Housing affordability SYDNEY (2 Viewers)

[Chronost]

There's major implications when buying in an area that isn't growing. For one you're putting money into essentially a depreciating asset. Secondly, its much much harder to get an equity loan.

Yeah expect almost all areas in Sydney are currently enjoying growth,and you cant just predict which area is going to grow,not to mention any area that has already enjoyed growth etc (which is basically every area within 30-40kms of CBD) is a good place to live especially for job and family.(example North Shore).

Nowadays NOBODY is going to live in the 'same area' for the next 10 years. You can always elect to sell your house and move. It makes the latter much more difficult when people's housing have gone up and yours have done zilch.



And so what? I find it funny the Chinese are being singled out when most australians have families overseas. How many friends are willing to give their mate or family member money to invest in housing where they have 0 legal title and claim. There is quite a few purchases by new citizens/PRs who have parents from overseas who are buying property for their children. How is that any different than an aussie family whose doing the exact same thing? in fact it's BETTER for Australia since there's more capital inflows to the country.

Contray alot of people have been living in the same area, not many people move every few years unless the job requires it, and especially older people settling in for life. Yes you can sell your house, but i dont think you realise how much of a hassle it really is to sell something and move if you BOUGHT IT, renting is different because your not fixed to a contract and it's not yours. Not to mention if you like an area and your established,it's easy to settle in.

Because you mentioned its not so, and so I put it out there that it is? Yes Chinese are singled out because thats where all the capital investments has been coming from,It's not hard to tell Chinese are pulling out from China and into overseas markets like Australia. You'll be suprised how close Chinese families are with their funds, and it's not friends, it's "business partners" - you can always put your name along on house as long as you are a family member and/or make it a partnership/"Couples". Yep I agree with you, alot of them are bought for their Children, the problem obiviously is that we ourselves can't afford it due to the increases (topic of the thread).

 

[isildurrrr1]

Yeah expect almost all areas in Sydney are currently enjoying growth,and you cant just predict which area is going to grow,not to mention any area that has already enjoyed growth etc (which is basically every area within 30-40kms of CBD) is a good place to live especially for job and family.(example North Shore).

Wrong. Just use Domain's price guide and it gives you sales numbers. Some people have bought above market rates previously and their asset has not grown at all EVEN in the north shore eg chatswood, roseville, killara etc. It's a fallacy to think just because median price has gone up doesn't mean YOUR property has gone up. People have bought at the higher end of the market after all.

Yes you can sell your house, but i dont think you realise how much of a hassle it really is to sell something and move if you BOUGHT IT, renting is different because your not fixed to a contract and it's not yours. Not to mention if you like an area and your established,it's easy to settle in.

If you're renting you are fixed to a contract, you know that's why it's called a 'rental lease'. Mortgages are not contracts, they are liens. Different legal concepts.

You'll be suprised how close Chinese families are with their funds, and it's not friends, it's "business partners" - you can always put your name along on house as long as you are a family member and/or make it a partnership/"Couples".

And you know how Chinese people treat their own business partners? They stab each other in the back ALL THE TIME. Giving a legal title to someone is pretty stupid even in China. Using families as a proxy is a lot more common but not as much that it's driving the prices up so to speak.

Yep I agree with you, alot of them are bought for their Children, the problem obiviously is that we ourselves can't afford it due to the increases (topic of the thread).

Nobody can ever save the amount of money for a first deposit under 30 unless you have a gun job. Bank of mum and dad IS needed and there are things called 'equity loans' that allows people to draw up deposits from their parents' mortgages. My aunt lent my cousin around 100k AUD for his first deposit for a house in canberra because she knows its beats him trying to wait a few more years saving up. Hint: they're not chinese.

 

[Chronost]

Wrong. Just use Domain's price guide and it gives you sales numbers. Some people have bought above market rates previously and their asset has not grown at all EVEN in the north shore eg chatswood, roseville, killara etc. It's a fallacy to think just because median price has gone up doesn't mean YOUR property has gone up. People have bought at the higher end of the market after all.



If you're renting you are fixed to a contract, you know that's why it's called a 'rental lease'. Mortgages are not contracts, they are liens. Different legal concepts.



And you know how Chinese people treat their own business partners? They stab each other in the back ALL THE TIME. Giving a legal title to someone is pretty stupid even in China. Using families as a proxy is a lot more common but not as much that it's driving the prices up so to speak.



Nobody can ever save the amount of money for a first deposit under 30 unless you have a gun job. Bank of mum and dad IS needed and there are things called 'equity loans' that allows people to draw up deposits from their parents' mortgages. My aunt lent my cousin around 100k AUD for his first deposit for a house in canberra because she knows its beats him trying to wait a few more years saving up. Hint: they're not chinese.

