Financial Planning for Buying a House in Sydney

This article discusses financial planning for buying a house in Sydney. It covers topics such as property prices, income growth, expenses, insurance premium, and savings. The article provides tables and graphs to help readers understand the calculations and make informed decisions. The subject is finance and the course code is not mentioned. The college/university is not mentioned either.

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Finance
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Answer (Question 1):.................................................................................................................3
Answer (Question 2):.................................................................................................................4
Answer (Question 3):.................................................................................................................5
Answer (Question 4):.................................................................................................................6
Answer (Question 5):.................................................................................................................7
Answer (Question 6):.................................................................................................................9
Answer (Question 7):...............................................................................................................10
Reference and Bibliography:....................................................................................................11

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Answer (Question 1):
Year Price Four Year Average Price change
2002 404
2003 474
2004 509
2005 494 470
2006 487 491 4.41%
2007 512 500 1.93%
2008 491 496 -0.92%
2009 508 499 0.72%
2010 603 528 5.84%
2011 567 542 2.61%
2012 608 572 5.42%
2013 670 612 7.07%
2014 759 651 6.34%
2015 878 729 11.97%
2016 919 806 10.66%
2017 978 883 9.53%
Average 5.46%
Year
0
Year
1
Year
2
Year
3
Year
4
Year
5
Year
6
Year
7
Year
8
Year
9
Year
10
Year
11
Year
12
Year
13
Year
14
Year
15
Year
16
Year
17
Year
18
Year
19
Year
20
$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$0.98
$2.83
Sydney property price In Million
The calculation conducted in the above table relatively represents the average value of
property prices in Sydney, which could be used while drafting the overall financial plan for

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the client. The 4-year average price is relatively used to detect the overall changing prices of
property in Sydney, which is then average it to identify the growth in property price. The
growth values a relatively used to identify the future price change in property that will
income in the next 20 years. This detection of the overall is essential to understand the level
of expenses that will in curve by the client to buy a housing property in Sydney. With the
help of the graph it could be identified that the property price but relatively increased from
$0.98 million to $2.83 million in 20 years. Therefore, adequate financial planners to be
conducted for the client so that she could attend the Australian dream of buying a house in
Sydney (Baker & Lester, 2017).
Answer (Question 2):
Year Weekly Income Yearly Income Four Year Average Price change
1994–95 $ 642 $ 33,384
1995–96 $ 626 $ 32,552
1996–97 $ 648 $ 33,696
1997–98 $ 664 $ 34,528 33,540
1999–2000 $ 692 $ 35,984 34,190 1.94%
2000–01 $ 709 $ 36,868 35,269 3.16%
2002–03 $ 726 $ 37,752 36,283 2.88%
2003–04(a) $ 806 $ 41,912 38,129 5.09%
2005–06(a) $ 870 $ 45,240 40,443 6.07%
2007–08(a) $ 994 $ 51,688 44,148 9.16%
2009–10(a) $ 981 $ 51,012 47,463 7.51%
2011–12(a) $ 1,015 $ 52,780 50,180 5.72%
2013–14(a) $ 1,046 $ 54,392 52,468 4.56%
2015–16(a) $ 1,070 $ 55,640 53,456 1.88%
Average 4.80%
Growth in Income 4.80%

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Year
0
Year
1
Year
2
Year
3
Year
4
Year
5
Year
6
Year
7
Year
8
Year
9
Year
10
Year
11
Year
12
Year
13
Year
14
Year
15
Year
16
Year
17
Year
18
Year
19
Year
20
$-
$0.05
$0.10
$0.15
$0.20
$0.25
$0.08
$0.20
Income Growth of Client In Million
The similar calculation as the 4-year average is relatively used in determining the
income growth rate of salaried citizens in Sydney. This would eventually help in identifying
the level of income that will increase for the client in future to support her purchase of
housing property. From the calculation it is detected that an average of 4.8% growth rate in
income is seen for the past 20 years, which would eventually help in growing the level of
income for the client. The graph relatively represents the income growth anticipation of the
client, where an increment of 0.08 million to 0.20 million is seen after 20 years (Abs.gov.au,
2018).
Answer (Question 3):
Particulars Monthly Yearly
Salary $ 6,666.67 $ 80,000.00
Expenses on Amenities $ 1,435.00 $ 17,220.00
Expenses on rent $ 765.00 $ 9,180.00
Total expense $ 2,200.00 $ 26,400.00
Tax $17,547.00
Savings $ 3,004.42 $ 36,053.00
Particulars Value

