Start out Small, build up as you build your equity and look at you options within your investing capability (maybe rent a room or two out to friends) Property Investing is slower and less exciting..but rewarding compared to many forms of investing.
Do you get a good Loan rate with Elders?
How about Access to thier real estate listings ?
Why bother ???????? Sheesh….every loans been a battle for me, but its worth the battle [inlove]
“Money is a currency, like electricity and it requires momentum to make it Effective”
Online Positive Cashflow and Renovating CalculatorsI’ll try not to be overly cynical….or bitter. You could always try raising a few thankless kids, who still do the smoking and injecting, but cost you so much meanwhile, that by the time they do leave home (early or otherwise) you cannot afford to buy anywhere decent yourself? That feels just as bad. Oh, and they could then save thousands getting the first home buyers grant with no stamp duty, while you pay that if you are able to actually afford to buy a house. And have I got a great story that reflects what many (not all) starting out today are like. ….. I often feel you don’t appreciate the ‘good things’ in life fully, unless you have worked and ‘done it hard’ in the past, I have lost count of how many ‘younger’ first home buyers want a house ‘just like my parents’, who have saved/worked/begged/borrowed etc etc and would never consider living in a weatherboard place, or a two bedroom home, or something with (gasp no!) second hand furniture. Kinda like the young fella (not that much younger than me…) I spoke to the other day who was ‘quite upset’ to learn he could only service a $270,000 loan. ‘I want at least $330,000 he said beligerantly…’What can you buy that’s any good for ‘only’ 270k?’ With an area that has a median of around 245k I did not really see that as a problem. Just as well there a still a few left that work hard and appreciate what they are able to achieve by a little bit of hardwork, the right attitude, and not begruding someone from a ‘generation catagory’ a few nice things after years of work and spending tens/hundreds of thousands bringing them up…… News flash….It is not just first home buyers that have difficulty affording property. It is out of the reach of many now. A $300,000 house, using a 5% deposit, will cost a non FHOG buyer around $14000 in stamp duty and LMI in NSW. A First home owner will ‘save’ $18000 on this. Use this excellent provision when or while you can, or rent. Easy. Man, that feels better. First rant I’ve had in ages. Thanks![strum]
Originally posted by peterhutchy:TextText I’m 24 and just completed my university studies finally obtaining my Bachelor of Business (Accounting major).
I’m from Burekup WA (Just outside of Bunbury).
My question is as per the subject line “is the great Australian Dream finally dead for and a large part of my generation”
I just read a report that the median house price in Perth (where I come from its even more expensive) is $490K or over 12 times my gross income!!!!!!!!!!!!!!!!!
How are we ever meant to afford THAT!!!!!!
Traditionally (way back in the boomers day) it has usually been between 4 – 7 times the average annual gross income.
I’m on $40K as a Banking Officer at Elders which is ment to be quite good for someone fresh out of university.
The average wage in this country is around 50K.
Is it any wonder why kids of today “just don’t care”?
Part of the ethos of the country is the dream of owning your own home.
Now that appears for the most part taken away.
And all we seem to get for it in return is garbage:
– Back in my day……….
– You kids don’t have the drive…….
– When I was your age………….
– You don’t know how good you got it………WHAT A LOAD OF CRAP!!!!!The HECS Debts…….
The unaffordable housing……..
The attitude of the older generation…….We’re staying at home longer in order to try and save some money so we can make a life for ourselves, and all we get is more crap for that too. You move out of home early and all of a sudden you “have a bad attitude”
Is it any wonder why drugs are such a problem???? “There’s no point in working your ass off so you might aswell so smoke some dope, inject some ice etc” you may not be with it but hey i’m sure in your own little world you were having a good time sure you’ll screw your life up as you get older but who cares you haven’t got much to look forward to anyway.
Your going to have till your much loved parents pass away till you can make a life for yourself……………..hang on nowadays its trendy to spend all of the kids inheritence on yourself!!!!!!!!
Here we are generation X & Y everything the previous generation took for granted we have to work our butt’s off for and even then don’t stand much chance.
