Anyone wanting get to get a flavour of the madness that is the Sydney housing market only needs to read the below snippet from the Weekend SMH:
On one of the biggest auction days Sydney and Melbourne have seen came more evidence of the grim truth facing Australia’s young home buyers: in our inner cities, there’s often little hope without parents’ help…
In red-hot inner-city Surry Hills, first-home buyer Claudia Crause, 23, a student at the University of NSW, snapped up a two-bedroom terrace at 45 Rainford Street, Surry Hills, for $1,094,000, $119,000 over the $975,000 reserve.
‘‘The market’s a bit hot at the moment. There’s a lot of people wanting terraces with potential,’’ Ms Crause said.
‘‘Prices are going up … I think we got a pretty good deal’’…
Parents Ron and Theresa Crause, of Mosman, were happy to help…
Assuming the home was purchased with a 10% deposit, leaving principal of $1,030,260 to be repaid (i.e $984,600 plus $45,660 in stamp duty). At the current 5.1% discount variable mortgage rate, Ms Crause (or her parents) would be required to make loan repayments of $1,290 per week, or around $67,000 per year.
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Let’s hope that Ms Crause is studying brain surgery, as otherwise she could be looking at a lifetime of debt serfdom.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
