After highlighting concerns over housing shortages and affordability on recent threads I was contacted and asked if I could post the following for discussion. The person would like to remain anonymous, however, they did feel that ‘many of the caring and intelligent people who visit ‘Blogocrats’, not my words, would offer honest feedback and put forward potential solutions.
Here are the key facts from ‘Issues in Society’:
The Housing Crisis
Volume 284, Issues in Society, 2009
* The average house price in the capital cities is now equivalent to over seven years of average earnings; up from three in the 1950s to the early 1980s.
* Around two-thirds of households in the lowest 40% of the income distribution with a mortgage or renting are spending over 30% of their income on housing, the established benchmark for ‘housing stress’.
* The problem of affordability in Australia has been a function of both strong demand and limited supply. Several factors have contributed to the strong demand for housing. They include: higher average real incomes and an increase in the number of double income households; a decrease in the size of the average household due to later marriage, fewer children and increased incidence of separation and divorce; relatively strong population growth underpinned by higher immigration rates; the decline in standard home loan interest rates from the mid-1990s to early 2002 reflecting a low inflation environment; greater availability of credit, including from non-bank lenders; the taxation system’s incentives which have encouraged investment in second and third properties (through negative gearing provisions and the 50% capital gains tax discount) and have benefitted owner-occupiers over renters (through the capital gains and land tax exemptions on owner-occupied housing).
* Income has failed to match the pace of growing house prices, which jumped 400% between 1986 and 2007 while income increased just 120%. According to the report, Australian households needed 7.5 times their annual disposable income to buy a typical house in 2006, up 53% from 1996 when households needed five times annual disposable income.
* Between 1996 and 2006, all Australian states experienced significant drops in housing affordability. New South Wales is Australia’s least affordable state, with homes costing 8.3 times annual disposable household income in 2006, up almost 40% on 1996 figures, while the Northern Territory is the easiest place to buy a house, with house prices just five times median disposable income. Western Australia wasn’t far behind New South Wales, with housing unaffordability increasing 63% to 7.45 times annual disposable income while Tasmania saw the biggest jump, up 65% to 6.1 times annual disposable income.
* Out of all English speaking industrialised countries, Australia has one of the least affordable housing markets, with nearly 90% of areas surveyed considered severely unaffordable.
* Over the past decade outright home ownership dropped from 42.9% to 34.3%. The most dramatic home ownership decline occurred for those aged 45-59. Only 35.8% of this group fully owned a house in 2005-06 compared to 54.4% in 1995-96.
* Older generations are taking more debt into retirement with more than twice as many people aged over 60 paying off a mortgage compared with a decade ago (9.5% in 2006 compared to 4.2% in 1996). This group also experienced the biggest jump in housing stress which almost doubled from 5.3% in 1996 to 9.5% in 2006. Outright home ownership also dropped over the past decade for this group, from 79.6% to 74.5%.
* Recent first home buyers are the most vulnerable to housing stress. This group had the lowest incomes and paid the highest prices for houses due to the current housing boom, putting 62% of first home buyers in housing stress.
* The property shortage has led to rental vacancies dropping to around 1.5% from a 20 year average of around 3.5%. With more tenants than properties, landlords have been able to ratchet up prices.
* Australian Bureau of Statistics data from the 2006 Census shows 105,000 people are homeless across the country. In 2001 the figure was just fewer than 100,000, but Australia’s overall population increase means the rate of 53 homeless people per 10,000 of population has been maintained.
* “The rise in the number of people sleeping rough on our streets – up from 14,158 in 2001 to 16,375 in 2006, an increase of 16% – is particularly damning.” (Mission Australia’s chief executive Toby Hall)
* “After 17 years of strong economic growth it is unacceptable that 105,000 Australians are homeless on any given night, including 12,000 children.” (Federal Housing Minister Tanya Plibersek)
* The latest ABS figures show that teenage homelessness fell 20.8% between 2001 and 2006, from 22,600 to 17,891. However, the number of homeless children under 12 increased by 2,192, or 22%, as family homelessness rose from 22,944 people to 26,790.
* A 2007 report by St Vincent de Paul says around 50% of people seeking help from homeless services across Australia are working families who cannot pay the rent.
* A 2007 report by the Housing Industry Association found that by the end of the decade 750,000 Australians will be classified as under rental stress.
* According to a 2008 National Youth Commission report, Australia’s Homeless Youth, the number of homeless teenagers has doubled to 22,000 since 1989, and one in two homeless youths is turned away from emergency shelters every night because services are full.When young adults aged 18 to 25 are counted in, that number rises to 36,000.
