Guest shin2005 Posted June 2, 2012 Share Posted June 2, 2012 The problem with property in Australia is that it is too overvalued. It will decline in a similar manner to the Japanese market, but for people moving out from the UK or US to Australia it is a struggle for them to get onto the Australian property market (comparing like for like properties) unless you decide to take out a very high loan to value mortgage. If you take out a mortgage of over 80% you get hit with mortgage insurance which in some cases can be as high as 20k. The cost of borrowing is much higher in Australia with banks a law onto them selves and not wishing to follow the RBA rates and looking at their bottom line. The wages in Australia are definitely higher than in the UK and US, but the cost of food, services, goods and eating out is more than double. The Australian dream is quickly beginning to tarnish with the Chinese economy stalling and more and more people being laid off every week in the service and manufacturing sectors as these companies realize that it is cheaper to send jobs overseas as what happened in the UK and US. I would recommend anyone moving to Australia to come out and shop around for property and negotiate on price as there are people that will move on price. Not much is selling for more than 700k and you can't buy much for less than 400k. Builders are charging too much to build and in most cases you can get a property that is ready built with more in it for less than the price of a build. The problem with many Australians is that they feel that property prices will not go down and that they will not be affected by the world recession. Many of them are too far in the clouds to realize what can happen. Hope this helps! Quote Link to comment Share on other sites More sharing options...
Peach Posted June 2, 2012 Share Posted June 2, 2012 The problem with property in Australia is that it is too overvalued. It will decline in a similar manner to the Japanese market, but for people moving out from the UK or US to Australia it is a struggle for them to get onto the Australian property market (comparing like for like properties) unless you decide to take out a very high loan to value mortgage. If you take out a mortgage of over 80% you get hit with mortgage insurance which in some cases can be as high as 20k. The cost of borrowing is much higher in Australia with banks a law onto them selves and not wishing to follow the RBA rates and looking at their bottom line. The wages in Australia are definitely higher than in the UK and US, but the cost of food, services, goods and eating out is more than double. The Australian dream is quickly beginning to tarnish with the Chinese economy stalling and more and more people being laid off every week in the service and manufacturing sectors as these companies realize that it is cheaper to send jobs overseas as what happened in the UK and US. I would recommend anyone moving to Australia to come out and shop around for property and negotiate on price as there are people that will move on price. Not much is selling for more than 700k and you can't buy much for less than 400k. Builders are charging too much to build and in most cases you can get a property that is ready built with more in it for less than the price of a build. The problem with many Australians is that they feel that property prices will not go down and that they will not be affected by the world recession. Many of them are too far in the clouds to realize what can happen. Hope this helps! Thank you for joining the site to post all those opinions as facts. Too many for me to bother picking apart. Quote Link to comment Share on other sites More sharing options...
Rupert Posted June 2, 2012 Share Posted June 2, 2012 Not much is selling for more than 700k and you can't buy much for less than 400k. In some parts of the country, there is plenty available for less than $400k. We toyed with the idea of buying something as a investment / holiday home / future retirement home and we found many options in FNQ for example. The reason we thought about buying in those parts, is because buying where we live is out of reach. Not much selling over $700k - I wish that were true!! Within commuting distance of Sydney, this would get very little and certainly not in a decent area. Quote Link to comment Share on other sites More sharing options...
Perthbum Posted June 2, 2012 Share Posted June 2, 2012 I have noticed that house prices have decreased in Perth, these figures bear that out, 10% down, on a $500k property = $50k, which is definitely good news for us, all i need now is for the dollar to go up to $2 to £1 would see us get over there, buy the house of our dreams and be mortgage free, i can see it might be all coming together. Go for it hoff, you might never have a better time to get to oz and live the dream. Quote Link to comment Share on other sites More sharing options...
stevemalbec Posted June 2, 2012 Share Posted June 2, 2012 I think people should take a look at realestate.com.au and domain.com.au for a realistic idea of asking prices. Of course all prices depend on location and size of property. I've been checking the market for the last couple of years around the northern beaches of Sydney anticipating my visa and I'd say that prices have definitely been leveling out if not declining slightly. Rents have come down a bit too. Other areas, I can't say, apart from friends who live in Queensland who say that prices have been falling at a rate. My advice is rent for a while before committing to a purchase. Know the area, and wait a while as prices have a way to go before they hit the bottom. Unless you don't mind taking a hit of 5-10% over the next year or so. Quote Link to comment Share on other sites More sharing options...
Peach Posted June 3, 2012 Share Posted June 3, 2012 Know the area, and wait a while as prices have a way to go before they hit the bottom. Unless you don't mind taking a hit of 5-10% over the next year or so. You need to factor in the cost of renting whilst you're waiting for those prices to drop... Quote Link to comment Share on other sites More sharing options...
stevemalbec Posted June 3, 2012 Share Posted June 3, 2012 As I've said before, putting your deposit into a good deposit account, not paying strata fees, water rates, maintenance costs etc, could easily offset the rent. Quote Link to comment Share on other sites More sharing options...
Peach Posted June 3, 2012 Share Posted June 3, 2012 As I've said before, putting your deposit into a good deposit account, not paying strata fees, water rates, maintenance costs etc, could easily offset the rent. By my reckoning to offset a $500 a week rent, you'd need to be $26K a year better off to not be out of pocket.... Which is far more than my deposit interest, water rates or maintenance costs (didn't by a unit so no strata fees). Quote Link to comment Share on other sites More sharing options...
