Yup, you read it right.

The average house price in Australia is ~$500,000.
You can get ~ 5-5.75% interest in the bank.

Now assuming you own your house or can put together ~$500k, you can get ~$25,000 most tax free (threshold + expenses).

So with $25k a year you could retire to say Greece and still be earning more than the average salary.

Or Portugal, Italy, Finland?

And if you went to say India, you'd be able to also hire your own maid, cook, bodyguard, masseus and driver at the average salary.

Sri Lanka?
Kazakhstan? Like Borat!

No more working, all the time you want to pursue your own interest... just think about that Adolf.

Great idea. Try to get a pension and move to some island in Indonesia. I've never been there but have flown over it on the way it on the way to Hong Kong. The islands look magical with a mountain in the middle and a few villages by the coast.

Mark _australia said...
Sigh.

People (and govt policy) treating housing as an investment for the rich is the reason many cannot afford one.

Housing is an investment for ANYONE who is willing to get off their arse and work for it.
The sad sacks that whinge they cant afford a house usualy spend half their money on smokes,alchol,,,well drugs in general. Or think they are hard done by the government because they cant afford a house on the beach.
Buying a unit or house is open to anyone that is motivated to work hard for it.
At your age Markie by now Im guessing you should own a couple and be thinking of retirement living the good life.

Currently you won't get 5.75% from the bank, as you state.
Term deposits is under 5%, no?

There's even a chance, depending on Europe and US elections, that it drops a bit more. Things will eventually come back a bit to 'normal', but never to the full 7%, and even then, it's gonna be good-years-bad-years and not guaranteed interests for that rate.

With a mere $500k, you're taking the chance that a bad year happens early, thereby wiping out a chunk of the capital.

Other thing is health: the slightest problem and you're eff.d.
One last bit: good plan for a few years, but you have to make sure this is what you want to the end of life, coz there is no plan B (little cash left, too old for the marketplace, etc.).

Other than that, good plan.

Its your choice, not the governments, for you to choose to live in an area you cant afford.Maybe move to suit your earnings or get the training required to work in the industry thats supporting the area.

I know people on minimum wage that have given up on the non ecentials so they can buy a house. Internet,mobile phone, beers, smokes, etc.
It all depends how much you want it.
They moved to areas they didnt want to buy, but could afford, then sold and moved to where they prefered to live.

If you are really motivated to own a house, you can.

Not quite yet loggie, yes I blame the Libs but not quite ready to join ya yet


Lotofwind - you familiar with the term "average"?
I was not referring to where I live. I live in free rent provided by my employer. Doesn't mean I can't talk about how the average person finds it harder than ever.

Percentage of bank loans for property investors has risen from 15% to 30% in the last 20yrs.
That is a massive change.

People quote a 12-fold increase in household debt commitment since the 1970's.

Bank lending has quadrupled since the 1970's.

House price to income ratio in Australia is about 7 - 9. The benchmark is that anything over 5 is "severely unaffordable"

If this happened to food prices there would be rioting. For it to happen to a necessity of life is terrible. The baby boomers, aided by Govt taxation policy, have allowed a necessity of life to become for the benefit of the rich only

lotofwind said...
Its your choice, not the governments, for you to choose to live in an area you cant afford.Maybe move to suit your earnings or get the training required to work in the industry thats supporting the area.

I know people on minimum wage that have given up on the non ecentials so they can buy a house. Internet,mobile phone, beers, smokes, etc.
It all depends how much you want it.
They moved to areas they didnt want to buy, but could afford, then sold and moved to where they prefered to live.

If you are really motivated to own a house, you can.

Problem is... someone's gotta push the shopping trolleys back and man the checkout and all the other menial jobs that need to be done around the people flying in and out.

Mark _australia said...
Sigh.

People (and govt policy) treating housing as an investment for the rich is the reason many cannot afford one.

Not sure what salary you're on, but for many of us that work for below the 'average' income and are so far removed from being categorised as 'rich', our home equity & investment properties will be the only way we 'may' be able to avoid retiring on the pension.

We bought our home about 15 years ago and due to the increased value (equity) over the past few years were able to borrow from the bank & invest in property. These investment properties are rented for little above the loan repayment rates in order to keep them tenanted for both tax purposes and so that in 20-30yrs when (if) my wife & I retire (if we're still above ground), we may avoid needing gov't handouts.

As for "How does $1500 p/w rent for a 1 bed apartment sound?" - sounds good to the property owner I expect, but this is one example...how about the property owners that are sitting on goldmines and could cash in, but still honour low rent in order to make sure they can provide housing for 'loyal' tenants that choose to rent at the agreed price instead of the headaches of owning their own property.

To be honest - everyone in WA from the mining companies to the miners, contractors, suppliers, councils, coffee shops etc. seem to be cashing in on the boom...do people really expect property owners not to make the most of the current opportunities?

Sailhack and Cisco that is exactly what I am talking about. May be great for you right now, but what about the aussie fair go way of life blah blah for your decendents?

