Financial Plan For Realizing Australian Dream – Housing Purchase

Investigating Historical Housing Price Data for Sydney/Melbourne

1.

The graph collectively represents the rising property price in Sydney for the next 20 years, which has been calculated by conducting average of the previous 15 years property price movement.  the analysis relatively helps in detecting the level of growth in property prices, which could be attained in future and allow our client to achiever Austrian dream (Lee & Reed, 2014)

2.

The graph relatively represents the income growth of the client in 20 years perspective, which is essential to understand the level of saving that will be conducted over the period. This analysis is relatively detected by calculating the average increment in income of citizens living in Sydney, who are employed. respectively represent that within 20 years the income of the client visibility in the group from $80,000 to $189,500.

3.

The calculations related we represent that the client would eventually save around 2994.42 on monthly basis which could be used for mortgage payments. Moreover, seeing the savings conducted by the Client or property value of only $429,665 can be bought in the current situation.

4.

From the perspective of insurance premiums, the client could effectively by the property with low savings. Therefore, it could be assumed that without insurance premium the property value that could be bought by the client is at $428,275. On the other hand, the property value with the insurance premium can rise to the levels of $800,000.

5.

Year	Property price	Savings Target	5% upfront	Insurance premium	Stamp duty	Amount
0	$        977,500	$           85,933	$     48,875	$                    37,532	$     41,868	$ (42,342)
1	$     1,034,121	$         123,625	$     51,706	$                    39,706	$     41,765	$   (9,551)
2	$     1,094,022	$         163,167	$     54,701	$                    42,006	$     44,184	$   22,276
3	$     1,157,392	$         204,469	$     57,870	$                    44,439	$     46,743	$   55,418
4	$     1,224,433	$         247,635	$     61,222	$                    47,013	$     49,451	$   89,949
5	$     1,295,357	$         292,758	$     64,768	$                    49,736	$     52,315	$ 125,938
6	$     1,370,390	$         339,939	$     68,520	$                    52,617	$     55,346	$ 163,457
7	$     1,449,769	$         389,284	$     72,488	$                    55,665	$     58,551	$ 202,579
8	$     1,533,746	$         440,903	$     76,687	$                    58,890	$     61,943	$ 243,383
9	$     1,622,587	$         494,910	$     81,129	$                    62,301	$     65,531	$ 285,949
10	$     1,716,574	$         551,427	$     85,829	$                    65,909	$     69,327	$ 330,362

Year	Property price	Savings Target	20% upfront	Stamp duty	Difference
0	$        977,500	$           85,933	$                  195,500	$     41,868	$       (151,435)
1	$     1,034,121	$         123,625	$                  206,824	$     41,765	$       (124,963)
2	$     1,094,022	$         163,167	$                  218,804	$     44,184	$         (99,822)
3	$     1,157,392	$         204,469	$                  231,478	$     46,743	$         (73,752)
4	$     1,224,433	$         247,635	$                  244,887	$     49,451	$         (46,703)
5	$     1,295,357	$         292,758	$                  259,071	$     52,315	$         (18,629)
6	$     1,370,390	$         339,939	$                  274,078	$     55,346	$          10,516
7	$     1,449,769	$         389,284	$                  289,954	$     58,551	$          40,779
8	$     1,533,746	$         440,903	$                  306,749	$     61,943	$          72,211
9	$     1,622,587	$         494,910	$                  324,517	$     65,531	$        104,862
10	$     1,716,574	$         551,427	$                  343,315	$     69,327	$        138,785
11	$     1,816,005	$         610,579	$                  363,201	$     73,342	$        174,036
12	$     1,921,196	$         672,500	$                  384,239	$     77,591	$        210,670
13	$     2,032,480	$         737,328	$                  406,496	$     82,085	$        248,747
14	$     2,150,210	$         805,207	$                  430,042	$     86,840	$        288,325
15	$     2,274,759	$         876,289	$                  454,952	$     91,870	$        329,467
16	$     2,406,523	$         950,734	$                  481,305	$     97,192	$        372,238
17	$     2,545,919	$      1,028,707	$                  509,184	$   102,821	$        416,702
18	$     2,693,389	$      1,110,383	$                  538,678	$   108,777	$        462,928
19	$     2,849,402	$      1,195,944	$                  569,880	$   115,078	$        510,986
20	$     3,014,451	$      1,285,580	$                  602,890	$   121,744	$        560,946

From the evaluation of above table, it could be identified that within upfront payment of 20% of the client could effectively by the house during sixth year office savings.  However, the use of orphan payment of 5% would eventually allow the client to buy the house in 2nd year of her being employed in Sydney.

6.

After evaluating the mortgage payment condition of the client that could be identified that, any increment in interest rates from 3.39% to 7% would not affect how capability to support the mortgage payments. This is relatively detected from the above calculations conducted in the table, where the savings are adequate to support her increased mortgage payments.

7.The overall financial plan drafted for the client could eventually backfire during an economic crisis, where the actual income of the client would get hampered. The financial planning is laid on the income stream of the client, where the property can be bought only if the income stream continues. In addition, the changes in the constant income would directly nullify the condition of buying a house in Sydney (Fitzpatrick & Pawson, 2014).

Reference and Bibliography:

Abs.gov.au. (2018). Ato.gov.au. Retrieved 26 May 2018, from https://www.ato.gov.au/calculators-and-tools/simple-tax-calculator/

Fitzpatrick, S., & Pawson, H. (2014). Ending security of tenure for social renters: Transitioning to ‘ambulance service’social housing?. Housing Studies, 29(5), 597-615.

Hulse, K., & Milligan, V. (2014). Secure occupancy: A new framework for analysing security in rental housing. Housing Studies, 29(5), 638-656.

Hulse, K., Pawson, H., Reynolds, M., & Herath, S. (2014). Disadvantaged places in urban Australia: analysing socio-economic diversity and housing market performance.

Lee, C. L., & Reed, R. G. (2014). The relationship between housing market intervention for first-time buyers and house price volatility. Housing studies, 29(8), 1073-1095.

Stampduty.calculatorsaustralia.com.au. (2014). Stamp Duty Calculator. Retrieved 26 May 2018, from https://stampduty.calculatorsaustralia.com.au/