Firstly I was talking about areas in general as you were - now your switching to individual property - How do you know what people have bought for and have not seen their asset grown in years and/or can't sell for higher? That's seems like a small minority to me - in addition my point stands where people buy for families (e.g. kids and certain school areas to get into selectives, worth much more to someone)

your not fixed to the contract in the sense that you are freely able to move(giving notice), compared to a property you buy and own. - different meaning was undertaken, you mentioned mortgages are not contracts,just wanted to mentioned I didn't mean so either.


Thats why you create subsidiares and appoint "directors" - you assume like Chinese are the only ones that stab each other, every part of the world does, thats business - they're not stupid enough to just hand over funds like that. As i mentioned, families aren't the only ones, companies owned by millionaires make a huge transaction jerk in Australia.


Tbh if you work as a grad at a big 4 bank and live with your parents for most of that time, you'll easily be able to save a deposit by 30(not doing a double degree, that shit takes too long). Yeah I understand that - Aussies buy homes too,It's just that there's an ever increasing Chinese ownership of homes which are all getting grabbed up, and a major capital outflow from China could be disasterous - that being said very unlikely to happen.

 

[isildurrrr1]

Firstly I was talking about areas in general as you were - now your switching to individual property - How do you know what people have bought for and have not seen their asset grown in years and/or can't sell for higher? That's seems like a small minority to me - in addition my point stands where people buy for families (e.g. kids and certain school areas to get into selectives, worth much more to someone)

Because a lot of information is published

Take this unit for example

http://www.domain.com.au/property-profile/1-8-nola-road-roseville-nsw-2069

Bought in 2011 for 1.1M, sold in 2015 for 1.16m. Only 60k capital gains in 4 years. Not exactly stellar.


This one even lost money.

http://www.domain.com.au/property-profile/9-12-nola-road-roseville-nsw-2069

All I'm saying is that in property investment, you have to do your homework and it isn't exactly easy as just buying anywhere because 'sydney prices are going up'.

Thats why you create subsidiares and appoint "directors"

Why even take all that risk and effort when you can buy off the plan property, actually own it and get mortgages easier? It's not exactly 'easy' buying under someone's name since they would be the ones fronting who the mortgage companies assessed. Young buck making 70k a year can't exactly get a mortgage for a 3 million dollar house now can he.

It's just that there's an ever increasing Chinese ownership of homes which are all getting grabbed up

As I said, many of them are PR/Citizens. Not exactly nice to ostracise an entire group of migrants due to their race. Not to mention Chinese don't even make up the majority of buyers.

http://www.firb.gov.au/content/publications/annualreports/2012-2013/05_Chapter_2.asp

Chinese spent around $6 Billion in real estate sector including development. Canadians spent around 5 billion. You don't see people complaining about how canadians are coming in to take our houses.

This video pretty much explains everything

 

[Harvard]

Can someone explain how purchasing off-the-plan apartments work? The deposit is so cheap ($5 000) and I'm not too sure why.

 

[isildurrrr1]

Can someone explain how purchasing off-the-plan apartments work? The deposit is so cheap ($5 000) and I'm not too sure why.

5k isn't the deposit.

There's 2 'contracts' to off the plan.

the 5k is the 'deposit' to the deposit. It just secures the sales of land contract for you. You pay the balance of the rest of the off-the plan deposit (10% less the $5000 usually) in 14 days. If you fail to pay that developer can terminate and sell to someone else.

The reason why off the plan purchases require a deposit is because banks don't like lending to developers until 80% of the property has been sold already.

edit: the 10% doesn't necessarily always have to be in cash, a bank bond will suffice (usually for people want to keep their money in savings account or other financial instruments).

 

[seremify007]

Can someone explain how purchasing off-the-plan apartments work? The deposit is so cheap ($5 000) and I'm not too sure why.

Deposit is to stop them from selling the unit to someone else. It doesn't sound much but it's risky for you given there's a chance it may not get built to the timeline, to the quality you expect or even at all.... and usually there are multiple stages or deposits in line with completion or some other metric (because generally you wouldn't pay up a huge amount upfront without seeing something to show for it).

Don't get this mixed up with the deposit for the home loan - i.e. the bank wants you to have skin in the game and some buffer to protect them against losses if you are unable to meet your repayment obligations.

 

[enoilgam]

Does anyone know what's going to house prices once they peak? At this rate, will they keep increasing or will the bubble pop?

