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First Time Buyers Still Want Property
Topic Started: 23 Sep 2015, 07:18 PM (3,341 Views)
The Whole Truth
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No one's judging you over your aborigonal heritage herbs, it's safe to come out of the closet.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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peter fraser
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Terry
23 Sep 2015, 10:59 PM
Sure, I think that you pose the right questions, which can be answered by a preference question among the different variables. With that one question, you're giving an important insight that can help you make inferences to what can see below. What would be even more interesting is what people are prepared to trade off to choose a house over an apartment. It would be possible to understand this by looking at the differences in the cross tabs of "what you will buy" x "reasons to buy" for houses vs apartments. However, you can only ask so much information in a modern-day consumer survey. If you take more than 20 mins of people's time, they're not interested. People expect incentives to take part in a survey. For example, in Japan, housewives get paid about AUD40 for a 20-25 min online survey. If you're a housewife or part-time worker, that's not a bad payment.
Well I think that the price difference will be a large part of the reason to choose an apartment, but not in all cases. A member of my family is about to move from an inner city unit into a suburban townhouse, and he doesn't want to go because the inner city lifestyle is what he prefers despite the more cramped living space.

We pay some of our survey subjects here as well, which concerns me a little. I think the most candid answers come from those who tick the boxes because they are interested in the subject and not the pocket money.
Any expressed market opinion is my own and is not to be taken as financial advice
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Chris
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Lef-tee
24 Sep 2015, 08:01 AM
We can all draw whatever interpretations we like. To me it simply looks as though first timers are now becoming priced out of owning a traditional family home and are using the strategy of buying a less expensive unit which they do not really wish to live in as a leg up into an actual house. Hence the focus on capital gains over somewhere to live as the prime motivator.

It may be all but impossible for growing numbers of them to afford a house but the profit from the sale of their investment unit might just be the leg up they need to get there. I tend to think that this is likely just as big a reason if not the main reason for the behaviour, as opposed to simply seeing it as a wealth building tool, though I'm sure that motivation is strong as well.

Once this strategy being employed by our current crop of first timers has caused unit prices to swell to the point where the next crop can't even afford that, it seems unclear what will happen from there.
If FHB are jumping into apartments as a way of using capital gains to saving a deposit then they will be sorely disappointed. I think recent data showed the Victorian yoy average for units was a 2% increase, even at best they have risen about 8%. With a median of $550,000 that's somewhere between 11-44k pa in the greatest growth period the nation has ever seen.

Now you consider costs such as stamps, surveyor, legal, inspection, body corporate, land taxes, accountant for tax return etc then the first year has been a write off even if it has exceeded the average, if its net the average you are in arrears.

If there are even slight declines you are way behind. Then it becomes a matter of how long you have to wait to see the average yoy increase to see a gain significant enough to have an acceptable deposit to buy the home you desire. So in 10yrs at 35 and 2% growth you may have got $100-150k cg. Remove your entry and exit costs then what you have earned from the exercise is less than what you could have just saved by stating at home. Thrown in lost interest from something as pissy as a term deposit and you are well behind.

It appears to be a terrible strategy.
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peter fraser
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Lef-tee
24 Sep 2015, 08:01 AM
We can all draw whatever interpretations we like. To me it simply looks as though first timers are now becoming priced out of owning a traditional family home and are using the strategy of buying a less expensive unit which they do not really wish to live in as a leg up into an actual house. Hence the focus on capital gains over somewhere to live as the prime motivator.

It may be all but impossible for growing numbers of them to afford a house but the profit from the sale of their investment unit might just be the leg up they need to get there. I tend to think that this is likely just as big a reason if not the main reason for the behaviour, as opposed to simply seeing it as a wealth building tool, though I'm sure that motivation is strong as well.

Once this strategy being employed by our current crop of first timers has caused unit prices to swell to the point where the next crop can't even afford that, it seems unclear what will happen from there.
Leftee - long time no see.