* In the past five years, effective early intervention programs have reduced youth homelessness from 26,000 in 2001, but the programs reach only a third of the young people who need them.
* Australia’s Homeless Youth paints a heartbreaking picture of children and young people who are the fall-out of three decades of social and economic change, of families not up to the task of child-rearing because of poverty, mental illness, violence, substance abuse, divorce and neglect; of warring blended families and families at breaking point because of angry, rebellious adolescents.
* Drug use among homeless youth has increased in the past 20 years. The type of drugs used has also changed with the wider availability of stimulants such as ice. Reasons for use centre on self-medication and contact with other users on the streets. Two-thirds of problem users developed their habit once they became homeless, and access to detoxification programs remains limited.
So, do we have a major problem on our hands or don’t we? Who’s accountable and who’s not for addressing these issues?
How on earth did we let it get so bad?
Over to you
Filed under: Uncategorized
Come on Min, Let loose!
Just for the record I reckon you’re all a pack of bastards (wink)
Let them eat cake. There are still plenty of available bus stops!
Enough already!
I appreciate your efforts and imput but I don’t want to read about this all the time!!!!. Plenty of economy news/blog’s getting around, take it there for FS
I’m over this HUGE focus on things financial
Can we please focus on tits or dicks or something else ?
Um, yeah – wasn’t this meant to be the first week where the financial crisis is discussed in the one thread only. The “housing crisis” as outlined above is pretty strongly related.
Where is the political posts? We have an alcopops law about to be bounced from the Senate, an election looming in Queensland, Turnbull vs Costello, and a number of other subjects which this blog was built around. Enough with the bloody financial crisis – we got the bloody point weeks ago!
Everyone, this is a legitimate social issue that developed well before the GFC came along.
Have our leaders failed to plan and meet the needs of its citizens?
@John:
I acknowledge this is a legitimate social issue… hell, I’m having issues because of it. I have been saving for some time (and I am on above average earnings) and still the banks don’t want to talk to me (with govt grants I have $50K!). Seems the threat of “retrenchment” doesn’t enter the mortgage equation but being self-employed (with great revenues) is a Bad Thing ™.
That said, we have talked about housing along with pretty much every other financial ill that can/has occurred in the current economic climate. In case you haven’t got it yet – most of us are burnt out over the issue and simply don’t want to read/talk more about it.
You’ve become a one issue poster. This would have been a fine addition to the current “Economic Open Thread”, but you bringing it up in a separate thread seems (to me and at least one other poster) like you are trying to wheedle the subject back into other threads.
Just on alcopops, I have been meaning to get a thread up on it, but cannot find time to do the research (as work is a bit hectic at the moment).
If anyone wants to put up a thread on it, or to email the address above we will put it up.
Ben
I appreciate your honest feedback.
Ben
The person who contacted me is highly regarded and I can’t say in what area, it’s not economics, and they appreciate this topic being raised openly in forum such as this. The GFC has obviously brought highlighted this issue that has been conveniently ignored at state and federal levels for many years now.
…in fact, this issue effects everyone in one way or another. It goes to the heart of our social fabric.
It’s not just alcopops that politically hot at the moment but also legislation dealing with political donations. It’s being reintroduced in the Senate which creates a trigger for a double dissolution. Not that you would know if you relied on the MSM.
Surely the Opposition wouldn’t want to fight an election on either of these grounds.
“Whose Accountable”
Many of us are accountable. The rich bosses who increased their wages from 30 times the lowest paid worker in their organisation to 260 times the lowest paid worker. Thereby altering the so called “average wage” statistics forever. The true multiple of earnings for a new home for the average worker is more like 9 or 10 times, not the 7 quoted by statisticians. I speak from analysis of my over 300 clients.
The citizens by changing their requirements from a 3 bedroom home with 1 loungeroom 1 Kitchen 1 bathroom and 1 dining room, with possibly a verandah. To a mansion containing no less than 4 bedrooms 2 or 3 bathrooms 1 media room 1 study 1 family room 1 formal dining room 1 laundry room 1 sewing room etc etc.
The change from a social society to a greed society where everyone is for themselves and the keep up with the Jones’s ethic exploding.
The Government for introducing negative gearing, allowing the wealthy owning investment properties to offset any losses against their other income and therefore giving my tax dollars to those who own more than one property. If they pumped this money into assisting home owners the benefit to society would be far greater.
We were told that rents have to rise because interest rates were rising. Well those same rates have dropped by almost 50% yet rent is increasing by 10% or more per year. We are now told it is due to low availability. Any excuse will do to screw the renter who has no hope of saving a deposit while paying rent.
