How Will People Maintain Their Homes with The Increasing Cost of Living?

ForkSnorter on 24/05/2023 - 11:40

I'm seeing prices rising massively for basic services, trades, renovations, building, materials, etc.

These prices are rising much faster than incomes, plus there seems to be a bit of a mini recession at the moment.

With many people owning older houses that will need a lot of maintenance and/or renovation, I wonder if there will be a nationwide disaster in terms of quality of housing over the next decade.

Many people won't be able to keep their house in decent liveable condition, especially if we have a lot of rain or a few floods. I'm in a reasonably comfortable position, but my house is pretty old and already needs a lot of work. I don't know if I'm going to be able to afford all the things I need to do to the house over the next few years.

Any ideas on this?

Home & Garden

Comments

  • Dollarino on 24/05/2023 - 11:44
    +9

    Work multiple jobs

    • BewareOfThe Dog on 24/05/2023 - 15:58
      +2

      I heard/read that 1 in 4 adults now have a 2nd job in Sydney (or Australia)?

      • Wiadro on 24/05/2023 - 18:27
        +3

        i dont

        • tessel on 24/05/2023 - 20:05
          +56

          We need another 3 people to reply to confirm if the stats are accurate now.

        • Logical on 25/05/2023 - 09:25
          +1

          I do, but am not in Sydney

      • DiscoJango on 24/05/2023 - 21:12

        I heard/read that 2 in 8 adults now have a 2nd job in Sydney (or Australia)?

        • WhyAmICommenting on 25/05/2023 - 07:58
          +4

          I heard 4/16 but 67% of statistics are just made up 90% of the time

      • [Deactivated] on 24/05/2023 - 21:32
        +2

        I have 1 job.

        My wife has 3 jobs.

        We are over average.

        • Littlevu on 26/05/2023 - 14:58

          Are you sure you don’t have one of her job? Looks at username very closely.

          • [Deactivated] on 26/05/2023 - 22:16

            @Littlevu: Yeah, no, I wish. Sex life took a hit :-(

            • Littlevu on 26/05/2023 - 22:25
              +1

              @[Deactivated]: You know how to get her in the mood?

              Do the chores!

              If it doesn’t work, you have a tidy home whilst watching Netflix

      • virhlpool on 24/05/2023 - 21:38
        +2

        I highly doubt these stats; not sure where you read it. There are simply not that many jobs available for 25% of adults to take another job.

      • IpGem on 25/05/2023 - 09:14

        I don't have first, but yes looking for a second now

      • BewareOfThe Dog on 25/05/2023 - 10:10
        +1

        Here is the article for those interested.

  • CyberMurning on 24/05/2023 - 11:48
    +21

    How people keep buying new homes with the increasing cost of living and mortgage rate?
    i still see people buying new $1-2mils houses each weekend on auctions, and the bank are very strict with their lending criteria, so those people have having like CEO salaries?

    • ForkSnorter on 24/05/2023 - 12:05
      +22

      They might have built up equity from the massive rise in house prices between 2019-2022. For example, they may have bought back in 2017 for $500k with $100k deposit. Then sold their house in 2021 for like $800k, plus they had another $100k equity from paying off the mortgage. All combined, they've now got a $500k deposit. Or maybe they're a couple, each with $90-120k salaries, this increases their borrowing power.

      • dtc on 24/05/2023 - 12:14
        +7

        yes, there seems to be a real gap in understanding that the vast majority of people buying a $1.5m home are not borrowing $1.2m but are using existing equity and borrowing far less. Sure there are exceptions but not that many. Its odd that the perception then becomes 'the first home needs to be a $1.5m home and I cant afford it'

        • sal78 on 28/05/2023 - 00:43

          But equity is unrealised and in a recession that equity will wiped off.

          I know a doctor in the market and he is looking for an apt around $1.5mil cash. Everything he owns is unencumbered inc his PPOR. There's no creative ways to build wealth. Just sheer hard work. He starts work at 6.30am to 4pm mon to fri and he's 73yo.

      • virhlpool on 24/05/2023 - 21:40
        +4

        But the loan withdrawn from the equity is also borrowing power tested.. isn't it? So with the current interest rate, how do people have borrowing power (let alone repaying capacity) for their existing loan AND the equity pull out in addition? I am not referring to small loans here.. but so many people buy $2m-$3m homes every Saturday! Didn't ever realise Sydney had so many rich people or CEOs.

        • dtc on 24/05/2023 - 21:47
          +1

          The ‘equity’ is from selling their current house.

          • virhlpool on 24/05/2023 - 21:50
            +7

            @dtc: That's called cash they own, not equity. Equity withdrawal is a loan.

        • sal78 on 28/05/2023 - 00:48
          +1

          They don't and it's going to be very interesting to see it unfold how strong their risk management really is. Credit Suisse was 1st to collapse and there may be more to follow.

