DEAD END FOR NORTH SHORE HOME BUYERS
“It’s grim," North Shore local Charles Roest simply states. "I hate being in the rental market."
At 33, the classical musician and commodities trader feels disillusioned and dejected. Renting on the North Shore for the past few years, he says he would like to buy within close proximity to his office in North Sydney and the Sydney CBD - but he's also prepared to go to the inner west to look for housing. Having done all the sums and tracking the real estate market, including interest rates for the past few years, he knows he could be at least five years from buying.
"I've floated the idea several times," he tells North Shore Living.
"It's a daunting process, with prices rising and fluctuating interest rates - I know that it's just not possible at the moment".
For Mr Roest and many first-time buyers who don't have parents contributing large sums of money for deposits, the costs on a $1.1 million property would be $220,000 for a 20 per cent deposit and about $46,000 for stamp duty, according to the Australian Credit and Finance Corporation.
“It's not necessarily the mortgage - but the deposit is the first impossible hurdle on your own. It's deflating - I've got business experience, I travel a lot for work and I do have a social life and I just don't want to sacrifice everything in my life to buy into the market," he notes.
He's also critical of the market place, saying most buyers feel like they are in a "game of agents", where manipulation and preference deals abound and "you have to be on their radar".
"All my friends feel the same way I do. They want to get into the market but know it's impossible without a correction, which I am sure will happen. There is no short-term fix the government can implement. Interest rates will inevitably rise and a lot of people will be badly affected," he explains.
North Shore Richardson and Wrench principal Robert Simeon says his advice to first-time buyers is "stay well clear of the market right now and enter when there is a correction - which will happen," he says. "During the global financial crisis, property prices fell by 30 per cent on average. First-time buyers should be preparing themselves for when this happens."
Mr Simeon says the biggest single drag on property prices in NSW is stamp duty, which has increased 750 per cent over the last 12 years.
"Last financial year In NSW, the state government collected $6.2 billion in stamp duty receipts. It has also ruled out changes to the current charges on property acquisitions.
“If the state and federal governments were serious, they would call for a bipartisan inquiry into the NSW property markets - both residential and commercial.
This will never happen because they know only too well what the outcome would be and changes simply won't happen," he says.
Mr Simeon claims both levels of government have outdated policies and these have contributed to the property market being at an all-time high. “I support negative gearing but this urgently needs critiquing where property investors should be restricted to the number of Investment properties they can have,” he adds.
The housing affordability problems are being debated in Canberra, but Treasurer Scott Morrison recently ruled out any changes to the capital gains policy. He also ordered the forced sale of a further 15 residential properties owned by foreign nationals, who the government alleges are in breach of foreign Investment laws. “Improving housing affordability is a key policy goal for the Australian government," he notes.
NSW Premier Gladys Berejiklian has declared the housing crisis in NSW as one of her three key priorities. She has now appointed the former head of the Reserve Bank of Australia, Glen Stevens, to advise the government on how to make housing more affordable and accessible.
But for young buyers like Charles Roest and his friends, the future does not look promising and the wait continues.
"I look most weeks but the prices just keep going up. I'm finding it very depressing," Charles says.