Well that's the reason many of us don't buy a house on a reasonable sized block.
For me, I'm in strata because that's what I can afford. In an ideal world, I'd prefer a standalone house a little bigger than my unit with more outdoor space. But when it comes down to it, what I have is tons better than renting, so that's that.
Same here! As a couple, we could have got a bigger mortgage and buy a 2 br unit but we opted for 1 br one. Could we do with more space? Of course! Are we better off now than when we were renting a 2 br apartment? ABSOLUTELY
The way things are going it might be a permanent house. I bought 4 years ago for $420k and the bank has now valued it $600k. Similar homes are selling for that on my street. If I wanted to upgrade I'd need to spend at least $600k. The market is moving too fast.
You can still get that in places like Lynwood actually and I'm sure there are other suburbs like that. Although Lynwood specifically is going up fast. Just last year you can get what you want for 500k (then you spend the remaining 100k on some renovations)
When I was a kid we lived in a tiny 3 bed house... that's mum, dad and four kids. My dad was a chef and made wedding cakes in the smallest kitchen I've ever seen. People just expect a lot more these days.
How are you upgrading if what you have is already worth 600?
Only way you would upgrade your house is to move further away from the city than you already are
This is only because the market barely moved for 10+years previously. I bought a $490k house in Kallaroo in 2013 and sold it 2 years ago for $500k. That was with around $30k of renovations.
Now that same property would probably be with $600-700 - which is what it SHOULD have increased to over that decade had the market been moving at an average rate. We're playing catch up...
Realistically, if you can pay X amount per month for rent or mortgage, mortgage is always the better option. The bubble can't keep inflating this quickly forever, but in the 24 months of home ownership in my second place, the value has increased by 20% or so, compared to the 4-6% interest rate on it.
When we moved, we sold my old place for almost the same we paid, but then pocketed all of the mortgage repayments (less interest) made over the life of the loan. People don't often think about this; purely being in the market is a forced investment.
Just remember that the on paper value of your house isn't the real value of your house. You don't know the value of your house until you sell it. My first house was "valued" at $470k by the bank before I bought it. I bought it for $420k. The owner dug his heels in for 6 months before contacting me and asking if I was still interested at my original offer price.
Be careful tho. House prices are a big political issue and the voting demographic is changing.. I think right now is a great time to sell but a really shitty time to buy. But TBH I’m just a dickhead on Reddit so take this with a grain of salt and do your own research.
I know where you’re going with it. But it’s basic supply demand. Supply, needs more land, trades, materials. Doable, but will take 5-10 years to start seeing the effect.
Demand, you could reduce that other ways, but all of them are inhumane and political death.
Its artificial. Most cities have no shortage of land. Its just not released and banked.
Perth? Look around jamdakot / treeby, that's all greenfield, just not released.
There is talk of cutting migration and the birth rates are declining massively.Just wait and see what happens with the next election. Millennials and Gen Xers have just over taken the boomers in voting power and they are much more left leaning. I don’t think population decreases will be political suicide, it should equal higher wages, cheaper housing and so many more parking spaces.
Like the person you replied to mentioned, the things you're talking about take at least 10 years to play out, and then there is no guarantee that prices will go the way you hope they will.
The only way prices come down is if supply goes up. I don't see that happening for a loooong time.
This depends if you want an investment, I would argue a first home is an investment as most likely you will want to sell it later for a better property. Or you want a home for life, most second home buyers are in this category as they are selling their previous house and want a home to start a family or live in for the rest of their lives.
I built a 3x2 on a tiny block in the Swan Valley. Get my keys tomorrow. It’s not my dream house or in my dream area, but I was able to do it by myself, my mortgage is under $400k and I only had a 5% deposit (including FHOG). It’s an asset I can use as a stepping stone to something closer to what I really want.
What are you doing looking at house and lands. Buy a unit, villa, townhouse, pay that off over the next 10 years then look at something bigger if needed
Start small. Buy a unit or townhouse in a good location, build some equity and then use that to buy your next place which is hopefully bigger. Don’t build, it’s a nightmare at the moment. Your only 27, plenty of time to save and grow some equity
This and I will add to broaden your search.
If you don't want a unit or townhouse then you will need to travel, if houses are 700-900k where you want to live then start looking 20-30mins away where comparable houses will be 500-700k.
As I always say, there is a difference between need and want.
Yep agree. You can’t expect to buy the perfect house in your preferred area for your first property.
Also you can try the Reno route, buy an old dump as close to the city as you can and start fixing it up yourself.
Things are tough out there, no doubt. But there are options, just gotta keep preserving and get creative
I bought a shit box in a crap area for 450k in 2013, my wife thought I was joking when I said yes to buying it. I promised to reno the kitchen to her liking. Paid 15k for that. In 2018 I was very upset because the price had not moved much, even with the renovations done. but because it was low cost, I was able to pay it down with the loan offset account, which I was fanatical about. I think loan offsets are absolutely brilliant.
Then that home became an investment property and I moved to a really nice home last year, was able to use the offset to deposit on the nice home, as well as the rental income to increase my pre-approval $.
This stuff is doable on a teacher's salary and with 2 kids. People just see the end result they want and want to jump to that.
I bought my first in Merredin, cheap reno & leased it, while I rented in Stirling. A year later I made \~$26K on it, which I put into flipping Perth property.
This. Be disciplined and get rid of junk and clutter if you start small. Consider public transport proximity and try and get by with 1 car and an (electric) bike for example freeing up half your garage for gym/hobbies/workshop/storage out of the house. Optimise outdoor living/garden similarly.
Yep! many times I've seen/heard, "I can't afford a house" blah blah blah. Buy's $10 beers at the pub vs a carton, take away, compulsive spending, etc. Some may even be paying off a Harley, $50K car, boat, goes to Bali once a year
TL;DR by buying a property you are making yourself dependent on property cost inflation, but if it does inflate in a similar way to how property prices have always inflated, you are **significantly** better off buying ASAP.
---
As a extention to this point, equity is accrued extremely slowly in the initial stages of a mortgage. For example on a $500k mortgage at 6.1% interest and 30 year repayment, you will have accrued $35k of equity after 5 years, despite having made $156,000 in mortgage payments. The rate of equity accrual will increase exponentially with time, for example you'll accrue $134k equity through mortgage repayments in the final 5 years.
The main way you build equity over time, especially in the early years, is through price inflation. The big 5 banks are estimating anywhere between 2% to 10% property inflation in Perth for the next year, though there was 20% appreciation in the last year. Lets go with an average yearly property inflation of 6% (yearly compounded average for last 30 years is 5.4%) on a $500k apartment/ townhouse with a $100k deposit and stamp duty/other fees taking out $30k
| Years | Apartment Value | Principal Owing | Equity |
|-------|-----------------|-----------------|-------------|
| 0 | $500,000.00 | $430,000.00 | $70,000.00 |
| 1 | $530,000.00 | $424,817.36 | $105,182.64 |
| 2 | $561,800.00 | $419,309.59 | $142,490.41 |
| 3 | $595,508.00 | $413,456.30 | $182,051.70 |
| 4 | $631,238.48 | $407,235.80 | $224,002.68 |
| 5 | $669,112.79 | $400,625.06 | $268,487.73 |
| 6 | $709,259.56 | $393,599.59 | $315,659.97 |
| 7 | $751,815.13 | $386,133.38 | $365,681.75 |
| 8 | $796,924.04 | $378,198.79 | $418,725.25 |
| 9 | $844,739.48 | $369,766.42 | $474,973.06 |
| 10 | $895,423.85 | $360,805.05 | $534,618.80 |
As you can see by year 10 you own \~70% of your apartment due to inflation. This is the process that people refer to when they talk about "building equity". Not the actual repayment of the loan.
For completeness sake here is the result if you were to rent for 10 years to "save" for a house, paying rent of $550 a week, with a 7% yearly increase in rent (this is actually below the last years rent increases, but is often slightly above property inflation
| Year | Rent | saving power vs equiv mortgage repayments |
|------|------------|-------------------------------------------|
| 0 | $28,600.00 | -$2,669.00 |
| 1 | $30,602.00 | -$667.00 |
| 2 | $32,744.14 | $1,475.14 |
| 3 | $35,036.23 | $3,767.23 |
| 4 | $37,488.77 | $6,219.77 |
| 5 | $40,112.98 | $8,843.98 |
| 6 | $42,920.89 | $11,651.89 |
| 7 | $45,925.35 | $14,656.35 |
| 8 | $49,140.12 | $17,871.12 |
| 9 | $52,579.93 | $21,310.93 |
| 10 | $56,260.53 | $24,991.53 |
As you can see, the rental costs inflate past the mortgage cost after the first year, because the mortgage repayments are tied to the mortgage amount taken out in the year you bought the property, whereas the rental payments will inflate with property costs.
The big asterisk to all of this: If you buy a townhouse, and then a block of low income flats is built next to your townhouse, your property value will tank, your equity will disappear, and you will be very sad. Everyone likes to take a dump on NIMBY's but as soon as you buy, you join the cult.
Solid post however a few things to note to counter:
1 - Your example lists apartments and those aren’t likely to nearly double in price in only 10 years (historically)
2 - “Affordable” houses currently sit on the outskirts of city limits and also historically those also don’t double every 10 years because they’re constantly at the mercy of new builds/more land releases nearby which keep existing resale value low(er)
3 - Rents don’t increase by 7% annually and typically have been far lower (pre covid)
But of course we also haven’t ever had this many new people coming into our country to prop up the economy so there’s likely to be a tug-o-war effect between that and the above points.
Bottom line if you extrapolate over the long term buying will always be more favourable than renting but the figures from start to finish aren’t likely to be in line with your examples 🙂
Your numbers for the appreciation of an apartment are pure fantasy. I'd like to see any apartment go up 6%/yr, it just does not happen.
That $500k apartment will probably be worth $600k max after 10 years.
Eh, building isn’t that bad, especially single story. Yes it takes longer than it used to, and you have to be onto your builder via qualified inspectors, but it’s your biggest asset so you should be doing that anyway.
Building is probably the easiest way to build equity these days if you do it properly.
I’m not against building. But it’s just as hard to find decent titled land, and if you do it’s 45kms from civilisation. And if you want a smaller half block or similar in a nicer suburb, you are still paying top dollar, so may as well buy established
how does the old advice of "get a starter home" work when the starter home loan payments consume ALL of the spare money that should be saved or going to investment for people earing what used to be 'plenty of money'
i make like 105k and the idea of moving from renting with 500$ payments to a 750 dollar loan for a 'cheap' country town house will somehow lead to a better home later is crazy to me.
As time goes on, if you rent, your rent will increase with no equity in the house you live in. If you buy, your mortgage payment will go down, yet your equity in the house you live in will go up, the value of the house will also go up. So mortgage should be viewed as delayed gratification: suffer some short term pain for long term gain.
I managed to buy my first home, a 330k 1 bed apartment in 2016 on a 70k single income. Apartment was inner city, about 4kms from the city. No help from parents or and gifts or inheritance, just savings and the FHB grant. Didn’t have to sacrifice much, was still able to enjoy a modest lifestyle. Interest rates were similar to what they are now, maybe slightly lower.
And you’re telling me you can’t afford something in the 400-500 range on 105k pa? But you can afford a $500pw rental?
I think you need to re-do your maths and get back to me.
Stop turning your nose up at "undesirable" suburbs and actually look at the listings. There are some absolute bangers available in nice suburbs that people absolutely refuse to look at because of a reputation they had thirty years ago.
That’s what I did, I was able to build a 4 bedroom 2 bathroom house on a decent block for a reasonable price around 25 minutes or so from the CBD. Still plenty of blocks going but prices have gone up in the last 12 months after my house was finished
I'm only going to speak of my own experience here: I've lived in Koondoola almost all my adult life, and it being a great place to raise a family is a hill I'll die on. Balga and Girrawheen are also good. I'd skip Mirrabooka, just too busy, south of Reid hwy because of the shopping centre north because of the mosque and JSR high school, traffic is awful all day. Some of the family spent over a decade living in Lockridge and didn't have a problem. I don't know how gentrification is going, but I spent time in Lynwood, and it was nice and as well as affordable.
Hope this helps.
We brought our first house in Banksia Grove. People were telling me it’s a war zone with gang riots and druggies in every park. Honestly yes there was antisocial behaviour, but it was nowhere near as bad as other places I had lived.
I felt safe enough taking my dog for a walk in the evening, yes there were bogans (we live in Perth), however everyone we spoke to was polite and we never had any issues.
You're aiming too high for your age. At 24/27 my wife and I had just married and were paying a modest rent in the Pilbara (nurse/teacher). We bought the cheapest, house we could afford. It was 3br, had an asbestos roof, and on a 600 block, so there was a bit of a yard. I agree with you that prices are insanely high now, but your first home is usually not gonna be the dream home you will eventually find. Good luck on your house hunt.
Yeah i was still living in dodgy sharehouses at that age. I wasn't in a position to buy a house until I was 39.
It's probably good that people are thinking somewhat further ahead than I was, but I find these posts by young people with such high expectations strange to say the least
A lot of young people will have grown up in a single home so their understanding will be that you buy one home for life. I think it's just a lack of understanding and experience. There's also a lot of bad advice and opinions that get put forward by other young people which sounds right but actually isn't.
Because people don't know how to do basic financial management. I have friends who live hand to mouth despite always earning more than me.
One woman i know is earning close to 200k before tax on a single income (not including her husband's income) and their family is not only still renting, they also have basically no savings and they have debt as well. If i was on their income I would have 5 properties giving me some nice rental income by now.
Lower your expectations or look a bit further out or be prepared to put in some hard yards on a shit house. My wife and I bought the worst house on the street that the local white trash used to live in, got it for about 200k under at the time and after 3 years and about 100k put into it its recently got appraised for a refinance and it's worth double what it was when we bought it.
