Bermudashorts

My short term rental was a one bedroom serviced apartment, Fraser Suites on Kent Street.

Is the $800 you mention for a short term or long term? If you mean short term furnished then that a great price. If you mean long term then I am sure it is possible to get something with 2 beds for under $800, just depends on area.

Zen10

That's not my experience of SA. We rent a three bedroom place for 13% of monthly salary in a prime location which is bigger than our house in the UK, for which we paid 26% of monthly salary in mortgage and it was nice but in a dump. If we were to buy here we would end up paying 21% of monthly salary or thereabouts, but we would buy bigger than we rent.

carolinephillips

The poster Perfectionist is moving to SYDNEY- which is very expensive.

Zen10

The point stands nationally. If two bed apartments in SYDNEY are $800 per week to rent, but $750,000 to buy, which they are, then it is cheaper to rent an equivalent property because 90% LTV on these properties works out to $4900 repayments per month, which is $1225 per week.

So of two equivalent properties in SYDNEY it seems cheaper to rent.

Perfectionist

That was the long term option,i.e. 6 months. May I ask how much was the cost of the serviced 1 bedroom? Did they require any advance payment? Kent street serviced....hmmm..just checked the price $300 per night if that's the right Fraser serviced i am looking at. we have quite a bit of Holiday Inn bonus points so it looks like may be best to use those up and then get into serviced if don't find anything suitable longterm wise by then. it's difficult to research from UK as they all have open days right now and we are not due there until september...

Bermudashorts

Don't worry about it. Majority of people find something within a few weeks of arrival. There really is not much you can do now. We paid about $200 per night for Fraser Suites.

Perfectionist

Thank you for the info.
Would you know if there are any good schools near Kent Street? My OH's office is on Kent Street. We want to try to be based closer to workplace and at the same time do not want to compromise on school. I have tried to find a thread which would talk about primary schools near Sydney CBD but unsuccessful so far. Any tips would be much appreciated.

martin1978

We pay $500 a week for a great 2 bedroom, 2 bathroom, 2 balconies and a double garage. Right next to a railway station and 25 minutes from Sydney CBD. If you don't want to pay $800 you only need to move 15-30 minutes train journey out of the city. Similar to London really.

I don't think there are any schools in the CBD. I could be wrong though. In case you don't know it stands for central busisness district. I wouldn't want to live in it with a family. Most families in Sydney live in the suburbs.

carolinephillips

It depends on your deposit. We had a 25% deposit on our house, from the equity in our last home, so it was cheaper to buy. Renting is dead money, going to line the pockets of landlords who seem to think it is ok to rent out a "freshly painted" house, that has windows that don't actually shut, a leaky roof and that hasn't been properly cleaned, yet woe betide you if you dare to hang a picture or complain about anything. I was told that the English are too fussy when I asked for the roof to be repaired.

2 bed apartments are not all $750k to buy- it depends on location. You can buy 4 bed houses for that in some areas. It is too hard to generalise, as Sydney has a wide variety of housnig stock and prices.

IvanM

You are losing from the opportunity cost of the capital you have in the home.

Sydney landlords do seem to be slumlords.

Zen10

I'm in agreement about owning being preferable, don't get me wrong on that. I hate the rentier societies that are being created in Britain and Australia by grossly unaffordable housing. Totally agree with your view on landlords as well. I would however add that the interest we pay on loans is as dead as rent money.

A rough example would be you buy a house for $500,000. You borrow $450,000. The repayments of $450,000 at 7% are approximately $3200 per month over 25 years. This means you end up paying about $550,000 to the bank. So that's $100,000 of dead money to start with, never mind calculating a drop in the capital value of the house which is likely over the next few years. This must be balanced, of course, with the fact you weren't paying rent during those years.

In the final analysis I think owning is more sensible, but in a deflating economy saving cash over many years then buying outright is more sensible. Problem is are we in a deflating world?

Bermudashorts

Why is paying $500k of interest only $100k of "dead money"?

Kiwikaye

Agreed. If you pay $3,200 per month over 25 years, the total repayments are $960,000 - that means you've paid $510,000 in interest on top of the original $450,000 borrowings. That's $510,000 of dead money (less any rent you would otherwise have paid). You have to hope that this is somewhat offset by any capital gains in the property over that time, but that's not a guarantee either.

Zen10

I'm not sure I count all the interest as dead money as a good proportion of the interest serves the function of securing the capital asset. In this way, the only real dead money is the difference, which in my case would be around 100k.

Bermudashorts

Before you said interest we paid on loans was dead money. I am just wondering how you estimate that $100k of the $500k interest is dead money ... how is the other $400k "securing the capital asset" but this $100k is not, it is all interest.