Financial GoalsReal Estate

I almost moved out of my rental…

Rental Woes!

The dream of home ownership in Australia is rooted deep in our psyche. According to the Australian Bureau of Statistics, approx 1 in 3 Aussies own their own home outright (no mortgage) whilst 37% own a home with a mortgage. One in four of us rents our dwelling. The numbers are similar for adults under 35, with the exception that very few (<5%) own their home without a mortgage (no surprise there). I’ve been renting since I was 21 when I joined the Air Force. A conservative estimate is that I’m probably 3-4 years away from having a decent home deposit. With some prudent saving, I might get there in 3 years.

In the past 9 years though, I’ve lived in 10 different homes (this includes 4 moves with the RAAF but even recently it’s been about one move per year). I absolutely can’t wait for a place of my own – living with others has been fun at times, and at other times a royal pain in the ass. I’m currently in the latter situation. Every now and then, as an escape from this posterior pain, I like to browse online rental sites for new listings. I was doing just this last week when I found a place with river views, close to work, public transport, with garage and air conditioning, I was so tempted I went to the open house for a look. On a whim, I applied for the place and to my surprise, was accepted.

Given that I’ve only just started working for myself (6 weeks in), have limited savings (< $10,000) and the yearly rent was $16,640AUD, I was shocked they approved my application. Needless to say, most WFT readers would agree this could stretch my budget, especially when I factor in fitting the place out with some basic furnishings. I called the agent and kindly declined the property but going through this process illuminated a few points for me:

i) the inner city apartment real estate market in my area is getting desperate,

ii) I can probably negotiate on price a bit when I look for my next a rental, and

iii) I should be able to purchase a similar place in the future for a reasonable price (I can’t see the apartment market rising significantly in australia, given current demand is relatively low and we have a huge surplus of apartments due to be constructed in the next few years).

For now then, I’ll continue renting and saving as best I can so that in the next 6 months I’ll have around $20,000 available to move into a new place, purchase a few essential items (fridge, couch, etc) and have a nice buffer should my income dip for a month or two. As much as I’d like to live solo now that I’m 30, I can’t quite afford it. Once I’m in a new place, I’ll continue saving like a squirrel caching nuts for the winter and hopefully be able to buy my own place by 2020.

How did you know you were financially ready to buy your first place? Or move from a shared accommodation and rent?

10 thoughts on “I almost moved out of my rental…

  1. Thanks for the post, WTF. Sydney is a very expensive market. That’s why we decided to buy on the Central Coast. You can get two houses here for the price of a small apartment in Sydney. Good luck and I hope you find a good place to live soon

    1. Thanks Len. Six months more isn’t unbearable. Agreed Sydney is overpriced, I’m glad I don’t live there – I have mates sharing with 4-5 housemates and paying what I’ve paid sharing with one. Central Coast is a nice area to live, sounds like you’re happy there!

      Thanks for stopping by again.

  2. The first time my brother and I moved out from living with relatives, we weren’t actually ready for it but we had to (sort or forced to, because family is a bit difficult sometimes). I just got a full time job and half of my pay went to rent, my brother only had a part-time job and was studying. It didn’t help that he was an international student, too. It was tough, we had no savings, but we had no regrets. At that time, rent was just money and we chose peaceful lives over it. 🙂 I did struggle when I moved in with my boyfriend to a share house though, living with strangers is not something I’m fond of. That’s why when his landlord decided he’ll rent out the whole place and we needed to find another place, I was firm that if he was moving into another share house, I’ll move back with my brothers. And as you know, we’re renting our own place now. 🙂 He was adamant at first that we have to rent out the spare room but the moment he realised how nicer it is to live on our own, he changed his mind.

    I’m sorry to hear that your housemates are giving you a hard time. I hope 6 months isn’t too long to wait. I hope you get to use the aircon during the summer!

    1. Wow J, sounds like a pretty rough start to living in your own place, which makes me even more happy for you and your boyfriend now that you’ve got things sorted. 6 months won’t be too bad, and in the meantime I’ll keep an eye out for bargains 🙂

  3. Wow, WFT, even the rental peeps see you as a good bet! Sorry you had to let it go, but as you said, you learned a lot from the experience.

    We knew we were ready to buy a house when we had a 20% deposit. Simplistic, I know, but this was 20 years ago, and things in Sydney weren’t cray-cray as they are now. Having said that, we were both fresh out of study (and me out of a traineeship on $14,000/year), so there was still a whole lot of market that was WAY out of our reach. I’ll be honest, looking for a house that was within our price range but wasn’t falling apart (literally, some of the houses that the real estate agents took us to), was probably the most stressful time of my life. This was partially self-inflicted because I wasn’t going to borrow more than 80%. Stand your ground, your business needs the attention at the moment.

    1. I think 20% down is still a wise choice. Or perhaps doing the minimum down and making an immediate extra payment to approx 20% that can be re-drawn if needed. If it’s a 25-30 year loan, this just cuts the interest bill in a massive way, provides a buffer on future repayments and peace of mind. Mrs. ETT, well done for managing that – I hope you feel it’s paid off in the long run.

      1. It totally paid off in the long run. Just watch out for Lender’s Mortgage Insurance if you have the 20% but decide not to put it all down for the deposit. That can run over $10,000 in itself on today’s mortgage prices. Good plan for the redraw, but it might not be worth it depending on what the lender’s requirement are.

  4. I think you’re doing the prudent thing by waiting and saving. There’s no point jumping the gun if you’re not ready for it. We definitely aren’t ready to buy, that’s for sure.

    We are still long term renters until after IVF and we’ve built up our wealth a bit. We’ll know we’re ready when we have a strong strong source of income and our net worth is above a certain amount (not sure what that is yet 🙂 ).

    I think you’re right that in a couple of years, property may be a lot more affordable. But we’ll have to wait and see on that one.

    Tristan

    1. It’s a waiting game, that’s for sure. In the meantime I hope to raise my savings rate and stash a decent deposit, I’ll be renting for a few more years yet though, even if I move in the next 6months. Best of luck with your savings too, looking forward to this blog post you teased this week!

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