You're 27 but how long have you been working for, how long have you been saving for and how much are your income/expenses? Age is irrelevant, I know people who bought their first home when they were 19 and people who still live at home at 32. You don't just wake up one day when you're 27 and expect to buy a home. Address the above and as others said lower your expectations a bit for your first home. Before you know it you'll be there.
lower your expectation.
your first house will not be your dream house with land to give you kids a backyard to play and grow veggies and stuff.
start from whatever you can afford even if it's just a small unit.
To add to that, you need to adjust your expectations to 2024 and not be stuck in 1994 or 2004. With population growth over the years, the definition of “inner city” and “outer suburbs” has changed. It’s mathematically impossible for *everyone* to live the exact same distance from the CBD on the same sized block as where their parents settled 30 years ago.
Key reason I'm wanting my adult children to continue living with us. We never could afford to buy a house, so if I can give them an opportunity to save money for a deposit, I will welcome them for as long as it takes.
I thought I was the only one who thought this! Bought my house 6 years ago for $400,000 and the bank said its worth $650,000. I couldn't afford it now. OP is dreaming thinking he's going to own a big plot of land at 27
Dual incomes and a decent deposit are the easiest way.
From there, the first 5 years are the hardest until your wage growth starts to get ahead of the mortgage repayments.
Anything in the private sector, I'm in environmental consulting and if you're dedicated to work "40 hour" weeks, then you'll climb up real fast, rather waiting on someone to retire... ain't easy but
It's not about beating inflation or anything but the portion of interest goes down over the life of the loan and your wage will more than likely go up (maybe not in buying power) but your mortgage stays fixed so it feels like your gaining momentum.
Temper your expectations for the coin. My 27yo friend just bought a $500k 2x1 apartment by the water in Ascot. No one was at the home open, they bid asking and got it.
You have to get your foot in the door first. These days buying a 'forever home' as your first property just isn't going to happen unless you are a millionaire.
If you only have yourself - buy a 2 bedroom place, do it up, and use the money that isn't being thrown on rent to pay down interest further and build equity. It's not fast, but it's how it works.
>I don’t want to live the next 40 years of my life paying off a mortgage. So how do you adults do it?
We'll - currently I'm planning to spend the next 30 years of my life paying off a mortgage. You can either be a millionaire, or get a mortgage and pay it off for several decades. There's not really an inbetween except for waiting for someone to pass on so you inherit their house.
As a 31 year old who bought this year, if you want a bigger block than 400m2 have to go out and learn how to be chill on a long commute. Even Pinjarra is 500k these days for a 3x1
Whaaa? This is so not true lol.. there are definitely houses around Mirrabooka for 550k - some of them are crap and need work, but majority of them are sitting on 600-800m size land!
This just sold for $600k - [https://www.realestate.com.au/property-house-wa-kelmscott-145216428](https://www.realestate.com.au/property-house-wa-kelmscott-145216428)
On one hand we are of vast country and we can go into urban sprawling, but this brings a whole bunch of downsides to the overall cost of things such as infrastructure, time , etc.
On the other hand we need to get used to apartment living because there is simply not enough space in the inner cities any more. And there are suburbs such as Nedlands Crawley etc. With huge blocks of land which are vacant or for sale which can be developed to apartment complexes that would help with these issues.
Don’t get me wrong I hate department living and if I could afford it I would definitely buy a huge block of land over an apartment any time, but the reality is a 90% of the population can’t afford this shit we have to adapt.
That’s the problem. People want to start big. Start smaller and with what you can afford. Eventually you will have some equity and be able to go bigger then.
No everyone isn’t millionaires they start small work their arse off and get bigger when they can afford it 🤷♀️
Weird how what your saying is pretty much word for word face to face discussions before internet forums. In 20yrs they'll be saying similar to others. Wonder if it'll be on reddit
And a boat
and regular overseas holidays twice a year
And put all their kids in the most expensive private schools
And get them expensive extra curriculars lessons in all sorts of things
Everyone is in the same boat it's fucked.
Something that helps me is to have gratitude for even being in Australia. When you really think about it, it's first world problems. Living like a king in a third world might not be all that given their healthcare and safety - or it might, depends on the person
There are many people in the world who truly have nothing and are still happy.
It’s all about perspective dude. I saved 130k since I was 18. I was lucky I had folks made me do it. Something told me during covid that now was the time to buy a house. So I did it in 2021. My rent for a 2 bed apartment was 2500 a month now my mortgage for a 5 bedroom house in a southern suburb in a very nice estate is 2700 so to me paying half my take home salary is worth it. Put it this way.
Don’t think about slogging at a mortgage. I came to this country with nothing but a suitcase. I worked hard at uni. Worked my guts out for 11 years. Became a teacher moved up the pay scales to a good salary. My house is my castle. My sanctuary and it’s big enough to have family stay when they want or if my folks get older I can look after them.
Life is so short. I know guys who lived in a van for two years to get a deposit. They bought down south and changed jobs and careers for the location. Keep your chin up. I know exactly how you feel. I built for 400k I put 100k down. So 500k and now it’s worth 780k.
Look at dump units or shitholes anywhere. Do it up. Flip it. Rinse repeat. Good luck buddy!! You can do. Positive mindset.
Buy a shoe box. Get your foot in the door. Pay it down then use it to buy your next house. Buying your dream home for your first home is seriously not something to aspire to. Get your foot in the door then you have a lot more to work with.
This is one of those old people "back in my days" things, but here goes.
So many young adults I know want to get a house as good as their parents house. We didn't start with that, we've worked up to it over 3 or 4 houses.
Don't expect your first house to be your dream house. Start smaller, older, further out, less desirable suburb, whatever. Pay it off as quick as you can using extra payments or offset. By getting smaller and cheaper you will pay far less in interest and will pay down the principle faster. At the same time, it will grow in value. Do some handyman work to make it more presentable. In 5-10 years use this to leapfrog to something better.
When I compare myself to where my parents where at the same age as me, I've got a far better quality of living. Compared to now, or when I was a teen they obviously knock me out, but in general I'm doing better relative to age when accounting for technology and modern conveniences.
Yep this too.. I’m 32 and have a 4yr old son. I remember we lived with my nan for 18 months and I was 9 and my brother 6 by the time we moved into our ‘dream’ house, my mum was 41
Exactly, my parents bought their first property at 42. I bought my first property in my twenties without direct financial help from my parents since they didn't have the money to spare. They did teach me how to save money and proper financial management skills so they helped a lot in that way. But no money handouts.
No. so many young people can't even get a foot in the door today. in 2000 I was making $18 an hour could do weekly groceries for 2 for $100 and could buy a nice house for around 100k. that same job today would pay me $25 an hour (with less penalty rates for weekends), the equivalent weekly grocery would be 400 to 500 and the same house would cost 1.5mil. young people today are screwed unless the have help and op doesn't sound like their family is in any position to help. cost of living today leaves little to nothing to be able to save. people who can save for deposits usually don't have enough because by the time they have saved it property had gone up even more.
I'm sorry but that is BS. In 2000 you could not buy a nice house for $100k. You can buy a nice house for maybe around $250k.
You can certainly buy a house for $100k, but it wouldn't be a nice house. It would be something that requires work and some renovations.
The type of house that you can buy for $100k back in 2000 you can still buy for $400K today.
In 2000 you absolutely could not buy a house for $100k - where did you get that figure from? I built in the outer suburbs in 2001 and the 620m block of land was $110k, house was another $133k. My wage was around $40k per year.
There is no doubt that things are hard and I feel really sad for my kids seeing what they are up against. The house I bought 20 years ago has tripled in price or more, outpacing wages.
Not only is everything expensive, but there are a lot of ways that young people are being encourage to bleed cash all the time. I am in no way blaming the avocado toast, but can see lifestyle expectations have risen a lot in 20 years too and that has an impact. Expensive phone upgrades, streaming services and uber eats aren't a great way to build savings. I also get that there is a sense of Nihilism in that if you cant afford a house, why save anyway.
Aiming too high for a first house, first car, holidays and lifestyle will only make it harder. Young adults need to have lower expectations and work up to it. My first house was a cheaply built 2.5 bedroom on a small block in a slightly dodgy suburb, but I made it comfortable. I had a shitbox car, no phone, and watched free to air TV or pirated movies. We mostly cooked at home and only ate out as a treat. I wasn't special or disciplined to do things this way, it was just normal for the time. Anyway all these things add up, especially over 5 - 10 years of compound interest.
P.S. not a boomer, still working class GenX.
I wasn't able to afford my first house until I was in my 30s. That was 25 years ago and I thought then the bank was bonkers to lend me the amount of money needed. Later trying to find a house we could afford in Perth in 2007 was an insane process. I'm sure now is worse. I think it's been a long time since people just easily waltzed into buying a house.
Currently realestate.com.au lists 162 3 bed houses for sale in the greater Perth region for up to $500,000. Excludes under offer ones. You only need one you can tolerate living in.
Of that 162 they are "offers from" and will go for $600,000 and there will be about 1500 people puting in offers.
Orelia in Kwinana has seen ex govt 2 bed flats going for $400k with about 30 offers.
We bought in Bunbury during the covid madness and picked up a 2x3 double lockup garage with a decent shed for $360k back in 2019 and today its worth over $475k
There is no way in hell I could afford to buy the same property now and have no idea how people in their late 20's and early 30's wanting to start a family would have any hope in hell of owning a property without considerable financial assistance from their parents or a massive deposit.
For me, I bought where i could afford, not where i wish i could live. I was lucky and didn't have a housing crisis driving a broken economy full of greedy boomers. I committed to the commute so i could buy where i could afford to live.
But in reality, compromise is the key to everything in life. Once you accept you're not the main character in this world. Everything is easier.
1. Stop thinking like a child: not wanting to have a mortgage for 40 years doesn't mean shit. No one wants to go to work everyday, but as an adult you accept it and move on with your life. If you have a goal and need a mortgage for 40 years to achieve it. So be it. You do what needs to be done.
2. Look regional: Why do you need to live where you are looking? Can you pivot and buy in the bush?
3. Start small to look big: why do you need the yard now? Most newer estates have green spaces and parks? A yard is just more work.
4. Grow vertical gardens, grow vegies indoors.
5. Win lotto.
Think outside the box.
It's weird how many don't consider it similar to cars. Rarely anyone's first is their dream, HSV, Mustang, 50K land cruiser, etc. Most of us start out in <$5K, upgrade. Bonus of property is it will likely increase vs cars, but some complaining would get a 12%+ 5 year loan for a $50K car, vs a home.
My parents first block in 1975 was $5K 'in Sydney'. 20 years later mine was $40K, in where the F is Mandurah. My sons was \~$150K 2 yrs ago, when he was 21. His kids will prob be 2 x that. But if they want it bad enough, like my son did they'll make it happen
I bought my first place on my own at around your age - it was a shitty 2 bedroom unit in Belmont (was one of 50 units in the development). Cost $250,000 - back in 2006ish. I sold in 2010, and used the equity as part of a deposit for a two storey 3 bed townhouse in a nicer suburb (this was a joint purchase . Sold that 8 years layer to buy a 4 x 2 on 600 m2 which I am still living in.
The point is that even 20 years ago we had to start small, and work your way up. I don't know anybody under 30 who has every bought a house on reasonable land size, except if they bought in the country.
Edit - and I forgot to say that I made a lot of sacrifices to save up for my first deposit. I did not go on overseas trips with my mates, I did not drink out much, I did not buy CDs/PS2 games for a year, etc.
Understand the money system, debt can be good and bad, but it's good in times of inflation because it devalues your debt. The world and especially the US is in a lot of debt, how are they going to get out of it? Either increase productivity or inflate, or a combo of the two. Inflation is going to continue, so get some debt, but inflation causes downturns and that leads to financial stress on individuals so how do you manage? Find a level of debt that will be comfortable in times of stress and don't max out on what you can technically borrow currently. That generally means buy something small to start and wait for inflation / your asset to appreciate (which is another way of saying your cash depreciates).
There was a 2 bedroom unit for sale in Bentley on the weekend for $240,000.
Absolutely this isn’t a 5 bedroom 3 bathroom house on 800m2 in a better area.
But this could be bought on a low income.
I urge anyone who is thinking they can’t afford a place to go see the government first home buyers scheme and or a mortgage broker and let them see if you can get a loan.
Then see what you can afford to buy, and start trying to buy now - as with rising prices lower paid workers will be priced out of buying even the cheapest places soon.
So to break it down I to bullet points, here are some things to gelp setthe right expectations:
- Distance - you'll most likely have to find a location that isn't that close to the city or more inland. It might be somewhere in the hills or way out north or south, like Pinjarraor Lansdale. It's not ideal, but it's what you'll have to work with.
- Location - you could work to a bigger house but remember most people, such as myself had to start with a small house with a 210 square metre lot (with something like 120 square metre built up). Now, I moved to a more comfortable 375 sq m house, but I kind of lucked out in terms of location. And you will most likely have to get a place in a less-than-stellar area, but you don't have to stay there forever.
- Timing - One thing you can do is wait for the real estate market to start dipping in price. My parents got a large 600 sq m house less than 30 minutes drive from the city back in 2009, when the market was starting to cool at a price 20% less than what wad asked. However, it is best not to wait because who knows when that will happen.
- Mortgage - Sorry, but thems the brakes, you'll get yourself a mortgage, but you got to learn how you can pay it off faster. Things you can do include salary sacrificing, offset accounts, and shop around for lower interest rates. There are probably more options I haven't thought of.
- Determination - This point is interesting because this one is given courtesy of Friendly Jordies. If you really, really want to some million dollar house, you could do it, though it will require a lot of hard work and sacrifice. Even idiots can end up as millionaires, and if you are dead set on getting a particular kind of house, in a specific location, you could get it... well, as long as you don't keep feeling pessimistic, cynical, or self pitying.