RockDr Posted June 3, 2012 Share Posted June 3, 2012 By my reckoning to offset a $500 a week rent, you'd need to be $26K a year better off to not be out of pocket.... Which is far more than my deposit interest, water rates or maintenance costs (didn't by a unit so no strata fees). Where we are living, rent doesn't even cover the interest on a mortgage, let alone any other fees. Quote Link to comment Share on other sites More sharing options...
stevemalbec Posted June 3, 2012 Share Posted June 3, 2012 Where we are living, rent doesn't even cover the interest on a mortgage, let alone any other fees. Out of interest, can you say where you are? Quote Link to comment Share on other sites More sharing options...
starlight7 Posted June 3, 2012 Share Posted June 3, 2012 The thing with realestate.com.au is that the asking prices can be a long, long way from the actual price paid. They report the auction prices but they won't tell you the others. You always offer a fair bit less than the asking price as a matter of course! Quote Link to comment Share on other sites More sharing options...
stevemalbec Posted June 3, 2012 Share Posted June 3, 2012 By my reckoning to offset a $500 a week rent, you'd need to be $26K a year better off to not be out of pocket.... Which is far more than my deposit interest, water rates or maintenance costs (didn't by a unit so no strata fees). In the areas that I've been looking, a broad rule of thumb is that a property selling for $500K would be rented out for around $500 pw. So, if prices fall by 5% (which they have done in some areas over the last year), a $500k property would cost $475k. So, after paying $26K rent, you'd break even, but be better off with the interest on your deposit, no water rates or maintenance costs. Of course this kind of calculation only works in the current market which is in a correction mode. If prices were rising as they were over the last 10 years, I'd be buying asap. But I'll definitely be renting for the next year or so. On the other hand, having a young family or needing to live near a specific workplace would make it difficult to be so flexible. Quote Link to comment Share on other sites More sharing options...
Peach Posted June 3, 2012 Share Posted June 3, 2012 In the areas that I've been looking, a broad rule of thumb is that a property selling for $500K would be rented out for around $500 pw. So, if prices fall by 5% (which they have done in some areas over the last year), a $500k property would cost $475k. So, after paying $26K rent, you'd break even, but be better off with the interest on your deposit, no water rates or maintenance costs. Of course this kind of calculation only works in the current market which is in a correction mode. If prices were rising as they were over the last 10 years, I'd be buying asap. But I'll definitely be renting for the next year or so. On the other hand, having a young family or needing to live near a specific workplace would make it difficult to be so flexible. Thanks for the explanation it does make sense. But in the scenario you've described, wouldn't you rather be breaking evening - but paying your own mortgage off? Quote Link to comment Share on other sites More sharing options...
Petals Posted June 3, 2012 Share Posted June 3, 2012 I was having a look at a realestate site the other day, on the house, it gives estimates of house prices in streets. Interestingly I looked up my house and the estimation they gave was about two hundred grand out. You see we have lived in the house since it was built and therefore there is no history for the house so they look at the council valuations. Of course houses only get sold for council valuations in the depths of a depression. So if you are looking at this particular site you really have to keep an open mind, what you see may not be what is actual. Quote Link to comment Share on other sites More sharing options...
Guest Posted June 3, 2012 Share Posted June 3, 2012 (edited) I have made contacts with agents since July this yr about various property I have seen, I have seen property priced at $500,000+ and asked the agent would offers of up to $60,000 less be accepted, their reply was yes as the market is struggling, therefore a buyers market, this will be good for me. Edited June 3, 2012 by proview Quote Link to comment Share on other sites More sharing options...
bensym Posted June 3, 2012 Share Posted June 3, 2012 I have made contacts with agents since July this yr about various property I have seen, I have seen property priced at $500,000+ and asked the agent would offers of up to $60,000 less be accepted, their reply was yes as the market is struggling, therefore a buyers market, this will be good for me. I sense this is a buyers market also. I've noticed on realestate.com.au that a lot of the rental properties on the market, have been, or are currently, up for sale also. Quite a few negative gearers attempting to cash the profit now, realizing the party is over. In addition, there have been a number of properties sitting unsold for a very long time, certainly in the areas of Sydney I am looking. Quote Link to comment Share on other sites More sharing options...
stevemalbec Posted June 3, 2012 Share Posted June 3, 2012 Thanks for the explanation it does make sense. But in the scenario you've described, wouldn't you rather be breaking evening - but paying your own mortgage off? In the early years of a mortgage the capital is paid off very slowly, and the savings from interest on the deposit, water rates, maintenance costs, will be more than that. In the long term I always think that buying is the better option financially, but in this market, I'm going to wait for a year or two. Quote Link to comment Share on other sites More sharing options...
RockDr Posted June 4, 2012 Share Posted June 4, 2012 http://www.yourmortgage.com.au/calculators/rent_vs_buy/ Peach, have a play with this calculator. If you assume a flat market and set the yearly appreciation to 0, it shows what I'm talking about. try comparing an 80% 25yr mortgage on that 500k property to paying $500 weekly rent. (and this calculator doesn't take into account the extra savings you could be building up by adding the difference between rent and mortgage into that savings account) Quote Link to comment Share on other sites More sharing options...
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