Thursday, February 28, 2008

The Housing Crisis

How disturbing is the property problem in Melbourne, and Australia generally and I won't even mention the US. Oh, I am. One of the worst areas in US is Ohio. Thankfully my beloved blogger in the Ohio, US is a sensible young lass and knew how to set herself up for the future

Year, 1982.

I was living with R in his recently bought one bedroom Elwood flat and paying the expenses and then some. He paid $17,000 for his flat. He had no money after a relationship break up and a friend helped him and he paid her back quickly.

I managed to save $8,000 in a couple of years by never spending any money and we found a house to buy in East Malvern for $42,000. I only knew eastern suburbs back then. No where else existed. I was 23 I think. My bank was un-cooperative so I went to Hotham Permanent Building Society. The maximum I could borrow from them was $30,000, so with my deposit, $38,000 but well short if you include buying costs. There were also condition about things that had to be done to the house, such as water pipes renewed, a new hot water service.

My mother signed some paper work that she gifted me the difference, but she didn't, even though I asked and she had it.

We borrowed the rest with some subterfuge at a credit union and this was in the days of a maximum $500 Bank Card.

The house was pretty well a slum and we lived in the slum conditions for quite some time, but gradually we got the place together and sold it some seven years later for $186,000. We then bought for the same price a bit grander place in Glen Iris when there was a bit of a property slump.

One thing we did get right in East Malvern was buying the worst house in the best street and surrounded by good houses but that was just luck.

Were we under extreme financial stress at times? Yes! Did we argue about finances? Yes! Did we go without? Yes! Did we wonder what in the hell we were doing? Yes!

Was it easy? No!

While I have a lot of sympathy for young people starting out and wanting their own home, don't think you are the first to suffer. It was never easy to start on the own home road and you do have to go without.

And why do you want the grand palace in the outer burbs? Consider something a bit closer in and considerably more modest, your kids might actually thank you in the future.

I am watching kids grow up in the highrise, and gee, contrary to my expectations, they seem to have a pretty well rounded upbringing.

17 comments:

  1. I did the same thing. A $10,000 block in the country and a $30,000 loan with Hotham in 1983 to build an 8 square house. Interest rates went through the roof to 17% in that time.

    I bought up three kids in that teensy house.

    One daughter and her partner have just bought a tiny little cottage in Cockatoo for the absolute minimum while she finishes her PHD. They are deliriously happy with their purchase.

    These huge mortgages can bring people to their knees in only a couple of interest rises.

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  2. Gosh, I remember interest rates being 17% too, I'd just turned 20, we'd not long been married and had just bought a house. We only had a few pieces of furniture but bit by bit we aquired what was needed and I remember feeling like royalty as we ate our first meal at our new dinning room table, probably 6 months later. (Gawd.. I'm sounding like my mum again).

    They were certainly hard times and it's nice now to be able to afford things that we want instead of things that we need... yeah, like his goddamnbluddyfuken boat lol.

    All that's needed is time and a lot of hard work.

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  3. But are people who are struggling with mortgages today really going without?
    A friend's sister and hubby almost lost their house last year simply because they believed they needed pay TV,take away food/ready-made meals,computer games the kids demanded,footy tickets,etc.
    Most of their friends and work mates thought the same too!
    Some have their "needs" confused with their "wants".

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  4. Nice work all. It is funny how 17% seemed more affordable back then than 8 or 9 % does now.

    That's it Jayne, the generally aren't going without.

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  5. I'm glad to have not gotten in over my head, which is more than I can say for some of my friends here.

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  6. The Church of Privatisation believes that there isn't enough land released for housing expansion (so therefore, we should move into space where, supposedly, land is infinite). Clearly this is fallacious and specious and lack clarity too.
    I think we need to instigate a lowering of the birth-rate to curtail housing demand. The baby bonus scheme is ludicrous and barbaric and places infrastructural strain amongst many other things.

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  7. Indeed Daisy Jo. So how is the basement project going?

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  8. I reckon general opinion is that our population is growing too quickly. Anyone I have asked thinks so. It needs to be slowed quite a bit and then things may adjust themselves.

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  9. As a mortgage payer myself, I have to disagree about the 'mortgage payers today don't know what 'going without' is all about' stuff. We're always skint.

    Mind you the cat insists on fresh white rhino meat every morning and the leaopard skin wallpaper doesn't cheap.

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  10. Sorry, that should have read 'The leopard skin wallpaper doesn't come cheap.' It doesn't cheap either...not unless the cat's just eaten a chaffinch for dessert.

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  11. yeah I agree. Syd is chockablock with ppl n high-rise aptmts, Im beginning to hate the place now!

    Keshi.

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  12. I have been looking at something closer to work and if you truly look at it, the cost of petrol,cars and TIME that would be saved over the years I reckon things would balance out.
    You are right. Things are hard, but always have been really. I remember my mum balancing the books every week when I was a kid.
    The other problem is, people expect to begin wherer their parents end up.. they want everything now...thing is, it is all at a cost, something they cannot bear really. Secret is, if you cannot afford it then don't buy it hey.

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  13. Reuben not @ home7:41 pm

    True, Andrew, but will that be enough. I say a "two child policy" will curb population sprawl and I know the religions won't be happy because they're deluded and think having kids is "god's" wish. I suppose it was also god's wish for humans to be thick and obtuse and overpopulate the planet to unbearable conditions. I say have growth in rural centres to take pressure off Melbourne.

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  14. So are we always skint Brian. I guess we live reasonably well though. Asset rich and very cash poor. Pity we can't cash in a few concrete slabs. You English and your wallpapers.

    Just too many people hey Keshi.

    Interesting Cazzie. Be a pretty hard call when you are so established.

    Wise words Reuben. But immigration has to come into it as well.

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  15. besides owning a home is now a luxury...ppl r becoming slaves to society and living in poverty. I'd rather rent and save some money to enjoy life.

    Keshi.

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  16. Not sure about Oz, but over here in Blighty house prices have gone through the roof. In the last five years alone my own house has tripled in price. If I'd have applied for a mortage today I wouldn't have been able to afford it. Wages haven't risen by anywhere near that amount. This might be a British thing, but if the same applies to Oz, surely the reason why the mortgages are causing so much grief to new householders has squat all to do with the interest rates, and everything to do with the price of buildings far outweighing the average wage.
    Yours truly,
    The Devil's Advocate,
    Fleetwood-on-Sea,
    Lancashire.

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  17. Keshi, make sure your folks don't spend your inheritance.

    Very much the same here Brian. We could never afford anything now like we live in if we were just starting.

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