Much like ECMAs reply in this thread, I've also resigned myself to pretty much never owning a home. Although I earn enough to get by on, I'm out 80-90% of my weekly income in rent, power, internet, and food leaving practically nothing to save. I hardly ever eat out, thought I had a decent job and try to put as much as possible in high interest, but every time I look in my savings and think yeah that's looking good, I check house prices and a deposit has gone up another $1500 on what I've saved. It's debilitating, a feeling that I'm literally putting in all this work for nothing. Sadly, it's not just living close to the city anymore, anywhere within a few hours of Sydney is ridiculously expensive. Much like you, I'm not too concerned about carrying on renting, and I have time to wait out the market, but if this trend continues I feel like my whole generation will be permanently locked out of the market, and hence out of one of the most effective retirement savings vehicles the system has.
Sydney prices are absurd. Keep saving and wait for interest rates to rise. If they ever go to the 17%+ territory which we had back in the 90s then there'll be a country wide firesale, and you'll be sitting pretty with your cash savings.
It won't need to be 17% this time around, that's for sure. Just to give people a sense of the magnitude of the debt Australians are in:
- When mortgage rates 'peaked' in 1989 at around 17%, aggregate interest payments ate up about 6% of aggregate household disposable income.
- When mortgage rates 'peaked' in 2007 at around 9%, aggregate interest payments ate up about 11% of aggregate household disposable income.
We're more indebted now than we were in 2007. An external shock that causes mortgage rates to rise by as little as 1% (relative to incomes) will probably be enough to trigger our long overdue 'Minksky moment'. [0]