The finance industry for relaxing credit policy in the face of competition to maintain market share and taking on riskier borrowers. Lend Lend Lend. Although this is now starting to reverse.
The buy it all now society, for telling first home buyers they also need the best of everything in their new home NOW.
The expectations by borrowers that they should be given loans simply because they have assets. To them it should not matter that they cannot service the loan. A dangerous cocktail of destruction.
There will always be homeless as there are people that will not better themselves under any circumstances and will simply squander whatever they have and whatever they earn. I have these type of people in my own family.
The greed of many Real Estate Agents and Mortgage Brokers ( remember I am one of these) who, rather than exercise caution and do the right thing by their clients simply tell them anything to get a sale and the resulting commission.
Until the equlibrium between the top bosses and the avergage workers comes back into sync and the government stops the negative gearing rort and people get back to the basic home, for their first home requirement, things will not change.
Just a small one John. The above quote suggests that one of the reasons for upward pressure on higher housing prices is
I do understand that logically when 1 household separates into 2 households that 2 separate dwellings are required. However, I would have thought that whereas the situation prior to separation was 2 income, this then becomes 2 single incomes therefore having far less ability to save for new homes or being able to cope with the previous mortgage.
Different scenarios might be: wealthy who can afford following separation to easily afford another dwelling. Middle income where (usually the female partner) keeps the house and can afford future repayments. However, the male partner now has to rent. Lower income and also situations where there is little equity in the house, the house must be sold and so both partners are forced to rent.
I should imagine that the latter 2 scenarios are by far the more common. Which in my own convoluted way gets me back to my point. I would have thought that the upward pressure on house prices via separated families would have been cancelled out by the downward pressure on lower incomes experienced by separated families.
Thread up now on alcopops and electoral reform.
@John:
I’m always honest. I am also, usually, as polite as I possibly can be (even if calling them brain-dead dipshits; thankfully not something I need to attempt in this blog *laugh*).
I do understand where you are coming from, and I do understand the seriousness of the subject(s) you have chosen to push. It’s just that we’ve talked almost nothing else but economic/financial crises and wine selections for well over a month now.
@joni:
Perhaps a thread on “Senate Rejections” of legislation is in order. Not only can we debate the pros & cons of the legislation being rejected, but there is also the concept of rubber-stamping vs amendments in the Senate, the idea of a double dissolution on the idea of political donations, and where the so called “independent senators” really sit in the political landscape (sorry, but I don’t think any one but the true believers of the “Great Beardy Sky Man” think of him as anything but a Liberal).
These were the subjects and discussions that attracted me to Blogocracy & Blogocrats in the first place. Would also give my fine opponents in the “general right” political spectrum (Tom of Melbourne, being a prime example) a new set of subjects on which we can all debate
joni: new thread is up!
Ben
@John:
I’m always honest. I am also, usually, as polite as I possibly can be (even if calling them brain-dead dipshits; thankfully not something I need to attempt in this blog *laugh*).
I do understand where you are coming from, and I do understand the seriousness of the subject(s) you have chosen to push. It’s just that we’ve talked almost nothing else but economic/financial crises and wine selections for well over a month now.
Fully appreciated Ben. After being asked on this occasion, I really felt an obligation. I’m a passionate bastard at times I know. Like I said, I really appreciate honesty and I do so even more when it’s framed respectfully. Cheers.
Damn, I’m starting to feel like one of those alcopops.
Min
It certainly is a complex and convoluted issue that doesn’t always lend itself to linear-analysis. It’s very dynamic which simply because it’s about as broad a socio – economic issue as you can get. My guess is that its been placed in the too hard basket by politicians because they’ve always thought it would end up as someone else’s problem down the track.
Consider the spending required to deal with it.
Shane
Really thorough and comprehensive feedback, much appreciated. I was hoping you’d put your hat in the ring. Thanks.
Min
Shane’s response goes a long way to pointing out just how complex and imbalanced things have become, don’t you think?
I certainly agree John, Shane’s response is as always well thought out and gets to the point.
To me, the VIP things that Shane has pointed out are:
An end to negative gearing – however this no doubt would result in screams of protest from developers and the building industry. What about..end negative gearing except for new dwellings. Wasn’t that the idea in the first place, that negative gearing would encourage new constructions, but instead it resulted in churning.
Re people getting back to the basic home. This gets back to the banks via their requirements of X deposit and a provable income and that housing repayments should not take more than 30% of income. Goes back a while but I think that it used to be 5% or 6% deposit, a proven savings history (could be a shock to the young’uns!) plus 2 years continuous employment.
