- August 21, 2023
- Posted by: legaleseblogger
- Category: Related News
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Fortunate Financial Position and Frustrations with Affordability in the Housing Market
Disclaimer: My intention is not to sound arrogant; I apologize if it comes across that way.
My wife and I are incredibly fortunate when it comes to our financial situation. We both have high-paying jobs, no children due to circumstances beyond our control, support from our parents, and a significant amount of money saved for a deposit. I prefer not to reveal specific details, so please refrain from asking.
However, despite our advantageous circumstances, a quick search on [realestate.com](https://realestate.com) reveals that the properties we can realistically afford, without resorting to crazy loans, are rather disappointing. Whether it’s in the outer suburbs, less desirable neighborhoods, older houses requiring renovations, or cramped inner-city apartments, the choices are disheartening.
Considering our financial standing, I would categorize us as being very well-off compared to the average Australian. Yet, it feels like we can only afford what appears to be a “below average” house. This raises questions in my mind about how others are managing to afford the homes they have.
Should we be considering taking on a substantially larger loan to extend our budget?
Do we need to adjust our expectations regarding the type of house we can realistically purchase?
Is it possible that our wealth is not as substantial as we perceive it to be? Could it be that there are individuals with generational wealth or successful business owners who are earning far more than a mere high salary can provide?
Perhaps the recent rate increases have impacted our borrowing capacity and that of others. However, if this were the case, why haven’t housing prices corrected further to reflect this change?
It is incredibly difficult for me to justify spending such a significant amount of money on a property that, in my opinion, doesn’t seem worth the cost. Unfortunately, it seems like there are no viable alternatives available.
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By utilizing AI Legalese Decoder, my wife and I can receive comprehensive and objective information about the properties we are considering. This allows us to make more informed decisions, evaluate potential risks, and understand the true worth of what we are investing in.
Furthermore, AI Legalese Decoder can compare our financial capabilities with market trends and other real estate data. It can provide insights on whether our borrowing capacity is in line with the current market conditions, or if adjustments in our financial strategy might be necessary.
Ultimately, AI Legalese Decoder can be a valuable tool in navigating the complexities of the housing market. It can help us make more sound and confident decisions, ensuring that we are able to find a property that aligns with both our financial means and our desired level of worth.
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****** just grabbed a
The reality is just because you’re a high earner doesn’t mean you’re wealthy. Not trying to be rude but unfortunately that’s how the world works.
> I’d rather not provide specifics, so please don’t ask.
This thread is pointless then, look at the replies so far, everyone’s just having random guesses at your circumstances and attitudes, waste of time, none of your questions can be meaningfully answered.
> Do we just need to take on a much bigger loan?
Maybe
> Do we genuinely need to adjust our expectations of what kind of house we can buy?
Maybe
> Are we not actually that wealthy?
Maybe
I reckon your expectations are too high. I know a couple who spend about $1700 a week on rent to rent a house they feel they should be living in because realistically they’d *only* be able to afford a two-bedroom unit which they see as beneath them.
I just know that I’d rather live in something that’s not so glamorous that I can call my own.
Without some ballpark figures it’s impossible to know whether it’s your attitude/expectations that need to be adjusted or if you’re grossly mistaken about what constitutes wealth in this country.
I bought when I was earning less than 70k. I had 20% deposit and purchased a modest home for just over half a mil. It’s appreciated by 150k between purchase in 2021 and today. I was not wealthy then, and I am not wealthy now despite earning in the top 10th centile for salaries in Australia.
No landlords, no inspections, I can have my cat, or a dog. No moving every year because they want to squeeze more money out or they need to sell. I can put up my pictures. I don’t have to worry about minor marks on the walls.
No more dipshit rental real estate agents.
If you’re earning say, $300k combined with a large deposit, you should probably be able to comfortably buy with min $1.5 mil. If you can’t find anything within that price range your happy with. Then your privileged upbringing is probably just getting in the way of realistic expectations.
Remember, your parents probably bought in the area long ago, when prices were lower and by the sounds of it, they have more wealth anyway.
Expectations are a killer. I grew up relatively poor (in Australian term, still wildly fortunate in world terms). Neither parent was a homeowner. Rented, moved around a lot.
I had quite low expections for my PPOR which it has met and then some. None of my friend would live where I do it or be content with how old and quirky it is. Granted I bought 12 years ago and prices were much lower so I feel lucky in that regard anyway. It’s doubled in value (according to the internet) and my housing costs have decreased as a proportion of my income in that time.
