Affordability of Sydney Houses

Hi KimC,

Don't give up, home ownership is the best thing you can do for your family... there are affordable homes in Sydney, and often can be found in areas that people think are are not affordable... However it takes time and knowledge to find these gems...

KimC, Head North!!! I have been dealing with clients from West Sydney/penrith areas who tell me that travelling into the city for work takes as long from wst syd as from the Central coast. The trade off? NEW or NEAR NEW homes under 400k and 15 mins to awesome beaches and lakes. Surrounded by unpolluted national parks minimal traffic, come pay us a visit! Suburbs to google are-Blue Haven, Hamlyn Terrace, Woongarrah, Norah Head. Keep me posted!!

Hi Kim,

We have houses for sale under $450,000 in the Canterbury District and units from $229,000 Check out www.knapton.com.au and the best thing is we are only 20 minutes by train to the city. Great food outlets and close to all major freeways!

Regards, Knapton Property Agents

Hi Kim,

Yes unfortunately we live in the most expansive city in Australia, but for good reason it’s the best city!
I’ve always believed that buyers need to be in the right position financially to purchase any type of Real estate, if you need to borrow 95% of the purchase price and still look like doing it tough then you shouldn’t buy... simple it is a recipe for disaster.
There are many other costs and responsibility’s involved in owning a property beside paying the mortgage, you have
1/ Council rates
2/Building Insurances (As per all lending institutions requirements of lending money to mortgage a property)
3/ If you buy Strata title you have these contributions due every 3 Months
4/ Water Bills
5/ Electricity bills
6/ Gas Bills
7/ Mortgage insurances
8/ Contents insurances

And because Buildings deteriorate over time you always need cash saved to fix a variety of things that can go wrong.
There is no doubt that home ownership is a good thing, but it is only a good thing for people who can comfortably afford to do so.
My warning to people considering buying is this, Wait until you have a great deposit saved, if you can’t save it you can’t pay for it!
Preferably 20% of the purchase price (No mortgage insurance payable), and budget for interest rate increases!! Always calculate 2.5% more then you are paying now if you can still afford the repayments your ready to buy.....and remember the current interest rates at around 6.3% are way too cheap when the economy is right interest rates should always be between 7.8 and 9%.

House prices in Australian cities are an ABSOLUTE CRIME.

In the USA you can purchase a nice basic home, in a nice location in many regional cities for well under $100,000. A friend of mine there bought a lovely small house on a huge block of nice land for US$39,000 seven years ago.

I come from Broken Hill, and MANY city people are retiring to here. Why? You can buy a "renovator's delight" for $50,000 to $80,000, an old but nice home for $80,000 to $100,000 and some very stylish, nice homes for around $150,000. These are "sold" prices, not "advertised" prices. However, there's not a lot of good, highly paid employment for young people there. But then again, you don't "need" all that money here, as it's a VERY cheap place to live.

But of course most people don't want the outback. They don't want a lovely, safe town. They want status, money, prestige and newer and bigger houses. And like idiots, they are prepared to sacrifice their lives, freedom and health in pursuit of high wages to feed the ridiculously high **criminal** mortgage that they encumber themselves with.

When it comes to housing costs, we are NOT a first world country. We encumber ourselves with IMMENSE debt ....... that's not "living" ...... that's a living death. It destroys those who fall by the wayside.

Australian urban property prices are criminal! The successful ones then sell their property, thinking they've made a huge profit. But they make "nothing", because the replacement property they buy is sold to them at equally criminal prices. The main ones who profit from this legal criminality are those who have multiple investment properties ....... these are the people who drive the market and make it extremely difficult and often impossible for youngsters to gain their own home in a city.