Houses are appreciating at a faster rate than peoples ability to save the deposit required.
WHATS THE POINT!!!!!!!!!!!!!!!!!!!!
WOW! That’s some anger!! Sit down, relax and have a beer mate.
First of all; CONGRATULATIONS for finding this forum! I wish I had found it when I was your age. (I’m 45)
In the words of ‘RICH DAD’ from Robert Kiyosaki’s book; ‘RICH DAD, POOR DAD’ – “your employer’s job is not to make you rich; his job is to give you a job”.
Can we qualify your anger and hopelessness first – are you from broken home? Were you emotionally/sexually abused as a child? Did you live in a poor neighborhood? Were you bullied at school?
Who wasn’t?
If so, and you are now a healthy adult with a good job who made it through Uni, then you should be tougher than this.
If not, and you had a nice upbringing, then you are spoilt and need your botty smacked.
Those are all excuses to stop trying. It sounds as though you’ve given up already Peter, and you have a great opportunity in front of you.
If you are on this forum then you are going to learn all you need to become wealthy if you WANT to.
We’ve all done it tough, and times always seem tough. The 90% of the population who have nothing give in to the tough times. It’s easier to give up, and you can give up anytime; so why not give up later?
The 10% keep on plowing forward. Which group are you gonna live with?
I don’t want to add to the “Back in my Day” crap; I copped that too from my old, poor and pensioned parents (who I love dearly), but when I was 18 years old I moved away from home to follow my chosen career. I vowed to never end up like them in retirement.
When I began work I was earning $70 per week and my living expenses were $65. Then the motor in my car blew up- $1,000 for a new motor. I had to get a second job doing barwork to pay off the repairs. For the next year or so I lived on Cornflakes and tinned spaghetti and never went out. That was a tough time, but it didn’t last and now I’m 45, married, one beautiful boy and 5 properties under my belt; looking for another – I started late.
Was it easy? Not in the slightest – but there are always good times and I always look at the big picture. Everyone of us can tell you a sob-story like mine. We tell them so YOU might not feel so bad about your lot.
Come on Pete! Get into life man!
If you can’t afford to buy, and you can’t live at home with the folks (god knows I couldn’t) then try ‘boarding’ at someone’s house. It’s cheaper than renting, not always ideal, but you are free to come and go and you can start saving towards that 1st investment property. On a salary of $50k you could have a deposit in 12 months (maybe 18 months if you don’t want to sacrifice eveything in life).
You’re still so young; if you follow our paths on this forum and do what we do you WILL be financially free at 40!!
Do 1-2 years of hard yards now, keep learning about investing and stay positive, and you will have a long, easy life later.
Cheers,
MarcHi Peter,
I sympathise with you in many ways due to some commonalities between us. I’m at Uni in Perth (1.5 yrs to go) and I’m accumulating a HECS debt. I got interested in investing around your age (4 yrs ago) and watched helplessly as the Perth property boom passed us by, saving in vain for a deposit and also trying to pay off $13k in personal debt each pay. We were getting nowhere fast on one income. My husband’s job bought in a rare opportunity to get a deposit, but once we had paid of the $13k, we only had $17,000 left. I felt shattered as I learnt this wasn’t nearly enough to cover closing costs, let alone a deposit.
If you want something bad enough, you have to think outside the box to make it possible and ethical. If the property game seems overwhelming because you keep hitting brick walls, try telling yourself that there is an answer, you just haven’t thought of it yet. I often tell myself this, because it leads to research and investigation, crossing bad ideas off the list and nutting out another way to make your idea work work.
Our solution presented itself in the form of my mum offering to put up equity in her home as security for 20% deposit + closing costs. This allowed us to use the money we had saved to do a cosmetic reno on the house we bought (in Shoalwater, WA) before we rented it out at $20/week extra and now have a slush fund for any maintenance required. I am not advocating that this is a solution for everyone because it is a significant risk for the person putting up the equity if the mortgagees default on their payments – the person lending equity becomes liable and the bank can sell that person’s house to recover the debt. It was a viable solution for us because my mum and I have a long history of helping each other out financially and each debt had been honered in a timely manner. As soon as is humanly possible, I will refinance and release her from the deal.