          I have friends that invest in luxury homes for Air Bnb business but the tightening of Air BnB regulations may not be in their favour. Air BnB is part to blame for housing crisis. Their homes rent for $2k per night. When recession hits, smart ppl will control their spending. It will be a domino effect.

          • virhlpool on 28/05/2023 - 12:59

            @sal78: Also, as the economy gets tighter, people will stop throwing insane amounts on Airbnb stay. Paying $250-$400 a night for a shitty place 200km from Sydney or Melbourne, in the middle of nowhere, was fun when everything was hunky-dory but not when the jobs are at risk and monthly loan repayments are increasing.

      • legendary-noob on 25/05/2023 - 12:43

        You're gonna get capped out by cash flows, not LVR
        Are you sure about the numbers?

      • BanannaMan on 25/05/2023 - 17:49

        That's literally my wife and I, bought at 500k shops at 800 and household income 250k. But we don't own a investment, and we got kids so we don't have disposable income.

      • George Washington on 28/05/2023 - 19:49

        a couple on 200k combine salary wont be allowed to borrow 1 mill plus

    • AustriaBargain on 24/05/2023 - 15:22
      +7

      They are already on the ladder, they probably own a few ladders by now. Keeping prices high is in their best interests, it's like greasing the bottom rungs of the ladder to keep others off it, forcing renters to hold the ladder for them instead of stepping up on it themselves. We got full time workers in Sydney living in a tent, news ltd interviewed one who was paying a thousand a week in rent at the old place but rents kept going up and they couldn't afford to renew and presumably need to be in Sydney to work. $1,000 a week just on rent, so they weren't earning chump change.

        • Creamsoda on 25/05/2023 - 15:12
          -1

          The housing crisis is very real. My income is $130k after tax and own a investment house but decided to rent inner city. We wanted to upgrade to a bigger place and have been applying for rentals with 6-10% above their listing price with perfect rental history but still get rejected multiple times or the rental property gets rented before the 1st ever open for inspection date. long rental inspection lines are real and most of them are not students. This is in Melbourne btw.

          • bobolo on 25/05/2023 - 20:35

            @Creamsoda: What kind of weekly rental price point are the properties you're applying for? $130k after tax is great, but that salary would still be not enough for many inner city suburbs especially larger homes

            Also in a hot market (which I don't deny it isn't), it is absolutely crucial to submit your application before open homes. You should call the PM as well to show you are super keen and even ask her to quickly show it to you before the open home so you can sign the lease and close it out before it even happens.

            We have been renting for decades and being more proactive than the rest just puts you at the front.

            • Creamsoda on 26/05/2023 - 22:28

              @bobolo: around $550-$620 for 2 bedroom villa. $130k is just my salary, I've got rental income not to mention yearly bonuses and shares with over $120k in savings. i've been a landlord for many years and have not gotten any applications before 1st open for inspection and i keep my long term tenant with small 2-5% each year or 0 increases during COVID.

              anyway we're going to buy a house. We've saved up enough for it, renting now is horrid. We've never got rejected before always got our first choice of homes this is in blue chip inner city suburbs. It was a great option for our life style. So yea this comes as a shock getting rejected 4 times already.

        • CheapWrangler on 25/05/2023 - 15:34

          We got knocked back on about 10 rental applications before deciding to buy instead. 200k+ combined income, no kids, no pets, no drugs. We even had 160k in the bank at the time

          • Creamsoda on 25/05/2023 - 15:46

            @CheapWrangler: did you have a good rental history? looks like we might be headed that way as well or stay at the place we're renting for now. bloody insane. can't imagine what lower income families have to go through.

          • pufffdragon on 25/05/2023 - 19:27

            @CheapWrangler: Good to hear. What line of work do you do that pays that much if you don't mind me asking?

          • bobolo on 25/05/2023 - 20:38

            @CheapWrangler: 200k+ is great, but its 2 x 100k incomes as a household which just puts you as slightly above median nowadays

            I'd be interested to know what rental pricepoints you were looking at?

    • freefall101 on 24/05/2023 - 17:43
      +2

      Parents purchased house in 1978 for $120k. House is now worth $4.5m. Parents are the security for the deposit because they want their kids to have a nice place like they do.

      Plus people get in at the bottom, wait for their parents to die then use that for a massive house upgrade.

      And that generated "profit" flows into wealth funds via interest, property investments and such. A small few get really lucky and buy low/sell high but mostly it's just slowly climbing the ladder.

      But hey, at least us in the middle class actually have wealth and it's not like the 17th century.

    • orangetrain on 24/05/2023 - 18:40
      +17

      Money laundering isn't affected by rising interest rates.

