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Sydney real estate and cost of living

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Dec 28th, 2010, 11:51 AM
  #1
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Sydney real estate and cost of living

Threads in this forum about cost of dining hinted at the high cost of living in Sydney.

Tourists are used to facing high prices in tourist areas of most cities but it seems the suburbs also have similar prices as the CBD.

An ice cream cone is about $5, which is more than you'd pay in Italy, for instance.

The thing that brought it home was the Waverly walks I did yesterday. Thanks to pointers in this forum, I did the Bondi to Bronte and then the Waverly Cliffs Walk northwards from north of Bondi towards Watsons Bay.

Particularly on the latter, I noticed a lot of well-placed homes off Military Road. These seemed to be good-sized homes, on quiet residential streets, but seemed to be at least 20 years old. There could be views of the city or overlooking the ocean.

I saw some real estate signs and when I got back, I Googled and was floored to find that homes in the area were selling for $2 to $3.5 million AUD.

No doubt it was due to the scenic location (though I wonder about the commute) but as far as I could tell, these homes didn't occupy particularly big lots. The front doors were just a few feet from the sidewalk and they didn't seem to have much in the way of backyards.

Apparently the real estate bubble never did burst in Oz and as far as I could find, median income in NSW is about $70,000AUD? Is it the wealth effect from appreciated real estate that makes it easy for Sydneysiders to spend about $20 for simple meals (burgers, chips and drink)?

I know the Australian economy has fared well with the exports of raw materials to China, resulting in low unemployment -- which makes you wonder why is the incumbent Labour govt. expected to lose in the next elections?

Is there any sense that real estate prices could crash as they have in other countries?
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Dec 28th, 2010, 11:02 PM
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What icecream are you eating for $5? You must have found the most expensive icecream parlour in Sydney.
You would have been walking ( Watson's Bay - from Bronte) in some of the most expensive Eastern Suburb areas of Sydney. These people get beautiful views and sea breezes but of course the price of houses there is VERY, VERY expensive BUT no more so than in southern beach parts of LA, Santa Barbera and many, many other areas near the water in the USA. Besides the commute is far easier and quicker than in LA and of course Sydney is one of the most popular locations in the World to live.
I suggest that you Google some homes in Carmel and Monterey for instance and perhaps the $5 Million price tag may surprise you. Of course you can now buy just about anything on the Florida coast for next to nothing but you will not get a mortgage because you cannot get insurance OR if you can get insurance it will cost you about $10,000 per year and then you will only be covered for part of the cost of your damage from whatever hurricane that decides to unroof your house. I know this because that is where I am from!
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Dec 28th, 2010, 11:03 PM
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I see that you sorted out the ETA issue...
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Dec 28th, 2010, 11:29 PM
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PS:
There is absolutely no reason for a crash of prices in Australia as there is nothing in comparison with the USA here in terms of financial disasters.
Further I really wish that people would either read what others have written about food and where to get excellant priced food or at least stop comparing Australia with the USA because you are comparing apples with oranges - which part of the USA are you comparing Sydney with? Here is a little guide about the residents of Waverley in Sydney where 25% of the households have a salary of $2,500 per week yet there would be about 100 restaurants in that area and close to that area where you could eat a beautiful meal for under $20.
As to houses being 20 years old - that is of no consequence in Australia because many of Sydney's homes are built of double brick and of sturdy construction, as well as not being subject to earthquakes, be they small or large.
Below is the demographics of that area. I got this from a site which will show you that there is a high total home ownership as well with 32% without any mortgage at all.
Anyway all I can say is that I am very happy to live here in Australia - I pay only a fraction of the price I would pay in the USA for health care and I can afford medicines as well. House insurance is far cheaper, we do not have State tax, general revenue pays for fire brigades and security. People can afford to send their children to College but the best thing of all is that there is not 300+ Million people crowding the country and there are many places that people can get away from the rat race which is the opposite to the USA.

Demographics Snapshot
The population of the Sydney’s Eastern Suburbs as of June 2008 was 288,517
residents. This number is up by 1.1 per cent from June 2007 with Botany Bay
and Waverley LGA’s having the highest growth rate over the period increasing
b 1 6 t th Th i i ffl t ith 25 t f
Couple with
children
44%
Couple with
no children
22%
Lone Persons
14%
Single Parent
10% Fully owned
32%
Being purchased
23%
by 1.6 per cent over the year. The region is very affluent with per cent of y
households earning more than $2,500 per week while the average weekly
income for Woollahra LGA is $1,917 per week, substantially higher then the
national average of $1,027. The Eastern Suburb’s is also a very family oriented
community with 76 per cent of residents living in a ‘family’ household, 44 per
cent of which live in what can be described as a ‘nuclear family’ or one with a
‘couple with kids’.
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Dec 29th, 2010, 01:48 AM
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Yes ETA is sorted out.

