Australian Housing Affordability Discussion

[footy99]

Disappointing; more reversion to implied obscenities. See my comment above about that.

I care very much - enough to give the advice people don't want to hear. If you are miserable where you live, can't get ahead, can't realise a dream , move somewhere else.

In other posts, feelings of the Treasurer are again implied ( uncaring etc) then criticised. Criticisms fine, but base it on what he said, not on what you ( I mean a generic you throughout here) think he might say or feel. That's just political barracking.

On the other hand, maybe I might imply all sorts of outrageous feelings to, oh I don't know ... Bill Shorten? ... About housing affordability and then rip into him as the ultimate, uncaring, unfeeling villain.

Any chance this thread can revert to facts ( and opinions on them) rather than stuff like "the Treasurer obviously thinks .... "?

It's a good point. I think the bloke just needs to play his audience a bit better. Any statement that could conceivably be isolated, taken out of context and construed as insensitive will always get the victim personalities out in force with righteous anger. It doesn't take long before what was actually said is lost in the sea of implications drawn from that anger.

The bloke has a blunt and practical personality style that will be effective if the people complaining are like-minded, which is rare. When they're not, he needs to adjust the communication style a bit. I suspect his attitude is the people getting offended here are the minority that are going to get offended by anything and everything anyway so just ignore it. The market will eventually correct the problem, we have some regulatory tools available to help with the international investment portion and here's the only practical advice I can really give in the interim. But that communication approach underestimates the size and influence of the angry mob. There's a reason everyone fronting the media takes constant PR lessons these days - he and his mate Tony might need a freshen up.

 

[OATEK]

I was implying Police, Firefighters, Nurses etc can't live near the places they serve. <redacted>

When I and many of my then work colleagues were looking to buy/build a house as we established our families, we were spread far away. Many went to new housing estates north of Gosford. Others established themselves in the lower Blue Mountains. Our first block of land was officially in the City of Wollongong, although near its most northern border. And we all worked together in the Sydney CBD (this was in the 1970s).

We traded up and eventually found a spot in Southern Sydney where we have stayed. Work places have varied from Parramatta to Chatswood and back to the Sydney CBD. Life is a journey, and home ownership is part of that journey with all the ups and downs.

 

[amaroo]

When I and many of my then work colleagues were looking to buy/build a house as we established our families, we were spread far away. Many went to new housing estates north of Gosford. Others established themselves in the lower Blue Mountains. Our first block of land was officially in the City of Wollongong, although near its most northern border. And we all worked together in the Sydney CBD (this was in the 1970s).

We traded up and eventually found a spot in Southern Sydney where we have stayed. Work places have varied from Parramatta to Chatswood and back to the Sydney CBD. Life is a journey, and home ownership is part of that journey with all the ups and downs.

Same Same for buyers in the 80's 90s, etc ... however, seems like it's changed for the current generation. Unrealistic expectations = nothing more than a whinge and blaming others.

 

[straitman]

Still this thread has been created based on a comment about Sydney, not the rest of Australia. Some may not give a rats about sydney but the fact remains the treasurer was talking about Sydney, not Tasmania. Little stories about Tasmania are all very interesting, but they're also mostly irrelevant.

The point I was making is as relevant (or more) than many posts here misquote what the treasurer said and then the others that continue to misquote what others have said.

Let's stick to all the facts not just those that suit people.

 

[medhead]

Housing Affordability Discussion

The point I was making is as relevant (or more) than many posts here misquote what the treasurer said and then the others that continue to misquote what others have said.

Let's stick to all the facts not just those that suit people.

Herein is the difficulty of creating a thread from nothing. The treasurer's quote was made specifically about Sydney. While the rest of australia might be important, that quote wasn't about the rest of Australia.

As for misquoting, it seems plenty are happy to add in a whole heap of words that the treasurer never said. Pretty funny to be accused of misquoting (by those adding words) for sticking to the actual words that were uttered.