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Max LVR 80%
Property Value $ 430,265.00
Loan From Bank $ 344,212.00
Deposit to bank $ 86,053.00
Both the calculations relatively help in understanding the level of savings that needs
to be conducted by the client to buy the relevant housing property. Hence, from the valuation
it could be identified that the client can buy the property with a value of $430,265 on the
current savings that is made by her. Moreover, the monthly savings value is relatively at the
levels of 3,004, which could eventually help the client to support mortgage payments on
monthly basis. Adequate savings are conducted by the client after deducting all the relevant
expenses and tax imposed by the Australian government (Baur & Heaney, 2017).
Answer (Question 4):
Particulars (With Insurance premium) Value
Max LVR 99%
Property Value $ 850,000.00
Loan From Bank $ 840,952.00
Deposit to bank $ 9,048.00
Stamp Duty $ 39,478.00
Insurance Premium $ 37,527.00
Particulars (Without Insurance premium) Value
Max LVR 80%
Property Value $ 428,875.00
Loan from Bank $ 343,100.00
Deposit to bank $ 85,775.00

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Stamp Duty $ 278.00
Adequate impact of insurance premium is evaluated in the above table where the
client could use the method for effectively minimising the overall LVR value and
maximizing the property value. From the calculation it is detected that without the insurance
premium a property value of $428,875, where the LVR value of at the level of 80%.
However, conducting the loan with insurance premium would eventually allow the client to
obtain a property with a value of $850,000, where the LVR is at 99%. Hence, it could be
identified that with the use of insurance premium the client could effectively buy the
adequate home to support her Australian dream (Chia, Li & Zheng, 2017).
Answer (Question 5):
Yea
r
Property
price
Savings
Target 20% upfront Stamp duty Difference
0
$
977,500
$
86,053
$
195,500
$
41,868
$
(151,315)
1
$
1,030,918
$
124,079
$
206,184
$
41,635
$
(123,740)
2
$
1,087,255
$
164,186
$
217,451
$
43,911
$
(97,175)
3
$
1,146,671
$
206,263
$
229,334
$
46,310
$
(69,381)
4
$
1,209,334
$
250,460
$
241,867
$
48,841
$
(40,248)
5
$
1,275,421
$
296,894
$
255,084
$
51,510
$
(9,700)
6
$
1,345,120
$
345,691
$
269,024
$
54,325
$
22,342
7
$
1,418,627
$
396,979
$
283,725
$
57,294
$
55,960
8
$
1,496,152
$
450,897
$
299,230
$
60,425
$
91,242
9
$
1,577,913
$
507,588
$
315,583
$
63,727
$
128,278
10
$
1,664,142
$
567,203
$
332,828
$
67,209
$
167,165
11 $ $ $ $ $

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1,755,084 629,901 351,017 70,882 208,002
12
$
1,850,995
$
695,850
$
370,199
$
74,756
$
250,895
13
$
1,952,147
$
765,224
$
390,429
$
78,841
$
295,954
14
$
2,058,827
$
838,208
$
411,765
$
83,149
$
343,294
15
$
2,171,337
$
914,997
$
434,267
$
87,693
$
393,036
16
$
2,289,995
$
995,792
$
457,999
$
92,485
$
445,308
17
$
2,415,138
$
1,080,808
$
483,028
$
97,539
$
500,241
18
$
2,547,120
$
1,170,269
$
509,424
$
102,870
$
557,976
19
$
2,686,314
$
1,264,412
$
537,263
$
108,491
$
618,658
20
$
2,833,114
$
1,363,482
$
566,623
$
114,420
$
682,439
Yea
r
Property
price
Savings
Target
5%
upfront
Insurance
premium Stamp duty
Amoun
t
0
$
977,500
$
86,053
$
48,875
$
37,537
$
41,868
$
(42,227)
1
$
1,030,918
$
124,079
$
51,546
$
39,588
$
41,635
$
(8,691)
2
$
1,087,255
$
164,186
$
54,363
$
41,752
$
43,911
$
24,161
3
$
1,146,671
$
206,263
$
57,334
$
44,033
$
46,310
$
58,586
4
$
1,209,334
$
250,460
$
60,467
$
46,440
$
48,841
$
94,712
5
$
1,275,421
$
296,894
$
63,771
$
48,977
$
51,510
$
132,636
6
$
1,345,120
$
345,691
$
67,256
$
51,654
$
54,325
$
172,456
7
$
1,418,627
$
396,979
$
70,931
$
54,477
$
57,294
$
214,277
8
$
1,496,152
$
450,897
$
74,808
$
57,454
$
60,425
$
258,211
9
$
1,577,913
$
507,588
$
78,896
$
60,593
$
63,727
$
304,372
10
$
1,664,142
$
567,203
$
83,207
$
63,905
$
67,209
$
352,882