Unless I missed something, few of these homes are actually at the edge of these cliffs with ownership of the land overlooking the ocean.

This is one of the homes I found:

http://www.domain.com.au/Property/So...did=2008493131

Very beautiful view of the skyline and Harbour Bridge but $3.5 million AUD for 522 sq. meter lot? Like I said, the front doors were like 10 feet from the sidewalk.

They may be affluent and they may live in a very desirable area but they're certainly not getting value for the money. Unless they bought a couple of decades ago and then these homes appreciated like crazy.

I haven't looked at California coastal real estate but usually, they do get some kind of lot size for that money.

So today I visited the Blue Mountains. The tour bus driver was saying some homes in Leura are summer homes for some well-off Sydney residents, because they can have big gardens and such. I happened by a real estate office and some of the placards they posted showed homes in the $600k AUD range for 3 bedroom, 1 or 2 bath homes. No mention of square footage/meterage but I gather they were more modest homes.
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Dec 29th, 2010, 01:55 AM
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Oh and ice cream was along the main drag in front of Bondi Beach. It was $4.80 for the smallest cone they sell.

Saw a similar price for ice cream up in Katoomba/Leura.

Tried a place selling milk shakes for $4. She put some ice cream in a blender and then put that blended cream in a cup and poured some milk on top of that. Oh well.

Lunch wasn't too bad. Most places selling sandwiches around $15-20. I got some penne pasta and a bottled water for just under $20. I'm not complaining but pointing out that in Italy, you can get 2-course meals for about half that price.

Sydney is much better for the selection of ethnic cuisine, especially Asian food, than Italy.
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Dec 29th, 2010, 02:28 AM
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scrb11-I think this is a very complex issue and someone with an economics degree will make better sense of it, but you cannot compare the US housing situation with Australia’s.

Some things to bear in mind:

Housing prices may appear to be more expensive BUT your emphasis on square footage as an indicator is really a cultural one. Australian houses are certainly getting bigger (comparable to the US) but middle class Australian homes built over 15 years ago will probably be smaller – as a very GENERAL rule. This is normal for Australia and not an indication of an inferior product; just a different approach to housing- and the market will only reflect the price based on demand.

Australia’s economy is booming , employment is one of the highest in the world, and net immigration in terms of the total number of people coming to reside in Australia means close to three quarters of a million extra people are coming here in a year. So - low unemployment and tight supply always puts pressure on prices.

The Australian housing market has been called the best performing in the world. First home buyers receive a government grant to assist them in purchasing their homes, and Australia is the only country in the world to exempt aged pensioner’s residential dwellings from assets assessments for pensions. Council rates cover all basic services such as roads, libraries, rubbish collections etc. with no additional charges, unlike the US.

Most importantly the subprime fiasco did not happen in Australia – due to stringent government regulation Australian banks have never lent money to home owners in such an absurdly risky situation, and housing loans are also a much smaller percentage of Australian banks’ risk issues.

The American mortgage collapses simply did not, and never could occur in Australia.

There is a risk that the cost of Australian housing is making urban sprawl a real concern and that the market needs some realignment for social reasons. But, remember, Australia still has one of the highest home ownership rates in the world and I’m sure you didn’t see beggars or starving children in the streets of Sydney did you?
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Dec 29th, 2010, 03:45 AM
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Ah, an expert with 4 days experience.
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Dec 29th, 2010, 05:06 AM
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"....but the best thing of all is that there is not 300+ Million people crowding the country and there are many places that people can get away from the rat race which is the opposite to the USA"

Sorry, I but I think this statement is pretty ridiculous. Part of the reason there are 300+ million people in the USA is because so much of it is habitable. Unlike Australia, the population is more spread out and not concentrated in just a few cities. In fact, despite its low population, Australia is one of the most urbanized countries in the world - easily 13+ million out of some 20 million Australian lives in large cities larger than 1 million. Sydney and Melbourne alone account for about 9 million. They are huge cities even by American standards.

It may be true in southern California and greater NY, but I would counter it is not harder to get out of the rat race in the USA than it is for most Australians. I live in Connecticut in the populated northeast. Work is 15 minutes away, never any traffic or traffic jams. Beautiful small towns, farms, forests, beaches and coast minutes away. And as much as I love Australia, there's no way I'd want to move to a city like Sydney, as beautiful as it is. Too big, too crowded and, counter to most American's impression of a laid back Aussie lifestyle, way too uptight.
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Dec 29th, 2010, 10:39 AM
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There is a show in the US called House Hunters International.

