I’ve been running a poll over the last day or two about whether people think it’s better
to build a home, or buy an existing home (or rent).
Ordinarily, I would fit into this category – renting.
For a long time, I lived overseas in Japan and China, and it was completely normal to
rent.
I didn’t find it expensive, and I could live where I wanted.
This was my last apartment in Japan.
It was only $700 a month and it kind of looks like a castle, right?
Of course, I’m joking.
This was my actual apartment.
It was nice and it was only $700 a month for a two bedroom flat.
I just lived in a suburban location next to a train station and the world was my oyster.
This was about 15 years ago, but prices really have not changed that much in Japan.
When I was over there, a bottle of coke cost about a dollar, and looking at the current
prices, a bottle of coke still costs about dollar (or 75¥).
Inflation really has not kicked in in Japan.
The point being, renting in Japan was completely normal and generally not very expensive compared
to income.
However, now that I’m in Australia renting, things are a little bit different.
This is the current state of where I’m currently living.
I took this photo this morning.
Despite repeated complaints to the real estate agent, nothing gets done about it.
The lawns are overgrown.
The fence has fallen over.
We live in a small block of units and my neighbours have also repeatedly complained, but nothing
gets done about it.
(It should be noted that we pay an extra $5 per week to pay for lawn maintenance, but
as you can see, it’s not exactly money well spent).
I’m not saying this is representative of the Australian rental market (I don’t know,
perhaps it is!), but this is what we have to put up with.
The owner is currently trying to sell this block of units and is basically refusing to
fix anything.
Sure, we could make an official complaint with the tenancies authority or whoever, but
what’s the point?
My wife and I have decided that now is the time to focus on buying our own place, hence
this poll.
I’m not saying renting is bad, it’s just that we need our own place now.
We’ve got two young children who are growing up fast and it’s just time for us to find
our own place.
(Actually, we have been trying very hard over the last 12 to 18 months, but we’ve now
decided that 2021 is the year we’re going to do something about it come hell or high
water).
But of course, things are never easy.
Ideally, we’d love to build our own home, but we’re finding that increasingly difficult.
The main reason is that land is incredibly hard to find.
If we want to live in the city, it’s prohibitively expensive, way outside our budget.
The only affordable lots of land are in the middle of nowhere.
Sure, we could afford it, but we just can’t accept it.
We just can’t bear the idea of having to travel all the time.
As I may have mentioned previously, my wife is a bit of a city girl having come from a
5 million population metropolis in China.
She literally finds living in the country scary.
She needs people around her and I’ve accepted that.
So basically this means that we have to rule out this option unless we become incredibly
wealthy, and as I said before, we’ve come to the end of our tether when it comes to
renting, so this option is gone too.
So that leaves us with buying an existing property.
Actually, in the last month or so, we’ve come to the conclusion that this is definitely
our best option.
However, that doesn’t mean things are cheap at the moment.
You can pick up a three-bedroom house in South Toowoomba in regional Queensland for example,
for less than $300,000.
However, it’s not in the best of condition and would certainly need a handyman’s touch
or more money spent on it.
It’s not that I’m necessarily against fixing up a house, it’s just that if I’m
going to spend a good proportion of my life savings on a house, I’d prefer that it is
in relatively good condition when we buy it.
I don’t think that’s too much to ask.
Sure, I know some people who love fixing up houses, but for me, we really just want something
that we can move into straight away with minimal work necessary.
But if we want that, if we want a three-bedroom house with two bathrooms and a double garage,
the price goes up dramatically.
In the nearby suburb of Middle Ridge, expect to pay close to half a million dollars or
more.
So at the moment, that’s just way out of our price league.
If you’ve been watching the news of late, you’ll know that house prices are just going
stupid.
“House prices predicted to rise by up to 10% in 2021”.
“House prices have hit record highs in all but two capitals, but it’s the outer city
regions that are really booming”.
It wasn’t that long ago, only April 2020, where many people were predicting prices crashes
of up to 30 or 40%, I mean not just crazy people, actual banks.
But just ten short months later, the opposite is happening.
How can that be?
Well, the Australian Government, the Reserve Bank of Australia and the banking regulator
APRA have pretty much thrown everything but the kitchen sink at supporting the property
market.
Record low interest rates, billions of dollars of economic stimulus, and the reducing threat
from the virus all are working to drive house prices up.
The Governor of the Reserve Bank, Dr Philip Lowe, doesn’t seem to be too concerned.
“‘RBA not responsible for property price boom’, governor says.
RBA governor Phillip Lowe has said that the Reserve Bank is not responsible for targeting
house prices, after questions were raised about the creation of a raging bull market
against the backdrop of low interest rates”.
“Housing price rise sustainable: RBA’s Lowe.
Reserve Bank governor Philip Lowe is not concerned that a possible housing price bubble is being
created against the backdrop of extremely low interest rates”.
Of course not!
As we can see in these pictures, Dr Phil is having a great old laugh about it.
He couldn’t be happier that house prices are on the rise.
I wonder why.
But poor old people like me who are trying to break into the property market just can’t
seem to catch a break.
Dr Phil and his mates aren’t expecting a rate rise until at least 2024 or maybe 2025.
They’re not planning for this boom to stop just yet.
Despite this, I’m trying to stay positive and will do everything in my power to get
my own house some time this year.
What do you think?
Do you think Scott Morrison and the gang are doing a good job, or are they actually secretly
worried behind the scenes that their little game of cards might just one day come crashing
down?