Very obviously if one has to save say 5% deposit and be able to fulfill the above criteria then Mr & Ms Average (or Mr & Mr/Ms& Ms Average) are not going to qualify to buy an $800,000 McMansion and will have to resume buying back-to-basics housing.
The above also puts pressure on developers, because if they continue to build McMansions, then they’re not going to be able to sell them. Which I think is what is happening around about now.
Min, the deposit requirement was 10%, proven savings record and repayments not exceeding 25% of nett income.
The original government scheme for first home buyers was called the Home Savings Grant (my emphasis). To qualify, applicants had to hold an earmarked savings account for 2 years, have signed a contract to purchase a house and not have previously owned or had an interest in a house. Applicants did not have to be married.
At the time that I worked in the section, the grant was paid on a sliding scale depending on how much was saved over the 2 year period. To qualify for the maximum grant of $750, you had to save $2,000, although I believe it was increased to $2,000 before the scheme ended.
You couldn’t include the grant in deposit calculations at the time, either, so the grant could be used to increase equity or furnish your house.
Of course, $750 didn’t completely furnish a house, but it helped and we put up with the army blankets at the windows and furniture hand-me-downs until we saved enough to pay for them. Houses were more a more modest size then, but the trend for larger rooms, at least 2 bathrooms, separate laundry and a family room was starting when we built our first house.
Sorry, should have read Home Savings Grant.
OK, bolding didn’t work. ;-(
Hi Jane..I was going to back..waaay back to 1976. We had to save $6,000 for a $20,000 loan before the Commonwealth Bank would give us a loan even though we had a block of land to build on in Lilydale. That one cost us $9,000, 864sqm (minimum density in those days). We paid it off while we were engaged and still living at home.
**However, thinking about it, we might have had to have had a larger deposit because we hadn’t saved for long enough.
We were able to build our 3br dream home resplendant with 2-way bathroom by doing a deal with the builder such as by painting the house ourselves and by sanding the floor boards ourselves (literally). By this time eldest had come along and so I spent each of her sleep-times puttying in nail holes. Our divan came from my Auntie May..in fact most things came from my Auntie May. In fact my Auntie May might be considered a very early version of EBay
Where the hell’s McPhilbin; having another mental dump?
I can’t offer anything on how we got to where we are now but it does seem to me that the extremely competitive nature of the rental market at the moment isn’t helping improve the situation.
A friend a work told me the other day that her partner has been renting the same house for 6 years and the rent has gone up every 6 months like clockwork. I’m not sure how much they’ve gone up by each time but that seems a little excessive to me. Makes it hard to pay the rent and squirrel away enough for a deposit.
To the other reasons given I would add the gutting of the public housing sector as another factor that added to the bubble simply because it forced more people onto the private market.
As for the first homeowner’s grant and its recent doubling and tripling – what were they thinking?
nic t
Nic look at the ages of this couple and the loan amount even with grants. Insane alright.
Deb
It’s become too common.
Tony
Up your nose with a rubber hose (wink)
John McPhilbin, on March 17th, 2009 at 5:39 pm
What is their income JMc? That’s over half a million dollars debt…and look at the “commitment” history – they aren’t even married…
TB
I’d love to know what their incomes are, and I’m guessing even combined it’s not huge. I hope they’re not planning on having kids anytime soon. Who knows, their parent may be well off and, but we can only assume that’s not the case, because there are so many like them getting these insane loans.
Without being too much of a stickynose..what is the value of a house around your areas? And could a young couple (married or otherwise) afford even a unit around your neck of the woods? This is not saying that you live in a yuppy upmarket area, but rather that even a unit in a reasonable area, close to schools and shops has become unaffordable.
TB
I keep hearing that it’s the middle to high end who are being effected and that’s just not the case.
Remember the revelation by the RBA last year, well banks are obviously still pushing the envelope:
Min
In Sydney’s West many housing prices have been tumbling in some areas, however, they are still at levels that require much larger loans than a few short years ago to buy.
John McPhilbin, on March 17th, 2009 at 5:45 pm:
A simple case for tightening regulations again I would say …
eg 10% deposit and 25% of gross income, only, to pay off a loan…that seemed to work for those greedy baby boomers trying to get ahead in the 60’s…
…remember? The days when you had to have at least $1500 in a savings account to be eligible for $500 first home buyer’s grant…(new home only, I think)
…between 1968 (when we got married) it took ,The Minister, and me, three years to pay off and sell a block of land to make the $1500…that gave us a deposit on a $12,000 home (1971-72)…earning $55-75 a week…(apart from two years in the army – 70-71 at $80 a fortnight…note – halved our income…)
..two kids to support and The Minister mowed neighbours lawns (sorry, KL, that’s life) for $5…I did tune ups on cars on the weekend…@ $20 a pop…sang at the local RSLs and earned $70 for 2×20 minute spots (as much as a week’s wage) but it wasn’t regular enough…
…it was called earning your way then…
Hi Min. I’m talking the same time frame as you. My first husband and I built our house around 1972-double brick, split level, 3br, 2 bath house (all the rage) for about $23,000 including the block, which we paid off before we built.
