Budget – Family

When I commenced selling real estate in 1970, the average mortgage payment was equal to 8% of gross male single income (around $70 per week).

In 2007, with the average or medium price around $360,000, the mortgage payment is equal to 51% of net joint income (i.e. $550 per week).

The rent payment for a similar property is around $325 per week plus so many family units simply can’t save a deposit whilst they are caught in the rent trap.

The family budget of 2007 has massive fixed costs, even before the extras of credit cards, entertainment and holidays are included.

On an entry level $360,000 house, the loan is $342,000 at 7.39% over 30 years, i.e. $546 per week.

On a $300,000 unit, the loan is $285,000 and repayment is $455 per week.

Where does the money go?

Income tax and GST 21%
Fuel & Fares (one vehicle) 12%
Power/phone/health insurance 8%
Food/ fees/ social 17%
Accommodation/rates/insurance 42%

It follows that the disposable dollar for the renter is higher. Unfortunately, in lower income areas, video, takeaways, pubs etc. do very well. This is money saved because of lower rents that should be put away as a deposit.

In high ownership postcodes like 4035 and 4037, high cost entertaining is avoided because of higher mortgages and the family home becomes the centre of focus with BBQ’s and activities based around community affairs of church, kindy and sports.

To continue to rent is the cheaper option and it does not fulfil in the long term at the basic of security of tenure. Whilst Peter Campbell Realty has been at the forefront of developing longer-term tenancy agreements of up to 5 years, normal rental agreements remain 6 monthly.

Yes it’s harder now than in 1970 and it will be even harder in 2037 than 2007.

Ask Peter 0418 774 663
peter@petercampbellrealty.com