A couple of the episodes have featured homes in Melbourne. In one, an LA family ends up buying a home in the $900k range, about comparable in size and price to what they had been living in in LA.

No not an expert, but you usually see real estate postings whenever you travel and you see what the prices are for a region.

Sure supply and demand sets the prices and we know high prices in urban centers for insignificant square footage isn't unknown. But those are usually apartments or flats in Manhattan or London, not detached homes with minimal yard space.

Still it sounds like they have no problems getting bids in this area. Also understand that one of the end units of the high-rise near the Opera House recently went for $30 million AUD so that sets the context somewhat.
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Dec 29th, 2010, 01:03 PM
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Of course Sydney house prices are dreadfully expensive but its the demand that sets the prices and a lot of people do not want a large garden anyway ( in terms of lot size of houses) . As for paying 30 Milliion for a unit near the Opera House well again its a matter of demand and if someone wants to live on the most beautiful harbour with a view to die for and a climate second to none in the World and they have the money then they obviously are happy to pay that kind of price.
They can live in a number of beautiful small towns along the coastal line in Australia for a lot less money. There are some lovely coastal, beachfront homes in the south of New South Wales for instance for $300,000.
I agree with Ralph on some points that he made but where pray tell does one "get away from it all" if you live in Philadelphia where you have mile upon mile of built up areas and large cities etc - where does one "get away from it all" if you live in places like Miami and Fort Lauderdale which is not hours away? - oh, sure they have some large lakes but again its like Broadway more often than no. Sure the USA has many more people throughout the country but when it comes to taking out the cities with dreadful climates i.e. freezing in winter and sticking hot in summer it still leaves the coastal fringes.
Connecticut is fortunate in having some wonderful countryside within easy reach but then I would not want to live in an icebox either and the climate is only for those folk who can stand the freezing cold temps.
LA has a nice climate but the only place to go to get away from it all is into the desert and in summer that is not an option. Even going to Yosemite Park you will have a battle finding a car park at any given vantage point or try finding a table at the hotel for lunch.
Australia gives me what I want, peace and security, beauty and contrasts. I have a wonderful home here right on a beach. I have 3 acres of land with a huge orchard, cows, goats and every other critter that has taken my fancy and I am pretty well self-sufficient in food. There is a major city within easy reach and a smallish town 20 minutes away. I think I must be one of the luckiest people on this planet.
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Dec 29th, 2010, 01:05 PM
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Oh, I just about forgot - why would anyone compare the price of an icecream in Sydney with one in Italy. I bet your bottom dollar that you will be able to buy a pound of quality steak at a butcher in Sydney for a lot less than you would pay for it in Rome!
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Dec 29th, 2010, 01:24 PM
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Ice cream is important in this beautiful weather.
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Dec 29th, 2010, 01:45 PM
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"Never" more than steak to an Australian
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Dec 29th, 2010, 05:36 PM
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I am afraid to post anything about costs in Australia. But if anyone has time to kill here is the view of one of Canada's major newspapers on your housing situation:

http://tinyurl.com/2c4eqg5
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Dec 29th, 2010, 07:18 PM
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Coldie, that issue has been talked about in the papers in Australia for over a year now so its nothing new and it did not come from a Canadian source to start with. People want to live in Sydney and Melbourne its as simple as that. The rest of the country has plenty of good real estate and at affordable prices.
The pressure on housing in those two cities because of the number of people who want to live there is the reason its so stupid and expensive. Answer - don't live there!
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Dec 29th, 2010, 07:46 PM
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I hear ya cold. Interesting article.

The housing prices here make me cringe.
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Dec 29th, 2010, 11:21 PM
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Well Melnq8 - don't live there if you don't like it, its that easy because planes go back to the USA at the rate of about 10 per day so I am sure you could get a seat on one. Then you can moan about the violence, weather, inundation of Hispanic illegal immigrants, cost of health care, unemployment, the big O, Casinos for Indians, out of control wildfires and everything else you can think of. You might also reflect on why we Americans are called " big mouths" by the rest of the World.
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Dec 30th, 2010, 12:49 AM
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I happen to like living in Australia, I'm just glad I'm not in the market for a house. No need to get defensive. If we all agreed on every topic, the world would be a very dull place indeed.
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Dec 30th, 2010, 12:10 PM
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Interesting part of that article is that mortgage and personal debt are equal to 100% of GDP and has actually gone up since the financial crisis.

Similar conditions to those in other countries before they had real estate crashes.
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