      AUSTRAC estimates that, in 2020 alone, criminals linked to China laundered $1 billion through Australian real estate.

      https://www.abc.net.au/news/2023-02-03/afp-money-laundering-…

    • bigbadboogieman on 25/05/2023 - 08:28

      These people aren't first home buyers or if they are, they have somehow brought in or are in possession of massive equity beforehand (for e.g. migrants selling their properties in their country of origin, parents helping out with equity, inheritance, etc.)

    • vid_ghost on 26/05/2023 - 08:04

      Simple.. people on their own home 100% that leaves all their income + rent from the tenant to cover the purchase of one.. two or three investment properties.. its the easiest way to become wealthy.

      Some young adults living at home do this. Free with parents so they buy up properties.

      The hard part is getting your place paid off first.

    • johndoh89 on 27/05/2023 - 12:19
      -1

      Bank offered $1.7m me as a preapproved amount on $210k pretax combined household income.

  • 87percent on 24/05/2023 - 11:49
    +15

    Learn to do it yourself

    • lostgoat on 24/05/2023 - 11:56
      +3

      I agree you can do everything by watching a Youtube video .
      Never call a Tradie again .
      But in a few years Tradies will be cheaper again with all the migration forcing labour prices down .

      • dtc on 24/05/2023 - 12:15
        +6

        There is no increase in permanent migration numbers. There is an increase in temporary visa holders, mostly students and working holiday. Not sure if you want any of them to do your trades.

      • BewareOfThe Dog on 24/05/2023 - 15:59
        +2

        Yes, but if there is a house fire, who do they blame?

      • surg3on on 25/05/2023 - 14:34

        I dunno if you should be doing your own electrical work but other than that. yes, most things can be done yourself.

      • Dogsrule on 25/05/2023 - 16:02

        Our average population increase due to positive migration between 2007-2020 was 226,000 per year:

        https://www.abs.gov.au/statistics/people/population/overseas…

        Which is more than the 190,000 places planned for 2023-2024:

        https://immi.homeaffairs.gov.au/what-we-do/migration-program…

        The shortage of skilled trades got worse, not better during 07-'20 so don't hold your breath for things to get any better in that regard.

      • chris666 on 28/05/2023 - 17:46

        Tradie prices are never going down

    • ForkSnorter on 24/05/2023 - 12:00
      +18

      Some things you just can't do without proper expertise or expensive equipment. Try removing a large tree from your yard. You need a strong team to do it, with special ladders/climbing equipment, a mulcher and large truck, and preferably a stump grinder. Just as an example.

      Plus these things get harder as you get older.

      • lgacb08 on 24/05/2023 - 12:20
        +2

        Not really, the job you describe was exactly what I did myself few years ago. Lots of diy is very reasonable if you spend time to plan and go with your pace, a few that you can't are the bureaucratic red tape due to trade union protectionism. It's actually the time spent on it that wears you out when your missus and kids start questioning why can't you take them out every weekend instead of crawling into spider infested space.

        • ForkSnorter on 24/05/2023 - 12:21
          +5

          Not really, the job you describe was exactly what I did myself few years ago.

          Must have been a small tree.

          actually the time spent on it that wears you out

          Yes, there are a lot of little things to do.

          • bejahi on 25/05/2023 - 08:39
            +4

            @ForkSnorter: Imagine how bad it must have been before 1900s when they invented large trucks, mulchers, special climbing equipment, and stump grinders. I guess they just had to build cities around the large trees…

          • lgacb08 on 25/05/2023 - 08:58

            @ForkSnorter: Yeah, 30cm trunk, over 6m high silver oak so not very big. But I also tackled remnant of gum trees twice that big that weren't clear off properly, some still alive when I did.
            You gotta push yourself and go with your own pace. It's the time planning and tinkering that take the longest. If you live simple life there's not much maintenance to do, negligence is the one causing damage long term.

            • ihbh on 25/05/2023 - 10:46

              @lgacb08: Did you rope yourself up and cut logs & branches off the top and work your way down?

              • serpserpserp on 25/05/2023 - 18:23

                @ihbh: He built massive scaffolding all the way to the top

              • lgacb08 on 25/05/2023 - 19:02

                @ihbh: No, just ladder and starting off with the small branches until you were left with manageable chunk no higher than 2m height. The stump was the one that kill you tho.

                • ihbh on 25/05/2023 - 19:17

                  @lgacb08: I assume the branches didn't overhang anything like the next door property or boundary fence?

                  Also, how did you do the stump? Axe?

        • DoctorCalculon on 24/05/2023 - 19:44
          +2

          can't are the bureaucratic red tape due to trade union protectionism

          So, if you need an electrician you would rather do the job yourself using YouTube videos rather than hire a REC?

      • Mistredo on 26/05/2023 - 14:36

        Yes, there are some exceptions, but 80/20 rule would apply here. 80% of jobs can be DYI, and for remaining 20% you invite people with machines.

