Sydney House Prices Are Depressing.….. (part 2)- Jhai Mitchell

Last week I asked the question are Sydney house prices depressing in this blog.

So how do you want to live? House or shoe box?

Some people have said “Embrace apart­ment liv­ing. The time of afford­able detached houses is over. I would def­in­itely live in a shoe box with my wifey and some cats,” but oth­ers say “I want a garden and a chook run

Not sure I’d be able to find a strata scheme that’d let me have chooks.

There is no doubt that people want to live in the city for the added perks and high paid work­ers are pre­pared to pay for it even it means liv­ing in a shoe box apartment.

living in a shoe box apartment

Some people even joke “Check out this nice $300,000 Win­nebago! Boom you have cheap city liv­ing! Sure you might have to find power and water but I’m sure you can work some­thing out.”

longreach-main longreach-front-angle

 

So where can you still afford to buy a house in Sydney on an aver­age income?

Well accord­ing to Census data, the aver­age median weekly house­hold income is $1,447 and the cor­res­pond­ing mort­gage value they can afford is around $430,000 to $500,000. Well you have no choice but to go west if you want to stay in Sydney.

Ok, so you have decided you don’t want to live in one of those massive apart­ment build­ings with a gazil­lion people or you have decided to still live in one (maybe rent­ing) and buy a house out of the city to save you get­ting in silly amounts of debt.[sam id=34 codes=’true’]

Some city people have a bad view of buy­ing in west­ern Sydney, as one com­menter said “Oh but wait, there’s a $35,000 gov­ern­ment grant, so you can buy your­self a new home at some new estate called “The Ponds” where you would be lucky enough to get any mobile phone cov­er­age and for­get any inter­net cov­er­age.”

Some people even say “It takes an hour to get to the city if you buy a house past Par­ra­matta”. Obvi­ously, they’ve never driven out west before.

 

Set­ting the record straight about buy­ing in west­ern Sydney

You can buy a house and land for under $500,000 in;

And make it to Town Hall train sta­tion in 45mins on a Sat­urday worst case scen­ario. We have full National Broad­band Net­work (NBN) with speeds of up to 100Mbps. I have also heard people say “But all the work is in the city.” Well that is not entirely true.

There are 9 indus­trial parks sur­round­ing these suburbs and more than 25% of Australia’s top 500 com­pan­ies have a pres­ence in the area, and the area also enjoys grow­ing links with China and India.

There is major infra­struc­ture boom in the area which means more jobs and growth. Some people tell me there is a crime issue out west. Well I don’t think they have looked in to it that well and just taken the media’s word for it.

Blacktown NSW crime stasts-data

Crime actu­ally has dropped over the past couple of years in these areas (under 738 cases) but I can’t say much for the south west, with 770 cases and increas­ing. Just look at the map below which shows the crime rates for the Inner West and East­ern suburbs.

Sydney Crime Stats and data

Not enough people have a vis­ion for the future.

We have buy­ers that come to us in Toongab­bie say­ing “We have $400,000 to spend and we want a house and land. Oh, and we don’t want Lalor Park”. Most of them can’t find a prop­erty and aren’t will­ing to go up $20,000 to secure the par­tic­u­lar home they want, so they hold off for 6/7 months to save for a big­ger deposit.

Now prop­erty prices have gone up $50,000 in Toongab­bie and they are still well priced out of the area. People are now ask­ing us to see homes in Lalor Park but in the  last 6/7 months Lalor Park prop­erty prices have now increased to levels close to that of  Toongab­bie real estate when the price increase star­ted and now they can only afford a base model home there.

The sad thing is that they could have got­ten an above aver­age home there 6/7 months ago! I would sug­gest 40% of aver­age home buy­ers are in this loop and it’s a vis­ion prob­lem, not look­ing to the future when pur­chas­ing a home. I know it’s a big decision. I’m not belittling them. In fact, I was in this loop myself.

I would sug­gest in a mar­ket like this, pay the extra 1,2, or 10 grand to secure the home now because you’re not going to remem­ber the exact fig­ure you paid for it in 7 years’ time any­way, or just choose another suburb!

House prices will always go up and down. I’m not delu­sional. How­ever, if you want a home in this mar­ket, you should know what you are will­ing to pay for a home and fight to get it, or you could wait for the prop­erty cycle to come down (not sure how long that will be) but Sydney’s sub-markets can have a mind of their own and defy mar­ket averages.

 

Con­clu­sion

Sydney hous­ing being expens­ive is sub­ject­ive based on your mind­set. People don’t have a vis­ion for the future and how prop­erty cycles work and even how to even­tu­ally afford where they want to live.

They aren’t will­ing to sac­ri­fice to get ahead in life because every­one wants everything and they want it now. For the aver­age per­son to be able to buy in Sydney they need to sep­ar­ate their wants from their needs and under­stand that Sydney is only “unaf­ford­able” if you have the wrong mindset.

[post_ender]



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Jhai Mitchell

About

Jhai is the Internet Marketing Business Development Manager for Elders Toongabbie and Kings Langley. He has been consistently quoted in the Sydney Morning Herald and Real Estate Business online. Visit his blog at www.realestatesevenhillsnews.com.au


'Sydney House Prices Are Depressing.….. (part 2)- Jhai Mitchell' have 7 comments

  1. February 27, 2014 @ 6:02 am Dan

    Spot on! I was lucky enough to buy a 3br brick house in the blacktowm area for under 350k in 2011. I copped some flack from eastern suburbs friends with the usual comments of “I could never live thete , even for 6 mths with a home grant” etc. I was there a little over 8mths, time flew, renovated the house and now it is worth well over 500k with rent easily covering mortgage and expenses. What seemed like a “sacrifice” at the time was actually dead easy. time flew and I will be able to buy in an area I want in a few more years.

