I realised starting a topic like this here was like blowing smoke in a hornets nest. The inherent overstatement of the thread title/first post was a point taken to its extreme. While I figure that profiteering from property does make it harder for everybody on middle-income to afford a home, its a capitalist society, so it's no great surprise that prices increase, people want to make money, and supply and demand plays a factor in that.

But, as its turned out, expressing such a point of view has been quite educational. I get extremely passionate about modern day (un)affordability, and wish there was something I could do to make the government address the issue (I'd like to work in the area, if I only knew more!). So its great to hear all the different view points, its changed the way I think about certain aspects of my uneducated, emotional response to the issue. I'm not sure what the best solution is but I hope some experts are trying to figure it out.

Increasing stock seems obvious, which makes me wonder why its not happening at the rate it could. Perhaps there is a vested interest from someone who wants to keep stocks low, in order to keep prices high. That may be getting a bit conspiratorial. Then again, a large influx of property could cause prices to drop and many people who bought at premium prices could be burned. It would be harder for the RBA to moderate the effect they play in peoples lives, and could even unstabilise the economy.

The only thing I really know, is that on the surface, Australia appears to be doing very well – people are singing its praises for surviving the GFC – but almost everyone I know in my social circle (mostly creative types, true – although many older people I know who are teachers and nurses are in a very similar boat) are struggling to pay rent, keep on top of their mortgage (I only know a couple of people who have even got that far), and to be able to afford to live in the city, or even the far flung suburbs of the city (or even regional cities in 1.5hr commutable distances), let alone feel secure in asking for minor repairs to their home in case it causes a rent increase and pushes them out.

So what I am really saying is, under the surface, I think we're struggling, and I'm worried. I'm constantly trying to figure out a way to get ahead (by which I mean some small level of security). I'm not just sitting around doing nothing about it. I am taking 8hr round trips to inspect property in my price range, looking at any option that might set me up for the future. Working and saving, and trying to get informed. This post was a bit of a vent/rant, but its turned me on to some new ideas, so that's great.

Anyway, my apologies, I was being cheeky/rude. Take it with a grain of salt, a serious issue expressed in an outlandish way (hence linking to such an entertaining youtube video). But as I said, the food for thought you have all offered has been very interesting/informative. And Sonia, we had pretty great private landlords (8years), but eventually their kids made them get a real estate agent, jack up the rent, and its lead to a break in contact. The agent started well, but once they switched property managers, the new young guy is hopeless, rude, lies, and doesn't return calls, even when the back fence blew down in a gust of wind, he treated us like <moderator: delete language> for asking for a repair (slightly dodgy neighbourhood/metal was blowing around putting people on the footpath out back in danger of being cut/hit etc). I wish there was a way for tenants to alert the landlords to the way some real estates 'manage' a property. it should be part of the six-month inspection – provide a feedback form to your tenant, make sure you are getting value for money!

Would it be worth buying a place in St Arnaud?

For example, this one has sold already, but to do the maths (quickly and roughly), have a look:
http://www.realestate.com.au/property-house-vic-st+arnaud-104794172

Say I pick one like this up for $100K. I put down $20K deposit, but we stay living in Melb and renting (so no first home grant for us). The standard variable rate on my loan of $80K over 30 years is: 7.81%. The weekly repayments are: $145 per week.

The rent collected on that joint above claims to be $125pw, so I'm only putting in $20pw, maybe $50 if the interest-rate rises a bit. And I guess general rates would be $1-2K per year?

Maybe in a few years, I can move out bush and live there. But even if I never do, maybe the rent will start to cover the mortgage, and in 30years my kid can have a home? Is this worth doing? It seems pretty great to me. But are there massive pot-holes in my thinking? Or are there better, much better, options I'm overlooking? PS: I'm looking for security as opposed to massive wealth. Just to provide for my family (sure massive wealth would be great, but I'd like to think I'm some what of a realist, or at least admit I'm a pessimist).

Hi Richard,

Thanks for your reply, I kind of glossed over over it back when I should have paid more attention. I have become more familiar with some of the lingo, so this sounds interesting. I have $20K deposit, just not a huge income. Who are doing these sort of loans? Any further insight into how it works? Is the bank taking 40% of CG a bit much, or you think ok?

Cheers,
W

I still think negative gearing and tax breaks for property investors, and even just the idea that property has become a source (or aspiration for) of massive profits, has changed the dynamic between rich and poor in Australia. I still think these factors, along with population growith has caused increased rents, and reduced the quality of housing standards, like no other era in Aus before. I'd like to commission a major stufy into it if I could, non-biased, all sides of the story, and see what the figures said.

Most renters rent because they feel like its their only option. This may not be true, I've been trying to figure out ways to make buying a place possible, its not easy, but its not impossible either. Growing up poor lead me to believe I didn't have a chance, but now I know I could have done things differently. I'm hoping to sort it out and if it works out, I'd like to educate young poor/creative people about saving for their future, that some sort of security is possible. Only problem so far is, its not possible. Too much income spent on rent to save for a reasonable deposit. $50 a week ain't going to cut it.

" The rent it just too damn high"

           Not really. In fact, it is cheaper to rent then  to buy.

** True, but it doesn't mean the rent or the mortgage are reasonable. They are both obscene. A loan with approx 6% interest over 30 years is more like 50% interest at the end of the day. We are being ripped off by banks. The renter suffers as the IP owner suffers. This isn't really win-win. Its lose-lose.

"Prices of other essentials have also risen, because the rent is too damn high"

          Sorry, don't make any sense here. The price of bread increase because residential rent is high?

** Most farmers, workers, bakers, truck drivers etc etc have to pay rent or mortgage. Cost of living goes up, cost of running a business goes up = cost of product goes up. My local supermarket now sells a loaf of bread for $8. There are cheaper loaves, but its all heading this way if you don't want white-super-processed-trash bread. Bread is just an example, apply the same theory to everything. Obviously there are other factors, like petrol, peak oil is like the property bubble, its going to end badly.

" Tax breaks for property investors have allowed the market to be ruined, and investors have done the deed "

          There is a gap between owning your home and public housing. The goverment alone can not meet the all demand for public housing. The waiting list is over 10 years for some area, the quicker ( say very far away area) is still 2 – 3 year waiting. Tax breaks are designed to encourage investors to fill that gap by providing cheaper rent (refer to the first answer).

I've lived in govt housing. Its pretty dire. I think things could be getting better through integration rather than high density govt housing. There was a time you could afford to pay off a house in a few years on a wage of $30,000. I think we need to get back to that point, and spend money on more important things, like infrastructure for a country with little vision for the immediate future.