I also had a look at Bunbury the other day and I agree that it is quite reasonable for someone in your position. These houses would also be quite cheap to rent eg fibro and I would suggest living with mates in a houseshare in one of these – you could organise it, then advertise to niche market too like students and charge more for board.
Don’t get agro at the boomers, they don’t owe us a thing. The only reason they really piss you off is because you percieve them as having what you want, getting in before the booms, cashed up, big portfolios at the expense of your coming of age 21st key. We’ve got heaps of access to information that they didn’t; the net, forums, books, DVDs, e-newsletters etc. There is a wealth of information out there for you to source, create a plan and achieve. This forum is particularly cool. I have a word document that I copy and paste info from this forum on to called “property research”. It helps if you can see what you’re learning cos you forget along the way.
Good luck and don’t lose sight of the big picture, think outside the box and remember you are only young = heaps of time to get it right and heaps of time to acquire knowledge. If you get it right, your kids won’t have to suffer the same anxiety your feeling cos you can pass on the knowledge for financial independance.
Regards,
DeeGee Im glad not all the young have this attitude.
My eldest, at 14 has just got his first job at KFC. For someone so young I’m very proud that he’s already made major goals for his life.
He wants to retire by 30 (an eternity when you’re 14). He plans to save as much as he can through his parttime job and reffing his beloved basketball games. He wants to get a trade, electrician or something useful for property management. When the time comes to get a licence, a little scooter will do to get around.
Then later, when he is financially established, he wants to go to uni to become a PE teacher.
All those hours spent playing the Cashflow game has paid off. The only potential problem i can see is if some floozy turns his head! (hey but wot are mothers for if not to protect their sons [ohno2])
I have 4 sons and am certainly not expecting them all to show this kind of initiative. No 2 son’s goal is the convertible. [rolleyesanim]
What I am saying to the author of this thread is that your attitude and goals are everything. Is the cup half empty or half full?
Unfortunately this joker is typical of a lot of todays youth-they expect to be given everything and wouldnt know hard work if they fell over it. I was amazed when I went back to uni as a mature age student when I was 24 to see how slack everyone was-I was working full time and doing a full time degree, getting by on 5-6 hours sleep a night but I still managed to do it. Same ole story those-u have those who complain they have nothing, then u have those who work and actually go and get it…
Hi guys,
I’m 21 and just finished Uni, i’m on about $40k p.a. as well and have a $20k HECS debt. Now you are telling him that he can still buy a $300k house. I’m sorry, but that simply is not the case. I’m not a negative person but I will point out some interesting facts:
Stamp Duty on $300,000 approx $13,000. Now if you add in all mortgage insurance, setup costs etc.. then it will be way over $20,000! And it will take you a year and a half plus to save up that money if you are careful with your money.
Secondly, $300,000 with a 7.2% interest rate is a $540p/w on repayments alone! Not including water,electricity, council / land rates etc.. And $540 p/w is what your wage is for $40k minus 9%super, minus HECS etc. So firstly, no bank will lend him that much money. And even if you can rent it for $200 p/w take out management fees and you are still paying $360 p/w! Now take out rent money that peter is paying, food, car rego etc.. and there is no way he can afford to buy a house for $300,000! ! ! Even the tax man can’t help you that much. I know that because my parents are building a rental house for $302,000 and there repayments even with PAYG is $180 with INTEREST ONLY. So if you add P & I it would be $300++ p/w.
I agree that he is whinging a bit about how hard his life is, but to also be realistic there is no way he could afford to buy a house and rent somewhere else for atleast a couple of years.
And I know this because being a TOTAL TIGHTASS ON MY MONEY, and renting with a friend to save on rent (because my parents live interstate) in 11months I have just managed to save $19,000 ! That includes not drinking alcohol, not going out for tea, spending almost nothing but food, rent, car fuel & rego, and sport registration every 6 months.
