First Home Owner Grant now $24000! Sydney House Prices Next?

I think Stonecutters Ridge has a better location at the junction of new motorway M7 and Richmond Road and very close to M4, M2, close to Quakers Hill, Rouse Hill, Kellyville and close to two Sydney train lines, Western and Richmond lines.

It will do amazing things to this corner of Blacktown.

Hmm.. i just did the maths on this. If the average aussie (earning the average aussie salary of $55k a year) lived by your mantra then they would only be able to afford a mortgage of $1220 a month, meaning they could only afford a house costing $185k. Certainly can't find a house for $185k in Sydney that's for sure.

However, I guess it's exactly the fact that people overstretched themselves that has pushed the house prices up so dramatically.

Of course when credit is abundant, consumers tend to use it to achieve their objectives; that's the free market that we all love, isn't that right?

How many people do you know who paid cash for a widescreen TV set, a car? The widely reported $42 billion in credit card debt did not create itself. It was created by a thing called Demand. Here comes the dilemma.

The suggestion that in Australia, mortgage lenders just hand over the money to anybody with a heartbeat is a myth. Some Australians (with help from sensationalists) may have confused the mortgage lending irresponsibility of USA lenders & relaxed Aussie consumer lending criteria with our unique mortgage lending situation here. Sure, we have 100% mortgages (up to maximum $500,000 for owner occupied residential property in Sydney) offered by a number of banks and non bank lenders but no-one would dare claim that these loans are easy to have approved. Even when assessed by a qualified mortgage broker or a bank lending manager; further assessed and approved by the lending institution and further assessed, approved and backed by the (financially independent) mortgage insurer, applicants' income and other financial commitments determine their absolute borrowing limit.

Strange times we live in; even a lender's ad inviting first home buyers to spend the Federal Government's first home buyers grant as their house deposit is critisized as irresponsible.

Stranger than Fiction;
1. The government offers a grant specifically to stimulate the stagnant housing market and therefore the economy (as our economy is heavily reliant on the construction industry), which will benefit Australians by increasing economic activity - read JOBS - as well as to relieve rental price pressure on households (as supply of housing cannot meet increasing population demand) .

2. Some Australians who already have a desire to buy their first home and knowing what they can afford each week are interested by this initiative.

3. A lender invites people who are considering buying their first home to make applications for finance (which are assessed using standard eligibility criteria and well tested financial ratios).

And this invitation to apply for an assessment of eligibility (aka home loan application) is slammed as irresponsible.

I have a suggestion Why not label credit card lending practices with their minimum required repayments and perpetually increasing limits as irresponsible? If Aussies weren't stifled by the 20% p.a. interest on the $42 billion credit card debt, they would all be able to save their own deposit to buy a house.

This is exactly the problem I've been hearing about from homeowners. The purchase of the home works out fine ... but over the long term ... they are fighting to keep their home. With things going this way I think the best bet is to fully research all of your options. No sense getting into something you may loose if you can't keep up on it.
Linda

One problem in the logic is that you haven't assumed any savings contribution...but it's likely that with current house prices the equation doesn't work out.

That's not a fault of my "mantra" as you put it...that's a reflection of what the average Aussie use to be able to be able to afford in terms of housing. It was a common place rule of thumb that could insulate you when times are tough. The "mantra" is about that...protecting your position when things turn to sh*t...the fact that it may not be possible...well greater minds then mind have to sort that out.

I've always been on a reasonable wicket...although I paid my way through uni, lived at home for a fair while (paying board though) but like most people I've worked hard for what I've got...but I soon resigned myself that I could not comfortably purchase my dream house in the dream location so we made compromises along the way. It's taken a few steps but in 14 years I'm happy were we are...is it my dream...no...I'd rather live on Beach Road, Brighton watching the sun go down over the bay...but it aint never gonna happen.

Oh don't get me wrong, I think what you're saying makes a lot of sense, which is why I was interested to do the maths. If everyone lived by that standard we'd have affordable housing, and a lot less 'mortgage stress' as the press call it.

I guess it's just the fact that people always aspire to have something better, therefore they end up stretching the disposable income a little further, and start assuming they'll always have two salaries, and when they have kids that goes out the window either because one person gives up work, or you suddenly have huge childcare costs.

You're right I didn't assume any savings in my calculation. Assuming that you should save 10% of everything you earn (after tax), that means the average aussie can only afford a house up to $165k on that basis.

Source: NSW OSR

For those who are looking to cancel contracts just to resign after 14 October 2008.

Just an update after speaking to real estate agents and one sales manager for a major property developer selling house and land packages in North west west Sydney. The sales (which would be eligible for the $21,000 as the blocks have council approved plans) have certainly not increased to a frantic levels. The increased first home owners grant has not impacted on prices of established properties either although vendors seem to think it will. So they are not listing their properties until there is upward momemtum. I think they'll wait a long time for that. By next March, I think confidence would have returned to first home buyers and with lower interest rates, there may in fact be a mini rush to lock in the boosted grant.

