Our first mortgage was $100,000. I didn't want to borrow any more than that - it felt like we could never pay it back. But now it seems we were extremely lucky to be able to buy a modest home in the inner city and that our kids might find it near-impossible without our help.
I'm interested to know if any Workshop members are helping their kids get into the market. Options we're thinking about include a granny flat in the backyard (given that the kids are likely to stay with us well into their 20s) or buying an little investment property that they could either live in or we could sell and hopefully help them out with a deposit using the proceeds. We've also encouraged them to put money into a bank account since they were very young, although that's probably more likely to be a car fund.
I think its great to be able to help where you can, but the best help will be to encourage them to save and sacrifice. The reality is that most people won't be able to go on regular fancy holidays and spend a lot of money eating out and having the latest mobile phone etc and save for a house deposit. Avoiding the temptation of credit cards might be a good start!
Tempting just to say "suck it up princess" and leave them to it but the reality is that house prices have risen dramatically compared to incomes. One option is obviously downsizing when the kids move on, which should hopefully result in some cash which could be loaned or given as a deposit.
I do really like Warren Buffett's approach. To him the perfect amount to leave children is "enough money so that they would feel they could do anything, but not so much that they could do nothing."
I was surprised to see this story this morning - http://www.domain.com.au/news/housing-affordability-improves-to-best-levels-since-2009-new-report-cl...
"Rising house prices means buying a property feels tougher than ever before, but housing affordability has improved to the best levels in seven years, a new report claims.
Experts say record low interest rates and a modest increase in incomes have strengthened home buyers’ capacity to repay their mortgage."
@Isobel the gobbledygook in that article is hilarious, & the distorted figures are comical.
I've always maintained that if people get sucked into thinking that where they live is a bonus, they'll literally pay the price, so I'm not surprised that Melbourne & Sydney are the losers.
The interest rate hasn't come down out of goodness of heart for potential homebuyers, it's due to the drop in applications.
To me, the best thing that could happen, is that potential buyers hold off long enough, to force the market into realising that they've gone too far. I mean, have any of you heard of a real estate agent that hasn't rocked up in a flash car & dressed to the nines? It's a mug be mug market, it's time to make a stand & bring change. *steps off of soapbox