THE latest property figures released this week showed that prices are continuing to fall across the country - down another 2 per cent in the last quarter.
Apparently the boom-time mantra that told us there was a property shortage has been turned on its head - today we're told there's a glut of 300,000-plus unsold homes nationwide.
I was invited on to breakfast TV this week to speak about whether the dip in prices signalled that it was a time to buy.
Interviewer: "You say that first home buyers should save up a 20 per cent deposit, but is that very realistic?"
Barefoot: "If you can't afford the deposit, you can't afford the home - that's the truth."
Few people want to hear that, of course. 'Hills Hoist envy' affects most of us.
Selling the Dream
"I have just bought my first property and I'm going to own five to six investment properties by the time I'm 30!" Sarah proudly proclaimed on my TV show a few years ago.
I explained, gently, that she was completely crazy. She explained, steadfastly, that it was me who was crazy for not following her lead.
Since then I've kept an eye on what she's doing (Facebook is a wonderful thing), and this week I noticed her status update: "Seriously thinking about selling both my investment properties".
I gave her a call and listened as she told me her two apartments were losing around $15,000 a year; an amount that chewed nearly a quarter of her $65,000 income.
Now there's no denying Sarah's ambition. She's a wonderful, intelligent young woman who bought into the concept the banks and property pushers have been selling for years - she could have it all, right here, right now.
They were wrong. And by saying yes when she should've said no, five years on she's gone backwards, and is staring down the barrel of a $60,000 loss.
Most people left in Sarah's position do one of two things: (1) they close their eyes and hope the market eventually comes back, or (2) they list the property on the market under the proviso they want a certain price - which really means the loss they're willing to endure.
To her credit, Sarah did neither. Not only did she have the guts to admit she was wrong - she had the courage to look to the future.
Now her goals are much more simple: "The truth is that each year I procrastinate it costs me $15,000, so I'm selling them both and putting my energy into my new goal of being debt free - hopefully within four years."
Sub-prime central
"Home owners facing loan repayment disaster" read the front-page headline earlier this week. The report focused on Australia's sub-prime lending market: new estates on the fringe of our capital cities that target young first home buyers with no money, who put down deals on house and land packages.
The article quoted a couple who had bought their three-bedroom brick veneer home in Melbourne's western suburbs in 2008 for $280,000 and were now trying to sell. The home was passed in at auction last weekend at $195,000, well below their reserve of $279,000 (a perfect explanation of Sarah's point two, above).
That sounds about right. The first three years after buying a house and land package are a lot like buying a new Korean car (actually, the Koreans are making decent cars now, so that analogy doesn't work. It's like buying one of those cheap Chinese imports that get a one-star safety rating because they tie pillows to the dashboard).
Every year a new model comes out, and three years later, it's three years older (and was probably shoddily built in the first place). The glamour period is over. And that shiny new home you bought has morphed from the hand-picked happy families on brochures and billboards to your Great Wall car-driving neighborhood.
The value of a property is mostly in the land, not the building. Eventually the land will rise in value, but as long as state governments continue releasing new land and scrimping on infrastructure it'll be a long, slow, and worst of all, costly battle.
That's why first homebuyers should steer clear of house and land developers and their sales gimmicks, and instead save like mad for a 20 per cent deposit and use it to buy a half-decent home on a decent-sized block in an established suburb.
My husband is an idiot
"What do you think property prices will do over the next few years?" asked Chris at the end of a seminar I'd given. I opened my mouth to answer, but was distracted by the woman sitting next to him, shaking her head and groaning.
"What's your problem?" I asked. "Why all the huffing and puffing?"
"Because he's my husband," she said, matter-of-factly. "And he's an idiot."
"We've been married seven years now, and we've saved over $100,000 for our deposit. But he's still waiting for the housing market to crash, still stalling, because he's just too tight to part with his cash."
Everyone in the audience laughed (well, except Chris).
"You need to respect your husband," I said. "He's doing just about the bravest thing a man can do by being cautious. He hasn't bought into the banker's bull-dust that debt is a necessity. Yes, it can be useful, and it can be convenient - but it's always dangerous."
The fact is that Chris and his wife could afford to buy, and I pulled him aside to tell him so. Owning your own home is a wonderful investment - maybe the best you'll make in your lifetime. Over the long-term it'll not only hold its value, but it'll become the place you enjoy while raising your family. And besides, I added, "happy wife, happy life".
As Australia's debt hangover continues, and property prices fall further, there will be plenty of opportunities to bag a bargain - but remember it's only a bargain if you can afford it. So lift your chin, throw your shoulders back and don't be afraid to tell yourself the truth.
