With all the news about people experiencing mortgage stress I wonder if Ozbargainers are experiencing housing stress? Do you struggle to pay your mortgage or rent? What would happen if your mortgage went up 0.5% or say $100/month?
Let us know in comments if you are experiencing stress where you live.
Is it only in Sydney & Melbourne as the news would have us to believe?
We need to hear from the Australian people rather than rely on the news.
It's defined as >30% of the post(?) tax income going towards your housing repayments/rent
What if it's deliberate because you're living in a property far more expensive than you need?
The median income for Australia is 45K. Meaning half are worse off.
I'd say housing stress is at chronic levels in Australia. That likely includes some of the 30% or whatever it is that own their own home.
Thanks for your comments
I thought median income in Australia was 65K AUD - I believe it is 45k in USD.
https://www.news.com.au/finance/work/how-much-do-you-need-to…
Looks like it's only 52K if you include those working part time.
If you having mortgage stress, you got a issue within your budgeting. Should plan for at least 1% interest rate hike.
No no, people being unable to budget is society's fault.
Should plan for at least 1% interest rate hike.
Should plan for far more than that.
no, can't afford to get a mortgage
Out of curiosity, with already low interest rates of under 4%, how do people manage to still struggle paying the mortgage. I would have thought that most people would be smashing down that mortgage at such low interest rates, until the rate rises. If people are struggling to pay mortgage at under 4%, what hope do they have at 5% interest rate? Don't banks do serviceability checks to ensure the mortgage is able to be paid in case rates rise to 5/6/7% ? Do people simply borrow at maximum capacity and don't bother to budget properly?
Personally, i was able to borrow up to 500k, but opted to borrow 315k instead, as i wanted to simply enter the property ladder. Right now i'm putting 4x the minimum repayment amount into the mortgage, so 7% interest rate is still manageable.
Because as interest rates went down people borrowed more and more money. Some even borrowed more as their house went up in value so they could buy new cars and expensive holidays. I work with someone who owes more on his house than what he paid for it 5 years ago.
Someone I know very well did exactly that many years ago and spent the next few years expecting sympathy for being victimised by market forces.
Bought and sold a few houses and called themselves a "property developer". Bought the essential sports car starter pack to show everyone they "made it". Still call themselves experts after going bankrupt.
intriguing…so how are they doing NOW?
When I had my first mortgage interest rates went up to 17.95%. That hurt. The next mortgage I went for later, after interest rates were beginning to fall, I asked the bank what my repayments would be if the interest rates went up 1 or 2% before deciding what Americans nut I wanted to borrow. The bank worker thought I was nuts asking this.
Starting too, because a hamburger and chips plus 6 beers on a Sunday at my local x2 is costing more than a $100..
Add smashed avo to the burger and you can kiss your house goodbye.
Is it only in Sydney & Melbourne
Property outside of these cities are cheap. So that would be a yes.
as long as you don’t lose your job you should never lose your house
But you’ll need to get rid of
Foxtel, smashed avo, holidays, kids sports,entertainment, gym, Spotify, Uber eats
Get a second job - eg fruit picking during paid annual leave while you eat for free
Get the kids doing a paper run
Shop at st vinnies
Stop lining up at iPhone launches
or have your annual leave paid out
And never visit OzB ever again. /s :p
There's plenty of affordable properties. Problem is everyone is obsessed with living in the middle of a big city.
'No I can comfortably afford my mortgage or rent'.
I'm not sure comfortable is the right word. You budget accordingly and If rates go up, then budgets need to be realigned.
There is, or seems to be, a never ending list that has items that need to be upgraded, installed, repaired or replaced. These items get shuffled and put further down the priority list on a rate increase.
These boy who cried wolf topics frustrate me. As a few (increasingly more) ruin it for the rest.
I work for one of Victoria’s biggest builders. I see little to no sensibility or humility any more.
Brand new to the country and/or straight out of school… borrowing “the max” and dropping it all on “the best” they can afford.
Citing you can’t go wrong, it’ll always increase in value, if you’re going for 30 yrs of tight finances you should get “everything” you want/need/think you might need later.
We’re building palaces for people, that came from VERY simple/working class backgrounds. Homes that make our own look like a flat pack.
They forecast stress, so reward themselves RIGHT NOW.
i'm more interested in builders/developers going down together with their greed
Yeah exactly. I blame the media (and people - like ely here) who've basically inflated the baseline expectation from: "Having someplace to live", to "owning a property", and now apparently "owning a palace". The recent thread on upgrading from a 2-bed apartment because of a second kid really drove that home - 2 parents + 2 kids in a 2-bed apartment is not "insane". The expectation that any nuclear family needs a 4-bed house with a giant backyard is what's crazy.
It does depend on what 2 br apartment you are talking about. most 2 bedders built in the last 5 yrs barely accommodate 2 adults. I live in a 2 br built in 1993. It can accommodate 2 adult + 2 kids. The neighbours mightn't be too happy with crying babies.