Our block was the traditional 1/4 acre but only cost $2,500 as it was in a new subdivision in the north-east. For $9,000 we could have lived in the flashest suburb in town! You chaps must have been saving like mad-men!
I guess the house was fairly expensive at the time, but we both had pretty good jobs and were prepared to wait to get the stuff.
I made the curtains and picked up 2nd hand furniture to do-up. We did splurge a bit on the (blush) purple lounge suite and the dining table, which were new.
The dining chairs belonged to my grandma and my other grandmother and I re-upholstered them. She came from a long line of amateur interior designers and even during the depression was constantly painting and decorating and shifting and doing-up furniture. My mother was also a mad decorator, so between the two of them, my house looked pretty good on a shoe string.
I used to make most of my clothes back then, but these days it’s much cheaper to buy off the rack.
I’m glad I don’t have to try to buy a house these days and I feel very sorry for young ones trying to get a toe hold on the property ladder.
TB
See, it should be really that simple shouldn’t it. I completely agree.
Now the reality is this:
Household finances take beating
http://business.smh.com.au/business/household-finances-take-beating-20090319-92mn.html
jane, on March 17th, 2009 at 11:28 pm Apologies for being so late in replying Jane. I only just found this. But Jane purple was just soo trendy in those days. Friends of ours ended up with tomato red shag-pile carpet throughout.
My favorite piece is a writing desk which came from my Auntie and Uncle’s house. It was used to store paint under their house. Easy I thought, and out with the paint-stripper. Top several layers, not a problem. Bottom layer, big problem as it was very old lead based paint which turns to glue if you apply paint stripper. I am sitting here looking at it as I write..came up rather nice (eventually) via lots of intensive sanding, stain and old fashioned shellac.
It was only a matter of time before the real figures reflecting the real hardships started coming through.
Bravo! At least it’s a start in the right direction
Absolutely John..
This is what I’ve been talking about. That there needs to be a lower common denominator.
And now as per your link, we have (a start) re affordable housing and it is therefore a challenge to the market to come down to meet this market.
In the Howard years there was no competition and with no competition then costs just went up and up and up. I think that a big problem was Howard’s difficulty with accepting that people who were low paid shouldn’t just ‘try harder’.
We got it Min (wink). A huge Howard Government denial for sure.
Does this mean John that it’s group hug time??
Min
I think it’s just you and me sweetheart (wink)
Min
Just in “The scheme is scheduled to run for 10 years”
At least you are a little more attractive now than some other (eww) avatars.
John
CBA has just put the brakes on First Home Buying in a big way. From today they will only lend 90% of the value of a home and the applicant must have 5% genuine savings accumulated over 3 months or longer. FHOG will not be accepted as genuine savings.
This has good and bad implications.
John you will be happy to know that no longer will the FHOG applicants be able to buy a home, so now they do not have to panic about the loss of their job or the market freefall being prophecised.
They will now be free to join the rental mob because they will never be able to save the 5% required while paying massive rentals with rentals forecast to increase by a further 20%.
The other ramicification of this will be the decimation of employment for the self employed tradies in the building industry as the FHOG opportuinity now grinds to a startling halt.
I mentioned this a wee bit earlier, but probably got lost. The FHOG is supposed to end June 30th. And so what will take it’s place? Recent statements from Ms Plibersek suggest that any future dollars will be aimed at the lower end of the market.
This is just me, but housing affordability is linked to rental affordability. When it becomes cheaper for people to buy rather than rent, then obviously people will decide to purchase.
When rentals become cheaper = pressure for rentals to become lower = pressure on making housing (purchasers) more affordable. Market pressure and all that.
As above, and the Howard years, no pressure on anything to become cheaper just higher and higher. Shock horror, can’t have that because all of the people with investment properties would have been camping on Howard’s door asking WHY. As per Howard..no worries about personal debt because your assets are now worth more.
You’re spot on Min. Think of how many people now have multiple investment properties and have been able to jack up rents to meet their obligations. Down come rents and the pressure is really on. Few people realise that housing prices over the long term roughly follow inflation and wages growth.
Time to come back down to earth.
Shane
My argument has always been and will always remain on the side of affordability Shane. Hopefully housing prices and rents will come down to more affordable levels and honest decent brokers such as yourself will always be in demand. That’s what I’m hoping.