I dont think house prices will completely tank - I think they will plateau or maybe drop a bit and stay that way for a while.

If you have saved the money for a deposit on an apartment/house, is it still competitive/difficult to buy a house? e.g. would you be competing against other people who want to buy that house and is the competition fierce

The competition is strong, but if you have a good agent and the bucks to back it up, it isn't too bad. I was lucky to know a really good agent who gave me a good deal on an apartment (mainly because he knew Id keep my business with him once I started renting it out).

Also with regards to competition, you have to focus on the ultimate objective, getting a property at the right price. Going to an auction and getting a property at an overly high price because you got into a bidding war with someone isnt "winning". To win in the property game, you have to find the right deal and that is difficult.

Do you guys plan on renting first? Or saving up for a house straight away?

I wouldnt rent unless I had to. My grandfather gave me this gem of advice "In life, you will always be paying a mortgage. If you rent, you will just be paying someone elses".

The way I see it is if you're going to pay $x per month renting, then how much more would you have to pay to make mortgage payments - keeping in mind the inherent risks attached with owning a place as well as the additional costs (e.g. strata) which you may not have budgeted for. The upside of course being you get to own something one day or at least if you go to move, you have some equity to sell (however little that may be).

So pretty much this.

Deposit is to stop them from selling the unit to someone else. It doesn't sound much but it's risky for you given there's a chance it may not get built to the timeline, to the quality you expect or even at all.... and usually there are multiple stages or deposits in line with completion or some other metric (because generally you wouldn't pay up a huge amount upfront without seeing something to show for it).

Don't get this mixed up with the deposit for the home loan - i.e. the bank wants you to have skin in the game and some buffer to protect them against losses if you are unable to meet your repayment obligations.

Also agree with this - Id personally prefer to buy something that has been built and is ready to go. When you are spending $500k plus, you want to know what you're buying.

 

[isildurrrr1]

Deposit is to stop them from selling the unit to someone else. It doesn't sound much but it's risky for you given there's a chance it may not get built to the timeline, to the quality you expect or even at all.... and usually there are multiple stages or deposits in line with completion or some other metric (because generally you wouldn't pay up a huge amount upfront without seeing something to show for it).

Don't get this mixed up with the deposit for the home loan - i.e. the bank wants you to have skin in the game and some buffer to protect them against losses if you are unable to meet your repayment obligations.

You never pay in stages in NSW, you pay 10% for deposit and the rest on settlement. The deposit is essentially putting in equity into the house and yes, prevents the vendor from selling at a profit (express trust etc). There is a risk involved in quality of the building, but if they dont abide by schedule of finishes you as a purchaser have legal remedies and that's why most people recommend a conveyancer. Land and Environment Court really doesn't like it when developers play mickey mouse bullshit. New strata laws are coming in that requires developer to put 2% of total value in a trust account to remedy any defects (minor or major).

I would personally not purchase off the plan property for reasons you are competing against a swath of foreign purchasers who have deeper pockets and unless you know the developer, you really don't know what to expect with the quality of the property. For apartments, water leaks are a strata fee nightmare that can set your selling price back far. Better off purchasing an established property, they generally have better rental yields as well.

 

[seremify007]

You never pay in stages in NSW, you pay 10% for deposit and the rest on settlement. The deposit is essentially putting in equity into the house and yes, prevents the vendor from selling at a profit (express trust etc). There is a risk involved in quality of the building, but if they dont abide by schedule of finishes you as a purchaser have legal remedies and that's why most people recommend a conveyancer. Land and Environment Court really doesn't like it when developers play mickey mouse bullshit. New strata laws are coming in that requires developer to put 2% of total value in a trust account to remedy any defects (minor or major).

Thanks for the info. I wonder how that translates into in practice around remedying of defects even once the new laws come into effect.

There are plenty of stories out there of trying to get the manufacturer to remedy defects from off the plan purchases - and that's when history of the developer becomes so vital as part of the due diligence process before you commit to buy off the plan. My fiancé bought off the plan and so far they have been great (in the first three months) but I noticed things like common property areas such as the carpark entrance had issues and whilst they tried to fix it a few times, it kept having issues so they provided temporary security guard to sit there (who did nothing)... but now, months later, still not fixed, and the guard is gone.

I personally am very happy with my Sydney CBD unit - but I also did the research myself reading the minutes of every strata meeting for each of the different properties I was looking at buying. I do feel sorry for some other owners particularly when they have had to introduce special levies to cover unexpected costs for repairs and repainting for relatively new buildings.