- Luck - Of course, it is best to put all your effort in making savings, shopping around and doing your research, but there will be some things that won't be in your control, some good, some bad. But everybody needs to make the best of their own situation. Who knows, the right opportunity could pop up, and you need to be ready to grab it.
TL;DR by buying a property you are making yourself dependent on property cost inflation, but if it does inflate in a similar way to how property prices have always inflated, you are **significantly** better off buying anything ASAP.
People will say "buy asap and grow equity" - but what does that mean? Equity is accrued extremely slowly in the initial stages of a mortgage in regards to repayments. For example on a $500k mortgage at 6.1% interest and 30 year repayment, you will have accrued $35k of equity after 5 years, despite having made $156,000 in mortgage payments. The rate of equity accrual will increase exponentially with time, for example you'll accrue $134k equity through mortgage repayments in the final 5 years.
The main way you build equity over time, especially in the early years, is through price inflation. The big 5 banks are estimating anywhere between 2% to 10% property inflation in Perth for the next year, though there was 20% appreciation in the last year. Lets go with an average yearly property inflation of 6% (yearly compounded average for last 30 years is 5.4%) on a $500k apartment/ townhouse with a $100k deposit and stamp duty/other fees taking out $30k
| Years | Apartment Value | Principal Owing | Equity |
|-------|-----------------|-----------------|-------------|
| 0 | $500,000.00 | $430,000.00 | $70,000.00 |
| 1 | $530,000.00 | $424,817.36 | $105,182.64 |
| 2 | $561,800.00 | $419,309.59 | $142,490.41 |
| 3 | $595,508.00 | $413,456.30 | $182,051.70 |
| 4 | $631,238.48 | $407,235.80 | $224,002.68 |
| 5 | $669,112.79 | $400,625.06 | $268,487.73 |
| 6 | $709,259.56 | $393,599.59 | $315,659.97 |
| 7 | $751,815.13 | $386,133.38 | $365,681.75 |
| 8 | $796,924.04 | $378,198.79 | $418,725.25 |
| 9 | $844,739.48 | $369,766.42 | $474,973.06 |
| 10 | $895,423.85 | $360,805.05 | $534,618.80 |
As you can see by year 10 you own \~70% of your apartment due to inflation. This is the process that people refer to when they talk about "building equity". Not the actual repayment of the loan.
For completeness sake here is the result if you were to rent for 10 years to "save" for a house, paying rent of $550 a week, with a 7% yearly increase in rent (this is actually below the last years rent increases, but is often slightly above property inflation
| Year | Rent | saving power vs equiv mortgage repayments |
|------|------------|-------------------------------------------|
| 0 | $28,600.00 | -$2,669.00 |
| 1 | $30,602.00 | -$667.00 |
| 2 | $32,744.14 | $1,475.14 |
| 3 | $35,036.23 | $3,767.23 |
| 4 | $37,488.77 | $6,219.77 |
| 5 | $40,112.98 | $8,843.98 |
| 6 | $42,920.89 | $11,651.89 |
| 7 | $45,925.35 | $14,656.35 |
| 8 | $49,140.12 | $17,871.12 |
| 9 | $52,579.93 | $21,310.93 |
| 10 | $56,260.53 | $24,991.53 |
As you can see, the rental costs inflate past the mortgage cost after the first year, because the mortgage repayments are tied to the mortgage amount taken out in the year you bought the property, whereas the rental payments will inflate with property costs.
The big asterisk to all of this: If you buy a townhouse, and then a block of low income flats is built next to your townhouse, your property value will tank, your equity will disappear, and you will be very sad. Everyone likes to take a dump on NIMBY's but as soon as you buy, you join the cult.
I hate to say it but if you’re complaining that you can’t buy a family-sized house plus land as a 27-yr old then you need to revise your expectations. If you were both pulling in good money ($100k+) then it’s possible, but that’s not the norm. And as an Australian I’m quite surprised that this comes as news to you.
For less than $400k you can get a 2 bed townhouse with garden big enough to grow some veg and room for a toddler to play in. Not too far from the city either. My son just bought a ground floor apartment in Wembley that’s really nice and will do for a few years, for $370,000.
Stop moaning, start saving for a deposit, buy whatever you can afford, then work your way up to your dream house.
Don’t think that all that glitters is gold. I know some people who are past their eyeballs in mortgage debt (1.5 M owing on a 2.9 M house) that they have become extreme cheap skates ie. Have to skimp on the bbq and get everyone to bring over a dish to share when they are ‘hosting’ to make it more affordable. They work like a dog and look older than their age. I don’t think putting all your money in only a house is worth sacrificing your health and lifestyle but then again different people value different things.
Where are you looking? Can you live further out? I'm in a satellite suburb of Pinjarra where most things are around 400k. Older houses but like everything will appreciate in value which will either provide equity to invest or a deposit for your dream home
People need to start accepting you need to move out further to afford a decent home who gives a crap it's 1hr30-2hrs from the city.
I know it sucks driving further to work but can't have everything
My first house I moved to an outer suburb and bought a basic project home. Lived in it for 10 years then upgraded.
If you’re looking at $700-$900k for your first home then your standards are too high.
I got a 2 bedroom duplex on a 500sqm block 10 mins from the city 6 months ago for just over $400k. saved a deposit by sleeping in the lounge room of our rental so we could rent out the bedrooms and we also don't drink or smoke or eat out at expensive places. the hunt for a place was tough ill admit because i wanted room for a shed out the back and didn't want to have to fight over parking with 20 uber drivers on the street but i managed to get there in the end and all for like $50 more then what our rent was.
Lower your standards and get interested in interior design and DIY home maintenance. Just bought a unit for under 400, part of a strata but it beats renting or being homeless. We analysed the "musts" and "wants" and figured out a budget based on that- and if you can't afford the budget, reassess what a must is. It sucks and it's hard, but you can't just give up if that's what you really want. Me and my partner both have under the average and lower incomes but we both work 9-5 (23 and 27) for context.
Too many people want their first home to be their middle or last home. You’re not going to be able to hop into the same house as your parents straight off the bat living in Maylands. A modest 30 year old 3x1 or 2x1 will start you on your journey and cost nothing like the figures above, and will stop you from over leveraging yourself. Really not sure why so many people looking to buy their first home want the absolute very best right this very instant rather than working towards it.
I feel like it's not just houses, it's cars and lifestyle too.
Australia had some good times 20-30 years ago, so a lot of young adults probably grew up with with higher standards of living than their parents did. Add in social media and you have a recipe for high expectations.
I'm so glad I grew out of my impressionable period before all that began.
I think you’re very right about that. I find it perplexing because every peer and family member I know, their first car/home/leisure activities were all run down/low key. Buying something like a brand new sedan in your 20’s was unheard of, let alone a 4x2. Expecting that and complaining that you don’t have it would have been very poor behaviour.
I know someone who is getting 100k as their first job out of uni and they think that's low...
Somebody else complained that they can only find find 80k jobs for entry level...
They spend too much time on TikTok and Instagram watching either liars pretending to be rich (this is pretty well documented by now) or spoiled rich kids of celebrities and they think that's normal
The whole '100k isn't a high wage anymore' attitude is especially annoying. Re-assess your lifestyle if you think you can't get ahead on that remuneration.
Well they say home is where the heart is, so my plan is to turn into one of those [Aliens](https://youtu.be/y-sBROXalU4?si=_gDXSGtpXWUJMv1s) that live in people's chest cavity.
Now imagine you’re single. I felt this way at the start of my career, did all the numbers and just couldn’t do it.
Managed to buy $750k in 2020. You save, aim smaller, and yes, pay it off over 30 years. The main thing is you need an income that will grow.
It’s definitely harder for us than previous generations, but it’s not like they did anything different.
Buy something under the FHB concession. It's going to be small, old, and probably not in the most amazing neighborhood, but it means that your regular payments are going towards building equity. Get an offset account and keep as much of your money there as possible.
The bigger the loan the more interest you're paying, which like rent is money that you're paying to someone else. Borrowing 300k twice is cheaper than borrowing 600k. If it wasn't for stamp duty, small regular upgrades would be the way to go. Because of stamp duty, you need to make bigger leaps but at least the FHB concession means there's very little downside to jumping in at that point of the market.
Start small. I bought a small unit in a shitty suburb that was about my 300th choice. I paid off as much as I could, it’s now valued well for me to then go and buy the family home.
I’m 24 and I don’t think I can afford a house in the next 5 years. I can’t imagine locking into mortgage for the next 20 or what years. I’m terrified but will be relying on my parents or partner.
Which area have you been looking? Southern suburbs can mean many different things. Willetton, Bull Creek, Melville are all super desirable now. Look further south. There's many houses in Kwinana with larger blocks for 500-600k. Same can be achieved in Baldivis. Definitely don't need 1M to get a house.
Suggest you look at house and land package - suck it up for a few years - pay down hard and then use your equity to upgrade ( just like the boomers did in their day)
I've been looking at loads of places in and around Perth (I'm from Syd). Found an amazing one for 800k out east, but I'm looking at real nice ones for 500-650k, down further than Armadale. Maybe I'm more accustomed to travel, so to me, Perth outer suburbs still feel close to the city (although I don't really care about proximity to the city).
But to see you talking about 900k, you may as well be talking about Sydney. Perth has heaps of great 3-4 bed modern builds for <600k. What is your actual criteria? I find it hard to believe that 900k is your starting point, when I'm drooling over 500k houses that would be 1.5m here in Syd.
The goals isn't necessarily to pay it off, it's to maintain it, sell, then contribute more to the next one and hopefully by retirement you've enough capital to still be paying it off
Most people skip over the building phase, I would recommend you and your partner look into the first home builders they have going on, can get by with keystart and whatnot. My wife and I built a house and land package with summit and keystart and i highly recommend it over buying a new house. Lower your standards and a simple block can be $200’000-250’000 and then then a house on top is pretty reasonable. Won’t need to look into high $ that way
If you can afford to get a mortgage for a 700k place you can afford to get a unit for half that and pay double the repayments, then you’ve paid your first place off in under 8 years.
It takes time and effort. My wife and I have saved hard for years, bought and fully renovated 3 houses in less desirable suburbs, and were now building our dream home in a good suburb. We’re both around 40 and this has taken us 15 years (since buying our first one). Neither of us come from money. Work hard and set realistic goals.
I just got a place on the outskirts of the Perth hills for 340k. It’s possible. Small cottage but huge block.
I am very happy. I hope you find something
https://preview.redd.it/mwhmve4f4i7d1.png?width=316&format=png&auto=webp&s=fe9df5a73caaefc3cc82b46b0a5f91ff58e25e3a
maybe if i win lotto a couple times, i might be able to afford buying a place. first step, save enough money to buy a lotto ticket. maybe if i go without a couple meals this week. lets fucken go!
Moved from expensive city to bush 32 years ago. Bought a 5 acre bush block, with an old wooden shed on it. With snakes. Remote and cheap. Lived in shed and a $500 unreg. Caravan for 2-3 years. Illegal, but w.t.f. Worked at any casual work I could get. Put up a metal work-shed, lined and insulated it. Turned into a small, comfy house. Gradually built a veg. garden, and built up regular, reasonably well-paid work (tutoring) online. Tree-changers arrived. Prices went up. Now my partner and I are well off. Took a risk, and it paid off. There are opportunities out there. Life is risk. Go for it.
I’m 33 FHB and just bought a 2 bedroom house in our preferred area for 900k. Just have to save save save, lose all your credit and find a good broker. A few years ago I too thought it was not achievable but in reality it hasn’t been as hard as I hyped it up to be. We saved around 200k for this
I didn’t think it was possible either, spoke to a mortgage broker and turns out it was doable. Bought just over 12 months ago, duplex with a decent backyard in a ‘good enough’ suburb. Bordering right on the edge of where we wouldn’t want to live and some issues with school catchment zones but it was the best we could do with what was available. 40k savings, first home owners DINK earning 100k each scraped us through to buy at just under 500k.
You're only 27. I'm guessing on whatever job you work you haven't hit the good years where you're experience is starting to get you decent pay increases.
When you say 40 years. Why would it be this? Referring back to my first comment. Your wage will increase but your home payment stays the same and you'll find you will pay it off faster using offsets or extra payments. When I bought my house I was terrified about the repayments. But give it six months and you may realise you can handle them. Few years and they're very manageable and suddenly your big scary loan is just a fact of life.
For context Im an immigrant here and have rented since I was 18 so never had the leg up of living with the parents while earning.
As someone who consults with first home buyers, my advice to you is simple.
Start playing the long term game and use your brain.
Get a financial evaluation to see how much you can borrow from the banks. Take advantage of the government grants (FHOG) with 5% deposit and no LMI depending on your purchase.
To take full advantage of the grants and schemes I would look into building. Say what you want about building, but I’ve seen more cases than I can count (especially in the current market) where the person didn’t even have to move in because the house price soared up (some up to 150-200k) during the building stage. It’s one hell of a money grab I’ll tell you that much.
+ building is way cheaper then buying established and you don’t inherit any repair, maintenance, or renovating costs.
Couple this with proper research into growing suburbs in Perth and you have a winning formula to at least have the option of owning your own home and accruing equity or selling it for your next home.
Quick tip: research where there’s a new McDonald’s being built - they’ve got a killer growth business model that you can take advantage of.
Wealth isn’t instant. It’s built. Start with what you can afford (no snobbiness) and invest in the best possible ASSET you can. If it’s a great asset, the value will go up and you now have a stepping stone that’s worked for you.
I bought in a 💩 hole suburb with gentrification potential. Paid 380. Currently worth 500 and won’t go down. Get over yourself and get down with the ghetto and play the waiting game.