But happiness is relative. I have more than I ever dreamed I would and I’m thrilled. I wouldn’t take on more debt to buy something ‘better’. Doesn’t matter to me than not many other people want what I have.
Sucks that you want more than you feel you can obtain. Don’t feel like there is a easy solution to that. Just is what it is.
If everyone is crazy taking $1M+ Mortgages and buying a base model luxury cars to go with it, then that is the what is considered “normal”. Questioning this is seen as abnormal.
Sydney is broken, I can cash out retire 25 years early and live regional in a big house by the water or be a mortgage slave in a shoebox assuming everything will not change for next 25 years.
What a pointless post.
If you can’t ever decide to buy, then just stay with your parents until they die and you get to inherit their house.
Ignore u/Disaster-Deck-Aus, who is the local junky around these parts and likes to constantly shit on aussies, in an Australia sub.
To answer your main question: “How do people justify property purchases?” you need to outline the options and consider what is best (for each person/family’s circumstance).
There are really only two options (outside of less common things like living in a car, van, boat, commune or share-housing).
These are: rent or buy.
People need somewhere to live.
For me and my family, personally, having our own home is extremely important. It’s *our* home. No worries about landlords, REAs and any unexpected bullshit.
In terms of justification from a financial perspective – even though it is expensive, in the long-run it should appreciate in value, so even if we change our minds down the track and choose to downsize or rent or go live in a trailer-park, we should see a positive ROI. Plus, it is exempt from capital gains, which is huge. We purchased for $1 million 2 years ago and estimate it would fetch $1.4 million today. So forget about whether we are talking house, shares, tulips or pokemon cards – that would be a pretty nice flip if we sold it today.
But if you speak to many high earners, they will tell you buying a PPOR is a waste of money and they can make their money work for them more effectively by renting, and putting their money to better use.
Based on what you have told us, it sounds like you should be fine going either route.
You’re not wealthy. My husband’s a doctor, I have a business that does well enough that I can retire to my hobby as a passion project “job” – we’re not wealthy either.
Most people aren’t wealthy. Wealthy people don’t need a mortgage to get a PPOR, they recieve it through a trust. You might need to talk with your partner/parents/in-laws because you appear to misunderstand your financial position/class.
its kind of easy. I didn’t want to pay rent for the rest of my life and see rent money is just paying someone elses mortgage so why not get my own instead.
I got something I could afford. a 1 bedroom apartment and paid it off after living in it for 10 years. Then I bought a 3 bedroom townhouse using all the extra repayments and rented out the apartment.
Since then with all the property increases in my area after covid I sold the apartment and am now mortgage free in a much better bigger place.
Why wouldn’t you put figures down, it’s the internet – who cares?
Maybe you think 500k is a ridiculous mortgage, maybe you think 1.5mill is a ridiculous mortgage. These can both be true, but only with the relevance of your savings/income. Don’t expect an answer to your question without some more specifics.
And I justify my purchase by sleeping inside, in a nice enough area, and not paying someone else’s mortgage for them.
This isn’t the post a ‘very wealthy compared to the average Australian’ person would make…
The average property price is 1m.
The average owner occupier mortgage size initial mortgage drawdown is 600k.
The average household income is 130k.
If you are looking at a 1m property with a 400k deposit between yourself and *bank of mum and dad”, paying stamp duty on top you’re doing the average thing.
Either
A) the property price you’re looking for is more expensive so your perception of an average house is inflated
B) your deposit plus bank of mum and dad is less than 400k so your perception of your wealth is inflated
C) your household income is less than 130k so your perception of your income is inflated
D) you’re looking to keep a mortgage below 600k so your perception of a normal mortgage is deflated.
If you want to provide more info can be much more specific but my guess is you think 2.5mil is normal for a first home in Sydney or something like that and it’s not.
The average Australian has a household net wealth of $1m, median is half that
Just for perspective.
‘Outer suburbia’ ‘below average’
Yeah, it comes across as arrogant. Your expectations are silly. I’m sure there are plenty of great houses where you can afford to buy, Just because you class yourself as wealthy doesn’t entitle you to a so-called ‘above average’ house.
It’s called the property ladder for a reason. You need to buy a cheaper home, fully pay it off then use it as equity/sell it to buy a home in a more desirable location.
