It is economically irresponsible to expect young adults to commit to thirty years of heavy debt merely to get on to the first rung of home ownership.
The current price of land is grossly overvalued compared to take-home earnings.
Compounding this, Australia is in the grip of a housing Ponzi scheme similar to that which brought the northern hemisphere to their knees.
I undertake not to bid at auction or negotiate by private treaty to buy real estate until prices moderate, just as they have in all the countries we compare ourselves to.
I will use this time to save a larger deposit to free myself earlier from mortgage finance and gain my economic independence.
April 4th, 2011 at 7:59 pm
If you want to have ‘lifestyle’ in your younger years I recommend to stay renting. House rents are less than the interest on the house cost, never mind the rates, insurance and repairs. Many Europeans have accepted this and are lifelong renters. There is a lot of temptation to consume today – look at the advertising – but if you never save how can you expect to own a house?
April 5th, 2011 at 3:23 pm
Think this through… What about those people who have already own a property? Can you imagine how it would feel to watch as your home loses value because a group of people are hell bent on drastically altering the market? People in the US and Europe have been financially ruined because their house is no longer worth what they borrowed. Is it really a good idea to encourage that to happen in Australia? A more moderate approach that allows a slowing of the market, not a complete standstill, would be beneficial to all.
April 6th, 2011 at 12:07 am
No different from the stock market Lisa. If people treat something as important as housing as a speculative investment, then odds-on they are going to get burnt (and badly, due to the amount of leverage involved). For those that are propery owners and not spec investors, thats tough, but it’s exactly what happens when a stock market bubbles bursts. Anyone who buys a house as a home should be supportive of any changes in regulations that stabilize the housing market – not the measures that increase it’s volatility.
April 6th, 2011 at 4:12 am
If you are youngish and high skill high income you might consider renting and putting the difference (between that and buying) into your superannuation fund and enjoying the positive tax advantages of doing so. You will stay mobile and free to follow career opportunities. You will save a fortune on the costs of selling and buying houses on average every 7 years or less. You will avoid the temptation of wasting money on “improvements” and redecoration. Your super fund can invest in whatever you see as the best investments in the world and it too can do “gearing”. There is no limit to how much you can accumulate in your super. When you do eventually retire or know where you are settling down for life you can take some of the huge surplus you have built up in your super and, if the timing is right, buy yourself something appropriate at that time and use the rest for income.
April 6th, 2011 at 8:42 pm
fed up- I agree, if you are only talking about property in terms of investment. It’s more dangerous when you consider that “property” as an investment is also the roof over families’ heads.
Cautious reform is preferable to a “stop buying” campaign so as not to rob those people of what they have worked hard to own. Thank you to the makers of this website for allowing free comment on this issue.
April 7th, 2011 at 3:08 am
I am sick of hearing about first home owner pain.
If you are a prospective first home owner and finding it difficult to enter the market take a look at what you are trying to buy. All too often first home owners are suckered into purchasing off the plan in a new estate on the outer reaches of our cities, tempted by the extra bonus grants offered for new buildings and stamp duty savings. But a much less expensive way to break into the market is to take a look at older fixer-upper homes, which can sell for as much as $100,000 less than the brand new homes. Of course the older home will be much smaller and lack the features of the brand new McMansions, but you’ll generally get a larger block of land which will allow room for extending the home into your own unique McMansion.
Look around in older suburbs, hunt around for the place that needs tidying up or a bit of DIY.. Why live on baked-beans, in order to pay for a mini-palace when all you need is a basic home ?
Just because its a fixer-upper doesnt mean you have to fix it right away.. you can do your renovations when you have the money and time.
April 7th, 2011 at 2:07 pm
“Investing in residential Housing” has been very profitable for a lot of people, but its now time to pay the piper. Making money from house speculation does nothing positive for Australia.
It burdens the young with an unfair debt, it drastically erodes the value of the retirees nest egg,it produces nothing for the economy.it puts pressure on wages to increase, etc,etc.
Next someone will try to speculate on foodstuffs.
April 7th, 2011 at 3:11 pm
JOHN BILBO SAYS THANKS
April 11th, 2011 at 2:26 pm
Thank you so much Prosper for standing up for hard working Australians. The Real Estate Industry, government and banks have spent years in collusion misleading people and deceiving them into becoming economic slaves. The damage has already occurred and now it’s time for the correction. Thanks to you a lot of people will be spared financial ruin by also being sucked in.
April 12th, 2011 at 10:23 am
Stef, don’t be ridiculous. People are buying “fixer-uppers” for 500k on small blocks with no working kitchen/bathrooms, floors that need re-stumping, no heating, etc.
The problem isn’t first home buyers buying iphones and tv’s, its not them buying brand new mcmansions because even the crap stuff is too expensive.