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The tables relative Lee represent that under the 20% up front system the client could
effectively by the property during 6-year, as adequate savings needs to be conducted before
the purchase of Australian home. However, from the valuation could also be detected that
under 5% upfront payment the client to effectively by the property during 2nd year, as
Insurance premium is allowed by the bank for delivering the loan.
Answer (Question 6):
Property value $ 1,087,255
Loan amount $ 1,032,892
Year Interest rate Mortgage Payment Saved Savings
3 3.65% $37,701 $ 76,078 $ 38,377
4 3.65% $37,701 $ 92,644 $54,943
5 3.65% $37,701 $ 111,683 $73,982
6 7.00% $72,302 $ 133,325 $61,023
Year Income Expense Tax Net Income
0 $ 80,000 $ 17,220 $ 17,547 $ 45,233
1 $ 83,837 $ 17,623 $ 18,794 $ 47,420
2 $ 87,858 $ 18,035 $ 20,101 $ 49,722
3 $ 92,072 $ 18,457 $ 21,698 $ 51,916
4 $ 96,488 $ 18,889 $ 23,332 $ 54,267
5 $ 101,116 $ 19,331 $ 25,044 $ 56,740
6 $ 105,966 $ 19,784 $ 26,839 $ 59,343
7 $ 111,048 $ 20,247 $ 28,719 $ 62,082
8 $ 116,374 $ 20,720 $ 30,690 $ 64,964
9 $ 121,956 $ 21,205 $ 32,755 $ 67,995
Adequate calculations are conducted regarding the mortgage payment condition of the
client if interest rates increased from 3.65% to 7%. Further from the valuation it is detected

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that during the fourth year after purchasing the property the interest rate will increase to 7%,
which will increase the mortgage payment from $37,701 to $72.302. However, there is no
problems which could be seen in paying the mortgage of the house after increment interest
rates. Hence, it could be identified that the client could effectively support the high interest
rates at the savings conducted on yearly basis (Gurran & Bramley, 2017).
Answer (Question 7):
The main problems that could be identified from the drafted plan is destinations that is
conducted on behalf of the client. The relevant estimation such as the income of the client
will eventually increase and there will be no problems related to her job. Therefore, any kind
of economic crisis would eventually hamper the credibility of the client to sustain a job which
is an essential part of the financial plan to support her Austrian dream (Hulse & Yates, 2017).
Moreover, the changes and economic conditions, government policies and interest rates on
Bank would eventually hamper the actual financial capability of the clients to support the
mortgage payments. In these scenarios, the overall grafted portfolio would not be effective
and not allow the client to successfully fulfil her Australian dream.

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Reference and Bibliography:
Abs.gov.au. (2018). Ato.gov.au. Retrieved 20 May 2018, from
https://www.ato.gov.au/calculators-and-tools/simple-tax-calculator/
Baker, E., & Lester, L. (2017). Multiple housing problems: A view through the housing niche
lens. Cities, 62, 146-151.
Baur, D. G., & Heaney, R. (2017). Bubbles in the Australian housing market. Pacific-Basin
Finance Journal, 44, 113-126.
Chia, W. M., Li, M., & Zheng, H. (2017). Behavioral heterogeneity in the Australian housing
market. Applied Economics, 49(9), 872-885.
Gurran, N., & Bramley, G. (2017). Urban planning and the housing market: international
perspectives for policy and practice. Springer.
Hulse, K., & Yates, J. (2017). A private rental sector paradox: unpacking the effects of urban
restructuring on housing market dynamics. Housing studies, 32(3), 253-270.
Leal, H., Parsons, S., White, G., & Zurawski, A. (2017). Housing Market Turnover. RBA
Bulletin, March, 21-30.
Lee, C. L. (2017). An examination of the risk-return relation in the Australian housing
market. International Journal of Housing Markets and Analysis, 10(3), 431-449.
Li, T., Dodson, J., & Sipe, N. (2017). Examining household relocation pressures from rising
transport and housing costs–An Australian case study. Transport Policy.

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Manzi, T., & Darcy, M. (2017). Organisational research: conflict and power within UK and
Australian social housing organisations. In Social constructionism in housing
research(pp. 142-158). Routledge.
Mee, K. J. (2017). Necessary welfare measure or policy failure: media reports of public
housing in Sydney in the 1990s. In Social constructionism in housing research (pp.
117-141). Routledge.
Pettit, C., Tice, A., & Randolph, B. (2017). Using an online spatial analytics workbench for
understanding housing affordability in Sydney. In Seeing Cities Through Big
Data (pp. 233-255). Springer, Cham.
Stampduty.calculatorsaustralia.com.au. (2014). Stamp Duty Calculator. Retrieved 20 May
2018, from https://stampduty.calculatorsaustralia.com.au/
Thomson, G., Newton, P., & Newman, P. (2017). Urban regeneration and urban fabrics in
Australian cities. Journal of Urban Regeneration & Renewal, 10(2), 169-190.
Valadkhani, A., & Smyth, R. (2017). Self-exciting effects of house prices on unit prices in
Australian capital cities. Urban Studies, 54(10), 2376-2394.
Wood, G. A., & Ong, R. (2017). The Australian housing system: a quiet
revolution?. Australian Economic Review, 50(2), 197-204.