Kenneth123 ,

Sounds like you are as passionate about real estate as I am! however I could not disagree with you more.
1st of all house prices are not criminal, to the contrary they are very legal, they are so legal in fact that every man and his dog is currently competing to purchase property in this state it is BOOMING it is also a seller’s market there are way too many buyers and not nearly enough sellers, SUPPLY AND DEMAND!
If you want something and it is in short supply you need to pay a premium and there are people lining up to do just that...simple.
Other thing you mentioned is about a fantastic property in the USA your friend bought for $39,000??? Well not only is that the price of a new car it is also only the average wage a person earns in one year! If we where to go along with what you are saying a good property in this country should cost the same as a car and you could pay it off in 1 year...that’s ridiculous .
You then mention Broken Hill, well you are either city folk or you are country folk young people born and raised in the big smoke have absolutely no interest in going to live in the back of nowhere with no work nothing to do and a completely unfamiliar lifestyle I see this as a non option.
You then go on to make the ridiculous assumption that people from the city want in your words “status, money, prestige and newer and bigger houses.”
Rubbish! So a child that is born and raised in the city, educated in the city lives in the city will one day grow up and want to purchase a property of his own close to family and friends is only interested in status, money, prestige and newer and bigger houses is he????? Opposed to what your biased opinion of the bush town you grew up in, in your words again “They don't want a lovely, safe town” Ken, I’ve been to Broken hill my uncle lives there..... I think he is mad I wouldn’t live there in a house given to me for free that’s my choice Ken, lovely and safe is your opinion, boring, dusty hot, baron and a million miles from nowhere, is mine
And last but not least you mention that investors drive the market and create the high prices, WRONG as a real estate agent with 14 years experience I can tell you that the opposite is true, because investors do not have emotional ties to their property’s they are always out to buy a bargain they want cheap property’s that make good returns, the buyers that drive the market are 1st home buyers and younger people who are inexperienced in the buying process, get emotionally involved in there purchasers and thus drive prices up!

(1) Obviously house prices are legal. You know exactly what I meant by the use of the word "criminal". The over inflated property prices in our cities are criminal; an absolute injustice to buyers, and of no real use to most private sellers. City buyers have **ZERO** choice if they wish to live in a city ...... they MUST pay world record high prices..... they have no choice!!!! Regarding property affordability prices, Australia is not a first world country anymore: We've screwed our own people to the extent that we've reached world record property prices. Who profits from this? The big developers, the real estate agents (who just love housing booms ..... it makes them more money) and the private investors who have property portfolios for the sole purpose of profit, plus the other usual culprits. New home seekers particularly are serious victims of housing booms, as it puts them in horrific debt or excludes them from owning their own home. When existing home owners sell in boom times, it costs them boom prices to get their next property ....... so even they don't profit from housing booms.

(2)Regarding regional city USA property values of 7 years ago.... it's a lengthy and complex subject. USA housing affordability has been significantly way superior to Australia for quite a long time.

(3) Of course you see Broken Hill as a non option: You're a real estate agent, house prices in Broken Hill are LOW LOW LOW. There's no money in it for your agency compared to over inflated city prices. That's how agents make their money ..... selling houses.

(4) I did not say all people in cities are "only interested in" (your words, not mine) status, prestige, money, better houses etc. Many are, many aren't .......It's called a strawman argument...... arguing against something that someone didn't say in the first place. Please respect me by debating against what I "actually" said.

(5) In your reply to me you stated that first home seekers are responsible for the current prices: it's not the fault of young first home seekers as you imply. It's sellers who drive market prices: Sellers who screw their fellow Australians into paying 2 to 3 times as much for equivalent property that the citizens of the USA pay.
It's NOT the normal everyday Aussie buyer and seller that has driven the market to these ridiculously and unnaturally high prices. It's driven by the developers, real estate agents and the multitude of private citizens who have property investment portfolios for the sole purpose of profit, and also some other sectors.
Please don't blame the struggling first home seekers for these horrific, unnatural high prices.