John, here are some stats that don’t spell doom and gloom.
1. The ABS official House price Index shows that house prices in Australia’s capital cities fell 1.8% in the September quarter of 2008, however prices were still 2.8% higher than they were in September 2007.
2. The median mortgage in Australia is $250,000. The median home price across Australian capital cities is $450,000.
3. Construction costs will fall because of the global diminished demand for commodities, such as steel.
I’m taking these from the February issue of Australian Property Investor, and time permitting I could type merrily away with a raft of positives. I’m not sure if there is a link anywhere to the article titled Property Market Health Check, but it is worth a read if you want to look at the property market froma different angle. But brace yourself: it’s happy reading.
John, to show you that I’m not all evil, the wife and I rent out a Townsville house to a single mother for $60 a week below the market rate.
The tennant is also unemployed.
Whilst the wife and I are serious about getting a good nest egg together, we’re not in the business of screwing the less fortunate.
Migs
I didn’t say it was all doom and gloom, simply prices and rents need to become more affordable across the board. That alone will ensure downward pressure. Where the bottom will be is anyone’s guess.
Migs
I’ve never for one minute thought of you as a despicable landlord. Far from it. I know you’re heavily invested as a result of previous misfortunes and I sincerely hope that sensible people such as yourself come through okay.
John, wahtever you do, don’t listen to this bloke (or the author).
http://www.news.com.au/business/money/story/0,28323,25223797-5013951,00.html
Despite that Milne and Keen say we’re heading to our own subprime crisis, consider the facts:
Subprime loans involve providing credit to higher-risk borrowers who don’t meet the criteria for a traditional, or prime, loan.
The increase in foreclosures in the subprime market has been the primary source on downward pressure on American house prices.
Mortgagees in possession will sell at any price because they don’t want to keep their house, they want to get at least some of their money back as soon as possible. That is now happening on an unprecedened scale in America. But this is unlikely to happen in Australia.
One of the reasons for that is that there has been far less imprudent lending here than in America.
Non-conforming loans, which are the closest thing Australia has to subprime loans, represent about 1% of all outstanding mortgages in Australia, as against 15% in the US. Low doc and no doc loans account for another 7% of loans in Australia, whereas in the US 15-20% of loans are low doc no doc.
John
The problem I have with your comments regarding hoping rents come down. I have never seen rents reduce in the housing market since I became a renter in 1980.
I was never offered lower rent and at the moment people are out bidding each other in the rental wars.
While it would be nice, can you give me actual details of a time in the last 30 years where rents have reduced in the housing market ?
You rent or buy what else is there ?
There’s been numerous reports of rents skyrocketing and ample people to attest to that fact.
By way of example Shane, from as far back as 2007.
April 2008
Melbourne 2008
Rent crisis forces urgent action
Jason Dowling
February 17, 2008
John
Please re read my comments to you I asked for evidence of rentals going down not up. Rentals going down appears to be one of your answers to our problem. What I am pointing out is that rentals have remained higher during both boom and bust times before and now.
The only way to relieve rents is for people to own their own home. If this is denied them, rentals will continue to soar due to demand.
What I cannot understand is why you think it is a bigger disaster for a home owner to lose their job and have to make payments than for a renter to lose their job and have to make rental payments.
A bank does have some sympathy and will give holidays in payments and also accept interest only if this can be afforded. They are also governed by the CCC which is draconian in certain aspects towards Banks.
Have you ever tried to ask a land lord to forgo payment for a few months while you look for another job.
Me too..
Shane
Shane
John
I do not assume that everyone has the ability to afford their own home. It is you who wishes to take the possibility away from people on the perhaps, that they might lose their job.
You still failed to answer me why a person who pays $500 per week rent is better than someone paying $500 a week in loan repayments if either lose their job.
Private debt trap or not a person paying a loan is slowly owning something, a person paying rent is captive to the landlord forever.
How many landlords rely on rental income to pay their mortgages? I’d say a fair whack! The pressure for many sees mortgage repayments dependent on rental income.
Who’s better than who Shane, the issue is affordability. To assume that someone is better off buying because their rent (being inflated by a shortage of housing) is better off buying is nonsense. Now we’re going around in circles.
If a house is deemed affordable then sure, why not take the plunge. But if the rent you’re paying is taking its toll then jumping in and buying and paying off a mortgage that will cause the same stress is a wee bit silly.
We have many people who are low paid workers who simply cannot afford to buy or rent without suffering significantly.
I would assume that most landlords rely on rental income as well as income from their job. But if I had to lose one, I would say it is the rental income. It is far easier to find a new tennant that it is to find a new job.
