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Anyone on minimum wage can afford to buy or rent a home in Australia
Topic Started: 29 Jan 2013, 03:53 PM (22,067 Views)
Miles McCarthy
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Andrew Judd
29 Jan 2013, 08:26 PM
You do not appear to need a 20% deposit in Australia unless conditions have really tightened in the last two months.

Peter can probably get you a 95% mortgage?
Then you would need to pay mortgage insurance, and Shadow's claim of affordability is premised on 80% LVR.


The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
H. L. Mencken

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Andrew Judd
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Miles McCarthy
29 Jan 2013, 08:31 PM
Then you would need to pay mortgage insurance, and Shadow's claim of affordability is premised on 80% LVR.
I still think you can buy a home for less than 200,000 in Australia

Shadow did not i think specify house?
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Shadow
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GloomBoomDoom
29 Jan 2013, 07:50 PM
Is that $200 before or after the RBA raises interest rates back to 7%?

I failed to see the $200 example broken down but it does sound unlikely.
Here's one example... http://www.realestate.com.au/property-apartment-wa-perth-111931175

Two bedroom apartment right in the centre of Perth for $250K.

Assuming 20% deposit of $50K, less FHOG of 7K, means savings of $43K would be needed.

Or assuming 10% deposit of $25K, less FHOG of 7K, means savings of $18K would be needed.

Anyone who can't save $18K-$43K over a few years just isn't trying and isn't willing to make sacrifices.

A 3-year fixed rate of 5.39% is available from Westpac, and even lower fixed and variable rates are available other lenders.

Interest only repayments on a $200K loan at 5.39% would be $207 per week, or P&I repayments would be $280 per week (25 year term).

If necessary, the spare bedroom could be rented out for $140 per week, in which case it only costs the buyer $67-$140 per week (depending on IO or P&I loan).

Interest rates might be higher after the three-year fixed period, but the buyer should have knocked off a fair bit of the principle after three years (assuming P&I repayments), and they should also have had a pay rise or two after three years, so it would still be quite affordable even if interest rates did go up. They can also increase the rental income from the spare room.

When the bears say housing in Australia is unaffordable... who do they mean it is unaffordable for? People without jobs?
Edited by Shadow, 29 Jan 2013, 08:40 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Andrew Judd
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Shadow
29 Jan 2013, 08:37 PM
Anyone who can't save $18K-$43K over a few years just isn't trying and isn't willing to make sacrifices.
Shadow

You make many good points but this does not seem to be one of them.

That is a lot of trying and sacrifice for a person on the minimum wage.

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Poontang
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I believe anyone on minimum wage can afford accommodation. I don't believe anyone on minimum wage can afford* to buy.

Cost of living as a percentage is much harder on the lower paid than higher income earners.

Current low interest rates will not last, even locking in a fixed 5 year rate will most likely leave them exposed to much higher rates at the end of the 5 years, strong chance of lower capital growth over those 5 years and being low earners the ability to pay a significant amount of in the early years would be difficult.

Yes, there are things the lower paid can do to help save money as far as lifestyle choices and spending habits but even with all that there are some whom will never be able to buy.

They could move to a regional area of Victoria and purchase a home for under $100k which more than likely would be affordable for them.. If they can actually find a job.


Afford is not just about money.. Why should someone have to move 250Km from friends and family just to be on the property ladder?
There are some people who seem angry and continuously look for conflict.
Walk away, the battle they are fighting isn't with you, it's with themselves.

The first lesson of economics is scarcity: There is not enough of anything to satisfy all who want it.
The first lesson of politics is to disregard the first lesson of economics. ~ Thomas Sowell.

Who was the fool, who the wise man, who the beggar or the Emperor? Whether rich or poor, all are equal in death.
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Shadow
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Andrew Judd
29 Jan 2013, 08:42 PM
Shadow

You make many good points but this does not seem to be one of them.

That is a lot of trying and sacrifice for a person on the minimum wage.
Define 'a lot'...

Putting aside $200 a week, a person could save $16K after a year and a half for a 10% deposit, or $43K after four years for a 20% deposit.

I think this is reasonable. The person would still have over $200 pw remaining to spend on food/bills after $140 pw share-house rent and $200 pw deposit saving.

Or a young person can just live with their parents while saving - it would only take a year or two to save the deposit in that case.
Edited by Shadow, 29 Jan 2013, 08:57 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Andrew Judd
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Shadow
29 Jan 2013, 08:52 PM
Define 'a lot'...

Putting aside $200 a week, a person could save $16K after a year and a half for a 10% deposit, or $43K after four years for a 20% deposit.

I think this is reasonable. The person would still have $217 pw remaining to spend on food/bills after $140 pw share-house rent and $200 deposit saving.

Or a young person would just live with their parents while saving - would only take a year or two then to save the deposit.
How much does somebody working at Mcdonalds earn?

Is it possible that person can save 200 a week week in an week out for 18 months?? It sounds totally impossible to me.

Ok.....maybe they have no food bills. I worked at mcdonalds and use to take the thrownaway wrapped clean burgars out of the bin, nip out the back and eat them in a few seconds and come right back.

It sounds counterintuitive but probably they could save 300 or more a week

:lol
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Shadow
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Andrew Judd
29 Jan 2013, 09:01 PM
Ok.....maybe they have no food bills
The person would still have over $200 per week remaining for food and bills after spending $140 on a share-house room, and saving $200 for the deposit.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Miles McCarthy
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Shadow
29 Jan 2013, 08:52 PM
Define 'a lot'...
Quote:
 
Putting aside $200 a week, a person could save $16K after a year and a half for a 10% deposit,

Then they would need to pay mortgage insurance. I vaguely recall that isn't free.
Quote:
 
or $43K after four years for a 20% deposit.

Assuming that house prices haven't gone up 50% in the intervening 4 years, like they did in Sydney in 1998,1999,2000 and 2001.
Quote:
 
I think this is reasonable. The person would still have over $200 pw remaining to spend on food/bills after $140 pw share-house rent and $200 pw deposit saving.

You think it is reasonable that someone does not drink alchohol, own a car or a phone, buy any gifts, or spend any money outside of food and bills for four years? Is that what you did, or do you think that is reasonable for someone else?
Quote:
 
Or a young person can just live with their parents while saving - it would only take a year or two to save the deposit in that case.

Why would they want to buy their own place if they were living with their parents?


The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
H. L. Mencken

.
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Shadow
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Miles McCarthy
29 Jan 2013, 09:17 PM
Then they would need to pay mortgage insurance. I vaguely recall that isn't free.
It's not free, but it wouldn't be particularly high on a small loan like that. It would just be a few $K added to the loan.

Quote:
 
Assuming that house prices haven't gone up 50% in the intervening 4 years
Very rare for that to happen, and in a high inflation environment their wages would be rising too.

Quote:
 
You think it is reasonable that someone...
Yes, I think it is reasonable that someone limit their alcohol consumption, uses public transport, uses a cheap phone, buys inexpensive gifts, and tries to waste as little money as possible for a few years while saving for a deposit.

Quote:
 
Is that what you did, or do you think that is reasonable for someone else?
Yes, I did that. In fact, even today I limit my alcohol consumption, drive an oldish mid-range car, and generally try not to waste money.

Quote:
 
Why would they want to buy their own place if they were living with their parents?
Most people start off living with their parents, and later decide they want their own place. Different people have different reasons, but this is not unusual behaviour at all.
Edited by Shadow, 29 Jan 2013, 09:27 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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