SYDNEY AND MELBOURNE HOUSING UNAFFORDABLE
The Demographia International Housing Affordability Survey of 325 cities around the world comparing the ratio of house prices to median yearly household income, has ranked Melbourne at No 321 and Sydney at No 324! Only overcrowded Hong Kong ranks worse.
The median Melbourne house price was $565,000 and the median household income was $63,100, so the ratio of house price to income was 9. Sydney was worse at 9.6, and Hong Kong had a house/price income ratio of 11.4.
These figures show just how much rapid population growth has damaged housing affordability in our large cities. Australia used to be a country where everyone could aspire to a home of their own. Sadly that is no longer the case. Our high migration high population growth path is killing off our children’s chances of owning their own home.
Kelvin Thomson MP
Federal Member for Wills
Monday 24th January 2011
How are people on average or lower incomes, especially families, supposed to afford a roof over their heads? The cost of housing is cruel, and hostile to our citizens. We used to be the "lucky country" with the highest rate of home ownership in the world. Only the baby-boomers and those older will know or remember this time. Poor government, globalization, priority to property developers, greed, and corruption can only be blamed. At least with unaffordable housing, Australia may not be so attractive to live in for prospective migrants. If we had a stable population, there would be enough homes for everyone.
ReplyDeleteThe dynamics of this are clear- limited resource = land (to put houses on). Unending increase in demand from population growth spurred on by those who see this being in their interests = rise in prices. Beneficiaries = those who could afford to buy land when others couldn't and now sell it at a profit.
ReplyDeleteMany of those who could not buy earlier would have been too young= inter generational inequity.
Indeed,the fundamental problem is population growth driven by the Growth At Any Cost lobbies.
ReplyDeleteAll politcal parties facilitate their activities seemingly regardless of the future of Australia.
There are a lot of other aspects of the present housing bubble.Negative gearing is one.Another,a potential disaster,is the amount of money which has been borrowed overseas by banks and non-bank lenders to fund housing and land purchases.
This Ponzi scheme will only continue as long as our terms of trade are favourable.It is a certainty that our trade position will not always be favourable.Along with housing,private debt is a bubble.All bubbles burst and when this one blows it will cause a lot of tears.
If we want to make housing affordable then lowering population growth is a sure way to reduce demand pressures.
ReplyDeleteIn 1970 it took 151 times (or nearly 3 years of) the then Average Adult Weekly Wage of $65.40 to acquire a median priced home of $9,910. Today it’s 511 times, or nearly 10 years wages, making houses more than three times more expensive today in real terms than in 1970.
This becomes 784 times (15 years wages) by 2020, 1,090 times (21 years wages) by 2030, 1,514 times (29 years wages) by 2040, and 2,105 times (or more than 40 years wages) by 2050 (see graph on Page 7).
It is shown as we continue to grow home ownership becomes more elusive.
Reference:
http://blogs.abc.net.au/queensland/files/JOHNSTON_DIXON_Report.pdf
There is huge intergenerational inequity with the current housing situation. I bought a block of land when I was 21 after a year of saving. Now my 40 year old single daughter is struggling to get into the market. She would do better had she a husband or partner but she chooses to be single. In doing so, however, she's excluding herself from the Canberra market. And she's a middle class professional! What hope for the low paid?
ReplyDeleteRecent media articles emphasize that developers do appear to land bank.
ReplyDeleteDevelopers can only be expected to act out of self-interest by controlling supply. It is quite another thing for the state property agency, VicUrban, to sit on a bank of 25,000 housing lots listed for development and release just over 700 a year. One of VicUrban's key responsibilities is to provide affordable housing, but chief executive Pru Sanderson says: ''VicUrban's act requires it to operate commercially.''
Matthew Quinn, managing director of Australia's largest residential developer, Stockland, recently explained the company would continue to keep about a quarter of its land holdings in a long-term bank to ensure maximum capital growth. However, he said the bulk of its land assets had been moved to a short-term bank that would be developed within five years, to give shareholders a more immediate return.
''I think that's a better result for our shareholders because the returns might be much better in the longer term from these big, long-dated land holdings,'' he told Business Spectator. ''But there is much greater impatience by investors to get returns, much more short-term focus and we need to respect that.''
Stockland owns 16,000 vacant lots in Victoria, according to a recent company report. It acquired an extra 1100 lots in the Whittlesea suburb of Wollert near Epping last month and 1300 lots in the City of Wyndham at Truganina in August.
Reference:
Morton Consulting Services 2009, Overview of Recent Trends in residential lot supply & demand in seq.
National Times 2010, http://www.theage.com.au/opinion/editorial/competing-visions-lack-a-liveable-balance-20100319-qm2r.html
The Age 2010, http://www.theage.com.au/victoria/huge-land-bank-puts-squeeze-on-buyers-20100317-qflq.html
If families feel it's tough, how on earth does someone on one income afford half a million dollars to have a house?
ReplyDeletePeople try to say that the house price increases have kept pace with incomes, but that's balderdash. Compare how long it took someone to earn enough to pay off a house in the 80s and early 90s, compared with now. and it's not real value, houses aren't worth that much more, it's purely supply and demand.
The only winners from population growth are big business.
It is simplicity to call population growth as the cause of rising house prices. There is so many different factors onto this which I, cannot even mention them in this short space but, the most important factor or cause (or fault) is by the governments of the both sides (or their greed) which try to keep prices high to send more taxes (in different ways like GST,Stump duty,..so on)to their hip pockets. Without population growth so many foreign rich nationals had their eyes on our lands (and bought) so, it affected the prices plus bad share market plunge sent investors towards investing their money in properties.
ReplyDeleteWhen are both Federal and State politicians going to stop listening to the "noise" made by business for continuing growth. Rapid population growth is resulting in unaffordable housing of a lower quality.
ReplyDeleteKelvin says it like it is.
ReplyDeleteLand; no one is making more of it...