‘Can't always get rid of a mortgage': Aussie reveals apartment ‘hell'

News.com.au

16 hours ago

Buying your own home is sold to most of us as the Aussie dream, but one woman has claimed purchasing her first property was the worst financial decision she's ever made.
Nicole Sherwin bought a small apartment in Melbourne in 2019. At the time, she felt relieved that she'd managed to crack Australia's incredibly tough property market.
The 37-year-old always knew that buying an apartment wasn't going to be the 'best investment', but she feared that if she didn't buy in 2019, the property market would keep increasing and she'd miss out forever.
'I felt like I needed to do it,' she told news.com.au.
Within a few short years though, Ms Sherwin was locked in a financial nightmare, and her apartment became more of a liability than investment.
Ms Sherwin wasn't convinced buying a new apartment was the best investment but decided to take a measured 'gamble' and purchase it anyway.
At the time, she was pregnant, and she explained to news.com.au that, due to societal expectations, she felt buying was the right decision.
'I was pregnant, and once you have a baby and you're on maternity leave, I knew it'd be harder. I figured it was now or never,' she said.
In hindsight, Ms Sherwin concedes she was thinking too short-term with her property purchase.
She wanted a place near Melbourne's CBD that was convenient for her current situation and wasn't prepared to shake up her lifestyle to buy a better investment.
'Hindsight is 20/20. I should have sucked it up and bought a place further out and it might have appreciated in value,' she said.
When Ms Sherwin bought the apartment it didn't feel like a bad decision, and for two years it wasn't.
She and her partner lived in the small apartment happily but then their family expanded.
'It was amazing. It was a great location and a great apartment but the downfall was the car stacker,' she said.
The young mum explained that the car stacker wasn't working in their favour. It only fit smaller cars, and they were a growing family, battling car seats, which became the bane of their existence.
'We got to the point where we outgrew it,' she explained.
The family decided to become rent investors. They rented out the apartment and then rented a bigger place to live, but this strategy didn't work out because the property was negatively geared.
'I got a tenant in and figured we'd be rent investors but that only works when properties appreciate and it wasn't appreciating,' she said.
The apartment's value had been decreasing because other apartment blocks were built around it after they purchased in 2019, and suddenly supply outweighed demand.
The timing compounded the financial problem.
It was right in the middle of when interest rates were rising and Ms Sherwin got slammed with rate rises. The body corporate fees also went up by $200 a month.
'My home loan had gone from 2 per cent to 6.8 per cent. Homeownership was hell for me,' she said.
Ms Sherwin then made the decision to put her apartment on the market, sell it, and invest her money elsewhere, but even that didn't provide financial relief.
'We put it in the market and people were coming through every weekend but it just wouldn't budge. People were saying the size was a problem because it was a small apartment,' she said.
The property languished on the market for two years, and Ms Sherwin said they couldn't sell it, despite going through multiple real estate agents, as she was desperate to offload it.
Even though rents were rising at the time Ms Sherwin couldn't even afford to risk increasing the rent on her tenant because she feared they would move out.
Ultimately, her tenant was paying below market value for the apartment, which was better than the alternative of having to cover a mortgage and rent.
'If she left I'd have an empty apartment that no one would want to move into because it was on the market,' she said.
'I needed to get rid of it so I could move on with my life.'
The apartment finally sold this year for $30,000 less than Ms Sherwin paid for it. By the time the sale went through, the mum-of-two believes she lost around $65,000 all up. The $65,000 figure factors in the cost of maintaining an apartment that was losing value.
Even though she lost money, Ms Sherwin was so relieved to get rid of the property that by the time she sold it, she felt more relief than stinging regret.
'By the end I was just accepting of it,' she said.
The 37-year-old said what she's learned from the experience is that you can't 'always get rid of a mortgage' but she argues her story isn't unique.
Ms Sherwin claimed that she's heard from plenty of friends and acquaintances who have made the same mistake, bought near the CBD to avoid the 'outer suburbs' and watched in horror as their property decreased in value.
'If I had known this would have happened, of course, I wouldn't have done it. I think people think property is a safe bet but it absolutely isn't,' she said.