My $0.02 take:
I don't understand why people think they need a million now to afford a house? You don't need to buy it outright. Put down the bare minimum you need to get the bank approval.
For a starter home, spend about 600k, put down the 60k minimum, and the mortgage will be less than what you're paying in rent anyway (or would pay for a similar-sized house). If you can put in more, that's even better! Call in all favours and inheritances and make whatever deals you need to make (downsize the car from a new SUV to an old getz for 20k extra, whatever), but put together the largest deposit possible.
Yes you need the initial deposit. But that's where the whole being young thing comes in. Live in a shared house or with family if need be, and save save save. If you're blowing the salary up on nights out, sure it's fun now, but then you're essentially giving up the cosy family dream for short term escapades that you're usually too drunk to even remember after. 🤷🏽♂️
The way money and inflation and everything is set up, money is worth more now than years later. This time value of money means that the 60k you put down now has a 100k value 5 years from now when you sell and get a bigger and better house. You'll be able to afford that because you and the partner will be earning a lot more then.
Now, sure, the plan assumes that you will be earning more as you get further along in your career. And there's an element of risk in every investment. But housing is a basic need, so it's worth the risk.
Helps to be lucky too. I bought my home for 410k in the housing downturn of 2018, spent about 30k on renovations and additions, and today I could sell for 720k easy (4x2, 560sqm 15 minutes from the city).
My mortgage (in 2018) of ~1900 was more than the rental price of ~380 per week WAS back in 2018. Today I would need to rent my own home for 750 a week and would have to compete with 40 other couples who earn more than us, but my mortgage is just 2250 even after the constant increases in interest rates.
If I sold for say 750k in 2 years, and wanted the same size house in a slightly better suburb or a larger house in the same suburb, it would cost me a million, but the increase in cost to me is 250k, or about 1500 per month in mortgage. Which is much more manageable and tangible.
Remember, your loan amount reduces slowly, so whatever value your house adds on is essentially adding on to that initial deposit you put down. In my case, the 70k I put down on a 410k house, at even a conservative 710k value today is 370k!! Now sure I was lucky, but you will get at least a doubling yourself in 5 years. You're not going to be able to afford to put down double that deposit in 5 years though if you're still renting then.
Barring a huge downturn for some global reason, which would be a temporary blip anyway, this is the trend you can expect going forward. So no matter how expensive it seems buying a house is, it's the cheapest it's going to be in your lifetime right now!
Just get into the property market somehow. Do whatever it takes to do that.
It even makes more sense for 5 friends to buy the house they share together rather than rent it! Live in it together for 5 years and then sell, and get double the initial deposit you each put in back. 🤷🏽♂️
We don’t own a house. We pay a mortgage on “a” house that we keep our beds and car and cat in but it belongs to Westpac. We were lucky enough to get ourselves in that situation at least in 2017.
Not sure a lot of Perth has reached the $1mil+ range 😅 unless you're demanding a 4 BDR house within 20mins drive of the CBD. There are established houses you could look at but obviously need to assess what you're willing to sacrifice or trade for price or size or location.
I was playing around with this the other day and it's a pretty good way to get a rough idea of what you can afford and where: https://www.domain.com.au/afford-to-buy/results
Obviously not the most accurate thing ever because it's median prices looking at historical data so not keeping up entirely with the rapid growth rate but still a good place to start getting a ballpark idea of what you can afford.
Start small, it won’t be in the best area, or be the nicest house, but it will be yours.
We started out in 2015 by building a small 3x2 in Banksia Grove. It wasn’t flash, but was better than where we were before.
We previously rented a unit in Lockridge, which wasn’t too bad until we ended up with the neighbour from hell. Before Lockridge, we lived in an apartment in London.
I glad we built when we did (2015) as the Banksia Grove house took us through the Covid lockdowns, there were lots of places to walk my dog and the internet was lightning fast.
The resale value was also very good. We made a good amount of money to put down for a 3x2, with potential to become a 4x2, house with a yard and right next to the train line.
Pay your dues. The Brookings institute reports that high school graduates that do not have children before marriage, do not get incarcerated, do not incur college debt, maintain outdoor employment, can buy their first home in their 30s.
The average millionaire in the US is a plumber, drives a work truck, wears non-name brand sneakers, a t-shirt and jeans. Name 1 lineman, electrician, or gas guy that can't afford a house by 40, that met these standards.
I got a 1100sqm block 50 mins from Perth. Cost &75k for land
Don’t need to live in Perth anymore. People commute 1h plus just sat in traffic, so why not spend 1h commute a bit further out of Perth for hell a lot cheaper than this price gauging city
Your ability to own a house will be determined by the level of sacrifice you are willing to engage with. That could be lowering costs by living with more people in a cheap suburb for a few years, or sacrifices around career path. House prices in Perth are partly driven by the 10's of thousands of people working FIFO as a sacrifice to afford stuff
Unfortunately Perth's unchecked urban sprawl during the 80s and 90s and the ever increasing cost of transport (fuel) mean that your dream will probably never come true. There is simply not enough land close to the city for everyone to have a 1000m2 block and a 4 bedroom house. It's time for people to start managing their expectations because demand for land close to the CBD is never going to go down and the only way for it to be affordable is through higher density (units and apartments, not shoehorning freestanding houses on 300m2 blocks). The country town dream is over and this has nothing to do with the current situation, we can't even keep up with the infrastructure demands of the tack another suburb on the outside mentality as it is.
I am sorry but you are talking about 500k land or 900k house and then complaining that you cannot afford it. Yeah, duh, you cannot. Because it is a 900k suburb. Have you thought about the First home buyer grant? Have you thought about lowering your expectations maybe to 500-600k range? You literally want to own a million dollar house without earning a million. Where is this fancy dream coming from. Be real and build realistic dreams. Don't buy a house buy a unit for gods sake. I did the same I never had money or proper saving but I wanted to own a property and I got a unit. I want to live in a house with big land too but I know i cannot afford it so I go for the next best thing, and then build up equity or money to buy that dream house, it may not be possible or it may be possible but that's for the future.
Check out Belmont area. We built in kewdale, started just before COVID, over 400sqm, custom build, above average quality, cost us around 600 all up with land and build.
Admittedly prices have gone up, but this area is still undervalued considering how central it is. 15min from city and it's cheaper than buying an hour and a half down southn or up north.
Edit: just had a quick look. Over 850sqm in Belmont asking 700k. You'd be living in a small 2 bed 1 bath, but once you can afford to can subdivide and rebuild. Nice large piece of land.
Cloverdale, 3 bed 1 bath over 800sqm from 650k
Rivervale 3 bed 1 bath just over 300sqm for 650k, but it's a nice house you can just live in.
I don't get why people are spending so much to live ages from the city when you can spend less to live centrally. Is it just so close no one bothers to even look thinking they're going to cost a shit ton?
My advice is to buy an established home of whatever you can afford as an investment property, and use the current market conditions to rent it out and subsidize the mortgage. Look for a 3x2 arrangement that would be a good size if you have a child but not the huge family home. Then you rent a much cheaper room in a share house. Be prepared to put every cent you have into your mortgage (no luxuries), as one dollar on now is two dollars less you need to pay back over the loan term. Aim to move in year six and have it be your principal place of residence then. Live in it for five years, and then at that point aim to sell and upgrade into your family home
The advice that was given to me was to get into the market whichever way possible. In other words, start small and then in time you can build equity and eventually buy somewhere bigger. If all you can afford with your partner is a 1 bedroom apartment, then do that. The most important key is to just get into the market
Realistically house prices nowadays are never going to drop to people's expectations no matter how unfair which sucks.
The harsh and straight forward answer is find a way to earn more money. It's not that easy and takes a lot of effort, but it can be done!
We were super lucky.. we bought the house from my MIL, for 250k just after covid hit. Already we’ve gained 350k equity just because prices and values have gone up. I get it, it’s hard. My advice would be to start looking in suburbs that might not have the best name.. we are in mirrabooka and the way things are going, in another 10yrs our land size and house will be valued at over a mil just because we’re close to the city.. balga is slowly changing, girrawheen etc.
Rockingham/warnbro has some amazing schools and parks and sporting clubs and beaches and you can definitely get a 3 bed 2 bath for around 500k - at least when I checked a few months ago you could
Perhaps start small, something less taxing on your finances like a one bedder or something.
You'll still get capital growth and have a foot in the door. Two or three years down the track sell and try for something bugger.
Started with a 2x1 in a 3 town house strata at 27, lived there a few years, renovated, progressed in my career, next I could afford to build something, 4 x 2 in wattle grove which was not a desirable suburb at the time. I have continued to progress my career, move a rung up the ladder a couple more times until I'm in a "million dollar house" in my 40s.
You start very small, move up the career ladder and the house will appreciate until you can take the next step. You probably won't be in the house you really want for 20yrs, but so long as you get on the first rung, you will get there. For me, making the right moves in my career has been a lot more beneficial than buying the right property, each rung of the career ladder has meant I can comfortably handle a bigger mortgage basically.
BUY A SMALLER HOUSE.
I guarantee if you are looking at new builds with no land like you say that are going for 700-900k, you are buying a big house on a tiny block.
Do not do this.
It’s amazing what comes into the price range if you just drop the second bathroom / fourth bedroom. I live in a 3x1. For your age group (no kids), this will be completely fine.
Smaller house - do it. You might even get a yard!
I bought my first place 4 years ago at 28, It wasn't exactly what I wanted but I compromised on it. I wanted a nice 4by2 house but couldn't afford that so I settled on a 2by2 apartment 35min south of the city which is what I could afford at the time.
Now I'm looking at selling and using the gains to purchase a house.
Point is your first house isn't meant to be your forever home its supposed to be your stepping stone to it. heavily compromise on the first house and move on after 5 or so years to bigger and better things.
To be completely honest, if you don't have any family help it is going to be very hard. 60% or so of home buyers get help from family in some form, and the other 40% probably have to pay off their mortgage until their last days.
As many have said already, start small. I'd recommend the villa/duplex route rather than an apartment in Perth.
We bought the worst house with the most potential in the best street we could afford. Renovated, repeat. We lived in areas we didn't want to until we built enough equity. It is hard work, takes a lot of sacrifice (no eating out, no drinking, no unnecessary shopping) but totally worth it long term.
Low income earner here. Lived with my parents for 5 years to save 100k. Bought in the KGB at the end of 2022.
Probably pay the same if not less in rent.
Just up the road from me has been selling for about $550K for an established 3x1 house (though even that is crazy to me). Yes it's way out of the city but it's a first step on the ladder, and the area's starting to get nice. You probably won't be able to afford the centre of the city or the trendy areas but it's a start and gets you on the pathway.
Just bought in Ferndale. Nice suburb, close to the river, CBD, public transport and carousel with a really low crime rate but still undervalued. We’d never heard of it before but found it when looking for anything close to the CBD near the 600 mark.
The houses are old and can be a bit tatty, but they are still affordable(ish) for so close to the city and amenities. For example a 3x1 on 600 plus (albeit quite old) just went under offer and the asking was 530k.
https://www.realestate.com.au/property-house-wa-ferndale-145201240
You need a pathway for your household income to be close to 2x median earnings, I think, if you want to launch right away into a 700K loan. You can get buy with fairly small deposits, what you need is the income. Also, as people have said, you can buy a unit or town house for less to get going. Even if you have kids in five years time, it will be a few years before they will appreciate a back yard.
Or plan to move to a regional town, which will give you the veggie growing and kick the ball lifestyle more easily.
We got lucky. Renting with 2 young kids for a few years, then, moved back in with MIL for 2 years to save for a deposit. We used MILs house on our mortgage in lieu of needing the entire deposit.
10 years later we have now just got enough equity to take her name off it so she can finally have the deed to her house.
We have 3 kids now in a 4x1 detached duplex. So essentially just a small house. Backyard is big, rooms are decent size, but living room and kitchen are tiny.
We want to upgrade to bigger, but it's just not possible budget wise. We are both on decent pay too. We could possibly do it, but it would mean beans on toast each night for the next 20 years.
I know not everyone isn't as fortunate to have family to fall back on to help.
Well that's the reason many of us don't buy a house on a reasonable sized block. For me, I'm in strata because that's what I can afford. In an ideal world, I'd prefer a standalone house a little bigger than my unit with more outdoor space. But when it comes down to it, what I have is tons better than renting, so that's that.
Same here! As a couple, we could have got a bigger mortgage and buy a 2 br unit but we opted for 1 br one. Could we do with more space? Of course! Are we better off now than when we were renting a 2 br apartment? ABSOLUTELY
Good onya guys! My son now 23 bought his first at 21. I was 24. All about desire vs lifestyle, build equity, upgrade.
Yep, it’s called a starter house for a reason
The way things are going it might be a permanent house. I bought 4 years ago for $420k and the bank has now valued it $600k. Similar homes are selling for that on my street. If I wanted to upgrade I'd need to spend at least $600k. The market is moving too fast.
Yep, I can afford 600k & I have 2 kids and WFH so ideally need 4 bedrooms... Can't get that anywhere. Most people are in debt to their eyeballs
You can still get that in places like Lynwood actually and I'm sure there are other suburbs like that. Although Lynwood specifically is going up fast. Just last year you can get what you want for 500k (then you spend the remaining 100k on some renovations)
When I was a kid we lived in a tiny 3 bed house... that's mum, dad and four kids. My dad was a chef and made wedding cakes in the smallest kitchen I've ever seen. People just expect a lot more these days.
someone who made wedding cakes supported a mortgage and 4 kids. imagine doing that in 2024.
How are you upgrading if what you have is already worth 600? Only way you would upgrade your house is to move further away from the city than you already are
This is only because the market barely moved for 10+years previously. I bought a $490k house in Kallaroo in 2013 and sold it 2 years ago for $500k. That was with around $30k of renovations. Now that same property would probably be with $600-700 - which is what it SHOULD have increased to over that decade had the market been moving at an average rate. We're playing catch up...
