commonwealth

my god! i bought it at $430k last year, now a smaller property nearby is selling at least $490k!

and now i could not find anything below$500k on domain!

paulry

And I remember everyone um-ing an ah-ing about the wisdom of buying back then.

sr71

Well house prices will increase of course, but I also wonder how many foreigners are just buying to have a house in Australia as a safe haven and possibly with a eye to the future. Where I live there are loads of houses bought by the Chinese and just left vacant for years

Beoz

Very few according to a stat I saw. 2% or something.

knockoff nige

I think you have to make a choice. Either buy to occupy or buy to invest. If you buy to invest, you can negatively gear it making up the difference on yur investment. But buying a house is usually seen as an investment regardless if you live in it or not. That's what has put me off buying. It's too risky. Who knows if this bubble will burst but what if the same was to happen as what happened in Ireland where prices were just cut in half? A $800k house suddenly becomes your property for life.

Swerv-o

But it may not. Ever since I arrived people have been predicting the mother of all property crashes, but it never seems to arrive. Lots of people decided to wait in anticipation, and now find they have left it to late as they don't meet the lending/deposit requirements. Even the GFC only really saw a plateauing of prices in the Inner West (I can't comment on other areas).

If you are sure that you want to stay here, and have found somewhere you really like, then waiting for prices to fall may also be a risky strategy.


S

knockoff nige

I agree and it's only my own lack of faith in the property market that's stopping me. I'm certainly not waiting for government assistance to get me there. But, I just don't think I could buy a property responsibly. A 20% deposit for a loan likely to get close to a million all in is a bit overwhelming. House are just not worth it. I've ruled out buying an apartment as I don't know what you own when you buy one. Other than the strata fees and other bullshit.

Beoz

Or rent a property that would cost me double the rent to pay in mortgage repayments, all of which would be interest. This way half the mortgage amount is wasted, not the full, and I get to live in a great pad I wouldn't be willing to pay off.

commonwealth

Remember, 80-90% of the purchase price is funded by the bank. so if you consider the return on your deposit, it could be high.

I calculated it could be more than 10% net return on your initial investment (ie your 10-20% deposit), after tax, if you play it right!

al dente

We rent ours at 1350 a week. Bought it for $1.7m 3 years ago. We prop up the mortgage by 1,500 a month and have major land, tax so it is a bit of a money pit. However, we needed to keep in the market for when we move back. That is our driver but it is just so bloody expensive and needs a lot of love.

Compared to the UK where a 70% mortgage means that rent easily covers the payments. We have a 50% in aus and still top up majorly.

Interest rates are of extreme interest to me.

Beoz

... and that's why there a fewer foreign investors than people think. Nothing to negative gear against. If I didn't live in oz and was interested in property, Oz would be the last place I'd invest. Negative gearing means the difference between mortgage and rent is too far. Oz is a renters dream.

knockoff nige

Isn't it illegal for non residents to buy housing property in Australia? It does happen and I'd imagine most of it doesn't get caught. Buying to invest is primarily done in existing builds of apartment blocks which is probably more attractive to negatively gear against. If there were more housing estates, there would be more affordable housing. These wod obviously be further out of the city but transport would make it's way in.

Beoz

I don't believe it is illegal for non residents to buy. But I could be corrected.

I think for most non residents they are not able to take advantage of negative gearing as they are unlikely to have any other forms of earnings in Oz. Therefore it makes it a bad investment.

Though some Chinese are just buying an leaving it idle.

Swerv-o

I think they have to seek approval from the Foreign Investment Review Board before they can buy. I don't know what the criteria are, however I understand that at the moment this is largely just a rubber stamp and is pretty much always given.


S

Swerv-o

Looks like Moody's estimate that negative gearing contributes to 9% of the current value of housing.

Negative gearing pumps house prices


S