What is INSANE is how I heard this person value his apartment.
If the developers develop this block, they can fit x number of apartments that they can sell for $x. They will make this much and therefore they should offer me $1000,000.
most 2 bedders built in the last 5 yrs barely accommodate 2 adults.
I haven't seen a 2 bedder in the last 5 years of much less than 100sq. m. That's more than enough for a (young) nuclear family of 4. You only need one room for the parents, one room shared by the kids, and a living/eating area to fit a sofa and TV.
And why would you need more than two bedrooms for 2 adults if you're a couple?
I haven't seen a 2 bedder in the last 5 years of much less than 100sq. m
Come to western Sydney i have seen plenty which are 75 -80 sqm.
Well, I think this poll pretty much settles it. OzBargain's demographic isn't exactly the richlist. What it is, though, is generally financially responsible, cautious people with budgeting skills.
And apparently if you have a sense of financial responsibility and those budgeting skills, the current property market is absolutely fine no matter how much or how little money you have. Who would've thought?
You deserve your own segment on Dr Phil.
When I took out my mortgage back in 2000, interest rates were above 8% (and we did the calculations based on at least 10% interest rates).
Since then my income has doubled, and my interest rate has halved, so quite comfortable at the moment in being able to repay my mortgage
still paying the same mortgage 18yrs ago ?
did you put your money elsewhere ?
Took advantage of the low rates and didn't borrow 1.5 million to keep up with the joneses and now we are debt free.
That may be true, but the opportunity cost is you could have had a $3 million house, sold it, bought your current house and had an extra $1 million in the bank ;).
High risk/high reward. In a bull market, you do that and you end up retiring at 30. In a bad market, you do that and you end up bankrupt.
I'm ok. But tenant is in rental stress. They have only paid on time for 1 month out of the 9 months that they've been there.
You might want to try and find a better tenant…
I have a story fellow Ozbargainers.
I came to Australia from the largest country in the world in 2010 with $10,000 aud in my pocket - spend them all in 3 months on rent, first car, groceries and basic furniture. Than I managed to find a job. So for the first 5 years I was thinking and dreaming about getting the house. Now I can afford 20% deposit for some early's 7 digit property.
So I have a good question - shall I buy at all? The rent I have in inner city for 2bdrm apt with a swimming pool is only early $300's p/week. It takes me not more than 15 minutes to get to work by bicycle, have a good shower (not counting 5 minutes to save on bills). I don't spend 1.5-2.5 hours on commute and don't believe I really would like to buy a house in suburbia and have to wake up at 6-6.30 am to be on time at 8.30 in the office (now I wake up at 7.30 am while my partner makes me a breakfast).
The deposit that I have I would consider to split into more profitable higher yield investment (say about $50k), and other part into savers account with ubank or cua (2.7-2.8%) and that will help me to make more of a passive income.
The reasons I stopped looking at the buying of the property (inner city units if it is important) are:
1. High maintenance i.e. city council fees, body corp, sinking fund that all add up to about $7000-8000 p/a, which is sad to see going in nowhere.
2. Real estate agents and all the industry which seem to profit on hard working australians taking money as commissions, loan establishment fees and so on. All those shiny posters with smiling agents who come driving luxury bmw's and mercedeces to inspections… hate that… All the industry and those property seminars, everything…
3. There is no guarantee that the unit I'm looking at (say it's early 2000s unit without lift and pool) will not go down in price and I won't be able to get my money back.Plus that buy will convert my asset into liability putting me in uncomfortable feel if I loose a job or become terminally ill.
4. I think I should just rent and save money for another 15 years until I hit 50 than revoke my citizenship and take my deposit and super back home, where I can get really good apartment of 100-150m2 for cash for less than $275,000 and have leftover in cash to be able to invest overseas and have a passive income enough to support my simple lifestyle. And in case of not revoking the australian citizenship to return to Australia one day in late 60s to settle in abandoned village on seaside and live on the aged pension (just a highly unlikely option)?
5. Final question - why is Australia called a lucky country? I think it is to high a price to be here. Car Rego for my Nissan is $720 p/a against an equivalent of $180 back home, internet is crappy adsl 2+ for $59.99 vs. $15 for 100mbit ethernet with optics, medicare of thousands vs no payments at all - you just spend money on every visit when it is necessary for you and still it is cheap. Than the cost of utilities, petrol. And I'm not saying how expensive it is to go to Symphonic Orchestras here. So at the end of the day not much is left in a pocket in a lucky country. Sorry if offending - it is just my thoughts and an attempt of comparison. And I think I'm lucky I have a backup plan to get to my home anytime and not to get into the hands of banksters and that thing of 2/7 capital growth dreamers.
Can you at least provide some clarity around what you mean by Housing Stress?
Are you talking about Mortgage Stress? If so, what percentage of income do you deem 'stressful'?