Our kids will not be able to buy a house the way things are going, unless mum n dad are filthy rich or our kids are in the top 20% of earners.

i could never understand this madness watching the housing boom time.

like, developer i know bought a beautiful solid built brick house (renovated) on block of land for say $650 k's, knocked it down, subdivided, put 2 crapy built townhouses with paper walls and flat roofs and year later sold them for 700 k's each.

i mean, land value increases and that's fair enough or at least in wa houses are solid double brick built.

but in victoria, all these pile of sticks put together with china made kitchens and bench-tops with no land they called houses, what kind of investment is that, especially that most of people leveraging. what will be they worth say in 25 -30 years ?

Mark _australia said...
Sailhack and Cisco that is exactly what I am talking about. May be great for you right now, but what about the aussie fair go way of life blah blah for your decendents?

Our kids will not be able to buy a house the way things are going, unless mum n dad are filthy rich or our kids are in the top 20% of earners.

Mark, I have to admit that I have had a few lucky breaks. However as a general rule, "The harder you work the luckier you get." I made my lucky breaks.

It is not all "hard" work. There is "smart" work. The hardest work in the world is thinking and that is why so few people do it.

The biggest thing standing in the way of financial success for young people these days is the lack of the attitude or ethic of "delayed gratification".

The current generation is known as the "IWIN" (I Want It Now) generation. Wanting it now is fine if the individual can keep wanting it and working for it until he/she gets it. Then one needs to want what one has as well.

I don't see any lack of opportunity for young people these days especially with the resources boom the way it is.

What I do see are young people on good earnings who blow it on the "Have To Have" items like hot utes and cars costing $50,000+, the latest iPhones and expensive fashion clothes. If those possessions are their definition of success, well they have made it.

My definition of success was not having to do somebody else's bidding at an as early age as possible. My last "permanent" job was when I left the Navy in 1973.

My first investment was a $13,000 bush block in 1979 that I bought with a 50% equity.

I am a dyed in the wool real estate person and believe that like sex, everyone should get as much of it as they can while they are still young. It is the fastest, surest and safest vehicle to financial independence.

The best and first investment young people should make is in their financial competency and stewardship of wealth.

My children won't get any of my wealth until they have proven their financial competency or I die after which it won't matter to me.

All I want now is a life of ease on the ocean breeze toward which all my efforts are now focussed.

Rents are $350-400 in WA. (Alkimos 45kms from CBD) For a 3 bedroom 2 bath.

Awfully hard to save for a 20% deposit when rents are that high. I needed my parents to go guarantee so I didn't pay mortgage insurance.

I'm thankfull to them.

From personal expirence my incease in salary was less than the rent increases.

Having seen both sides of the equations, the problem we have with housing is directly related to -1) red tape.
2) slow release of land.( see above)

I guess none of you's watched that doco I posted last week... here it is again.



At Minute 39 it explains the reason for high prices in Oz.

Mark _australia said...
Yeah but you blokes worked hard to get a 10K deposit to buy a $150 - $200K house.

20yrs later, a couple starting out now need to save $30K plus to get a well below average house.

Forget the "i need it now" - I do agree sooo many people reckon they need new cars and flatscreen and flash stuff etc etc - BUT even with sacrificing all that it is simply sooo much harder than before. The numbers prove it.

So mum works, kids have very little parent time, kids off the rails, stress and divorce, pay a fortune for daycare - the societal implications of baby bommers becoming rich off property is huge and we will wear it for many years to come

Mark is sooo right

Mark _australia said...
Yeah but you blokes worked hard to get a 10K deposit to buy a $150 - $200K house.

20yrs later, a couple starting out now need to save $30K plus to get a well below average house.

Not disagreeing, but my wife & I were also on about $25k salaries, well below the 'average' income achievable now for an educated kid. Unfortunately the geography does play a part, but there are 'average' homes (3 bed, 2 bath, double lockable garage on 1/4 acre) advertised here and in other country areas in the paper every week for <$250k.

My wife & I couldn't afford to buy a $600k home either, so kids wanting to buy a house close to where they grew up (if they were raised in most metro or many WA cities) will struggle, or if they want the 'Aussie dream' they might have to look outside their nest.

I doubt that blaming those of us taking risks on investing in property (simply trying to make a secure future for ourselves), is the best way to argue rising property prices.

Underoath said...

FlySurfer said...

pierrec45 said...
Currently you won't get 5.75% from the bank, as you state.
Term deposits is under 5%, no?

UBank USaver 5.16%
RAMS Saver pays a high bonus variable rate of 5.75% p.a
www.rams.com.au/savings-and-transactions/rams-saver/

Under Australian Tax Law.

Interest revenue is taxable under statutory income and is included in your accessible income.

Yup, back to the drawing board. Maybe buying a portfolio of Blue Chip shares with 500K could work out better. If anything, it's unlikely that you will be buying at the top of the market and you could enjoy a bit of a dividend every 6 months.

Maybe even buy silver shares, or silver bullion now - cheap as chips.