 

[drron]

I agree people are using things the Treasurer never said,RooFlyer has given the links to the interview with no effect so here is the transcript-

JOURNALIST: Treasurer do you accept that housing in Sydney is unaffordable and the only way we’re going to make it affordable is if real house prices in real terms actually fall over the near term?
TREASURER:
No. Look, if housing were unaffordable in Sydney, no one would be buying it. People are purchasing housing in Sydney, it’s expensive. As a multiple of average weekly earnings it is expensive, it’s an expensive city to live in. It’s my home city, it’s an expensive city. But, having said that, you know a lot of people would much rather have their homes go up in value than fall in value. Why? Because when you take out a mortgage, the mortgage is against the assessed value of that particular point in time, whatever’s leftover is your equity in the property. If your equity builds in the property not only is that to your financial benefit, but it also gives you the opportunity to borrow against that if you choose to do so for a small business. A lot of small businesspeople are borrowing against the equity in their homes in order to start up their business or build their business. Now, to have increasing equity in a home is a good thing, that’s a very good thing. Interest rates are at record lows. So if property is proving unaffordable for people with interest rates at record lows, then they should think carefully about how much they really can borrow, because you should always plan on in this situation interest rates potentially going up over the long term. So, you’ve got to be careful, it is a big financial risk to buy your own home. We want to make it easier. There are a suite of initiatives we have in place in regard to that, but most obviously, the best way to address inflated house prices in Sydney is to build more properties, build more properties.
JOURNALIST:
You say that housing is affordable, but what about for first home buyers who can’t get on the property ladder, those people that don’t have access to equity in other properties?
TREASURER:
Well there are a range of incentives that have been put in place by state governments and others in relation to first home buyers. The starting point for a first home buyer is to get a good job that pays good money. If you’ve got a good job and it pays good money and you have security in relation to that job, then you can go to the bank and you can borrow money and that’s readily affordable. More affordable than ever to borrow money for a first home now than it has ever been. But, the response for first home buyers is to build more properties. I know, it’s a difficult concept for some to get their heads around, supply and demand, but it’s not that complicated. If you increase supply to meet the demand, then obviously you won’t get the growth in property prices that you may have thought if you have less supply.

 

[OATEK]

Re: Housing Affordability Discussion

Herein is the difficulty of creating a thread from nothing. The treasurer's quote was made specifically about Sydney. While the rest of australia might be important, that quote wasn't about the rest of Australia.

As for misquoting, it seems plenty are happy to add in a whole heap of words that the treasurer never said. Pretty funny to be accused of misquoting (by those adding words) for sticking to the actual words that were uttered.

Did you mean to say "by those" Just "adding words..."

 

[JessicaTam]

For clarity, and to avoid the thread getting bogged down in just one city I have amended the thread title as that seems to be where the discussion is going.

 

[CaptJCool]

If youve got a good job AND it pays good money AND you have security in relation to that job.....

If my aunt was my uncle....I could have a great job that pays small or a temp or contract that has a use-by date ....neither of these conducive to "owning your own home". And it would be an interesting study to see just how those Interest only loans are going .... A 30 year rental from the bank..?

Luxury homes in Sydney are like Manhattan and London. There's always another offshore millionaire buyer willing to outbid someone else, having made money while they slept.
The next layer down around $700k - $800k is at risk of flatlining as the average Aussie household of 2 working adults sits inside the pyramid scheme of a large corp not being given access to extra salary, bonuses nor free share script. While pricing may come down 5-10% demolishing a house on a large block and sticking half a dozen units on it means prices stay high. Ie you now get the 1/7thsized place for the same $700k price as "everywhere" else in the suburb. A smaller Land size doesn't seem to result in an equivalent smaller price...