This!! Get into the market.
Realistically, if you can pay X amount per month for rent or mortgage, mortgage is always the better option. The bubble can't keep inflating this quickly forever, but in the 24 months of home ownership in my second place, the value has increased by 20% or so, compared to the 4-6% interest rate on it. When we moved, we sold my old place for almost the same we paid, but then pocketed all of the mortgage repayments (less interest) made over the life of the loan. People don't often think about this; purely being in the market is a forced investment.
Just remember that the on paper value of your house isn't the real value of your house. You don't know the value of your house until you sell it. My first house was "valued" at $470k by the bank before I bought it. I bought it for $420k. The owner dug his heels in for 6 months before contacting me and asking if I was still interested at my original offer price.
Be careful tho. House prices are a big political issue and the voting demographic is changing.. I think right now is a great time to sell but a really shitty time to buy. But TBH I’m just a dickhead on Reddit so take this with a grain of salt and do your own research.
I know where you’re going with it. But it’s basic supply demand. Supply, needs more land, trades, materials. Doable, but will take 5-10 years to start seeing the effect. Demand, you could reduce that other ways, but all of them are inhumane and political death.
Its artificial. Most cities have no shortage of land. Its just not released and banked. Perth? Look around jamdakot / treeby, that's all greenfield, just not released.
There is talk of cutting migration and the birth rates are declining massively.Just wait and see what happens with the next election. Millennials and Gen Xers have just over taken the boomers in voting power and they are much more left leaning. I don’t think population decreases will be political suicide, it should equal higher wages, cheaper housing and so many more parking spaces.
Like the person you replied to mentioned, the things you're talking about take at least 10 years to play out, and then there is no guarantee that prices will go the way you hope they will. The only way prices come down is if supply goes up. I don't see that happening for a loooong time.
You’re probably right but to save myself from deep depression I refuse to admit it to myself.
This depends if you want an investment, I would argue a first home is an investment as most likely you will want to sell it later for a better property. Or you want a home for life, most second home buyers are in this category as they are selling their previous house and want a home to start a family or live in for the rest of their lives.
This. That is how I did it too.
I built a 3x2 on a tiny block in the Swan Valley. Get my keys tomorrow. It’s not my dream house or in my dream area, but I was able to do it by myself, my mortgage is under $400k and I only had a 5% deposit (including FHOG). It’s an asset I can use as a stepping stone to something closer to what I really want.
What are you doing looking at house and lands. Buy a unit, villa, townhouse, pay that off over the next 10 years then look at something bigger if needed
Start small. Buy a unit or townhouse in a good location, build some equity and then use that to buy your next place which is hopefully bigger. Don’t build, it’s a nightmare at the moment. Your only 27, plenty of time to save and grow some equity
This and I will add to broaden your search. If you don't want a unit or townhouse then you will need to travel, if houses are 700-900k where you want to live then start looking 20-30mins away where comparable houses will be 500-700k. As I always say, there is a difference between need and want.
Yep agree. You can’t expect to buy the perfect house in your preferred area for your first property. Also you can try the Reno route, buy an old dump as close to the city as you can and start fixing it up yourself. Things are tough out there, no doubt. But there are options, just gotta keep preserving and get creative
I bought a shit box in a crap area for 450k in 2013, my wife thought I was joking when I said yes to buying it. I promised to reno the kitchen to her liking. Paid 15k for that. In 2018 I was very upset because the price had not moved much, even with the renovations done. but because it was low cost, I was able to pay it down with the loan offset account, which I was fanatical about. I think loan offsets are absolutely brilliant. Then that home became an investment property and I moved to a really nice home last year, was able to use the offset to deposit on the nice home, as well as the rental income to increase my pre-approval $. This stuff is doable on a teacher's salary and with 2 kids. People just see the end result they want and want to jump to that.
Lots of people think they should get the same cost of a house as their parents currently have.
I bought my first in Merredin, cheap reno & leased it, while I rented in Stirling. A year later I made \~$26K on it, which I put into flipping Perth property.
This. Be disciplined and get rid of junk and clutter if you start small. Consider public transport proximity and try and get by with 1 car and an (electric) bike for example freeing up half your garage for gym/hobbies/workshop/storage out of the house. Optimise outdoor living/garden similarly.
Yep! many times I've seen/heard, "I can't afford a house" blah blah blah. Buy's $10 beers at the pub vs a carton, take away, compulsive spending, etc. Some may even be paying off a Harley, $50K car, boat, goes to Bali once a year
TL;DR by buying a property you are making yourself dependent on property cost inflation, but if it does inflate in a similar way to how property prices have always inflated, you are **significantly** better off buying ASAP. --- As a extention to this point, equity is accrued extremely slowly in the initial stages of a mortgage. For example on a $500k mortgage at 6.1% interest and 30 year repayment, you will have accrued $35k of equity after 5 years, despite having made $156,000 in mortgage payments. The rate of equity accrual will increase exponentially with time, for example you'll accrue $134k equity through mortgage repayments in the final 5 years. The main way you build equity over time, especially in the early years, is through price inflation. The big 5 banks are estimating anywhere between 2% to 10% property inflation in Perth for the next year, though there was 20% appreciation in the last year. Lets go with an average yearly property inflation of 6% (yearly compounded average for last 30 years is 5.4%) on a $500k apartment/ townhouse with a $100k deposit and stamp duty/other fees taking out $30k | Years | Apartment Value | Principal Owing | Equity | |-------|-----------------|-----------------|-------------| | 0 | $500,000.00 | $430,000.00 | $70,000.00 | | 1 | $530,000.00 | $424,817.36 | $105,182.64 | | 2 | $561,800.00 | $419,309.59 | $142,490.41 | | 3 | $595,508.00 | $413,456.30 | $182,051.70 | | 4 | $631,238.48 | $407,235.80 | $224,002.68 | | 5 | $669,112.79 | $400,625.06 | $268,487.73 | | 6 | $709,259.56 | $393,599.59 | $315,659.97 | | 7 | $751,815.13 | $386,133.38 | $365,681.75 | | 8 | $796,924.04 | $378,198.79 | $418,725.25 | | 9 | $844,739.48 | $369,766.42 | $474,973.06 | | 10 | $895,423.85 | $360,805.05 | $534,618.80 | As you can see by year 10 you own \~70% of your apartment due to inflation. This is the process that people refer to when they talk about "building equity". Not the actual repayment of the loan. For completeness sake here is the result if you were to rent for 10 years to "save" for a house, paying rent of $550 a week, with a 7% yearly increase in rent (this is actually below the last years rent increases, but is often slightly above property inflation | Year | Rent | saving power vs equiv mortgage repayments | |------|------------|-------------------------------------------| | 0 | $28,600.00 | -$2,669.00 | | 1 | $30,602.00 | -$667.00 | | 2 | $32,744.14 | $1,475.14 | | 3 | $35,036.23 | $3,767.23 | | 4 | $37,488.77 | $6,219.77 | | 5 | $40,112.98 | $8,843.98 | | 6 | $42,920.89 | $11,651.89 | | 7 | $45,925.35 | $14,656.35 | | 8 | $49,140.12 | $17,871.12 | | 9 | $52,579.93 | $21,310.93 | | 10 | $56,260.53 | $24,991.53 | As you can see, the rental costs inflate past the mortgage cost after the first year, because the mortgage repayments are tied to the mortgage amount taken out in the year you bought the property, whereas the rental payments will inflate with property costs. The big asterisk to all of this: If you buy a townhouse, and then a block of low income flats is built next to your townhouse, your property value will tank, your equity will disappear, and you will be very sad. Everyone likes to take a dump on NIMBY's but as soon as you buy, you join the cult.
Solid post however a few things to note to counter: 1 - Your example lists apartments and those aren’t likely to nearly double in price in only 10 years (historically) 2 - “Affordable” houses currently sit on the outskirts of city limits and also historically those also don’t double every 10 years because they’re constantly at the mercy of new builds/more land releases nearby which keep existing resale value low(er) 3 - Rents don’t increase by 7% annually and typically have been far lower (pre covid) But of course we also haven’t ever had this many new people coming into our country to prop up the economy so there’s likely to be a tug-o-war effect between that and the above points. Bottom line if you extrapolate over the long term buying will always be more favourable than renting but the figures from start to finish aren’t likely to be in line with your examples 🙂
Your numbers for the appreciation of an apartment are pure fantasy. I'd like to see any apartment go up 6%/yr, it just does not happen. That $500k apartment will probably be worth $600k max after 10 years.
Eh, building isn’t that bad, especially single story. Yes it takes longer than it used to, and you have to be onto your builder via qualified inspectors, but it’s your biggest asset so you should be doing that anyway. Building is probably the easiest way to build equity these days if you do it properly.
I’m not against building. But it’s just as hard to find decent titled land, and if you do it’s 45kms from civilisation. And if you want a smaller half block or similar in a nicer suburb, you are still paying top dollar, so may as well buy established
how does the old advice of "get a starter home" work when the starter home loan payments consume ALL of the spare money that should be saved or going to investment for people earing what used to be 'plenty of money' i make like 105k and the idea of moving from renting with 500$ payments to a 750 dollar loan for a 'cheap' country town house will somehow lead to a better home later is crazy to me.
As time goes on, if you rent, your rent will increase with no equity in the house you live in. If you buy, your mortgage payment will go down, yet your equity in the house you live in will go up, the value of the house will also go up. So mortgage should be viewed as delayed gratification: suffer some short term pain for long term gain.
I managed to buy my first home, a 330k 1 bed apartment in 2016 on a 70k single income. Apartment was inner city, about 4kms from the city. No help from parents or and gifts or inheritance, just savings and the FHB grant. Didn’t have to sacrifice much, was still able to enjoy a modest lifestyle. Interest rates were similar to what they are now, maybe slightly lower. And you’re telling me you can’t afford something in the 400-500 range on 105k pa? But you can afford a $500pw rental? I think you need to re-do your maths and get back to me.
Stop turning your nose up at "undesirable" suburbs and actually look at the listings. There are some absolute bangers available in nice suburbs that people absolutely refuse to look at because of a reputation they had thirty years ago.
That’s what I did, I was able to build a 4 bedroom 2 bathroom house on a decent block for a reasonable price around 25 minutes or so from the CBD. Still plenty of blocks going but prices have gone up in the last 12 months after my house was finished
KGB represent!
Hell yeah, homie!
Which suburbs?
I'm only going to speak of my own experience here: I've lived in Koondoola almost all my adult life, and it being a great place to raise a family is a hill I'll die on. Balga and Girrawheen are also good. I'd skip Mirrabooka, just too busy, south of Reid hwy because of the shopping centre north because of the mosque and JSR high school, traffic is awful all day. Some of the family spent over a decade living in Lockridge and didn't have a problem. I don't know how gentrification is going, but I spent time in Lynwood, and it was nice and as well as affordable. Hope this helps.
We brought our first house in Banksia Grove. People were telling me it’s a war zone with gang riots and druggies in every park. Honestly yes there was antisocial behaviour, but it was nowhere near as bad as other places I had lived. I felt safe enough taking my dog for a walk in the evening, yes there were bogans (we live in Perth), however everyone we spoke to was polite and we never had any issues.
You're aiming too high for your age. At 24/27 my wife and I had just married and were paying a modest rent in the Pilbara (nurse/teacher). We bought the cheapest, house we could afford. It was 3br, had an asbestos roof, and on a 600 block, so there was a bit of a yard. I agree with you that prices are insanely high now, but your first home is usually not gonna be the dream home you will eventually find. Good luck on your house hunt.
Yeah i was still living in dodgy sharehouses at that age. I wasn't in a position to buy a house until I was 39. It's probably good that people are thinking somewhat further ahead than I was, but I find these posts by young people with such high expectations strange to say the least
A lot of young people will have grown up in a single home so their understanding will be that you buy one home for life. I think it's just a lack of understanding and experience. There's also a lot of bad advice and opinions that get put forward by other young people which sounds right but actually isn't.
Because people don't know how to do basic financial management. I have friends who live hand to mouth despite always earning more than me. One woman i know is earning close to 200k before tax on a single income (not including her husband's income) and their family is not only still renting, they also have basically no savings and they have debt as well. If i was on their income I would have 5 properties giving me some nice rental income by now.
Lower your expectations or look a bit further out or be prepared to put in some hard yards on a shit house. My wife and I bought the worst house on the street that the local white trash used to live in, got it for about 200k under at the time and after 3 years and about 100k put into it its recently got appraised for a refinance and it's worth double what it was when we bought it.
This is the way. Dream small and be prepared to mot live in your ideal home or location for a few years.
At that age I couldn’t afford a house but got a shit box at 30 and eventually upgraded. Not too many people go to their dream house for their first.
Just like cars
You're 27 but how long have you been working for, how long have you been saving for and how much are your income/expenses? Age is irrelevant, I know people who bought their first home when they were 19 and people who still live at home at 32. You don't just wake up one day when you're 27 and expect to buy a home. Address the above and as others said lower your expectations a bit for your first home. Before you know it you'll be there.
lower your expectation. your first house will not be your dream house with land to give you kids a backyard to play and grow veggies and stuff. start from whatever you can afford even if it's just a small unit.
To add to that, you need to adjust your expectations to 2024 and not be stuck in 1994 or 2004. With population growth over the years, the definition of “inner city” and “outer suburbs” has changed. It’s mathematically impossible for *everyone* to live the exact same distance from the CBD on the same sized block as where their parents settled 30 years ago.
Key reason I'm wanting my adult children to continue living with us. We never could afford to buy a house, so if I can give them an opportunity to save money for a deposit, I will welcome them for as long as it takes.
