Society/Culture Landlords - What is the point?

[FRUMPY]

https://www.realestate.com.au/vic/pakenham-3810/

$650,000

Repayments Calculator

With our Home Loan Calculator, you can estimate what your repayments would be. You can also generate a personalised Key Facts Sheet based on your loan amount, term and repayments.

www.commbank.com.au

$650,000 over 30 years = $3,271 / month = $39,252 / year

What's the typical income in Australia? This list shows the incomes of hundreds of occupations

If you want to compare your income to your neighbour's, the average taxable income is not the whole story, writes Gareth Hutchens.

www.abc.net.au

Median income = $48,381 / year

Ouch.

bit silly to buy a $650k house when your income is $48k a year isnt it.....

 

[FredLeDeux]

And this other argument about young people not wanting to "live within our means".

Quite simply the "means" is dramatically worse in 2022 than it was in 1992. A person could work full time in a pretty skill less job and afford to buy a house and go on holidays regularly. In 2022 people with post grad degrees have to work in hospo and be underpaid while renting a house that's owned by a succubus who owns another six investment properties and is charging whatever the hell they want.

I wouldn't mind renting if the landlady volunteered as a succubus.

 

[owen87]

bit silly to buy a $650k house when your income is $48k a year isnt it.....

So buying a median priced home in an outer east suburb should be beyond people on a median wage.

No housing issues whatsoever.

 

[FRUMPY]

So buying a median priced home in an outer east suburb should be beyond people on a median wage.

No housing issues whatsoever.

So median wage should get you a median priced house in any suburb? thats all you've done....

why would you even look at the median for any suburb. Work out how much you can spend and look around - you'll find somewhere to buy somewhere.....otherwise suck it up and rent (and be part of 'the problem')

same as all those complaining about house prices and investors and then they go and book an air bnb/stays holiday in someones investment property.....and thus being part of 'the problem'

 

[La Dispute]

So buying a median priced home in an outer east suburb should be beyond people on a median wage.

No housing issues whatsoever.

Why do you have to live in the Eastern Suburbs?

There is affordable land in the West, the North and in various pockets in the outer, outer East if you want to chance your luck there.

So many prospective buyers need to adjust their expectations of purchasing a house. The market has shifted and it's now much harder to buy in a choice area, so you can either rent in those areas, you can get a higher paying job so you can purchase a house in your preferred location or you can consider other options so you can afford a house within your means/pay bracket.

 

[Nuggs Bunny]

Well obviously there's fair doubt that over half the millennials would own their own home. Otherwise there wouldn't be a discussion about it.

More than 50% of Gen Y own their own home by the time they reach 30.

 

[burge13]

The amount of people i know who had kids in their early 20s then come early 30s still dont own a house says a bit (anecdotal of course but id imagine a common theme) tbh. You made a choice to do something very, very expensive whilst young...

I wonder how many complaining about house prices chose to have kids early, get giant car loans etc as well.

 

[owen87]

in any suburb?

the Eastern Suburbs?

I mean, Pakenham isn't exactly noted for it's high property prices or proximity to the CBD.

It's 60km from Federation Square.

Exactly how far out should first home buyers be looking? Should they be able to gain employment near their place of residence?

Feels like a lot of goalpost shifting going on in order to justify that there's no issue with the current housing situation from you guys.

 

[La Dispute]

I mean, Pakenham isn't exactly noted for it's high property prices or proximity to the CBD.

It's 60km from Federation Square.

Exactly how far out should first home buyers be looking? Should they be able to gain employment near their place of residence?

Feels like a lot of goalpost shifting going on in order to justify that there's no issue with the current housing situation from you guys.

You can answer most of those questions yourself depending on your situation with work, but living near the CBD isn't as essential with so many businesses working remotely.

First home buyers should be looking to buy wherever is possible based on their income. Investors aren't just going to stop buying up real estate because those that don't have the capital feel it's unfair they can't buy in preferred locations.

 

[owen87]

You can answer most of those questions yourself depending on your situation with work, but living near the CBD isn't as essential with so many businesses working remotely.