Is own your own home unique to Australia?
The Comm Bank in the 1950s had low interest rates and that started the trend in that direction.
When negative gearing resumed remember it was withdrawn and started again, many if not all the State Governments opted out of public housing saving themselves enormous cost and donating the tax breaks to the federal coffers and at some point many of the existing renters were offered the chance to buy the place they rented. And then urban renewal and infill in housing trust suburbs in the 80s.
All this means less and less square metres for more and more price which requires one really high income or two in the household earning a salary or parental or family support and certainly not bank support..
As for the rent trap, who can save serious cash while earning average wages ?
even when you have saved 10%. Finding stamp duty and LENDERS mortgage insurance taking anywhere upto 2/3 of that saving. Who claims on that cash cow ?
Deemed deposits could be the way to go using the rent paid and super saved as a backdrop to getting into the market oh and let's forget HECs.loaded onto recent graduates .. - after all it seems it's the act of getting into the starting blocks that is the biggest hurdle not the future payment from future earnings. In England, it's commonly acknowledged you are stuffed without parental financial support. That from a Genworth Finance study

 

[vetrade]

A pertinent point that Hockey made but which seems to have been essentially overlooked in this discussion is the effect of under-supply of housing land i.e state governments are responsible for controlling the release of land for new housing estates but have been reluctant to do so (because they baulk at the infrastructure costs) or have placed more onerous obligations on developers by requiring them to fund much of those infrastructure costs themselves. This has driven up developers' costs and stifled land supply accordingly. It is the lack of land availability for new housing which is the major reason for increasing prices. The actual building cost of the house itself is not the main force driving the price increases at all. I can sense the disbelievers rushing to their keypads to dispute that and complain (again) that they want a house close to where they work to keep down travel times, maintain lifestyle choices etc. but that is the economic reality.

In Victoria the previous Labor Government went looking for cash and decided to oblige owners of outer Melbourne and rural land wishing to sell their properties to prepay much of the development costs traditionally imposed at the time developers actually finish subdividing. The majority of those people could not either borrow or afford to pay those costs before they had a buyer so the result is that a lot of housing land is languishing in never never land. To my knowledge the Libs did nothing to fix the problem when they got in either.

It was also Labor's policy to push higher density housing in the Melbourne suburbs too rather than facilitate new developments in outer suburbs. Their solution was to encourage people to build units or granny flats in their backyards and reduce setbacks from side boundaries etc so that more units could be squeezed onto blocks. Many once lovely suburbs are turning into congested concrete jungles in the process.

Even my local council (Mornington Peninsula) now demands that developers build and pay for roads before they are allowed to even start construction of retirement villages etc. This is despite the fact that the council's own planning projections show that demand for retirement accommodation is massively outstripping supply and will get worse. The result here has been a dramatic slowdown of development with developers now waiting much longer so they can pre-sell a bigger number of units to finance the extra costs they now face. As well as that they have blithely changed the planning scheme to exclude many suitable small acreage properties from being used for housing development despite the fact it is only a few km from the centre of Mornington.

If land supply was opened up there would be a significant release of the pressure on housing prices in all our capital cities.

 

[cove]

Some assistance from parents can help the next generation by either knocking out some of the HECS on uni or tafe or by helping with the deposit on the first home.

 

[CaptJCool]

One of my younger work colleagues had no deposit... First home owners grant was $28,000. That was the deemed deposit...... HECs was $28-30,000. Took 8 years to pay out. Net effect, first home buyer! EVen if there was not HECS, doubtful the savings of $28k could have happened within the time period in question.
Others took the first home owners grant lived in the place for the minimum statutory period, then moved out and rented it for a few years.....net effect had the house then became a landlord and rented with friends.....lmao

 

[UP4014]

Re: Housing Affordability Discussion

Disappointing; more reversion to implied obscenities. See my comment above about that.

I care very much - enough to give the advice people don't want to hear. If you are miserable where you live, can't get ahead, can't realise a dream , move somewhere else.

In other posts, feelings of the Treasurer are again implied ( uncaring etc) then criticised. Criticisms fine, but base it on what he said, not on what you ( I mean a generic you throughout here) think he might say or feel. That's just political barracking.

On the other hand, maybe I might imply all sorts of outrageous feelings to, oh I don't know ... Bill Shorten? ... About housing affordability and then rip into him as the ultimate, uncaring, unfeeling villain.

Any chance this thread can revert to facts ( and opinions on them) rather than stuff like "the Treasurer obviously thinks .... "?