It’s certainly a complex mix when considering employment and housing affordability.
Guess who’s been reading my threads? Lol
Well they’ve got to get their ideas from somewhere
See Min, we had it mailed from the beginning (wink).
Mailed? I meant ‘nailed. Actually emailed the post to a few people and they were grateful for the feedback.
It didn’t take long for the first-home grant to push housing prices back to unaffordable levels for many Min.I’m with JPMorgan chief economist Stephen Walters on the outlook, in fact, a decline of 10% may be too optimistic. Lets see how the economy travels.
First-home grant hit by price jump
http://www.theaustralian.news.com.au/story/0,25197,25287000-2702,00.html
What all this is telling me is that I’d be a complete fool if I didn’t buy at least one other investment property within the next 12 months.
John…strangle, strangle (huggy ones). There is no low end of the market until there is a reasonable stock of public housing..because there is no competition at the lowest end, especially now that rentals are unaffordable.
To me we used to have: public housing and rental accomodation competing with low cost housing.
But what is there as competition? Just building more and more hasn’t worked (maybe because developers keep building McMansions..town planning..but that’s another story) and so competition must come from public housing.
We have that the FHBG has stimulated the economy which was needed. However, there is now the suggestion that it’s pushing the lowest affordable homes towards the unaffordable.
Two points – that in spite of a very large amount of frantics in the public press suggesting that the FHBG was funding McMansions (over a long time), the facts suggest that this is not so. But that the FHBG was taken up by the lower end of the market.
The other point is that the FHBG has to be means tested..for reasons, all obvious.
John – please please please please do not have large cut/pastes of articles – some people use mobile devices (like me) to read the blog and having these large pastes slows the pages down. Please just select a paragraph or two and the link. Please.
I’m extremely pleased with this initiative. Bravo, keep it coming I say.
Apologies Joni, I have trouble containing my excitement sometimes (wink). Not a bad turnaround for a so-called pessimist. Lets see a balance come back into housing affordability. The government’s willingness to take up what the private sector are unable to do is absolutely F$%king brilliant.
..also Joni, I’ve been lobbying for this type of intervention for some time and I get a great deal of satisfaction when the obvious is addressed.
Joni – “please please please please do not have large cut/pastes of articles – some people use mobile devices (like me) to read the blog and having these large pastes slows the pages down.”
Yes Joni, the same applies to me.
When using a mobile device, access and contribution is usually through “recent comments”.
People that make successive posts clog up access to those of use that aren’t always sitting by our computer all day.
Some of us enjoy contributing and following throughout the day via a mobile.
The blog hogs spoil the ability to particupate.
Miglo, on April 4th, 2009 at 12:51 pm Said:
What all this is telling me is that I’d be a complete fool if I didn’t buy at least one other investment property within the next 12 months.
People like you are the problem migs, not the solution. It’s pure greed, this is why we urgently need to do away with negative gearing as tax evasion.
You see, I’m not up on this mobile device stuff. How does it work? I’ve just always assumed that people would have access to PC’s.
Actually John, it wasn’t you I was referring to. But I often use my mobile phone; it has a touch screen, with a hand writing recognition function.
I hand write comments into a word document, then paste into this site.
When doing this I usually have a look at the active recent threads, and participate in the discussion. If anyone is hogging all the commentary with photos of stuffed toys and irrelevant random words style input, participation is not easily accessible.
Hence I’m entirely willing to press this type of hog to stop, but they seem entirely unwilling to consider this.
Perhaps a thread on blog etiquette?
I’d like to learn more because I am ignorant of the usage and restrictions from mobile devices Tom.
Hence I’m entirely willing to press this type of hog to stop, but they seem entirely unwilling to consider this.
Perhaps a thread on blog etiquette?
Maybe if you had’ve asked nicely and explained your reason ie using a mobile phone to access the blog. Might have got better results than an aggressive and hostile stance.
Or maybe someone else will volunteer to fill in the 11-5am shift?
Go away…where would I get my music from otherwise!
Kitty, that’s bit low, and I fail to see how I’m the problem. The problems have been caused by low-doc and sub-prime loans. I have been the recipient of neither.
I did what most sensible people do: I saved a deposit and I bought a house to live in. My wife received a paltry bit of super when she left the State Govt but it was enough to use as a deposit on another house. This house is rented out to a single, unemployed mother at $60 less than the market rate and we actually make a loss because of it. We didn’t buy that house out of greed, we bought it as some security for my wife when she retires in a few years.
The equity in those properties increased quite substantially and we used that to buy the house we now live in.