First home buyers should be looking to buy wherever is possible based on their income. Investors aren't just going to stop buying up real estate because those that don't have the capital feel it's unfair they can't buy in preferred locations.

This is very misleading; many professions can't work remotely at all e.g. teachers and nurses, but also rely on a suitably large number of schools / hospitals etc. being available in their area. Others can't work remotely full-time and so proximity to workplace is a relevant metric.

We're talking about areas like Pakenham, Mernda, Mikelham and Diggers Rest all having a median house price over $600,000. These aren't inner city suburbs. This isn't our parents going 'oh back in my day I had to move further out for my first home and buy in Reservoir'. It's literally living 1 hour (or more) outside the CBD.

And the bolded is precisely the problem everyone here is talking about. Investors are incentivised to invest in housing, despite housing being a fundamental necessity, and there being an insufficient supply of suitable housing located within a suitable proximity of major employment centers.

When you have the majority of the population living in our major metro cities, with the majority of the employment opportunities located in those major metro cities, having the housing in those major metro cities considered a class of investment that people are incentivised to invest in beyond what's required for their own housing needs, you're going to have problems - and we do have problems.

 

[morningbrown]

Lot of ******* victim blaming and lack of attention being paid to how cooked the housing market is in here.

 

[La Dispute]

This is very misleading; many professions can't work remotely at all e.g. teachers and nurses, but also rely on a suitably large number of schools / hospitals etc. being available in their area. Others can't work remotely full-time and so proximity to workplace is a relevant metric.

We're talking about areas like Pakenham, Mernda, Mikelham and Diggers Rest all having a median house price over $600,000. These aren't inner city suburbs. This isn't our parents going 'oh back in my day I had to move further out for my first home and buy in Reservoir'. It's literally living 1 hour (or more) outside the CBD.

And the bolded is precisely the problem everyone here is talking about. Investors are incentivised to invest in housing, despite housing being a fundamental necessity, and there being an insufficient supply of suitable housing located within a suitable proximity of major employment centers.

When you have the majority of the population living in our major metro cities, with the majority of the employment opportunities located in those major metro cities, having the housing in those major metro cities considered a class of investment that people are incentivised to invest in beyond what's required for their own housing needs, you're going to have problems - and we do have problems.

Are there not schools and hospitals in all parts of the state?

What's your wacky solution for investors buying up land? It's just going to continue, become worse over time and home buyers are just going to have to adapt to the situation.

So again you can either -

1. Buy in more affordable areas
2. Find a job that pays you more which allow you to buy in an area of your choice
3. Rent in an area of your choice

There are also more people leaving the city to living in regional cities where the housing is cheaper, but even in these spots the house prices are going up and buyers are spending 20% more than than they would in years past.

The idea of employment being focused in on the metropolitan area is also slowly dying off. Sure in the past this was the case, but knowledge workers now have the option of working remotely. There isn't the same pull to living close to the CBD as there once was.

In years past there are far more options with where home buyers chose to live, but there just isn't that same luxury anymore.

 

[Carringbush2010]

More than 50% of Gen Y own their own home by the time they reach 30.

Ok, I believe you, but then who's doing all the complaining?

 

[Carringbush2010]

Exactly how far out should first home buyers be looking? Should they be able to gain employment near their place of residence?

As far as they can afford and get to work.

The 2nd question won't always be possible given any one circumstance, (nor will the 1st one tbh)

 

[ElectricG]

The amount of people i know who had kids in their early 20s then come early 30s still dont own a house says a bit (anecdotal of course but id imagine a common theme) tbh. You made a choice to do something very, very expensive whilst young...

I wonder how many complaining about house prices chose to have kids early, get giant car loans etc as well.

In Adelaide there’s basically no excuse for this kind of whingeing. You can get get a house in an area 30ish km from the CBD with frequent buses and trains in the low to mid $300,000s.

I know two people who engage in this type of bleating, and they’re both the perpetual student and have both been to Europe twice lol.

 

[Nuggs Bunny]

Ok, I believe you, but then who's doing all the complaining?