Kenneth123, human greed is responsible for the prices going up. Not real estate agents. Agents are responsible under the law for getting the highest price for the vendor. I have sold hundreds of homes and in every case the vendor thinks their house is worth 'more' than the one down the street. You have obviously had a bad experience with an agent before and I am sorry about that. Real estate agents are easy targets, but we are the highest regulated profession in NSW. The REI in NSW is taking steps to introduce a rating type system that consumers can use so they can select an agent based on an achieved industry standard along the lines of the quality assurance 5 tick system. I think this will help our industry get rid of the 'cowboys'. However, on this ANZAC day, it is important to remember that we have free choice to live where we want and to pay what we want because of this beautiful country we live in. Go buy a cheap house in America? No medical system, guns everywhere, weak economy..... would you want to live there??

Ken,

As rhcharm said i think you have had a bad expirience with a real estate agent, and i would apprieciate you not taking your frustration out on me. Thank you Have a nice day

Rhcharm, you're correct of course, it's "human greed", which is basically what I've been saying. There's a whole raft of factors that contribute to the current criminal property prices, of which I've mentioned a mere few. It's full of complexities that most people, and even some professional people also, don't properly understand.

Adam, please either stop or delete the personal abuse. I'm sure you will.

Adam, that was a good decision from you to alter your lengthy, personally abusive post to simply read "I think we should all ignore Ken". I hope you feel better now. Remember, just because people don't agree with your "opinions" on real estate there's no need to get upset. Life's about give and take, and you'll learn more about that as you progress through life. Have a nice day.

I notice Adam has changed his abusive post 2 times now. Firstly he totally replaced the abusive post with the more gentile "I think we should all ignore Ken". Now he has scrapped that also and replaced it with "I think you have had a bad experience with a real estate agent and I would appreciate you not taking out your frustration on me. Thank you. Have a nice day".

Adam my boy, you'll be disappointed to know all my experiences with selling and buying property through real estate agents have been satisfactory.

It's not "specifically" the estate agents who are responsible for high prices, but they are still one of the major beneficiaries from boom real estate times; it's all a part of how capitalism works. There's both good and bad aspects of capitalism. Real estate agencies just LOVE booms. But it's primarily sellers who are responsible ....... especially "investment" sellers (both private and corporate). They are the greedy culprits who take advantage of lack of supply to screw their fellow citizens out of every cent they can. This then flows on to the rest of the market. We then end up with the situation where people have to pay preposterous prices for even ordinary properties, and for first homes.

It's got nothing to do with "wogs" gingy ......... some of the most manipulative and dishonest real estate people I've seen were dinky di Aussies born and bred. Most agents are honest and just do their job. People originally from Greece are fantastic folks who have contributed very much to the wealth and culture of this nation.

I don't see a dramatic drop in house prices happening in Australia anywhere on the horizon. Prices will hold up because our economy still has quite a way to go during the recovery, and the housing shortage will remain. This recovery will continue at a steady rate for several years at least. Since March 2009 our economy has had a boom recovery ........ from now on it will be a slower and more steady recovery.

You've got to be kidding Australians are more personally in debt than US citizens and a bank holding 30% of the residental mortgage market has said it will be increasing interest rates for many years to come regardless of what the reserve bank does. Nations all over the place are bankrupt. Look at Portugal, Italy, Spain, Greece, Ireland etc etc. What do you think will happen to the international money market (which is driving property investment in Australia) when all these nations need bailing out, or worse still they default?
We could see interest rates at over 15% this will cause mass foreclosures and a collapse in the property market the same as what is happening now globally.
Let me guess property NEVER goes down even when the next generation has no hope of ever owning a home, even when the market collapses globally. Australia is somehow magically immuned even though we have no savings of our own and rely on other nations to supply all our investment capital.
You are either deluded or worse still a realestate agent.

KimC, in response to your original post... I don't think you are "looking in the wrong areas". I think it is simply a case of too much emphasis on capital cities.

My wife and I are in a similar situation looking to buy our first home while already renting in Sydney. The conclusion that we have come to is that Sydney is only going to become less affordable with reduced supply and increasing population. On our already decent professional incomes, we could only just manage to pay rent and save a 20% deposit at slightly higher pace than property prices are rising. However, we don't want to sacrifice a family lifestyle to repay an overvalued property, especially if this really is a growing 'bubble'. We want a home, not a house. As such, we're looking at renting somewhere in between Wollongong and Sydney before buying out that way. At least then our future kids will have a backyard to play in, rather than just a balcony.