I agree, but what is the choice. When a city only has a population of 1M people everything seems to fit and the city fringe isn't that far out even though people at that time think it is. But when a city grows to be 6M or 10M or more then it's no longer possible to offer 600Sqm blocks of land to everyone and still have a city fringe within cooee of the CBD. Public transport, parking spaces, roads, everything starts to get stretched as the city fringe moves further and further out, so IMHO we need to develop suitable accommodation within a reasonable distance to where people wish to live and play - to me that sounds like tower accommodation that can and usually does provide extra amenities within the tower. You can knock it if you like, but getting involved in a debate about how to make that living more acceptable seems like a better way to contribute from my perspective.
Any expressed market opinion is my own and is not to be taken as financial advice
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zaph
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peter fraser
24 Sep 2015, 09:48 AM
Leftee - long time no see.

I agree, but what is the choice. When a city only has a population of 1M people everything seems to fit and the city fringe isn't that far out even though people at that time think it is. But when a city grows to be 6M or 10M or more then it's no longer possible to offer 600Sqm blocks of land to everyone and still have a city fringe within cooee of the CBD. Public transport, parking spaces, roads, everything starts to get stretched as the city fringe moves further and further out, so IMHO we need to develop suitable accommodation within a reasonable distance to where people wish to live and play - to me that sounds like tower accommodation that can and usually does provide extra amenities within the tower. You can knock it if you like, but getting involved in a debate about how to make that living more acceptable seems like a better way to contribute from my perspective.
Trends have changed - perhaps they will change back? In the ~70's New Farm was considered a pretty ordinary place to live. It was desirable to move to Sunnybank/Aspley etc where you could build a new brick and tile house. In the last decade+ it's reversed - it's more desirable to live in New Farm in a wood and tin house.
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Sydneyite
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The Whole Truth
23 Sep 2015, 08:44 PM
I'd have thought someone who owned sydney property would be a lot mellower than you? Shadow is mellow, gold is well up so I'm mellow. Perhaps your investments have not done well at all? Sorry for your losses...Not.
That was *hardly* a bitter personal attack! Merely an observation around the ever-lasting smugness of those with the most broken-perma-bearish mindset (such as yourself - exhibit A!).

As for my investments and financial position - that's all just fine, thanks for asking! I am pretty chilled really as well - far more than you I suspect, given how excited you get at every peice of bad news or every day the stock market happens to fall. Here's how my wealth has been tracking over the past 18 months or so:

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Attachments: WealthTracker_201509.jpg (171.76 KB)
Edited by Sydneyite, 24 Sep 2015, 10:17 AM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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The Whole Truth
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Chris
24 Sep 2015, 09:44 AM
If FHB are jumping into apartments as a way of using capital gains to saving a deposit then they will be sorely disappointed. I think recent data showed the Victorian yoy average for units was a 2% increase, even at best they have risen about 8%. With a median of $550,000 that's somewhere between 11-44k pa in the greatest growth period the nation has ever seen.
If you look into he rise in unit prices what do you see. You see thousands of brand new innercity units sold to investors and that pushes up the median. But what about the 10 year old ones? What will the new ones be worth in 10 or 15 years. If you want to know that just look at gold coast unit prices.

Units are a shit investment.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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Terry
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peter fraser
24 Sep 2015, 09:38 AM


We pay some of our survey subjects here as well, which concerns me a little. I think the most candid answers come from those who tick the boxes because they are interested in the subject and not the pocket money.
Oh, so you want to give Coca Cola and CBA data for free. They can do that to some extent anyway. Typically, a interviewee for a survey is given incentives for their time, which is usually announced after a survey. People can belong to panels knowing that they will get incentives for answering questions. However, panels provide certain demographic information than enables screening and prevents sampling bias.

As for this survey at hand, I would be concerned if it were being outsourced to some Indian company to save costs. Then it is entirely possible that q'aires are being filled in a back room somewhere with fraudulent QC.
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Loki
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herbie
24 Sep 2015, 09:22 AM
The fact that so many bears are such fuckwits these days, does make it rather more difficult for me to empathise with the cause than was once the case.
You should turn full-on bull, then the bears will have one less fuckwit.


“Talk sense to a fool and he calls you foolish.” - Euripides
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Matthew
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The Whole Truth
24 Sep 2015, 10:38 AM
If you look into he rise in unit prices what do you see. You see thousands of brand new innercity units sold to investors and that pushes up the median. But what about the 10 year old ones? What will the new ones be worth in 10 or 15 years. If you want to know that just look at gold coast unit prices.

Units are a shit investment.
A FHB and an investor are different things retard
My only hope for my three boys is that they turn out nothing at all like Chris.
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