Personally I think the issue is deliberately framed as rich kids wanting to live somewhere they can't afford, because it's easier to dismiss that sort of argument compared to each successive generation having to accept a slightly lesser standard of living in the future.

 

[Nuggs Bunny]

What's your wacky solution for investors buying up land? It's just going to continue, become worse over time and home buyers are just going to have to adapt to the situation.

You can phase out negative gearing for residential property out over a few year period to even the playing field between investors and owner-occupiers. Houses that are solid investments with good rental returns are unaffected. Houses that are poor investments end up back on the market.

You can adjust the CGT discount to only apply to properties which have been developed into higher density development or substantially increase the time before the discount applies to residential property. Investors who add more housing stock to the market (i.e. those who actually do something productive for the wider economy) are unaffected while those who aim to flip over a 24 month period (adding nothing to the economy) have to find another avenue to build wealth.

 

[Maddo11]

I'm 31, my wife is 30, 4 years ago we pretty much realised that we would struggle to buy a house and live off one income while we start a family. So we put our eggs into a business for her, She was doing the day to day managing for two years until we got pregnant, now we're paying a manager to run it for her while I work full time elsewhere. We live off what I earn (roughly 95k in a trade). The rising cost of living pretty much leaves me change left over most weeks. Wtf is going on with groceries at BTW, I feel like we're still buying the same stuff but it's costing 3x as much

I daily drive a 10 year old 4 banger that hasn't had any love in months

We bought 2020 CRV for my wife to put car seats in for the kids, because my little car probably isn't quite safe enough, which her business pays for.

We're hoping that by the time the kids hit primary we'll have enough buying power between the business and cash that we'll be able to pick wherever we want to live and buy there. The catch 22 is if "the bubble" doesn't burst then we may still not have enough buying power, but if the bubble does burst then the business will probably suffer because it's a "discretionary spending" business not really a necessity (think fitness)

But that's as long as I can continue to cover rent with my income lol, it's gone up 22% in 6mths and the longest lease we were able to get was 6mths so we may keep getting wiped by constantly moving and paying more and moving and paying more......

So its not always just "get a better job and move away from the city and don't have kids" ya know

 

[btdg]

Over the past 30 years, property prices have been rising at 6-8% per year, while incomes have been rising at effectively 1-2% in real terms. It means property prices are doubling every 10 years, while incomes double every 30-40 years.

Clearly, that's not sustainable longterm. in my lifetime, the expectation that people might be able to buy a family home in the area they grew up has shifted from 'you can expect to buy a home' to 'cut back on luxuries and save a bit longer and you can buy a home' to 'you can buy a home if you move to a cheaper suburb' to 'you can probably only buy a home in any part of Melbourne/Sydney if you have 2x good incomes and a bit of parental help/luck'...

Each decade gets tougher and it's not helped by people who slipped through the elevator doors shouting down from the floor above about how easy it is if you just cut back on avocado toast, or move to a different suburb, or... whatever. I say this as someone who has bought a home - i sold my first home after 7 years, and there's zero chance I could have afforded to buy that home now.

The current situation weights a bunch of incentives to people owning more than one home. There's a range of solutions necessary but it probably takes some combination of:

• reversing incentives and actively punishing people who own more than one home. Get rid of CGT and ALL tax deductions on property (including mainteanance and rennovation costs), abolish stamp duty and institute a substantial land tax (that is 90% discounted for owner-occupied properties).
• removing restrictions on the construction of medium density housing and promoting medium and high density living as the 'norm', with huge investment in the infrastructure to support this
• investing heavily in public housing to replace the rental market shortfall; a housing guarantee as a basic human right, combined with a range of new investments. Purhcasing and converting unused CBD and Docklands office space (now sitting empty due to WFH) could be a good start... but it also needs to be a feature of all suburbs and areas (incidentally, it's no suprise that the 'most liveable' suburbs in Melbourne - South Yarra, Collingwood, Brunswick, etc all have significant public housing presence).
• Combine public housing with rent-to-buy and other similar schemes that help low income earners build a home, then eventually accumulate capital within it
• banning AirBnB or taking a heavily punitive approach to ownership of unoccupied property

There's probably a heap more, but landlords are the enemy and honestly, screw em.