    Reply

    • February 27, 2014 @ 4:11 pm Jhai Mitchell

      Hi Dan,

      I love your story!

      If you ever wanted to, I would be happy to create a Blog post about you on our blog.

      “The only thing worse than being blind is having sight but no vision.”
      Helen Keller

      Reply

  2. February 27, 2014 @ 8:29 am Bob the builder

    Exactly how it is.
    The property market is just like a snowball.
    It will not slow down. It will not stop. It just keeps expanding in size and worth.
    The sooner you jump on board – the sooner you lock in your purchase price.
    The first time I considered buying a property was at 20 years of age. Being young, and looking back on it now – stupid, I wisely opted to invest in a fast car and good times instead.
    The property I DIDN’T purchase was nothing flash, a very modest three bed home in a below average area, with a very very modest price by today’s standards of $40,000 – how ridiculously cheap was that ?
    EIGHTEEN years later when the appeal of fast cars and even faster motorcycles and really good times started to become less appropriate, I found that the prices of property had appreciated a little.
    My first home eventually cost me 17 times as much ! $ 680,000 !!!!
    I don’t regret this although I do wonder sometimes late at night – what could have been?
    Now I have my proverbial together, I have moved onwards and upwards and have accumulated 3 residential properties and a half share in an industrial property over a period of 8 years (and a GFC) worth in excess of 3,000,000.
    I am not saying this to brag but to show that it is quite easily possible even in today’s market and in Sydney.
    My wife and I do have an above average joint income – not much above average – but at the same time haven’t had to over commit by any stretch of the imagination to achieve this either.
    The same or a lot better could easily have been achieved with an earlier start on a lot smaller income if only I had had the inclination. (Wouldn’t have needed the wife either)
    The absolute most important part of investing in property or owning your own home is do it now.
    The longer you wait the more growth you miss out on.
    When you make a purchase you are locking in the purchase price and your mortgage at what it is for as long as it is in your ownership. The value of the property will keep increasing. The rent will keep increasing if it is rented.
    Property prices in Sydney are increasing in value at a rate that is almost the same as the average income.
    The only way to stop this happening is to buy it – NOW !
    In 25 years we will all be looking back on today saying ” $ 500,000 ” how ridiculously cheap was that ?

    Reply

    • February 28, 2014 @ 7:11 am sid

      Bob, you sound like a property agent. Nevertheless you do have a point. I was looking for a property year and half back but not aggressively and wanted to have enough deposit to avoid the lmi which was coming at $7,000. I waited for a year and ended up paying $80,000 more for the house I wanted to buy. I was not smart enough and regret this decision. In the months time my house is valued with gains of $30,000. I was afraid of job loss with economic uncertainty and just not sure of putting all my savings into a property.

      Reply

      • March 1, 2014 @ 2:35 pm Bob the builder

        I’m not a property agent . I own my own business along with three partners.
        We are importers and manufacturers of products that are on sold by our network of resellers to the building industry and homeowners.
        So over the past thirty years I have had a keen interest in the housing industry because of my need to.
        I also wish to accumulate a sizeable portfolio of residential property that will hopefully enable me to semi retire sooner rather than later as I have seen so many people achieve through our involvement in the building industry. This has led to me reading and studying almost anything and everything even remotely related to property investment and personal finance that I can get my hands on.
        I only bought my first property in 2005 at 38 years of age so I know all too well what you have experienced. We ended up purchasing with a 5% deposit and LMI of about $14,000 I think it was.
        We purchased the best that we could afford – not what or where we wanted either – that was way outside of our means.
        My parents built a brand new three bed home on thirteen acres of land,two kilometres from the beach, ten kilometres from the centre of Christchurch NZ forty three years ago for the huge sum of $15,000. It would probably be worth $750,000 – $1,000,000 today.
        I had the opportunity to buy a three bed house for $40,000 in the same location seventeen years later with a $30,000 deposit I had inherited. I oh so wisely opted to invest in shares – this was in 1987 !
        We all know what a good year that was for shareholders. I halved my money !
        Inflation is compounding property’s value and so is supply and demand. It always has and always will.
        As long as the population is growing – so will prices. No matter where it is in the world.
        If the population decreases the opposite will happen – Japan and Detroit are good examples of this.
        Sydney, Melbourne and Brisbane are all growing fast – this is why the best time to buy is now – saving won’t outpace inflation – especially if there is a huge demand.

        Reply

  3. February 28, 2014 @ 8:38 am Dave T

    The only reason this Joker has written this arcticle to promote property in his backyard. He is the Marketing Manager for the Toomgabie area, so he has dragged together all the twisted stats like any spruiker to sell stock on his patch.
    The only reason for the rises are speculators drawn in by this kind of BS

    Reply

    • March 1, 2014 @ 12:37 pm Bob the builder

      It never ceases to amaze me that people always blame evil , nasty , money hungry speculators , investors and landlords for increasing property prices.
      An HQ Holden cost around $3000 – $4000 in the early eighties.
      Try to buy a new Holden for that price now.
      Maybe Jhai was a car salesman before he got into realestate and was so good at spruiking up the prices he decided he needed a larger playing field and switched to realestate.
      I suspect the twisted stat you’re angry about may be called inflation.
      If only more people would listen to advise like Jhai’s and invest their hard earned savings into an appreciating asset that keeps up with inflation instead of waiting for prices to lower to meet their expectations , these people would so much better positioned financially.

      Reply


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