Having said that, my plan is too move back with my parents in Adelaide at the end of 2007, hopefully with $35,000 in the bank and then buy some land and build a rental property on it to save on stamp duty, and increase my depreciation schedule. Also, I will be able to save money for a couple of years paying cheap rent at my parents place.
Anyways, Peter is you really want to go invest. Then be a tightass for a couple of years. Spoil yourself every couple of months, but don’t buy expensive things that you don’t need and don’t waste money on alcohol, drive instead and that way you don’t need a taxi fare home either!
Cheers
Paul[suave2]Congratulations Paul. Disciplined approach, too much for some, but if you can do it great…..good on you for setting and reaching goals. ….and I bet there will be plenty more milestones on the way for you. All the best.[strum]
Howdy Peter,
Ignore the sarcastic knockers here. You’re kind of right. It is unfair on some people at the moment. And $300,000 being affordable? Christ, you’re on $40k (which is only very slightly below the national average of $43k) – on that wage/salary you shouldn’t be borrowing more than $120-$150k!
But here’s the secret – this boom is based entirely on debt. When all is said and done, we, collectively (on the national scale) will have not made a single damn cent out of it. Sure there will be winners, but each will be matched by a loser. Or at least every dollar gained will be matched by another dollar in debt. It will not last, and it will prove to have been nothing but an illusion.
Here’s one of my old posts from the cracker.com.au housing forum. Read it, then let me know if you feel less angry or more angry (others may skip over my rant if it is familiar ground):
Bubble? What bubble? The Foundation theory of monetary stupidity.Summary
Only a small proportion of houses are bought and sold each year. This small number, generally around 5%, set the new price levels accepted by banks, valuers and ultimately owners and borrowers for the entire stock of housing. This is an illusion and a folly.
Bubble? What bubble?
If we turn the clock back a few years to when the total value of all housing stock was $1 trillion dollars in the mid-1990s, total housing debt stood at $250 billion.
In 1997, the rate House Price Inflation (HPI) hit 10% for the year. Although only 5% of houses turned over, the banks told everybody their houses were worth 10% more, implying $100 billion in extra wealth/equity. But all that had really happened was $50b of houses had sold for $55b. Magically, $5b spent became a $100b gain in wealth, but worse still, much of this extra $5b was debt-funded.
In a rational lending system, the banks would say “Hey, house prices are 10% higher, so instead of lending against $50b of houses this year, we’ll lend against $55b of houses.†Or, if they believed house prices were in a sustained 10% pa up-trend, perhaps an EXTRA 10%, ie $60.5b. But no, they revalued not 5% of the houses per annum at the new price, but 100% and the public largely fell for it. They withdrew a large chunk of their newfound ‘equity’, spent a little and invested the rest… in houses.
This added to demand and drove up prices even further, year after year. By 2000, we’d gained around $650b in additional housing wealth for an outlay of just $120b in extra debt. It’s no wonder the ‘borrow your way to wealth’ / ‘Other People’s Money ™’ seminars were doing so well – clearly it worked!
2003, total housing value passed $2.5 trillion and total housing debt was a miserly $540b. We’d turned $290b into $1,500b.
Now certain Cracker Housing contributors, the government, banks, REIs, and recently (shock and shame) the RBA themselves have all told us this is good, fine and dandy: “the sharp run up in household debt has not been a source of concern, as household’s overall balance sheets have remained sound.†ANZ Economics told us. A senior politician who should know better said “While it’s true that Australian families now have more debt than ever before, compared to asset values they are very low geared†or something very like it. And did you ever see those rubbish surveys that came out and said “the average Australian is now worth $270,000, 30% more than just 2 years ago� Gack.
It sounds good, but it is in fact lunacy.
Why? Because for values to remain inflated, turnover must continue at reasonable levels at current prices. Current prices are only met with increased debt (witness household debt continuing to rise by an additional $240b in 3 years of relatively flat prices, increasing LVRs on new loans, booming LMIs…). At 5% turnover per annum, it takes 20 years for a change in price to fully feed through to a new debt-load. We’re 4-6 years into our new level of house prices, with 14 – 16 to go.