I have a house but I would not be able to afford to buy my own house now It's fucked
I thought I was the only one who thought this! Bought my house 6 years ago for $400,000 and the bank said its worth $650,000. I couldn't afford it now. OP is dreaming thinking he's going to own a big plot of land at 27
Same. No way I could afford my place now! Or even to rent it. If I hadn’t bought I would be living much further out.
I mean you can buy for $500k in some suburbs still it may just not the suburb you want. Although it’s definitely on its way up.
Grow hydroponically rather than dirt in the backyard maybe? Times change and expectations have to as well.
Plus it's a great way to pay off your mortgage tax free!
Dual incomes and a decent deposit are the easiest way. From there, the first 5 years are the hardest until your wage growth starts to get ahead of the mortgage repayments.
What industries have wage growth outstripping anything?
Onlyfans
Anything in the private sector, I'm in environmental consulting and if you're dedicated to work "40 hour" weeks, then you'll climb up real fast, rather waiting on someone to retire... ain't easy but
It's not about beating inflation or anything but the portion of interest goes down over the life of the loan and your wage will more than likely go up (maybe not in buying power) but your mortgage stays fixed so it feels like your gaining momentum.
You can buy a house, you just can't live close to the city.
Temper your expectations for the coin. My 27yo friend just bought a $500k 2x1 apartment by the water in Ascot. No one was at the home open, they bid asking and got it.
You have to get your foot in the door first. These days buying a 'forever home' as your first property just isn't going to happen unless you are a millionaire. If you only have yourself - buy a 2 bedroom place, do it up, and use the money that isn't being thrown on rent to pay down interest further and build equity. It's not fast, but it's how it works. >I don’t want to live the next 40 years of my life paying off a mortgage. So how do you adults do it? We'll - currently I'm planning to spend the next 30 years of my life paying off a mortgage. You can either be a millionaire, or get a mortgage and pay it off for several decades. There's not really an inbetween except for waiting for someone to pass on so you inherit their house.
You don’t want to live in a smaller house and you don’t want to be paying a mortgage for 30’years? That’s how 90% of homeowners bought their houses
But I'm special boy
As a 31 year old who bought this year, if you want a bigger block than 400m2 have to go out and learn how to be chill on a long commute. Even Pinjarra is 500k these days for a 3x1
63 Parker Street, Lockyer, WA 6330 https://www.realestate.com.au/property-house-wa-lockyer-145262252 Bit of a longer commute, but affordable 🤣
Whaaa? This is so not true lol.. there are definitely houses around Mirrabooka for 550k - some of them are crap and need work, but majority of them are sitting on 600-800m size land!
This just sold for $600k - [https://www.realestate.com.au/property-house-wa-kelmscott-145216428](https://www.realestate.com.au/property-house-wa-kelmscott-145216428)
Yeah, but Kelmscott is a fancier suburb. It's got that sweet proximity to Gosnells.
And just a short walk to Challis traino, what a deal!
Yeah, but it's got a pool room!
Brother you'd ain't looking there plenty around 400m2 or bigger 😂
My wife and I are almost 50 and still renting. We've already adjusted to the fact that we'll never own our own home.
All you need to do is make your coffee at home, cut back the avocado toast and have rich parents
On one hand we are of vast country and we can go into urban sprawling, but this brings a whole bunch of downsides to the overall cost of things such as infrastructure, time , etc. On the other hand we need to get used to apartment living because there is simply not enough space in the inner cities any more. And there are suburbs such as Nedlands Crawley etc. With huge blocks of land which are vacant or for sale which can be developed to apartment complexes that would help with these issues. Don’t get me wrong I hate department living and if I could afford it I would definitely buy a huge block of land over an apartment any time, but the reality is a 90% of the population can’t afford this shit we have to adapt.
That’s the problem. People want to start big. Start smaller and with what you can afford. Eventually you will have some equity and be able to go bigger then. No everyone isn’t millionaires they start small work their arse off and get bigger when they can afford it 🤷♀️
Weird how what your saying is pretty much word for word face to face discussions before internet forums. In 20yrs they'll be saying similar to others. Wonder if it'll be on reddit
Every one wants a 4x2 on 1000sqm. Near the city.
And don't forget the theatre room. Or the Cruiser in the driveway....
And a boat and regular overseas holidays twice a year And put all their kids in the most expensive private schools And get them expensive extra curriculars lessons in all sorts of things
Don't have kids, you might get closer to the rest lol
Bro you’re 27yr.. we didn’t buy until we were 37yr…
Why are you looking at a million dollars homes
Everyone is in the same boat it's fucked. Something that helps me is to have gratitude for even being in Australia. When you really think about it, it's first world problems. Living like a king in a third world might not be all that given their healthcare and safety - or it might, depends on the person There are many people in the world who truly have nothing and are still happy.
It’s all about perspective dude. I saved 130k since I was 18. I was lucky I had folks made me do it. Something told me during covid that now was the time to buy a house. So I did it in 2021. My rent for a 2 bed apartment was 2500 a month now my mortgage for a 5 bedroom house in a southern suburb in a very nice estate is 2700 so to me paying half my take home salary is worth it. Put it this way. Don’t think about slogging at a mortgage. I came to this country with nothing but a suitcase. I worked hard at uni. Worked my guts out for 11 years. Became a teacher moved up the pay scales to a good salary. My house is my castle. My sanctuary and it’s big enough to have family stay when they want or if my folks get older I can look after them. Life is so short. I know guys who lived in a van for two years to get a deposit. They bought down south and changed jobs and careers for the location. Keep your chin up. I know exactly how you feel. I built for 400k I put 100k down. So 500k and now it’s worth 780k. Look at dump units or shitholes anywhere. Do it up. Flip it. Rinse repeat. Good luck buddy!! You can do. Positive mindset.
Buy a shoe box. Get your foot in the door. Pay it down then use it to buy your next house. Buying your dream home for your first home is seriously not something to aspire to. Get your foot in the door then you have a lot more to work with.
This is one of those old people "back in my days" things, but here goes. So many young adults I know want to get a house as good as their parents house. We didn't start with that, we've worked up to it over 3 or 4 houses. Don't expect your first house to be your dream house. Start smaller, older, further out, less desirable suburb, whatever. Pay it off as quick as you can using extra payments or offset. By getting smaller and cheaper you will pay far less in interest and will pay down the principle faster. At the same time, it will grow in value. Do some handyman work to make it more presentable. In 5-10 years use this to leapfrog to something better.
When I compare myself to where my parents where at the same age as me, I've got a far better quality of living. Compared to now, or when I was a teen they obviously knock me out, but in general I'm doing better relative to age when accounting for technology and modern conveniences.
Yep this too.. I’m 32 and have a 4yr old son. I remember we lived with my nan for 18 months and I was 9 and my brother 6 by the time we moved into our ‘dream’ house, my mum was 41
Exactly, my parents bought their first property at 42. I bought my first property in my twenties without direct financial help from my parents since they didn't have the money to spare. They did teach me how to save money and proper financial management skills so they helped a lot in that way. But no money handouts.
No. so many young people can't even get a foot in the door today. in 2000 I was making $18 an hour could do weekly groceries for 2 for $100 and could buy a nice house for around 100k. that same job today would pay me $25 an hour (with less penalty rates for weekends), the equivalent weekly grocery would be 400 to 500 and the same house would cost 1.5mil. young people today are screwed unless the have help and op doesn't sound like their family is in any position to help. cost of living today leaves little to nothing to be able to save. people who can save for deposits usually don't have enough because by the time they have saved it property had gone up even more.
I'm sorry but that is BS. In 2000 you could not buy a nice house for $100k. You can buy a nice house for maybe around $250k. You can certainly buy a house for $100k, but it wouldn't be a nice house. It would be something that requires work and some renovations. The type of house that you can buy for $100k back in 2000 you can still buy for $400K today.
In 2000 you absolutely could not buy a house for $100k - where did you get that figure from? I built in the outer suburbs in 2001 and the 620m block of land was $110k, house was another $133k. My wage was around $40k per year.
There is no doubt that things are hard and I feel really sad for my kids seeing what they are up against. The house I bought 20 years ago has tripled in price or more, outpacing wages. Not only is everything expensive, but there are a lot of ways that young people are being encourage to bleed cash all the time. I am in no way blaming the avocado toast, but can see lifestyle expectations have risen a lot in 20 years too and that has an impact. Expensive phone upgrades, streaming services and uber eats aren't a great way to build savings. I also get that there is a sense of Nihilism in that if you cant afford a house, why save anyway. Aiming too high for a first house, first car, holidays and lifestyle will only make it harder. Young adults need to have lower expectations and work up to it. My first house was a cheaply built 2.5 bedroom on a small block in a slightly dodgy suburb, but I made it comfortable. I had a shitbox car, no phone, and watched free to air TV or pirated movies. We mostly cooked at home and only ate out as a treat. I wasn't special or disciplined to do things this way, it was just normal for the time. Anyway all these things add up, especially over 5 - 10 years of compound interest. P.S. not a boomer, still working class GenX.
I wasn't able to afford my first house until I was in my 30s. That was 25 years ago and I thought then the bank was bonkers to lend me the amount of money needed. Later trying to find a house we could afford in Perth in 2007 was an insane process. I'm sure now is worse. I think it's been a long time since people just easily waltzed into buying a house. Currently realestate.com.au lists 162 3 bed houses for sale in the greater Perth region for up to $500,000. Excludes under offer ones. You only need one you can tolerate living in.
Of that 162 they are "offers from" and will go for $600,000 and there will be about 1500 people puting in offers. Orelia in Kwinana has seen ex govt 2 bed flats going for $400k with about 30 offers.
To be fair 2007 was basically at the height of the bubble at the time and just before it crashed in 2008 or so.
We bought in Bunbury during the covid madness and picked up a 2x3 double lockup garage with a decent shed for $360k back in 2019 and today its worth over $475k There is no way in hell I could afford to buy the same property now and have no idea how people in their late 20's and early 30's wanting to start a family would have any hope in hell of owning a property without considerable financial assistance from their parents or a massive deposit.
covid madness in 2019?
For me, I bought where i could afford, not where i wish i could live. I was lucky and didn't have a housing crisis driving a broken economy full of greedy boomers. I committed to the commute so i could buy where i could afford to live. But in reality, compromise is the key to everything in life. Once you accept you're not the main character in this world. Everything is easier. 1. Stop thinking like a child: not wanting to have a mortgage for 40 years doesn't mean shit. No one wants to go to work everyday, but as an adult you accept it and move on with your life. If you have a goal and need a mortgage for 40 years to achieve it. So be it. You do what needs to be done. 2. Look regional: Why do you need to live where you are looking? Can you pivot and buy in the bush? 3. Start small to look big: why do you need the yard now? Most newer estates have green spaces and parks? A yard is just more work. 4. Grow vertical gardens, grow vegies indoors. 5. Win lotto. Think outside the box.
“Once you accept you’re not the main character in this world.” That’s so true…
It's weird how many don't consider it similar to cars. Rarely anyone's first is their dream, HSV, Mustang, 50K land cruiser, etc. Most of us start out in <$5K, upgrade. Bonus of property is it will likely increase vs cars, but some complaining would get a 12%+ 5 year loan for a $50K car, vs a home. My parents first block in 1975 was $5K 'in Sydney'. 20 years later mine was $40K, in where the F is Mandurah. My sons was \~$150K 2 yrs ago, when he was 21. His kids will prob be 2 x that. But if they want it bad enough, like my son did they'll make it happen
Try looking somewhere out of the suburbs.
I bought my first place on my own at around your age - it was a shitty 2 bedroom unit in Belmont (was one of 50 units in the development). Cost $250,000 - back in 2006ish. I sold in 2010, and used the equity as part of a deposit for a two storey 3 bed townhouse in a nicer suburb (this was a joint purchase . Sold that 8 years layer to buy a 4 x 2 on 600 m2 which I am still living in. The point is that even 20 years ago we had to start small, and work your way up. I don't know anybody under 30 who has every bought a house on reasonable land size, except if they bought in the country. Edit - and I forgot to say that I made a lot of sacrifices to save up for my first deposit. I did not go on overseas trips with my mates, I did not drink out much, I did not buy CDs/PS2 games for a year, etc.
Understand the money system, debt can be good and bad, but it's good in times of inflation because it devalues your debt. The world and especially the US is in a lot of debt, how are they going to get out of it? Either increase productivity or inflate, or a combo of the two. Inflation is going to continue, so get some debt, but inflation causes downturns and that leads to financial stress on individuals so how do you manage? Find a level of debt that will be comfortable in times of stress and don't max out on what you can technically borrow currently. That generally means buy something small to start and wait for inflation / your asset to appreciate (which is another way of saying your cash depreciates).
There was a 2 bedroom unit for sale in Bentley on the weekend for $240,000. Absolutely this isn’t a 5 bedroom 3 bathroom house on 800m2 in a better area. But this could be bought on a low income. I urge anyone who is thinking they can’t afford a place to go see the government first home buyers scheme and or a mortgage broker and let them see if you can get a loan. Then see what you can afford to buy, and start trying to buy now - as with rising prices lower paid workers will be priced out of buying even the cheapest places soon.
