Wednesday, 23 October 2013

People weren't kidding: Property is really expensive in Australia

I posted recently about the fact that I have started searching for my own home and how I was doing this well in advance of when I actually wanted to buy my own place.  I have actually been surprised at the number of developments that have taken place in relation to this in the relatively short time since I did that post.

Some of the big things that I have done since I decided that I actually wanted to buy my own place included

  • Talking to my girlfriend about it
    • Getting on the same page with my girlfriend about where we were heading etc. was a great idea (although for the life of my I can't remember how the conversation came about) because it forced the discussion about other life factors
    • It is really really hard to work out what you want and a price range for a property when you have no idea of what your life plans are going to be 
    • If you are thinking about buying a place make sure you think about your life plans
  • I started narrowing down areas where I wanted to buy
    • I actually sat down and thought about where I wanted to live and what I wanted to buy and then thought about what I wanted to spend and how much I could afford now and potentially in the future as well 
    • I then worked out what areas fulfilled all three requirements
Then something scary happened...

You know how you read people complaining all the time in the newspapers and on blogs and in social settings about how expensive real estate is?  They weren't kidding.  I earn a really good wage for someone my age (you can estimate it from my various expenditure tracker posts) and I thought I would be able to afford something that, while not close to the city, was certainly not miles away from everything.  

I certainly didn't expect to be looking at where my parents lived.  My parents were not well off and live a fair way out of the city and I naturally made the assumption that I would be able to live closer than them. When I started plotting where I could buy on a map it actually scared me that I was ending up awfully close to their house.

There are pockets that I could afford closer in if I stretched myself a bit but I need to decide whether I am willing to do this and if so how much I am willing to stretch myself.

I have no idea who can afford the inner city places...or how people on 'normal' incomes can afford a decent place at all

I have no idea who can afford the types of prices that people pay for inner city and popular areas.  I imagine they are out of reach of first home owners, even those who are earning very well.  Doing the maths, I just cannot work out how anyone buys a place costing a couple of million dollars (especially those who are thinking of having families in the near term or who are funding private school costs).

The second big question that came to mind (and I don't mean to sound condescending here) but how on earth can 'regular' wage earners afford to buy a first home at all.  For example if 2 teachers are married and make $120k combined, there are a very limited selection of properties that they could afford to buy and those are quite far out of the city.

Housing is much less affordable than I had imagined.  It is remarkably easy to buy an investment property and I have written about this before - your tenants cover so much of your cost.  When you are moving in yourself it is much harder (especially as we are always trying to stretch ourselves).

This has not put me off buying a place at all - I just need to get realistic about what I want, what I can afford and how I am going to get there.  Have you had similar experiences?  I'd love to hear about them

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