 

[Chronost]

Because a lot of information is published

Take this unit for example

http://www.domain.com.au/property-profile/1-8-nola-road-roseville-nsw-2069

Bought in 2011 for 1.1M, sold in 2015 for 1.16m. Only 60k capital gains in 4 years. Not exactly stellar.


This one even lost money.

http://www.domain.com.au/property-profile/9-12-nola-road-roseville-nsw-2069

All I'm saying is that in property investment, you have to do your homework and it isn't exactly easy as just buying anywhere because 'sydney prices are going up'.



Why even take all that risk and effort when you can buy off the plan property, actually own it and get mortgages easier? It's not exactly 'easy' buying under someone's name since they would be the ones fronting who the mortgage companies assessed. Young buck making 70k a year can't exactly get a mortgage for a 3 million dollar house now can he.



As I said, many of them are PR/Citizens. Not exactly nice to ostracise an entire group of migrants due to their race. Not to mention Chinese don't even make up the majority of buyers.

http://www.firb.gov.au/content/publications/annualreports/2012-2013/05_Chapter_2.asp

Chinese spent around $6 Billion in real estate sector including development. Canadians spent around 5 billion. You don't see people complaining about how canadians are coming in to take our houses.

This video pretty much explains everything

I couldn't be bothered replying to everything else since we pretty much came to different opinions, but re-reading this I should mention that figure of China and Canada is outdated, a lot has changed since, I'm talking now, not 3 years ago and I can tell you China investment in property has definitely increased a lot more since then. Never mentioned they're a majority, however they are increasing in house ownership and they are the biggest buyer for sure - wasn't even talking bad about China lmao

 

[seremify007]

If people want to form their own opinion/statistics, just rock up to any launch of new developments. I haven't been to one in the past year but if the ones in the city/Pyrmont/Ryde were any indication.... or maybe they're just areas which are popular with certain demographics?

(on another note, I still remember looking at the display unit and a very excited "auntie" opening her handbag to an agent and said she had money with her in cash now and wanted to pay right now....)

 

[isildurrrr1]

http://www.domain.com.au/news/forei...lian-home-sales-new-research-20150902-gjdycq/

Chinese housing purchases only make up 2%.

Just because someone's Asian people make the huge assumption that they are 'foreigners'.

 

[seremify007]

http://www.domain.com.au/news/forei...lian-home-sales-new-research-20150902-gjdycq/

Chinese housing purchases only make up 2%.

Just because someone's Asian people make the huge assumption that they are 'foreigners'.

LOL... I'm Asian.. but I have an Aussie passport (and was born in Aus).

 

[isildurrrr1]

LOL... I'm Asian.. but I have an Aussie passport (and was born in Aus).

well that makes you as much of an aussie as anyone else

 

[wannaspoon]

http://www.domain.com.au/news/forei...lian-home-sales-new-research-20150902-gjdycq/

Chinese housing purchases only make up 2%.

Just because someone's Asian people make the huge assumption that they are 'foreigners'.

Clearly you haven't been to Melbourne...

There is not one single local that owns inner city apartments... Overseas buyers buy them at a premium and leave them vacant, they are pretty much artificially inflating the market for their own benefit...

 

[LandCo]

House prices in Sydney will never drop? They just go up at a slower rate?

 

[sida1049]

House prices in Sydney will never drop? They just go up at a slower rate?

Pretty much, due to the employment prospects of Sydney.

 

[Drifting95]

House prices in Sydney will never drop? They just go up at a slower rate?

It's like every other asset, prices go up and down.

Sydney house prices were stagnant from 2005 up until the last 2-3 years, in real terms they went backwards. This isn't even considering people who bought OTP in large complexes, i personally know of investors picking these units up for 200k less than the purchase price within 2 years of construction.

I think we'll see a repeat of this situation in certain locations within the next 5 years when the market stagnates and people struggle to settle on their OTP (due to bank valuations coming under the purchase price). I am NOT saying you'll be able to purchase apartments across all of Sydney for less than the initial purchase price, people who bought in boutique blocks in good locations will be fine. I'm referring more to the concrete ghettos of woli creek and wentworth point

This should give you a good hint to the areas i'm referring to, specifically in high density column.

http://www.genworth.com.au/docs/downloads/location-guidejanuary2013.pdf?Status=Master

 

[isildurrrr1]

Clearly you haven't been to Melbourne...

There is not one single local that owns inner city apartments... Overseas buyers buy them at a premium and leave them vacant, they are pretty much artificially inflating the market for their own benefit...

depends on the projects involved. if its a chinese developer there's gonna have a higher % of overseas buyer. locally based developers will have a lower percent, maybe 10-20% of new projects.