KimC, you ask "what city should we move to?".

Well, all other Australian cities are cheaper than Sydney.

If you don't mind the cold (many people like cooler climates) then Hobart is a FANTASTIC place to live. I spent 4 years there in the 90s. The place is simply beautiful, cosmopolitan, quite a bit slower paced than Sydney, MUCH MUCH safer than Sydney and the countryside is amazingly spectacular. It's a wonderful place for family life, diversity and adventure. It's also Australia's number one capital city for housing affordability with a median house price of $342,000. It's also the only capital city to have a number of locations where the median house price is under $200,000. One suburb, Gagebrook, has a median price of $153,000. I've never lived there, but that suburb is quite ok.

Most capital cities have nearby regional areas that offer a combination of lifestyle and affordability.

Way back in the early 50s my mum told me "get an education and good qualifications then you'll be able to live almost anywhere and still find work". If a person has a good skill base, then regional areas offer great opportunity ......... NOT unemployment. If a person doesn't possess good life skills, then moving from a capital city base can present employment difficulties.

Belmore is a up & coming area. It still has the old-fashioned appeal of lots of indivdual shops rather than chain-stores, and this to me means personalised serviced by locals who know and remember you and your preferences when shopping. There are many fresh produce shops - butchers, green-grocers, many bakeries, seafood, specialised boutique supermarkets as well as health professionals, services such Post Offices, Banks, Newsagency, TAB, Solicitors, Hairdressers and light industrial such as mechanics etc. Burwood has also a lot of cosmopolitan eateries, a full range from your local take-away, to intimate cafes to ethnic restaurants. And there are a couple of clubs (Belmore RSL and Canterbury Leagues Club) and pubs. Transport is excellent, there is a train station in the middle of the shopping strip and buses also service Burwood Road.

Canterbury Council is investing big in the local shopping strip. Having already re-paved most of one side of the road in expensive modern large tiles, they are currently renovating the opposite side and also installing outside eating areas and new street furniture - all helping the great cafe culture that is evolving in Burwood Road.

It's not as busy as most inner-city shopping strips - you can safely cross the road - but it's just as good and interesting. The shopping is amazing, the locals really friendly. It's only 10-15 to Roselands or Campsie major shopping centres if you are after a Department Store too, so you do get the best of both worlds.

Watch out, Belmore is making it's mark!

For all your real estate needs, be it commerical, residential, to rent or to buy, call a long-term local.

Look at our website and see what recent properties have sold for - that should give you an indication of what you get for your $

Professionals Belmore
(incorporating Belmore Real Estate - est 1958)
Call us! 9758 2744

How did you go with your house hunting Kim?

I would definately look at the lower end of the Central Coast Kim. I recently moved to Horsfield Bay - this is a gorgeous suburb with reasonably priced houses, most of which have GORGEOUS views over brisbane waters. It's a 4 minute drive to Woy Woy train station and its an hour on the train to get to the city! (Which is less than living west of sydney or woolongong). It's 10 minutes off the freeway too. There are plently of options on the central coast.....and you are close to beachs, national parks, horse riding, bike tracks, skate parks......this list goes on!

Recent reports suggest that the property prices in Sydney are on the rise, the median property price in Sydney is around $650,000. That raises serious questions about affordability for young investors and first home buyers entering the market. The First Home Owners Grants has thresholds and has almost no effect when purchasing a property over $600,000 specially with stamp duty concessions.

Having said that you can still find properties in Sydney outer west for around $450,000 to $500,000 which can be in reach for many.

I am a mortgage broker in Sydney, if anyone needs any assistance feel free to contact me:
visit my blog: http://firsthomebuyersgroup.blogspot.com.au/
website: www.ubikafinance.com.au