Here is a fact, Tasmania is subsidised by the mainland, in part due to lack of jobs which in turn keeps housing costs low and keeps a lid on growth.

Not intended to have a go, but we shouldn't be too simplistic, I think one of your posts said you sold up and moved with enough to buy a house and set your business up which is of course great, but if you don't have anything to sell in the first place.....

Matt

 

[coyote25]

Without wanting to get flamed I think there are people who think they have good jobs, nurses, police, firefighters, even construction workers but based on their salaries in Sydney (note not everywhere) are not in the salary range needed for an average house.

We need people in these necessary jobs and they should have a reasonable chance with hard work and sacrifice to get into the market.

The solution? I don't really know but with wages being suppressed for most workers and with high house price growth in Sydney and to lesser extent Melbourne (plus previously Perth) it is getting harder for people with good jobs but not high salaries.

We probably need more supply (allow more apartments in traditional suburbs) and decreased demand (less foreign ownership and investors buying established houses) but that means some people giving up some privileges they already have (I'm someone with an investment property so I can be said to be part of the problem).

I'm not sure people really want to solve this. You already hear the political slogans for and against change (x wants to cut you house price, y doesn't want your kids to have access to houses).

Public discussion in Australia appears to be at a low, short slogans don't help complex problems. Tax policy impacts real investment decisions so Federal policy does have some impact but so does State and Council decisions.

 

[Pushka]

The SA Govt is pretty much broke. So they are selling land to make money. Guess that's a good thing in SA. Kind of.

 

[amaroo]

Problem solved

 

[Pushka]

Problem solved
View attachment 50534

The wind farms in SA were noted by Alinta this week as being a major reason why they were shutting up shop here very soon - announced on the day that unemployment fell everywhere except here.

 

[Alanslegal]

We probably need more supply (allow more apartments in traditional suburbs) and decreased demand (less foreign ownership and investors buying established houses) but that means some people giving up some privileges they already have (I'm someone with an investment property so I can be said to be part of the problem).

All we hear at this stage is governments encouraging 'demand' like 'Go get a better job' or 'I like property prices rising because I am an owner too' but the issue is that the supply side of things, is pretty pathetic. I mentioned my suburb previously might get 1 or 2 new listings a month, well I have not seen an auction result for my suburb this month - so supply is definitely very scarce. It's good for me as an owner and investor in the same suburb though. We do need much more 'supply' in Sydney and it is time for the state and local governments to work towards removing all these restrictive regulations so that the supply side can pick up. Lets change zoning requirements so that low to medium density housing to built within, say, 1km of any train station in Sydney metropolitan or any major bus hub.

 

[seanpodge]

The negative gearing and capital gains tax rorts have to go. All they do is encourage speculators and tax dodgers into the property market at the expense of people seeking shelter. At least make it so someone negatively gearing has to do it on a new property so that there is a sliver of social benefit to it.

The main problem with Hockey's comments is how condescending they are. Firstly, people buy Ferraris too but that doesn't mean that they are affordable. Secondly, his government, certainly in it's Howard iteration, did plenty to both make housing more expensive (e.g. effectively halving CGT on investment properties) and making good, well paying and STABLE jobs harder to get (i.e. WorkChoices). Basically, unless there is a big crash in property (probably needing drops of around 50%) then there are many younger people who have little to no real chance of owning a home. This is a big social change that the government seems unwilling to confront.

While we're here, the rights of renters to stable accommodation and more protection under law should be looked at.

 

[trippin_the_rift]

So the question becomes....

a) Why bother owning a home?
b) If you do want to own, why live in an area that is out of your financial grasp? (area could mean suburb, city or country...)

I think JHs comments sum it up well. If you can't afford an asset - do something about it. Just because your parents could buy in that suburb 40 years ago on an average wage doesn't mean you can or should be able to do the same today. There's many suburbs in Australia JH wouldn't be able to afford but you don't see him complaining... if he wanted to live there he'd go earn more cash - simple.

I discovered last year that I was unable to afford tax in Australia. Unfortunately that means I had to move to another country where I am able to. Same applies to any type of expense including property. Seems straight forward to me!