So to break it down I to bullet points, here are some things to gelp setthe right expectations: - Distance - you'll most likely have to find a location that isn't that close to the city or more inland. It might be somewhere in the hills or way out north or south, like Pinjarraor Lansdale. It's not ideal, but it's what you'll have to work with. - Location - you could work to a bigger house but remember most people, such as myself had to start with a small house with a 210 square metre lot (with something like 120 square metre built up). Now, I moved to a more comfortable 375 sq m house, but I kind of lucked out in terms of location. And you will most likely have to get a place in a less-than-stellar area, but you don't have to stay there forever. - Timing - One thing you can do is wait for the real estate market to start dipping in price. My parents got a large 600 sq m house less than 30 minutes drive from the city back in 2009, when the market was starting to cool at a price 20% less than what wad asked. However, it is best not to wait because who knows when that will happen. - Mortgage - Sorry, but thems the brakes, you'll get yourself a mortgage, but you got to learn how you can pay it off faster. Things you can do include salary sacrificing, offset accounts, and shop around for lower interest rates. There are probably more options I haven't thought of. - Determination - This point is interesting because this one is given courtesy of Friendly Jordies. If you really, really want to some million dollar house, you could do it, though it will require a lot of hard work and sacrifice. Even idiots can end up as millionaires, and if you are dead set on getting a particular kind of house, in a specific location, you could get it... well, as long as you don't keep feeling pessimistic, cynical, or self pitying. - Luck - Of course, it is best to put all your effort in making savings, shopping around and doing your research, but there will be some things that won't be in your control, some good, some bad. But everybody needs to make the best of their own situation. Who knows, the right opportunity could pop up, and you need to be ready to grab it.
TL;DR by buying a property you are making yourself dependent on property cost inflation, but if it does inflate in a similar way to how property prices have always inflated, you are **significantly** better off buying anything ASAP. People will say "buy asap and grow equity" - but what does that mean? Equity is accrued extremely slowly in the initial stages of a mortgage in regards to repayments. For example on a $500k mortgage at 6.1% interest and 30 year repayment, you will have accrued $35k of equity after 5 years, despite having made $156,000 in mortgage payments. The rate of equity accrual will increase exponentially with time, for example you'll accrue $134k equity through mortgage repayments in the final 5 years. The main way you build equity over time, especially in the early years, is through price inflation. The big 5 banks are estimating anywhere between 2% to 10% property inflation in Perth for the next year, though there was 20% appreciation in the last year. Lets go with an average yearly property inflation of 6% (yearly compounded average for last 30 years is 5.4%) on a $500k apartment/ townhouse with a $100k deposit and stamp duty/other fees taking out $30k | Years | Apartment Value | Principal Owing | Equity | |-------|-----------------|-----------------|-------------| | 0 | $500,000.00 | $430,000.00 | $70,000.00 | | 1 | $530,000.00 | $424,817.36 | $105,182.64 | | 2 | $561,800.00 | $419,309.59 | $142,490.41 | | 3 | $595,508.00 | $413,456.30 | $182,051.70 | | 4 | $631,238.48 | $407,235.80 | $224,002.68 | | 5 | $669,112.79 | $400,625.06 | $268,487.73 | | 6 | $709,259.56 | $393,599.59 | $315,659.97 | | 7 | $751,815.13 | $386,133.38 | $365,681.75 | | 8 | $796,924.04 | $378,198.79 | $418,725.25 | | 9 | $844,739.48 | $369,766.42 | $474,973.06 | | 10 | $895,423.85 | $360,805.05 | $534,618.80 | As you can see by year 10 you own \~70% of your apartment due to inflation. This is the process that people refer to when they talk about "building equity". Not the actual repayment of the loan. For completeness sake here is the result if you were to rent for 10 years to "save" for a house, paying rent of $550 a week, with a 7% yearly increase in rent (this is actually below the last years rent increases, but is often slightly above property inflation | Year | Rent | saving power vs equiv mortgage repayments | |------|------------|-------------------------------------------| | 0 | $28,600.00 | -$2,669.00 | | 1 | $30,602.00 | -$667.00 | | 2 | $32,744.14 | $1,475.14 | | 3 | $35,036.23 | $3,767.23 | | 4 | $37,488.77 | $6,219.77 | | 5 | $40,112.98 | $8,843.98 | | 6 | $42,920.89 | $11,651.89 | | 7 | $45,925.35 | $14,656.35 | | 8 | $49,140.12 | $17,871.12 | | 9 | $52,579.93 | $21,310.93 | | 10 | $56,260.53 | $24,991.53 | As you can see, the rental costs inflate past the mortgage cost after the first year, because the mortgage repayments are tied to the mortgage amount taken out in the year you bought the property, whereas the rental payments will inflate with property costs. The big asterisk to all of this: If you buy a townhouse, and then a block of low income flats is built next to your townhouse, your property value will tank, your equity will disappear, and you will be very sad. Everyone likes to take a dump on NIMBY's but as soon as you buy, you join the cult.
Dude, you’re 27 This isn’t the 1950s Save up and buy when you’re 35
I hate to say it but if you’re complaining that you can’t buy a family-sized house plus land as a 27-yr old then you need to revise your expectations. If you were both pulling in good money ($100k+) then it’s possible, but that’s not the norm. And as an Australian I’m quite surprised that this comes as news to you.
For less than $400k you can get a 2 bed townhouse with garden big enough to grow some veg and room for a toddler to play in. Not too far from the city either. My son just bought a ground floor apartment in Wembley that’s really nice and will do for a few years, for $370,000. Stop moaning, start saving for a deposit, buy whatever you can afford, then work your way up to your dream house.
Don’t think that all that glitters is gold. I know some people who are past their eyeballs in mortgage debt (1.5 M owing on a 2.9 M house) that they have become extreme cheap skates ie. Have to skimp on the bbq and get everyone to bring over a dish to share when they are ‘hosting’ to make it more affordable. They work like a dog and look older than their age. I don’t think putting all your money in only a house is worth sacrificing your health and lifestyle but then again different people value different things.
Where are you looking? Can you live further out? I'm in a satellite suburb of Pinjarra where most things are around 400k. Older houses but like everything will appreciate in value which will either provide equity to invest or a deposit for your dream home
People need to start accepting you need to move out further to afford a decent home who gives a crap it's 1hr30-2hrs from the city. I know it sucks driving further to work but can't have everything
My first house I moved to an outer suburb and bought a basic project home. Lived in it for 10 years then upgraded. If you’re looking at $700-$900k for your first home then your standards are too high.
I got a 2 bedroom duplex on a 500sqm block 10 mins from the city 6 months ago for just over $400k. saved a deposit by sleeping in the lounge room of our rental so we could rent out the bedrooms and we also don't drink or smoke or eat out at expensive places. the hunt for a place was tough ill admit because i wanted room for a shed out the back and didn't want to have to fight over parking with 20 uber drivers on the street but i managed to get there in the end and all for like $50 more then what our rent was.
Lower your standards and get interested in interior design and DIY home maintenance. Just bought a unit for under 400, part of a strata but it beats renting or being homeless. We analysed the "musts" and "wants" and figured out a budget based on that- and if you can't afford the budget, reassess what a must is. It sucks and it's hard, but you can't just give up if that's what you really want. Me and my partner both have under the average and lower incomes but we both work 9-5 (23 and 27) for context.
Too many people want their first home to be their middle or last home. You’re not going to be able to hop into the same house as your parents straight off the bat living in Maylands. A modest 30 year old 3x1 or 2x1 will start you on your journey and cost nothing like the figures above, and will stop you from over leveraging yourself. Really not sure why so many people looking to buy their first home want the absolute very best right this very instant rather than working towards it.
I feel like it's not just houses, it's cars and lifestyle too. Australia had some good times 20-30 years ago, so a lot of young adults probably grew up with with higher standards of living than their parents did. Add in social media and you have a recipe for high expectations. I'm so glad I grew out of my impressionable period before all that began.
I think you’re very right about that. I find it perplexing because every peer and family member I know, their first car/home/leisure activities were all run down/low key. Buying something like a brand new sedan in your 20’s was unheard of, let alone a 4x2. Expecting that and complaining that you don’t have it would have been very poor behaviour.
I know someone who is getting 100k as their first job out of uni and they think that's low... Somebody else complained that they can only find find 80k jobs for entry level... They spend too much time on TikTok and Instagram watching either liars pretending to be rich (this is pretty well documented by now) or spoiled rich kids of celebrities and they think that's normal
The whole '100k isn't a high wage anymore' attitude is especially annoying. Re-assess your lifestyle if you think you can't get ahead on that remuneration.
So you want a house and "all that stuff" but don't want to work 30 years paying it off ?
Well they say home is where the heart is, so my plan is to turn into one of those [Aliens](https://youtu.be/y-sBROXalU4?si=_gDXSGtpXWUJMv1s) that live in people's chest cavity.
Now imagine you’re single. I felt this way at the start of my career, did all the numbers and just couldn’t do it. Managed to buy $750k in 2020. You save, aim smaller, and yes, pay it off over 30 years. The main thing is you need an income that will grow. It’s definitely harder for us than previous generations, but it’s not like they did anything different.
Buy something under the FHB concession. It's going to be small, old, and probably not in the most amazing neighborhood, but it means that your regular payments are going towards building equity. Get an offset account and keep as much of your money there as possible. The bigger the loan the more interest you're paying, which like rent is money that you're paying to someone else. Borrowing 300k twice is cheaper than borrowing 600k. If it wasn't for stamp duty, small regular upgrades would be the way to go. Because of stamp duty, you need to make bigger leaps but at least the FHB concession means there's very little downside to jumping in at that point of the market.
Start small. I bought a small unit in a shitty suburb that was about my 300th choice. I paid off as much as I could, it’s now valued well for me to then go and buy the family home.
I’m 24 and I don’t think I can afford a house in the next 5 years. I can’t imagine locking into mortgage for the next 20 or what years. I’m terrified but will be relying on my parents or partner.
Which area have you been looking? Southern suburbs can mean many different things. Willetton, Bull Creek, Melville are all super desirable now. Look further south. There's many houses in Kwinana with larger blocks for 500-600k. Same can be achieved in Baldivis. Definitely don't need 1M to get a house.
Just get a small loan of a million dollars
Suggest you look at house and land package - suck it up for a few years - pay down hard and then use your equity to upgrade ( just like the boomers did in their day)
I've been looking at loads of places in and around Perth (I'm from Syd). Found an amazing one for 800k out east, but I'm looking at real nice ones for 500-650k, down further than Armadale. Maybe I'm more accustomed to travel, so to me, Perth outer suburbs still feel close to the city (although I don't really care about proximity to the city). But to see you talking about 900k, you may as well be talking about Sydney. Perth has heaps of great 3-4 bed modern builds for <600k. What is your actual criteria? I find it hard to believe that 900k is your starting point, when I'm drooling over 500k houses that would be 1.5m here in Syd.
The goals isn't necessarily to pay it off, it's to maintain it, sell, then contribute more to the next one and hopefully by retirement you've enough capital to still be paying it off
Most people skip over the building phase, I would recommend you and your partner look into the first home builders they have going on, can get by with keystart and whatnot. My wife and I built a house and land package with summit and keystart and i highly recommend it over buying a new house. Lower your standards and a simple block can be $200’000-250’000 and then then a house on top is pretty reasonable. Won’t need to look into high $ that way
If you can afford to get a mortgage for a 700k place you can afford to get a unit for half that and pay double the repayments, then you’ve paid your first place off in under 8 years.
It takes time and effort. My wife and I have saved hard for years, bought and fully renovated 3 houses in less desirable suburbs, and were now building our dream home in a good suburb. We’re both around 40 and this has taken us 15 years (since buying our first one). Neither of us come from money. Work hard and set realistic goals.
I just got a place on the outskirts of the Perth hills for 340k. It’s possible. Small cottage but huge block. I am very happy. I hope you find something
https://preview.redd.it/mwhmve4f4i7d1.png?width=316&format=png&auto=webp&s=fe9df5a73caaefc3cc82b46b0a5f91ff58e25e3a maybe if i win lotto a couple times, i might be able to afford buying a place. first step, save enough money to buy a lotto ticket. maybe if i go without a couple meals this week. lets fucken go!
Moved from expensive city to bush 32 years ago. Bought a 5 acre bush block, with an old wooden shed on it. With snakes. Remote and cheap. Lived in shed and a $500 unreg. Caravan for 2-3 years. Illegal, but w.t.f. Worked at any casual work I could get. Put up a metal work-shed, lined and insulated it. Turned into a small, comfy house. Gradually built a veg. garden, and built up regular, reasonably well-paid work (tutoring) online. Tree-changers arrived. Prices went up. Now my partner and I are well off. Took a risk, and it paid off. There are opportunities out there. Life is risk. Go for it.
I’m 33 FHB and just bought a 2 bedroom house in our preferred area for 900k. Just have to save save save, lose all your credit and find a good broker. A few years ago I too thought it was not achievable but in reality it hasn’t been as hard as I hyped it up to be. We saved around 200k for this
I didn’t think it was possible either, spoke to a mortgage broker and turns out it was doable. Bought just over 12 months ago, duplex with a decent backyard in a ‘good enough’ suburb. Bordering right on the edge of where we wouldn’t want to live and some issues with school catchment zones but it was the best we could do with what was available. 40k savings, first home owners DINK earning 100k each scraped us through to buy at just under 500k.
You're only 27. I'm guessing on whatever job you work you haven't hit the good years where you're experience is starting to get you decent pay increases. When you say 40 years. Why would it be this? Referring back to my first comment. Your wage will increase but your home payment stays the same and you'll find you will pay it off faster using offsets or extra payments. When I bought my house I was terrified about the repayments. But give it six months and you may realise you can handle them. Few years and they're very manageable and suddenly your big scary loan is just a fact of life. For context Im an immigrant here and have rented since I was 18 so never had the leg up of living with the parents while earning.
Work 1 year in FIFO and you can buy a house.
