Life Style Shows

G'day all

Please remember I'm from QLD!!!
I'd like to ask a question of some of our very learned members. The life style shows on the tele featuring house/unit auctions with very young couples bidding and winning at these auctions. How does a young couple (very early twenties) afford $500 000.00 or ther abouts for a unit in Sydney/Melbourne? Most of my friends and myself up here are perplexed with this!
I thought they may have got an "interest only" loan and keep the property for a few years until the property values, then sell it. Am I on the right track?
If not, please set me straight. :confused:

One thing you have to remember is that the average salary in Sydney is much higher than most other parts of the country. The banks are quite happy to let you borrow up to the hilt on real estate. Both partners would also be working and there's unlikely to be any kids. DINKs - Dual Income No Kids. When my wife and I were both working in Sydney before we had kids, our combined income was well into 6 figures. The banks loved us, they even put us on a special "professional's" package which had discounted interest rates, free transactions, no setup fees.

As for the average family on an average income, I'm buggered if I know how they afford it. Friends of ours are leaving Sydney because they have no chance of ever getting into the property market if they stay there.

The thing that worries me is that as soon as interest rates start moving upwards, alot of people will not be able to afford the repayments and with housing prices dropping by 10-15% people they will owe more than their house is currently worth. The banks will allow you to borrow a huge amount based on your current situation, but in a few years a DINK can turn into a SILK (single income lotsa kids), which alot of people do not take into account and their repayments are more than that single income, let alone paying for food and clothing.

5 years ago we made the move from DINK to SITCOM and we are still in shock.
But it is a lifestyle choice, if you looked at logic, economics etc you would never get married or have kids.

(SITCOM = single income, two children, oppressive morgage)

We've become SKINs.

Spending the Kids Inheritance Now.

around 20 years ago when i bought my first house (in uk) they would only lend 2.5 times first income and you could only add about 0.5 times your partner's income and you had to go down on your hands and knees for that. The interest rate went up before I moved in and I was paying about 15%. A painful process to get a mortgage but you could be fairly happy that you had some chance of paying it back and still being able to eat.

A few years later the banks were practically throwing money at people 3x joint incomes etc. I went with another friend when they were applying for a mortgage and listened to how much they were offered. I then asked the loans officer - now how much the payments would be if the interest rates went up by 2%, 5% etc. The loans officer was unable to tell them that information. On my last trip back to the uk I heard a radio program where someone who was about to graduate with a medical degree was advised that they'd probably be able to find them someone to lend them up to 5x their starting salary in the expectation of higher wages down the track!!!

The sad thing is that young couples go to the bank, believe that if the bank offers them $x,000 then they can afford a house at $x,000. They don't realise that they have to do their own sums.

One set of friends were forced to hand the keys back to the bank - which was when they found that the mortgage guarantee that they had paid for was to protect the bank not them. The bank undersold the property, claimed on the insurance and the insurance company then forced my friends into bankruptcy.

I recently re-read the terms and conditions of my mortgage ( I'm that kind of sad soul ). It states quite clearly that if I fail to make payments then the bank can sell the house for whatever they want to whoever they want including to members of their own staff. So if there were $100,000 owing on a $500,000 house and a member of the bank staff was able to pay $100,000 then the bank would be quite happy with the deal. Moral of the story is don't hand the keys back to the bank if the **** hits the fan cos they aren't working on your behalf.

These people on the lifestyle shows are often high earners and not 'Mr & Mrs or Ms Average' as they try to portray.
It is possible to make a killing in real estate in a short time and apply the money you ahve made to your dream home without the vultures getting their fill.
Even after a messy divorce and losing everything we have our own place and a couple of investment properties which we achieved in under ten years from scratch.
As for real estate prices, I didn't think Brisbane was much different from Melbourne now and regional areas are still cheap.

Quote:

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Originally Posted by Bruce Micheal

If not, please set me straight. :confused:

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First off make sure your knife is very very sharp.
Now you can either do this yourself, or if a bit squeemish, get a mate to help.
Now all you have to do is whip off your gonads, and take them to the bank.
Once the bank has you by the balls, they are willing to lend you Squillions.
Ohh, one last thing, dont expect to your the nads for some time.

Al :eek: :o

Houses are nice and cheap in Perth!

One of my neighbours has one on the market (5 + 2 with a big shed). It's on half an acre and is a steal at only $599,000. It is 45 Km from the city, but in Perth that is about 35-40 mins drive IN RUSH HOUR!!!!!!!!!!

When the train comes through, it'll be 33 mins to the city.

Do you still want to live in Sydney?

Where's Perth? :confused: ;) :D

It's in the western suburbs, where the Panthers come from.

P
;)

I appreciate all your comments and I'll stay where I am thanks.

I used to live in Brisbane many years ago and had a house in the north western suburbs. Sold it for $110 000.00 15 years ago. The same house is now once again on the market for $350 000.00 (three bedroom, 600m3 block).

Where I am now, houses 7 to 8 years ago were mostly under the $60 000.00 mark (3 to 4 bedroom, large house block). Now you can't find a decent home for under $100 000.00, no rentals either.

Some of the local councils out here even advertised town blocks for a couple of $ with the stipulation you have to move/build/live within a 12 month time frame. A lot of retired southerners took up the offer and are now having their "tree change" as opposed to "sea change". :)