I don’t know if you’ve ever followed the stories I have posted but less than 10 years ago the wife and I had nothing. Absolutely nothing. I had just pulled though from a long and major illness that left me tinkering on bankruptcy, and Jedda and I wanted more in our lives than the poverty we had settled into, and we did something about it.
Jedda supported me while I went to uni and our lives from that point have changed for the better. From nothing 10 years ago to owning 3 houses, being in the position to buy another, and having good incomes and the trappings they bring, in my opinion, doesn’t make me a problem. Quite the contrary, I’d like to think I could be an inspiration to others.
Still, I’d rather be seen as a problem in your eyes than being destitute like I once was. I’ve been there Kitty, and there’s no way I want to go there again.
I want to be able to fund my own retirement, or would you rather that I rely on a taxpayer funded pension?
Yeah Miglo, we’ve had this exchange in the past, about you being a greedy slum lord and all.
Sell up, you tax dodger.
I want to be able to fund my own retirement, or would you rather that I rely on a taxpayer funded pension?
Welcome, to the Pariahas(spell?), Migs…
How dare you fund your own retirement…
…we were foolish enough to pay for my bachelor degree up front and I graduated at the ridiculous age of 45…(just for my ego according to my father – but he still came to Adelaide for my graduation)
…then I was silly enough to start my own business AND ask my wife to become a partner as Business Manager while I flew all over the world working…funny, we actually made money over the next 16 years…
…BTW did I tell you The Minister and I got married with a daughter on the way, $300 in the bank, a $1600 debt and an income of $53 a week…then the Defence Force decided I was only worth $80 a fortnight for two years…
BTW – no government handouts for you when you become a self funded retiree…yer on yer own smartarse..!
…and welcome to to the Australia of envy…
…the harder you work the luckier you get…you tall poppy you!
You greedy old bastard TB. You could have quite happily survived on the age pension, eating baked beans and dog food, but no, you had to go and make something of your life. People like you just can’t help themselves.
No wonder the world’s in a mess. And you’re the problem.
Now go and give all your trappings to the needy and front up at your nearest Centrelink office on Monday and apply for the age pension. The world will be a better place if you were destitute.
And don’t forget to tell your kids that your whole life has amounted to nothing.
I want to be able to fund my own retirement, or would you rather that I rely on a taxpayer funded pension?
But you’re not funding your own retirement migs, the taxpayer is. It is the negative gearing that I have a problem with, not you (I like you) I know that you are quite legally taking advantage of this reverse socialism form of tax evasion.
Kittylitter, one house is actually positively geared, while the other will be positively geared if we increase the rent.
PS – I like you too.
And herein lies the danger of the first home owners grant:
The reason why I felt compelled to post this thread in the first place?
I like Migs as well Kitty. Tall Poppy that he is LOL
Actually, I’ve had previous discussions about his approach and after suffering a major financial set-back some years ago has worked hard to reverse his fortunes.
He’s got a kind heart and, in my opinion, makes the type of landlord that I’d like if I were renting.
Investing in housing is a legitimate way to invest but it simply gets out of whack when housing prices, debt levels and rental income requirements to service investor’s debt become unsustainable.
Therefore John..if people have the option, then it’s much better to purchase as at least they’ll be covered by Rudd’s deal with the banks. This compares with renting – 2 weeks in arrears and you’re out on the street. Plus of course being evicted means that there is zilch chance of another RE agent taking you on as a client. Previous Rental History: Evicted due to moneys owing.
Min
Not always Min. The issue is affordability across the board is central. You don’t want renters jumping out of the frying pan and into the fire. Taking up the first homeowners grant and increasing private debt simply to avoid eviction. This could quite easily make matter increasingly worse across the board by pushing up housing prices and lead to even more people being unable to service their debt when interest rates increase has to be avoided at all costs.
Private debt, it should be remembered, is what’s led to us being in such a vulnerable position as a nation.
He’s got a kind heart and, in my opinion, makes the type of landlord that I’d like if I were renting.
Me too, judging by the info you’ve given us migs, I know you’re one of the good guys.
There’s way worse ‘wealth crazed pricks’ (a joke for reb) than you around!
John, I am certain that you and I could argue this until the cows come home
I still maintain that rent money is dead money, 2 weeks in arrears and you’re out the door with little prospect of obtaining another property to rent (due to your ‘history’).
From your link of 9.17am:
And re above:
Choke, choke rental assistance, this is available mostly only to people on the Disability Pension. At last look this was $40pw, however this was a while ago.
…and welcome to to the Australia of envy…
Not envy TB, just pointing out that the ’self-made’ get a lot of assistance from the taxpayer.