Heaps of houses in Perth at that budget eg seville grove, gosnells, Armadale, camillo
Your expectations are too high and unrealistic. Start small
As someone who consults with first home buyers, my advice to you is simple. Start playing the long term game and use your brain. Get a financial evaluation to see how much you can borrow from the banks. Take advantage of the government grants (FHOG) with 5% deposit and no LMI depending on your purchase. To take full advantage of the grants and schemes I would look into building. Say what you want about building, but I’ve seen more cases than I can count (especially in the current market) where the person didn’t even have to move in because the house price soared up (some up to 150-200k) during the building stage. It’s one hell of a money grab I’ll tell you that much. + building is way cheaper then buying established and you don’t inherit any repair, maintenance, or renovating costs. Couple this with proper research into growing suburbs in Perth and you have a winning formula to at least have the option of owning your own home and accruing equity or selling it for your next home. Quick tip: research where there’s a new McDonald’s being built - they’ve got a killer growth business model that you can take advantage of. Wealth isn’t instant. It’s built. Start with what you can afford (no snobbiness) and invest in the best possible ASSET you can. If it’s a great asset, the value will go up and you now have a stepping stone that’s worked for you.
I bought in a 💩 hole suburb with gentrification potential. Paid 380. Currently worth 500 and won’t go down. Get over yourself and get down with the ghetto and play the waiting game.
My $0.02 take: I don't understand why people think they need a million now to afford a house? You don't need to buy it outright. Put down the bare minimum you need to get the bank approval. For a starter home, spend about 600k, put down the 60k minimum, and the mortgage will be less than what you're paying in rent anyway (or would pay for a similar-sized house). If you can put in more, that's even better! Call in all favours and inheritances and make whatever deals you need to make (downsize the car from a new SUV to an old getz for 20k extra, whatever), but put together the largest deposit possible. Yes you need the initial deposit. But that's where the whole being young thing comes in. Live in a shared house or with family if need be, and save save save. If you're blowing the salary up on nights out, sure it's fun now, but then you're essentially giving up the cosy family dream for short term escapades that you're usually too drunk to even remember after. 🤷🏽♂️ The way money and inflation and everything is set up, money is worth more now than years later. This time value of money means that the 60k you put down now has a 100k value 5 years from now when you sell and get a bigger and better house. You'll be able to afford that because you and the partner will be earning a lot more then. Now, sure, the plan assumes that you will be earning more as you get further along in your career. And there's an element of risk in every investment. But housing is a basic need, so it's worth the risk. Helps to be lucky too. I bought my home for 410k in the housing downturn of 2018, spent about 30k on renovations and additions, and today I could sell for 720k easy (4x2, 560sqm 15 minutes from the city). My mortgage (in 2018) of ~1900 was more than the rental price of ~380 per week WAS back in 2018. Today I would need to rent my own home for 750 a week and would have to compete with 40 other couples who earn more than us, but my mortgage is just 2250 even after the constant increases in interest rates. If I sold for say 750k in 2 years, and wanted the same size house in a slightly better suburb or a larger house in the same suburb, it would cost me a million, but the increase in cost to me is 250k, or about 1500 per month in mortgage. Which is much more manageable and tangible. Remember, your loan amount reduces slowly, so whatever value your house adds on is essentially adding on to that initial deposit you put down. In my case, the 70k I put down on a 410k house, at even a conservative 710k value today is 370k!! Now sure I was lucky, but you will get at least a doubling yourself in 5 years. You're not going to be able to afford to put down double that deposit in 5 years though if you're still renting then. Barring a huge downturn for some global reason, which would be a temporary blip anyway, this is the trend you can expect going forward. So no matter how expensive it seems buying a house is, it's the cheapest it's going to be in your lifetime right now! Just get into the property market somehow. Do whatever it takes to do that. It even makes more sense for 5 friends to buy the house they share together rather than rent it! Live in it together for 5 years and then sell, and get double the initial deposit you each put in back. 🤷🏽♂️
We don’t own a house. We pay a mortgage on “a” house that we keep our beds and car and cat in but it belongs to Westpac. We were lucky enough to get ourselves in that situation at least in 2017.
Not sure a lot of Perth has reached the $1mil+ range 😅 unless you're demanding a 4 BDR house within 20mins drive of the CBD. There are established houses you could look at but obviously need to assess what you're willing to sacrifice or trade for price or size or location. I was playing around with this the other day and it's a pretty good way to get a rough idea of what you can afford and where: https://www.domain.com.au/afford-to-buy/results Obviously not the most accurate thing ever because it's median prices looking at historical data so not keeping up entirely with the rapid growth rate but still a good place to start getting a ballpark idea of what you can afford.
Start small, it won’t be in the best area, or be the nicest house, but it will be yours. We started out in 2015 by building a small 3x2 in Banksia Grove. It wasn’t flash, but was better than where we were before. We previously rented a unit in Lockridge, which wasn’t too bad until we ended up with the neighbour from hell. Before Lockridge, we lived in an apartment in London. I glad we built when we did (2015) as the Banksia Grove house took us through the Covid lockdowns, there were lots of places to walk my dog and the internet was lightning fast. The resale value was also very good. We made a good amount of money to put down for a 3x2, with potential to become a 4x2, house with a yard and right next to the train line.
1. Be wealthy 2. Don't be poor
Pay your dues. The Brookings institute reports that high school graduates that do not have children before marriage, do not get incarcerated, do not incur college debt, maintain outdoor employment, can buy their first home in their 30s. The average millionaire in the US is a plumber, drives a work truck, wears non-name brand sneakers, a t-shirt and jeans. Name 1 lineman, electrician, or gas guy that can't afford a house by 40, that met these standards.
I got a 1100sqm block 50 mins from Perth. Cost &75k for land Don’t need to live in Perth anymore. People commute 1h plus just sat in traffic, so why not spend 1h commute a bit further out of Perth for hell a lot cheaper than this price gauging city
Your ability to own a house will be determined by the level of sacrifice you are willing to engage with. That could be lowering costs by living with more people in a cheap suburb for a few years, or sacrifices around career path. House prices in Perth are partly driven by the 10's of thousands of people working FIFO as a sacrifice to afford stuff
Unfortunately Perth's unchecked urban sprawl during the 80s and 90s and the ever increasing cost of transport (fuel) mean that your dream will probably never come true. There is simply not enough land close to the city for everyone to have a 1000m2 block and a 4 bedroom house. It's time for people to start managing their expectations because demand for land close to the CBD is never going to go down and the only way for it to be affordable is through higher density (units and apartments, not shoehorning freestanding houses on 300m2 blocks). The country town dream is over and this has nothing to do with the current situation, we can't even keep up with the infrastructure demands of the tack another suburb on the outside mentality as it is.
I am sorry but you are talking about 500k land or 900k house and then complaining that you cannot afford it. Yeah, duh, you cannot. Because it is a 900k suburb. Have you thought about the First home buyer grant? Have you thought about lowering your expectations maybe to 500-600k range? You literally want to own a million dollar house without earning a million. Where is this fancy dream coming from. Be real and build realistic dreams. Don't buy a house buy a unit for gods sake. I did the same I never had money or proper saving but I wanted to own a property and I got a unit. I want to live in a house with big land too but I know i cannot afford it so I go for the next best thing, and then build up equity or money to buy that dream house, it may not be possible or it may be possible but that's for the future.
How do we do it? We'll be paying it off for the next 40 years. Feels bad, but better than renting in retirement.
How do we do it? We sign up to paying off a mortgage for 40 years. You're not going to be able to not do that unless you win lotto.
Check out Belmont area. We built in kewdale, started just before COVID, over 400sqm, custom build, above average quality, cost us around 600 all up with land and build. Admittedly prices have gone up, but this area is still undervalued considering how central it is. 15min from city and it's cheaper than buying an hour and a half down southn or up north. Edit: just had a quick look. Over 850sqm in Belmont asking 700k. You'd be living in a small 2 bed 1 bath, but once you can afford to can subdivide and rebuild. Nice large piece of land. Cloverdale, 3 bed 1 bath over 800sqm from 650k Rivervale 3 bed 1 bath just over 300sqm for 650k, but it's a nice house you can just live in. I don't get why people are spending so much to live ages from the city when you can spend less to live centrally. Is it just so close no one bothers to even look thinking they're going to cost a shit ton?
lazy and entitlted.
why are you even aiming for such a high priced house, coming from a poor family? aim small and build your wealth.
Wow! What a refreshing thread topic! People should definitely post more vent threads about the cost of housing!
My advice is to buy an established home of whatever you can afford as an investment property, and use the current market conditions to rent it out and subsidize the mortgage. Look for a 3x2 arrangement that would be a good size if you have a child but not the huge family home. Then you rent a much cheaper room in a share house. Be prepared to put every cent you have into your mortgage (no luxuries), as one dollar on now is two dollars less you need to pay back over the loan term. Aim to move in year six and have it be your principal place of residence then. Live in it for five years, and then at that point aim to sell and upgrade into your family home
The advice that was given to me was to get into the market whichever way possible. In other words, start small and then in time you can build equity and eventually buy somewhere bigger. If all you can afford with your partner is a 1 bedroom apartment, then do that. The most important key is to just get into the market
Realistically house prices nowadays are never going to drop to people's expectations no matter how unfair which sucks. The harsh and straight forward answer is find a way to earn more money. It's not that easy and takes a lot of effort, but it can be done!
We were super lucky.. we bought the house from my MIL, for 250k just after covid hit. Already we’ve gained 350k equity just because prices and values have gone up. I get it, it’s hard. My advice would be to start looking in suburbs that might not have the best name.. we are in mirrabooka and the way things are going, in another 10yrs our land size and house will be valued at over a mil just because we’re close to the city.. balga is slowly changing, girrawheen etc. Rockingham/warnbro has some amazing schools and parks and sporting clubs and beaches and you can definitely get a 3 bed 2 bath for around 500k - at least when I checked a few months ago you could
Start small. My first place was 2 beds and tiny.
Perhaps start small, something less taxing on your finances like a one bedder or something. You'll still get capital growth and have a foot in the door. Two or three years down the track sell and try for something bugger.
I bought a apartment for $205k a year ago. I was just looking for something cheap
Started with a 2x1 in a 3 town house strata at 27, lived there a few years, renovated, progressed in my career, next I could afford to build something, 4 x 2 in wattle grove which was not a desirable suburb at the time. I have continued to progress my career, move a rung up the ladder a couple more times until I'm in a "million dollar house" in my 40s. You start very small, move up the career ladder and the house will appreciate until you can take the next step. You probably won't be in the house you really want for 20yrs, but so long as you get on the first rung, you will get there. For me, making the right moves in my career has been a lot more beneficial than buying the right property, each rung of the career ladder has meant I can comfortably handle a bigger mortgage basically.
BUY A SMALLER HOUSE. I guarantee if you are looking at new builds with no land like you say that are going for 700-900k, you are buying a big house on a tiny block. Do not do this. It’s amazing what comes into the price range if you just drop the second bathroom / fourth bedroom. I live in a 3x1. For your age group (no kids), this will be completely fine. Smaller house - do it. You might even get a yard!
I bought my first place 4 years ago at 28, It wasn't exactly what I wanted but I compromised on it. I wanted a nice 4by2 house but couldn't afford that so I settled on a 2by2 apartment 35min south of the city which is what I could afford at the time. Now I'm looking at selling and using the gains to purchase a house. Point is your first house isn't meant to be your forever home its supposed to be your stepping stone to it. heavily compromise on the first house and move on after 5 or so years to bigger and better things.
To be completely honest, if you don't have any family help it is going to be very hard. 60% or so of home buyers get help from family in some form, and the other 40% probably have to pay off their mortgage until their last days. As many have said already, start small. I'd recommend the villa/duplex route rather than an apartment in Perth.
We bought the worst house with the most potential in the best street we could afford. Renovated, repeat. We lived in areas we didn't want to until we built enough equity. It is hard work, takes a lot of sacrifice (no eating out, no drinking, no unnecessary shopping) but totally worth it long term.
I got a house and land for $420k in Baldivis late last year. I've got no yard but it's not going to be my forever home either
Low income earner here. Lived with my parents for 5 years to save 100k. Bought in the KGB at the end of 2022. Probably pay the same if not less in rent.
Just up the road from me has been selling for about $550K for an established 3x1 house (though even that is crazy to me). Yes it's way out of the city but it's a first step on the ladder, and the area's starting to get nice. You probably won't be able to afford the centre of the city or the trendy areas but it's a start and gets you on the pathway.
Just bought in Ferndale. Nice suburb, close to the river, CBD, public transport and carousel with a really low crime rate but still undervalued. We’d never heard of it before but found it when looking for anything close to the CBD near the 600 mark. The houses are old and can be a bit tatty, but they are still affordable(ish) for so close to the city and amenities. For example a 3x1 on 600 plus (albeit quite old) just went under offer and the asking was 530k. https://www.realestate.com.au/property-house-wa-ferndale-145201240
In this day and age the average Australian doesn't buy their first home until the age of 33...
I guess you know now why your parents rented.
You need a pathway for your household income to be close to 2x median earnings, I think, if you want to launch right away into a 700K loan. You can get buy with fairly small deposits, what you need is the income. Also, as people have said, you can buy a unit or town house for less to get going. Even if you have kids in five years time, it will be a few years before they will appreciate a back yard. Or plan to move to a regional town, which will give you the veggie growing and kick the ball lifestyle more easily.
House share or move bush
Rent - vestor. Banks will lend crazy amounts if the income justifies it.
When did you start saving? It took me 10 years to save a decent deposit.
We got lucky. Renting with 2 young kids for a few years, then, moved back in with MIL for 2 years to save for a deposit. We used MILs house on our mortgage in lieu of needing the entire deposit. 10 years later we have now just got enough equity to take her name off it so she can finally have the deed to her house. We have 3 kids now in a 4x1 detached duplex. So essentially just a small house. Backyard is big, rooms are decent size, but living room and kitchen are tiny. We want to upgrade to bigger, but it's just not possible budget wise. We are both on decent pay too. We could possibly do it, but it would mean beans on toast each night for the next 20 years. I know not everyone isn't as fortunate to have family to fall back on to help.