Huge influx of transient workers to Canberra

What about the cost of bananas nowadays? I understand about the whole cyclone larry thing, but it’s getting ridiculous. How can I be expected to buy a house when I have to pay $10 for a bunch of bananas?

Bio, like I said I know its tough – my wife and I had a combined income equal to what you get by yourself when we saved our deposit. You WILL get there!

Mr_Shab, you raise a good point about risk. The idea is to reduce it using the different means available to you. I reduce my risk of not being able to pay multiple mortgages by signing (very) long term leases with a large corporation. I get a tad below market rent, but it’s all fixed in for years to come, and the corporation is making more than their fair share, which is good!
In terms of the economy dropping, that’s also a fair point, but it’s worth remembering that so-called ‘drops’ are often only nominal, they don’t necessarily correspond to real money. What I learnt about property investing has come mostly from a smart father in law, who has consistently made $$ regardless of markets rising or falling, and it really isn’t rocket science. For example, many investors (including myself) believe that the market isn’t going to crash, but will simply go nowhere for a number of years. This is the same as what has happened time after time. It also means we all still have a good window to get ourselves into the market before the next rise (due maybe 2010-2013??).
I know it all sounds so simple, but really its just a matter of talking to those who have done it, and there’s plenty of these folk around.
By the way, I wouldn’t be too worried about your own mortgage, if you have an asset to back up the loan, you’ll be well ahead in the long run…
Oh, and I too am a schlub, not an economist!

Gosh – it all sounds so easy VYB…

There’s a reason no everybody does this. Most people are (rightly) shit-scared of that much debt. I know that my mortgage hangs around my partner and my necks like a 300lb millstone.

Even though we’re well within our means (we’re DINK’s, we saved a decent deposit, bought a cheap place and live a frugal lifestyle) what if I lose my job? She gets pregnant? Sure, you can plan against this, but I doesn’t make the risk go away.

The top of the market is not the time to be gearing yourself to the hilt on a mortgage (or two!) but to be standing back biding your time.

If the economy does what it’s pretty much bound to do in the next few years (bust follows boom, as sure as night does day…) you’ll be rueing those kind of words, mate.

Hope you’ve payed the bank back a fair slab of the loan on those two places. If the market can’t pay $400/week for a 1br apartment, you won’t get a tennant at that price.

Rents rise 40% in Canberra…maybe, but no-one will be able to afford to live here any more. Thus, no tennants…

But hey, what do I know. I’m some schlub, not an economist.

All this is handy advice, however the bank/lender still needs to approve the required amount for a loan in the first place.

As an example, I earn roughly $58k a year which means lenders are going to limit the amount I can borrow to around $220k. Try finding any property for that amount anywhere in Canberra! There was one place in the Sundown Motel Village for roughly that amount! But I dont fancy being a Trailer Park Boy (ala Julian or Bubbles).

In the end, it comes down to the fact that if you only plan on living in Canberra for 2, 3 or 4 years, then it is much cheaper to rent than pay a mortgage. Which results in large transient populations living in expensive rental accommodation!

The mortgage risk is only an issue if you fail to pay. Get your ducks in row financially, and you’ll be fine. Another alternative is to take a slightly higher interest rate and borrow 100%. Then in a couple of year when you have some equity up, refinance into a cheaper product. There’s lots of way to do it.

Not to mention spreading the risk of your mortage over to your relatives as well…

Biogaz – I understand your problem. My wife and I had to live a VERY simple life for 3 years to save a deposit for our first home. Perhaps you could explore the possibility some people use where you secure 20% of the property against a relative’s house, and 80% against the house you choose. That way you can borrow 100% of the cost, and as long as you meet the payments you’ll be sorted. Don’t forget that payments become less and less of your overall expenses over time – although the odd interest rate makes a small difference, it’s nothing compared to the benefit of having inflation working for you for a change. Best of luck!

I remember when I was a chef working at Qbn leagues club, I lived in a 1br apartment across the river from the club.
Cost me $70 a week in rent. I cant remember the year GST came in, but that was the year I was living in qbn.
I doubt you could get a piece of cardboard in a seedy civic back alley for that cheap nowdays. I remember looking in an old note book of mine from when me and my best friend were looking for rentals in belconnen and there were places that we deemed back then as to expensive…. We were looking for between $180 to $220 a week for 3br. Good luck finding that these days for less than $320, and this was only about 4 years ago. Lucky for me, me and my partner are paying off her house. Me and her are as yet undecided weather to sell her house and get our house, or to get our house and rent her house, but in any case, we will be moving from the sticks ( ngunnawal ) soon to closer to woden ( she is a neuro nurse at TCH )

Even Shelbyville (Queanvegas) is getting expensive. Where will people commute from next – Goulburn?

Unfortunately VY if you havent been able to jump on the property/investment bandwagon yet (like myself)its a case of BOO HOO 🙁

By having to pay rent in the order of $250-$300 per week its almost impossible to save a deposit big enough to purchase a home/apartment in Canberra. Unless of course you are a DINK. Maybe there is something to be said for arranged marriages …

I have 2 Canberra investment properties…WOOHOO!

I read a report in the business section on news.com.au the other about how rents are going to rise by over 40% across the next 4 years, both in Canberra and Australia wide…WOOHOO!

Good summary Biogaz, I’d have to agree.

The huge rental market for transients is why they can charge $300 000 or more for gucci inner north one bedrooms. Despite the stupid price tag they rent out for a fortune, due to high demand, and hence are actually reasonable investments.

I doubt the “Live in Canberra” campaign has anything to do with this so-called influx. I moved here a year ago for work and the rental market was extremely tight and hence expensive.

The reason there is such a large transient population is because of people getting government jobs here to help further their career, and then leaving after 1 or 2 years because they have acquired the desired experience and/or they hate living here.

The fact that its almost unafforfdable to purchase a house in Canberra means people will move somewhere for the same pay and more affordable housing.