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Housing affordability in 'destructive cycle'

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Housing affordability in 'destructive cycle'

PEOPLE who cannot afford to buy their own home are unknowingly making the housing affordability problem worse, an industry body said today.

Urban Development Institute of Australia (UDIA) Queensland president Brent Hailey said housing affordability was now so bad, those who could not afford homes were funding their own social and economic problems in the future.

Instead of pouring money into home repayments, he said, people who could not afford to buy their own property were spending more in other areas, putting pressure on interest rates.

And rising interest rates made the housing affordability problem worse, Mr Hailey said.

The Reserve Bank will consider raising interest rates at its monthly meeting, next week, with some observers tipping another rise.

Mr Hailey said this was a "destructive cycle'' that would lead to job losses in construction and other industries, as people who moved to Queensland could not find affordable housing to buy or rent.

He said Queensland could end up with a whole generation of renters, as had happened in London and New York, as couples gave up on the dream of owning their own home.

He said the three tiers of government needed to work together to motivate people to enter the housing market.

More land should be released to bring land prices down, taxes and charges on new dwellings should be reduced, and the First Home Owners Grant should be doubled to $14,000 for existing homes and trebled for new homes to $21,000.

Mr Hailey said Infrastructure should be installed before houses were built to encourage people to buy.

"Our argument has always been that the infrastructure needs to lead development to give people that perception of quality of life being achieved from the day they move in,'' he said.

Mr Hailey joined the chair of the Real Estate Institute of Queensland, Peter McGrath, in calling for a state summit on the issue.

"This is not a short-term problem and there is no short-term solution,'' he said.

"Governments need to act now, on a national level, to ensure reasonable access to affordable housing is available into the future.''

A UDIA affordability index released in July revealed housing affordability either seriously constrained or at crisis point at 18 of 20 centres examined.


An update is due in the next week. Indications are that the situation has worsened.
 
I am certainly not in this category:

I am unable to enter the housing market so I am pouring all my spare cash into my superannuation and refusing to by Ipods etc.

So don't blame me for a further interest rate rise :rolleyes:
 
Who is to blame...?

(1) Generation x and y for buying Ipods and not saving

or

(2) Generation x and y for not being able to afford a home so they bought Ipods instead.

OR

(3) Baby Boomers who bought up housing at rapid rates making the housing market unaffordable for generation x and y

I reckon I am going to play it safe and vote for a combination of all 3 scenarios
 
not just that but the less people that buy houses the more people there are trying renting which is gonna push rent prices up which makes investment properties more attractive and higher priced :p:
 
Yes the investment return on housing will come not from the house itself as once was, but the rent instead
 
Theres 2 ways housing affordability is going to improve.
Wages will rise or house prices will fall.
By susidising houses is only going to keep prices up.
 
No different to the ebb and flow of housing throughout the years.

Infrastructure,new land releases,Purchase incentives.
Keep interest rates under control,Keep the housing industry employed,keep people with a roof over their head.

What a lucky country we are in that all this can take place and we have an opportunity.
Go have a look around Thialand,India,Even the UK and you think we are hard done by!!

Stop.(Kris).

Putting all your savings into Super means you will never have the funds to buy a house.(Better than blowing it!!)
 
tech/a said:
Go have a look around Thialand,India,Even the UK and you think we are hard done by!!

Yes but those 4 countries are very overcrowded.

Australia is by far and away the emptiest country on earth!

You can't give away some land here.
 
Not sure I have much respect for that article. Firstly, I don't think it's so much a generation X/Y issue in spending money on doodads and not assets, I'm gen X and have no problem makeing sacrifices to pay for my house and shares and I know amongst my friends they are of similar attitude. I'm pretty sure the baby boomers wasted money on other stuff in their youth rather then buy assets (i.e. cars, nightclubs etc), so I don't think the problem is so much a gen X/Y issue, but the standard issue then when people are young, they waste money. Hence the saying "youth is wasted on the young".

The other issue I have with the article is the propesed fix's for the cost of owning a home. throwing more money into the market is just going to increase inflation rate, releaseing more land isn't going to help either, A: the infrastructure costs money, and people are leaving inner city bad areas to move to new houseing areas. The two towns I'm familar with are doing the same thing, cairns and melbourne. Cairns people will spend big money to buy a small block of land 20 mins from the city (which is big considering the size of cairns) whilst larger blocks of land closer to the city are much cheaper. I know here in melbourne, my house that is 30 minutes closer to the city is cheaper then a similar sized house but on a smaller block of land that is on the edge of the city. That dosn't make sense to me? sure, in both cases their house is new/er then mine but in a few years time the novelty will wear off and their house will have problems just like mine.

Did the baby boomers cause all the problems by buying all the property around the place? I don't think so, I honestly don't know one baby boomer that has an investment property, most have just increased the amount they put into their super and thats about it.

Just my $0.02 +GST
 
Probably many takes on this but one of the dangers is assuming that the average, ie the average "baby-boomer" and I am close to be classified as a "baby boomer", applies to everyone in that classification. Usual trap with averages in that one person can have an income of $100k a year and another person $20k a year. The average of the two is $60k a year which comes nowhere near to accurately describing the income of either individual.

Same applies to each and every demographic group whether they be Gen Y, X or baby boomer. I tend to agree with shelldrake in that only a few are in the position to buy an investment property let alone multiple ones. Most are just focused on buying food and clothes, putting kids through school and paying the rates. I suspect that investing in the share market, property investment and superannuation is not even on the horizon for the majority of the population.

Only an observation from working in an office of 60 people in various age groups.
 
tech/a said:
No different to the ebb and flow of housing throughout the years.

Infrastructure,new land releases,Purchase incentives.
Keep interest rates under control,Keep the housing industry employed,keep people with a roof over their head.

What a lucky country we are in that all this can take place and we have an opportunity.
Go have a look around Thialand,India,Even the UK and you think we are hard done by!!

Stop.(Kris).

Putting all your savings into Super means you will never have the funds to buy a house.(Better than blowing it!!)


According to Time Magazine (October 2006):

Average house price in Ireland - 471,000 EURO
Average salary in Ireland - 41,000 EURO
Average tax rate - 31.7% (tax revenue as % of GDP, 2004)

Almost 12 x average salary, compare that to Australia.
 
One of joys of having your own house is that only in adverse circumstances like earthquake, fire, flood that you’ll have to go to find another accommodation.

One of good to buy property to live in, is to be able to plan if and when owner wants to change address.
True, that good tenants are often asked to stay and are given incentives to stay and longer you rent with no problems for the owner the higher value you represent, but sometimes your status will not guarantee continuation of your tenancy.

And as mentioned a few times already, you can start small and cheap, do some reno and upgrade, but as I said, this was said already few times, so no need to bore all of the readers to tears.

My 2c (GST exempt for Aussie Forum Readers :D )
 
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