 

[FRUMPY]

I mean, Pakenham isn't exactly noted for it's high property prices or proximity to the CBD.

It's 60km from Federation Square.

Exactly how far out should first home buyers be looking? Should they be able to gain employment near their place of residence?

Feels like a lot of goalpost shifting going on in order to justify that there's no issue with the current housing situation from you guys.

Where are they working for their $40k a year that you used as the example?....im sure they could get a similar job in most areas for that much....hell, i have a client who is an uber driver and makes more than that.....

 

[owen87]

Where are they working for their $40k a year that you used as the example?....im sure they could get a similar job in most areas for that much....hell, i have a client who is an uber driver and makes more than that.....

That's the median wage, plenty of award wage jobs would be in that area, across a number of industries.

 

[owen87]

Are there not schools and hospitals in all parts of the state?

Sure. Not enough to employ everyone nearby though.

What's your wacky solution for investors buying up land?

Stop heavily incentivising the property sector as an investment class, for a start. This is a very modern issue that saw property prices skyrocket when CGT discounting was brought in around 2000.

It's just going to continue, become worse over time

It certainly will if we continue doing precisely nothing about it.

home buyers are just going to have to adapt to the situation.

Yes, it's all the home buyers fault. Not the Government and the Investors who have a lovely cosy relationship where pumping up property prices as rapidly as possible is fantastic - so long as you're not a normal person on a median income trying to buy a median priced home anywhere near a major city.

even in these spots the house prices are going up and buyers are spending 20% more than than they would in years past.

Which is a problem.

but knowledge workers now have the option of working remotely.

'Some' knowledge workers, in 'some' industries do. Yes. Pity for all those non-knowledge workers, or those who don't work in an industry where working remotely is possible, or who simply want to be able to actually attend the workplace.

In years past there are far more options with where home buyers chose to live, but there just isn't that same luxury anymore.

It's really not a 'luxury' btdg nails it;

Clearly, that's not sustainable longterm. in my lifetime, the expectation that people might be able to buy a family home in the area they grew up has shifted from 'you can expect to buy a home' to 'cut back on luxuries and save a bit longer and you can buy a home' to 'you can buy a home if you move to a cheaper suburb' to 'you can probably only buy a home in any part of Melbourne/Sydney if you have 2x good incomes and a bit of parental help/luck'...

The housing situation is getting increasingly worse with every decade. Sticking our heads in the sand and doing nothing about it because those who own homes want to see their juicy juicy fat housing price increases whilst more and more people are locked out of the market isn't going to resolve anything.

 

[owen87]

As far as they can afford and get to work.

The 2nd question won't always be possible given any one circumstance, (nor will the 1st one tbh)

Is Pakenham, Mernda, Mikelham or Digger's Rest (all > $600k median house price) considered a bit too close? All of those are ~ 1 hour (more with traffic) from the CBD.

How far out is 'too' far?

People travelling 90 - 120 minutes to work is not a good thing, it's an failure of planning that we consider that normal.

 

[FRUMPY]

Is Pakenham, Mernda, Mikelham or Digger's Rest (all > $600k median house price) considered a bit too close? All of those are ~ 1 hour (more with traffic) from the CBD.

How far out is 'too' far?

People travelling 90 - 120 minutes to work is not a good thing, it's an failure of planning that we consider that normal.

look up places for sale in pakenham (again your example) and there are numerous places for sale well under $600k.......why are they going for places over $600k?

just dumb examples. buy what you can afford, plenty of them out there.

 

[owen87]

look up places for sale in pakenham (again your example) and there are numerous places for sale well under $600k.......why are they going for places over $600k?

just dumb examples. buy what you can afford, plenty of them out there.

It's the median house price in that area.

Sure you can cherry pick cheaper examples, some might be fine to live in, some might be absolute shitheaps that require thousands more in renovations to be livable.

The thing is; you've got the median house price in suburbs that are on the fringes of even being considered part of Melbourne, that is well above the means of someone earning the median wage.

Your example is dumb because there isn't plenty of cheap homes out there, if there was the median would be lower.