    • Ghost47 on 24/05/2023 - 12:31
      +9

      I personally would be more wary about buying a property where the owner DIY’d everything and would scrutinise their work very closely.

      Although building certifications probably don’t hold much weight either since properties are so poorly built in general in this country IMO.

      • WhyAmICommenting on 25/05/2023 - 08:02
        +7

        Although building certifications probably don’t hold much weight either since properties are so poorly built in general in this country. IMO.

        Fixed

      • Mistredo on 26/05/2023 - 14:36
        +1

        How would you even know?

        • Ghost47 on 26/05/2023 - 15:45

          Maybe shoddy workmanship, or some rooms have been renovated and others haven’t.

  • Jimothy Wongingtons on 24/05/2023 - 11:51
    +13

    cut back on the darts and pokies for one

    • Pecan on 24/05/2023 - 15:10
      +7

      …and the KFC? Or nah

      • tadrost on 24/05/2023 - 15:21
        +7

        how dare you

        • Pecan on 24/05/2023 - 15:52
          +1

          Ikr, what was I thinking

      • Jimothy Wongingtons on 24/05/2023 - 15:31
        +3

        lets not get too hasty

        • BewareOfThe Dog on 24/05/2023 - 16:00
          +3

          Back to the $4.95 fill up box, and bring your own bottled water @Jimothy Wongingtons? ;)

  • bobbified on 24/05/2023 - 11:52
    +10

    I think it'll come back to a 'demand and supply' thing. If the prices for basic services rise too much and noone wants (or can't afford) to use their services, then they'll eventually need to drop their prices.

  • ECE on 24/05/2023 - 12:04
    +3

    Sell, downsize. Will live within my means 🙄

    • ForkSnorter on 24/05/2023 - 12:06
      +1

      Haha, what if you've already downsized. The thing is, older houses in worse condition are cheaper. So poorer people will buy them. But they are the houses that will be expensive to maintain over the longer term.

      • lgacb08 on 24/05/2023 - 12:23
        +1

        No, poorer people just don't have the mean to buy anything. Those that do have quite healthy choices between spending 45 Min everyday to get out of their suburb or spending every weekend on some sort of project.

      • virhlpool on 25/05/2023 - 01:39
        +7

        You got tricked. The most of older homes have far superior builds compared to the recently built homes/ units. Honesty was more and greed was less back then.

        • ForkSnorter on 25/05/2023 - 09:11
          +2

          I would not want to have to maintain/renovate a 1960s asbestos beach shack nowadays. Entire thing made of decaying timber and asbestos. Most people would just knock it down and maybe keep part of the base/frame, but they're too expensive to rebuild nowadays.

    • surg3on on 25/05/2023 - 14:35
      +1

      Downsizing. Stamp duty. You lose ~$50k per transaction.

  • abcdefg5 on 24/05/2023 - 12:07
    +1

    I wonder if there will be a nationwide disaster in terms of quality of housing over the next decade.

    Already is. Especially for renters who have no ability to improve their house.

  • Fredfloresjr on 24/05/2023 - 12:15
    -1

    Horse quaddie

  • tsunamisurfer on 24/05/2023 - 12:18
    +3

    This could apply to anything not just home maintenance.

    Stop all discretionary spending, alcohol, ciggies, drugs, gambling, eating out, Netflix, Fox.
    Second job, third job.
    Sell belongings.
    If owning, get a boarder in.
    If renting move somewhere cheaper or move in with another person, two, three, four, five, six people.

    Any ideas on this?

    Well the positive thing is you know now so start saving up for those expenses in the future.

    • hullohullo on 26/05/2023 - 23:49
      +2

      A reminder to folks who own their home that if you get a housemate, that this will also impact your CGT when you sell later.

      • Frozensage on 28/05/2023 - 08:54
        +1

        Not if they pay cash?

  • Seraphin7 on 24/05/2023 - 12:21
    +1

    I wonder if there will be a nationwide disaster in terms of quality of housing over the next decade.

    Very much doubt it. Properties nationwide are not going to degrade at the rate that would be necessary to create a disaster due to cyclical economic events.

    • Mechz on 24/05/2023 - 12:58
      +2

      And things mentioned like heavy rain and flood are covered by insurance so it's a bit of a 'the sky is falling on me' post from OP.

      • ForkSnorter on 24/05/2023 - 14:39
        +1

        Does insurance cover things like wear and tear? 6 months of rain can do a lot of negative things to your house/yard that might not be covered by insurance.

      • maximum on 25/05/2023 - 08:48

        If general maintenance is not kept up insurance will use that as a reason not to pay out. Eg broken tiles let water in, should have had them fixed (even if you didn't see them before the storm). Insurance is also very expensive - prohibitively so in flood areas.

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