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.
So, at $200 per week, just another 2 months of saving?
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Very rare for that to happen, and in a high inflation environment their wages would be rising too.
1998-2001 was not a high inflation period, so what is your point?
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Yes, I think it is reasonable that someone limit their alcohol consumption, uses public transport, uses a cheap phone, buys inexpensive gifts, and spends as little money as possible outside of food and bills for a few years while saving for a deposit.
I didn't say limit, I said eliminate. On $200 per week, after food and bills, there would be no discretionary spending outside of food and bills. Period.
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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.
Don't worry, all that interest you are paying to the bank on your mortgages gets wasted, so you still get to waste money vicariously.
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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.
So, as long as you don't: drink, smoke, eat out, make or receive phone calls, use the internet, own a car or live more than 2 train stops from work (or you just Forrest Gump it to work), in 3 years you could be on your way to owning the Australian dream?
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
So, at $200 per week, just another 2 months of saving?
1998-2001 was not a high inflation period, so what is your point?
I didn't say limit, I said eliminate. On $200 per week, after food and bills, there would be no discretionary spending outside of food and bills. Period.
Don't worry, all that interest you are paying to the bank on your mortgages gets wasted, so you still get to waste money vicariously.
So, as long as you don't: drink, smoke, eat out, make or receive phone calls, use the internet, own a car or live more than 2 train stops from work (or you just Forrest Gump it to work), in 3 years you could be on your way to owning the Australian dream?
You could probably make a reasonable reality TV program out of Shadows idea, and if you advertised for the star you would probably be inundated with wannabe minimum wage earners about to save to buy a house.
My question is will a bank loan you money for a studio apartment? Don't you actually require 20% or more upfront? I recall there being some kind of square footage minimum?
as long as you don't: drink, smoke, eat out, make or receive phone calls, use the internet, own a car or live more than 2 train stops from work (or you just Forrest Gump it to work), in 3 years you could be on your way to owning the Australian dream?
Absolutely - but in less time than that if they are willing to make so many sacrifices. Live with parents for a couple of years while saving, and take a lodger in the spare room after buying, and it becomes even easier again. Is it as easy for someone on minimum wage to own a home in other countries? I don't think so, not in many other countries anyway. We have it pretty good in Australia.
Miles McCarthy
29 Jan 2013, 09:36 PM
On $200 per week, after food and bills, there would be no discretionary spending outside of food and bills. Period.
You previously calculated that a person would have $262 remaining to save for a deposit after accomodation, food, bills etc.
But now you're saying if they save only $200 a week (instead of $262), somehow they have nothing left over?
Miles McCarthy
Then there is a matter of the deposit. $606 per week gross is $557 per week net.
Less $140 per week rent in shared accomodation = $417 Less $20 per week utilities = $397 Less $105 per week food = $292 Less $30 per week train or bus ticket = $262
Miles McCarthy
29 Jan 2013, 09:36 PM
1998-2001 was not a high inflation period, so what is your point?
My point was that it is rare for house prices to rise so rapidly (even rarer for it to happen in a low-inflation environment).
While I do know people who bought their first home with family (or in one case a friend), I don't know any of my generation (late boomer) or my parents' gen who bought an apartment as their first home. They were the things one rented before buying. (And we typically called them 'flats' as I recall.) But anyway, yes it did cross my mind a few years back, that could be the way of the future. Namely the entry level home goes from being a house to an apartment. Couldn't see back then (and still can't,) how reducing the standard/price of the entry level home was going to especially increase house prices as such though. It would have at least as much of an opposite effect was my suspicion at the time ...
Absolutely - but in less time than that if they are willing to make so many sacrifices. Live with parents for a couple of years while saving, and take a lodger in the spare room after buying, and it becomes even easier again.
What spare room? It is a one bedroom flat they are buying.
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Is it as easy for someone on minimum wage to own a home in other countries? I don't think so, not in many other countries anyway. We have it pretty good in Australia.
In terms of affordability, it certainly was before 2000, it was just a question of credit availability. In the US, minimum wage earners have nearly always been able to afford to buy a house, but rarely were given loans. Particularly not with 30 year terms.
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You previously calculated that a person would have $262 remaining to save for a deposit after accomodation, food, bills etc.
I previously calculated that it would take 4 years saving $262 per week. Saving only $200 per week would require 6 years to save a 20% deposit if property prices are averaging 7% per year in appreciation. I assumed the $200 was a numerical error on your part, because you used 4 years as the time to save. You may be able to afford a prepaid phone and have 2 beers per week using $200, but you will be 6 years away from saving a deposit.
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My point was that it is rare for house prices to rise so rapidly (even rarer for it to happen in a low-inflation environment).
Do house prices double every 10 years?
Andrew Judd
29 Jan 2013, 09:52 PM
You could probably make a reasonable reality TV program out of Shadows idea, and if you advertised for the star you would probably be inundated with wannabe minimum wage earners about to save to buy a house.
Yes, it could be called:
"Who want's to live in abject poverty in a 1 bedroom flat surrounded by drug dealers and heroin addicts for only 40% of their take home wage?"
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Most of us started at the bottom and worked our way upwards. I was even cleaning bottoms at one point in my life as a psychiatric nursing auxilliary on a secure geriatric ward after I dropped out of college. A bit like Forest Gumps war friend who knew about shrimping i can tell you all about the different types of shit. Fairly amazing that shit can be so varied bottom to bottom. Life is a bit odd.
Solid shit, runny shit, dark shit, light shit, pineapple shit, carrot shit, green shit, pebbly shit, compacted shit, curly shit ... that's about it.
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
The scope of your "opportunities" is very much dependant on what you are born into.
It is true that we cannot have perfect equal opportunity, but that doesn't mean that we should strive for equal outcome instead. There are many trust fund kids who have squandered their position of birth, and people born in the worst of conditions who have made millions.
All we need for a fair society is fo the opportunities to be leveled somewhat. Not everyone will have a private school education, but anyone can get into a selective school like Knox, or get a scholarship into Kings. Those that have the intelligence and dedication, can go to uni without paying upfront, due to the government fee help system.
I find the problem with unions, is that they want to bring the exceptional down to the average - and socialists want to bring everyone down to the lowest common denominator. For society to flourish, you want everyone to have sufficent opportunity, so that you don't miss the next genius in a housing slum, but not so much that the successful are overlooked because we are flooded by the mediocre.
Property speculation is a type of gambling... But everyone knows that in gambling, the house always wins in the end.
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.
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