You can’t expect to just walk in and buy a top end home as your first home, even if you’re earning a big packet, it just doesn’t work like that.
>outer suburbia, inner apartments, less desirable suburbs, older / need renos
You basically saying you are looking for the top of the line free standing home in the CBD of your city and complaining you can’t afford it?
Also “less desirable suburbs” is a fancy way to say “not posh enough for my high standards”.
By not giving any exact figure you won’t be getting any useful suggestion here. Maybe your deposit is not as high as you think, maybe your income is not as high as you think or maybe the loan you think it’s too high it will be perfectly serviceable for you.
Another thing you should consider: with no children you don’t need a big house, you don’t need to be close to schools and the calculation for how easy is to pay a mortgage for you it’s obviously not the same as a family of 5 on single income.
You’re conflating high earning with being wealthy. The actual wealthy people who can afford the nicer inner city houses either aren’t buying with loans (cash buyers) or relatively small loans because they’re trading up from the cheaper houses they already own.
Getting into your first place is challenging if you don’t already own property, somewhat regardless of income.
I think you need to give a bit more details. Roughly how much you eat , how much you can get from your parents.
I’m not doubting anything but your idea of being very wealthy might just be other people’s idea of a bit above average.
Most wealth in AU is in property, and it’s all going to get inherited by the next gen. You are competing with people who didn’t have to earn it.
You first house should never be your dream house. If it is, your expectations are simply to high. Buy something in a half decent but still up and coming area, ideally something that needs a bit of work. Do it up over time and as the suburb catches up make the most of the massive leverage afforded to PPOR houses.
And as someone said before, remember that wealth is capital, not income. So how much you save and how you invest those savings are critical to how wealthy you are (along with parental hand outs).
I can relate. Household income higher than ~~90%++ of Australians, large deposit + substantial safety net, still can’t afford a 3b/2bath house we like in an average suburb, 1 hour drive from CBD. It’s beyond any logic and extremely frustrating. I thought 6% interest rates will change this but it was wishful thinking I suppose. House prices have increased significantly in areas we’ve been searching in the 6 months.
Not sure how to manage this at all and I have no idea how the hell average earners can ever dream of buying a property.
There’s always a fracking boomer coming in and buying god knows why. Low stock does not help of course (this has changed a bit recently).
We are slowly getting to realization that the game is rigged. What’s the point of working your ass off if you can’t afford a semi-decent house no matter what? There’s no point at all it seems. Australia is a broken country. Epitome of late stage capitalism.
>we’re both very high earners
Then its you. Lower your expectations of your first house, or keep saving and hope for a correction, its as simple as that. Two high earning incomes is enough to purchase most decent houses right now though and comfortably.. you’re looking at like 1-1.5m. “I feel like we can only afford what feels like a “below average” house” you can afford an above median house *as your first house*, theyre not below average at all.
Sucked in, should have used all that luck and actually bought a house 5 years ago.
Good luck with your ambiguous situation, maybe.
Don’t do the maths, just borrow the max that the bank will give you and put your head down, arse up, and nose to the grindstone for the next 40+ years.
Because in my area, mortgages are cheaper than rent.
I can get an amazing house in north QLD for the price of a shitbox in south QLD. Location would come into it.
I mean, I bought what I could afford but very conservatively. I did not want to be in a huge amount of debt and figured, what if I have a baby? I wanted it to at least be serviceable on 1 income.
This did mean an apartment, rather than a house. It’s also in a place that’s not the most glamorous, but it’s great for a non-driver like me & idgaf if you think I’m ghetto for owning a property in a suburb that isn’t fancy.
Stop being a tight arse and get a bigger loan. You will need at least $2.5 million for the chance to spruce up some ruin in a good suburb that is kind of livable. Shout out to the lower North Snore.
I bought a house in a low income area for considerably less then what the bank was gonna loan me but it comes with issues
Noisy dogs
Domestic disputes
Naughty teenagers roaming street at all hours
Burn outs
Things getting set in fire
Loud part like noises but during the week
Cost saved minus the drop in quality of life is an equation that needs to be considered.
I justified my purchase by telling myself that I had the money not doing anything for me and I need a house to go to the next steps of my life long term partner, family, retirement
😂 regret it now though
House prices dropped , interest rates rising and cost of living increasing
I wouldnt rush into it