Where do you really want to live?

I'll be honest. I want to live within 15 kilometers from the city, in a south eastern or bayside suburb. With a couple of kids, we consider ourselves Mr and Mrs Average. Me, I am a working suburban lawyer and the misses works part time. I don't aspire to live in Caroline Springs or Fountain Gate neither suburb being close to family, friends or place of work.

I have just read the latest update from the National Real Estate Institute, "The average new home loan of $247,455 doesn’t provide for McMansion style housing, but for a basic family home." So that's the average home loan, that is causing all the stress about mortgage stress. I would kill for a $247,455 home loan. Because where I want to live that is not even going to cover for a 1 bedroom flat.

Without being too fancy, I have picked on finding a house in Bentleigh which is close to where I grew up and to where I work. It is not exactly an aspirational suburb but it is near enough to suburbs that would qualify for such a tag.

The latest facts and figures on Bentleigh are -

Lower Quartile $600,000
Median $700,000
Upper Quartile $807,000
Annual change 34.6%

If I can pick up my dream (not aspirational) home, I need to budget on paying $700,000 and being conservative I will only borrow 80% of the purchase price. I don't really want to pay mortgage insurance. Stamp duty, government fees and legals alone add $40,000 to the equation.

Price $700K
Mortgage $560K
Deposit $181K

Interest Rate 8%
Term 25 years
Monthly payment $4,322
Annual repayments $52,000


How does this accord with the reported average new loan of $248K ?

Bentleigh in my childhood (1960s) was just pretty average. About 10 to 15 years ago, Bentleigh saw a great influx of young parents with numbers of kids and toddlers swelling the numbers at kindergartens, creches and the local schools. Bentleigh was for generations affordable.

I find it hard to see this being repeated today.

PS If you were to buy the 700K house in Bentleigh with a $248K mortgage, you would need close to a $500K deposit. Mum, I need a loan. Son, start saving.