I ve been reading up on the logic some commentators have used to support their guesstimates that Sydney prices will fall further. They compare what happened in Japan when its bubble economy burst at the end of 1980s following which house prices fell by 40% across that country. I remember that country was crazy with speculative investments in that decade after being cashed up with their export earnings (well, you can say we are similar in that way).

But havent they got negative population growth in Japan? I think that means their population is shrinking. I havent got a degree in economics like these TV pay per view commentators but someone should tell them about the housing shortage in Sydney and the fact our migrant intake leads to competition for the the limited supply of new housing. How can prices fall when demand is rising and supply is static. Am I missing something or are they?

Yes, but everybody is forgetting that the fallout in the US has a long way to go yet. The US is going to be in deep.... for a long time & as a result that will inevitably flow to the rest of the world including us.

We will be reading & hearing about the american fallout constantly & this will affect the consumers here. I really don't think real estate prices are going to go up. I'm certain there is still plenty of room for them to keep falling in some areas & to stay flat in others for a long time.

The fallout from the USA sub-prime is partly the perceived increased risk in housing finance after the banks lost in a big way in US real estate lending. As our banks rely largely on overseas finance supply (which has been disrupted) to lend to borrowers here, it affects how careful they are in handing it out.

New home buyers in New South Wales are set to get a $3,000 boost in tomorrow's mini-budget.

The State Government will increase the first home owners grant for people buying newly constructed properties in next Tuesday's mini-budget.

It means people will now be eligible for a total of $10,000 from the State Government plus $14,000 from the Commonwealth.

The extra $3,000 would be available to about 3,000 first home owners for one year before being re-assessed. GO Nathan Rees! You're the BEST

http://news.smh.com.au/national/extra-3 ... -5kcg.html

So, now it's $24,000 in New South Wales as well, I take that back what I said about Victorians being lucky.

don't go jumping yet.. remember to vist www.osr.nsw.gov.au
read into the specifics of this grant.. it will be means tested next year also ..
also note that if you have put pen to paper (contract) before these announcements you will not be entitled to the additional grant..
and ******* your contract date can land you in jail with a criminal record..

when you add the fact that Rees is removing free travel passes to students. adding 137 red light cameras and possible dual fitted with speed camera and the congestion toll and increased parking levy. BAM wallah you now have higher cost of living. the grant is the pretty side of things but the economic downfalls these coming years are going to far outway what good the grant can do...

unless you are the head CEO of the four big banks then i would not believe anything anyone has to say.. not the media not the analysts.. you see there is this thing called monopoly.. and as you can see from trend - have you noticed that each of the four big banks have taken turn in leading thier interest rate drop announcement.. there has not been one bank that has announced ahead of everyone everytime. last one was CBA, before westpac, before that ANZ.. they are playing thier game and they are monopolising the interest rates taking turn in the blame. yet they continue not to pass on the full amount... if you read enough and watch the trends you can make your own analysis. the banks want interest rates up not down for the same reason as any banking Business would -PROFITS.. big fat payout for the CEO.. i hate to say it but i bet ya in the december rate drop and i know there will be one - NAB will be the one to announce first...

Simple method of avoiding a few of these increased traffic charges:
1. Don't run red lights
2. Don't speed

Too easy.

Lyn that's funny . You forgot to mention you can also avoid the congestion toll and increased parking levy by not causing congestion and not parking in the city

There's a problem though, we have a large population in North West Sydney who don't have access to efficient public transport into Sydney CBD. Maybe Sydney city council can have large parking lots just outside the CBD and free buses into the CBD. Parramatta council has free bus services in their CBD for this reason. They run every 10 minutes from Parramatta ferry wharf to the city centre to Parramatta train station.

Yes well done to the Labor govt for the botch up of the North West rail line....

Tell me about it, I'm a daily user of the 610 bus service from the North West into the City and what I'm seeing at night now is such a huge amount of bus congestion within the CBD. Now they're going to add MORE buses, plus Westbus/Hillsbus get all of their brand new double decker buses at the start of next year.

I just found it incredibly funny reading about the congestion tax and increased parking levy, in order to deter people from driving in, and then reading that they have scrapped both the North-West and South-West rail links.....way to contradict yourself

The bus service into the city is actually quite efficient but outbound, it runs into problems due to no bus lane between the city and Beecroft.

It's often forgotten that the government didn't even have the forward planning capabilities to have the M2 three lanes when it was built. They knew the North-West was a massive growth area.

We do have a large parking lot just outside the CBD, it's called the Harbour Bridge!

Gee, obviously Sydney and Melbourne are exactly the same ... we have freeways that they start widening before they even finish the previous widening exercise.
We also have a really big carpark in the Monash Freeway. Funnily enough that runs through SE Melbourne where we have needed a quadruplication of the rail line to Dandenong for years ... instead of spending the funds on rail lines they are building yet another freeway to bypass a suburb that was already bypassed... but it will help the rich pollies get to their beach houses quicker.