So today with the average national price at around $300k, 420-450k houses must be sold each year. With the average new loan at $235k, that’s $100b in turnover, and around $80 billion new debt each year __just to maintain current house valuations__.
Where we had $250b in debt secured against $1,000b of houses a decade ago, we now have $800b in debt secured against $2,800b of houses, BUT an implied / required future debt load of $2,000b secured against that same $2,8000. The net national gain is exactly ZERO! It staggers me that most people can’t see this. If you don’t put anything in, you can’t take anything out.
Now if we take gross national wages at $435b today, and compound them 3% pa until 2022 (no recession or aging population here then, huh?!), they’ll be around $700b pa, growing by $22b that year. Instead of housing debt at 184% of wages as it is today, it will be 286%. Instead of housing wealth at 644% of income, it will be just 386%. Assuming 8% interest rates, debt servicing will take 29% of gross income, rather than 15% today! In 30 short years we will have quadrupled the (relative) amount we spend on INTEREST PAYMENTS ALONE from 7% to all most 30%! And all for what? NO NET NATIONAL GAIN!!!
Meanwhile the Schmucks who buy (sorry Ff, Cobran
) those average $300k houses today with a $235k mortgage will fall into two groups:
– Those whose loan is IO will have spent $300k in interest and still owe $235k on a house STILL worth $300k– Those whose loan is PI will have spent $340k on repayments and still owe $170k on a house STILL worth $300k.
All best-case scenario, pie in the sky kind of wishful thinking, because earlier I lied when I said “NO NET NATIONAL GAIN!!!†In econo-speak there will be a national gain, it will just be a NEGATIVE one! Imagine if the current 15% DSR rose to 30% tomorrow. Many people would cope, although most highly leveraged investors would be shirtless, or at least wearing brown pants. But if this happened over a decade or two, people would adapt. What wouldn’t adapt is the economy. The extra interest costs will take the equivalent of 65 billion dollars in today’s money OUT of consumption and investment EVERY YEAR! Enough to cripple the economy and bring on the mother of all depressions. I think.
So, best case scenario, we’re screwed. Worst case scenario, house prices collapse. Or should that be the other way around? House prices need to fall to a point where housing debt is growing at less than wage growth. As I’ve said before, that will require a massive (50%++) average drop in house prices coupled with a massive drop in turnover.
The third scenario, and final remaining option for us collectively, is to fund another house price boom, thus delaying the inevitable and magnifying the consequences when the correction does eventually arrive. In fact I think we’ve been doing this for the last 20 years anyway…
So buck up son. We’ve got a tsunami coming – Don’t cry for a lost sandcastle, get building a fortress!!! (And by fortress, I mean a secure financial future, not an actual fortress!!! In fact, by late 07/early 08 you should be able to pick yourself up a nice fortress for easy 30-40% Below Market Value (BMV) in real terms…)
Cheerio, F. [cowboy2]
peterhutchy said:
Is it any wonder why drugs are such a problem???? “There’s no point in working your ass off so you might aswell so smoke some dope, inject some ice etc” you may not be with it but hey i’m sure in your own little world you were having a good time sure you’ll screw your life up as you get older but who cares you haven’t got much to look forward to anyway.
What a stupid thing to say! Let’s go inject ice because you haven’t got much to look forward to… that’s just lame.
Honestly, my parent’s came to this wonderful country with only 0.50 cents in their pocket. They struggled with their english and had little money to survive on, especially food. But they were always positive and full of determination. Today they have total property of 1.7m, not bad for only having 0.50 cents to begin with.
I too worked hard to save up for a deposit to purchase my first IP, and you should be able to do the same. It’s not going to happen over night so you should start saving!
No it’s not dead….
But then – is that your dream ?? And…is it a dream or goal ??
) those average $300k houses today with a $235k mortgage will fall into two groups:
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