How can you afford to renovate something that cost half a million? You’d have to live in that dump for years before you can save enough to fix it up (because it’d cost you a good $50k+ to re-stump, re-tile, re-plumb, re-build the kitchen and fix it!). This is demoralising and sickening, people shouldn’t have to live like animals in a barn in the “lucky country”.
Greed, speculation and politicians who look the other way (while they get their negative geared capital gains too!!!) have turned us into the “lunatic country” where people are willing to pay exorbitant prices for rubbish and fight for it at auctions.
People coming here from europe laugh at how much our houses are worth. Their houses are double brick, insulated, double windows, better heating and are worth 1/3-1/5 as much! And if they rent them, they make a profit, they don’t need to kiss the governments arse to have “negative gearing”, what rubbish!
Take a look around, see whats available in other countries, THEN come back and tell us nothing is wrong.
April 12th, 2011 at 10:26 am
I’m also sick of hearing the term “break into the market” and “enter the property market”. What kind of stupid turn-of-phrase is that? Have I entered the fast-food market when I ate my hungry jacks burger last night? Did I break into the smart phone market when I bought a samsung galaxy last week? No, I just bought something.
Why do we make use this term for buying a house, as if housing was something special, some kind of honor to own. Why don’t people break into the sports car market and buy a Ferrar… oh I know, because they broke into the housing market and can’t afford ham to go with their bread. Good choice.
April 12th, 2011 at 3:18 pm
what about the people who were able to just buy a house and want to build a new one? what about them? it’s not just about buying a new or old house, it’s also about being able to build a new house in an existing block and also renting, some people can’t even rent a place. I guess what I am saying is, this website should not only be able people who can’t afford to buy a house but also who can’t afford to have a new house build as bloody builders are ripping people off and also about these who can’t rent.
April 17th, 2011 at 11:57 am
House prices have been ‘fixed’ & ‘stiched up’ for too long!
The whole way through our buying & selling procedures there are methods & tricks to leverage prices up.
Having a realestate agent barracking for the buyer & seller (while owning & having a vested interest in property) is as wrong as it gets.
Negative gearing should be changed!
I believe we should cap the number of investment properties people can own…maybe to 2 per person.
Tax dodge days for the well off & rich need to come to an end.
Its too easy for realestates, valuers, & institutional investors to hold prices up & show inaccurate or misleading data.
GREAT AUSSIE DREAM NEEDS A REALITY CHECK!
April 19th, 2011 at 4:58 pm
In response to Lisa at 2
I sympathise with people who lose money, I lost thousands in the early 90′s in the UK market crash, had to sell to come to this wonderful land.
If you can afford your Mortgage and are just buying a home then you wont lose anything as you wont be selling, if however you are speculating that prices always go up, then just like any investor, in any asset class, you must sometimes take your lumps!
May 9th, 2011 at 4:41 pm
[...] Abstainers Pledge We also posted a Total Abstainers Pledge for first home buyers on the Prosper website: The current price of land is grossly overvalued [...]
May 10th, 2011 at 4:27 pm
Supporters of this cause should also vote here.
http://oursay.org/q-a-after-the-budget-may-16th/housing-and-rent-consumes-the-largest-part-of-the-income-of-individuals-and-families-it-is-difficult-or-impossible-to-afford
May 17th, 2011 at 4:54 pm
The promoters of this theory are absolute in their opinion. No if or buts. Nobody can claim to know what will happen to the property market. dont listen to anyone who says they have all the answers. Independent professionals whose job it is to advise on housing markets whould never claim to be so precise. Remember prosper just a theory with an alterior motive. When house prices rise someone allways tells us they will rise no more. This does not always happen. Look at the median house price suburb by suburb VS income for that suburb – thats more like the sustainable 3 – 4 times. Think about if prosper are wrong – they could cause financial ruin if first home buyers get left behing and we go to the european model of the rich owning everything – there are no first homebuyers in europe. Facts are rents are soaring and if you dont buy now you may never be able to. Never make lifetime decisions based on only one point of view. Get unbiased professional advice.
May 26th, 2011 at 1:25 am
Nothing wrong with investing in property. It’s one of the very few trusted ways that working people like us could get ahead. I pledge to not buy another investment property in the next 6 months.
July 10th, 2011 at 9:03 pm
Paul is delusional.. lol good on ya mate.
October 15th, 2011 at 4:44 pm
We’re either going to see property go down in 2012-13 to realistic prices (35% lower) or we’re moving to another country as we’re both discouraged with the ridiculous prices in AU and it’s pretty easy to buy cheaper in the USA or Japan. I’m highly skilled so finding good employment isn’t a problem for either of us. Too bad for near-sighted central bankers and politicians as AU used to be such a lovely country.