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Potential FHBs baulk at deposit gap, low rates don't make saving deposit easier; First home owner grants rot the housing market from the inside
Topic Started: 13 Nov 2013, 07:39 AM (4,702 Views)
money money
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It's hard for first home buyers but it's always been hard.

It's about saving, however these days how much you have to save seems to be an astronomical amount and HOW to save is the hard part that seems to be missed in this article. I unfortunately don't know anyone who has been able to buy a house as a first home buyer without either moving back home with family which means they could save for the deposit or who has had some form of help from their family either as security or loan to get the deposit amount.

If you don't have family to move home to or who are in the position to help, you're stuck renting whilst trying to save for a house deposit and I think that's the real killer here - the incredibly high rent prices. When nearly all of your salary goes on rent, the remainder on living costs such as groceries and electricity it's pretty hard to save up enough to meet the high deposits these days. And trust me, I'm not out buying coffee or takeaways or living the life spending money. The amount I pay in rent I could easily be paying off a mortgage, but alas whilst I'm having to pay such high rent I won't be able to afford to save and get that allusive deposit.

And yes, I realise the argument is 'to find a cheaper place to rent'. Good luck with that in Sydney at the moment considering the cut throat rental market.
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money money
13 Nov 2013, 10:40 PM
It's hard for first home buyers but it's always been hard.

It's about saving, however these days how much you have to save seems to be an astronomical amount and HOW to save is the hard part that seems to be missed in this article. I unfortunately don't know anyone who has been able to buy a house as a first home buyer without either moving back home with family which means they could save for the deposit or who has had some form of help from their family either as security or loan to get the deposit amount.

If you don't have family to move home to or who are in the position to help, you're stuck renting whilst trying to save for a house deposit and I think that's the real killer here - the incredibly high rent prices. When nearly all of your salary goes on rent, the remainder on living costs such as groceries and electricity it's pretty hard to save up enough to meet the high deposits these days. And trust me, I'm not out buying coffee or takeaways or living the life spending money. The amount I pay in rent I could easily be paying off a mortgage, but alas whilst I'm having to pay such high rent I won't be able to afford to save and get that allusive deposit.

And yes, I realise the argument is 'to find a cheaper place to rent'. Good luck with that in Sydney at the moment considering the cut throat rental market.
A few words you need to hear !

''Move out of Sydney the over priced shit hole''
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fhb
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First home buyers are giving up at a time when conditions are relatively favourable for them. Interest rates are at historic lows and mortgage repayments as a proportion of average disposable incomes are lower now than for most of the past 15 years. Some economists say these are the best home buying conditions in years.

Some first-time buyers are being outbid by the rush of investors who have jumped into housing on the hope of quick capital gains.

But I think many are baulking at the deposit hurdle.
If this article is a shamefully hidden attempt to poke State and Federal Governments in to providing FHB's with increased grants to help with a deposit then this line of discussion needs to stop right now. Grants just serve to increase house prices which further pushes the goal of home ownership away.

What needs to change is the balance between immigration and supply. We currently have a situation of the Federal Government pushing the intake which is fine but State Governments hindering supply. Supply must increase and these false boundaries with levels of tax on new homes looked at and reduced. If someone wants to go live in the outer regions, the price should reflect this. It does not currently.

And remove stamp duty and reform with a flat and uniform land tax so State Governments have a fixed and predictable source of income. Finally provide incentives for investors to get out of the merry go round of buying existing housing. It does not provide more supply. The structure for housing supply is wrong. The grants are ok as they are. Fix them and it may just help younger buyers in to the market at a price they can both afford and are willing to pay. That isn't happening right now hence the plummeting levels of ownership with the only answer to export our home ownership instead or stifle supply which is an insane proposition.
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fhb
13 Nov 2013, 10:50 PM
What needs to change is the balance between immigration and supply.
Yes, mass immigration is the crux of the problem. And, one suspects, money laundering by foreign elites through locals who have PR. The Australian property market is in danger of becoming a complete joke. But we must put on our dancing shoes and dance to the music. Our public officials are determined to keep that music playing. Resistance is futile.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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Young buyers find home-owning dream a nightmare to fund

November 16, 2013
Simon Johanson

A generation of young Australians is being squeezed out of the housing market.

Skyrocketing house prices and the difficulty of saving a deposit are putting the great Australian home-owning dream out of the reach of many - despite the best buying conditions in years, with interest rates plummeting to historic lows and low unemployment.

Sunaina Nundeekasen, a 28-year-old Sydney doctor, has worked for the past four years and still not managed to save a large enough deposit.

''Even though I do get quite a good salary it's still going to be pretty tough,'' she says. ''When I went to the bank and discussed mortgages … it became apparent there was no way I was going to be able to do it just by myself.''

She is not alone in her struggle.

The number of loans to NSW's first timers and young families fell to their lowest level ever in January, when just 773 dwellings were financed.

All year, first home borrowers have bumped along the bottom at around 1000 per month, a stark contrast to March 2009 when monthly first home loans hit an all-time peak of 6241.

The situation is similar in Victoria, where first home loans hit a high in May 2009 when they reached 29.5 per cent of all lending, the most since records began in 1991. Now, just one in eight are first time borrowers.

When first home buyers really hit their peak the standard variable interest rate was at a low, around 5.8 per cent, similar to today's 5.95 per cent. But unlike 2009, interest rates now are not as attractive to first home buyers.

Instead of helping young people achieve their housing dream, they are spurring a charge of investors into the market.

''It's demoralising competing against investors who are using property to bolster their super fund. They've got far deeper pockets,'' says first home buyer Byron Slessar, 27. Across Australia people like Byron are giving up.

In September just 12.5 per cent of all loans went to first home buyers, the lowest since records began and well below the average of 18.5 per cent.

Some blame their difficulties on rising house prices and affordability issues, others on cuts to government incentives.

Prices are soaring in Sydney, up 13.2 per cent over the year according to RP Data, while Melbourne is again at the beginning of a new growth cycle. ''The change in first home buyer grants in some of the bigger states has made it more difficult for first home buyers to get in,'' says RFi's research director, Alan Shields.

Four years ago governments doubled the deposits of first home buyers with generous subsidies following the global financial crisis-induced credit crunch.

More recently those grants were cut and refocused on buyers purchasing new, rather than existing, homes.

For Byron Slessar, who this week jointly purchased a property in Sydney's inner-west with his brother Charles, 25, the grants were no help. ''It's got to be for a property under $600,000. In Sydney's there's not a huge amount of them,'' he said.

The Slessar brothers managed to afford $829,000 for a two bedroom terrace in Erskineville's MacDonald Street by banding together and combining their deposit, purchasing power and loan repayments.

''I've been working for four years and saving all that time. Charles has been saving for two or three years,'' Mr Slessar says.

What young people face now is a ''renovated Australian home owning dream'', says Ipsos Mackay research director Rebecca Huntley.

They need to be less fussy about housing types, maybe buy a property just to get a toehold in the market then rent and live somewhere else if they need to, and are frequently falling back on mum and dad for financial or other support, Ms Huntley says.

''We are seeing some downgraded ambitions.''

In the past most wanted a free-standing home, now they make do with a studio apartment. The majority, nonetheless, still want to own rather than rent.

Read more: http://www.smh.com.au/business/property/young-buyers-find-homeowning-dream-a-nightmare-to-fund-20131115-2xmf5.html
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First homebuyers need to save consistently for a decade to muster the average $113,000 property deposit
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First home buyers consider credit cards to cover deposit shortfall

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