Sydney not alone in seeking housing crisis solution - National - smh.com.au

hmm, Jess Irvine hasn't done a market-pumping piece funded by the REI for a change -- remarkable... As per the article, if politicians want policy suggestions, just come to this site. They are looking at releasing urban Defence land as well as the State and Crown lands, to answer the vexed 'where will the land come from?' question...

Sydney not alone in seeking housing crisis solution

Rent crisis taking psychological toll

THE rental crisis is having negative psychological effects on tenants, with a growing number reporting rent-associated depression and anxiety.

About one in three Australians rent and the survey by realestate.com.au showed 89 per cent of renters reported experiencing negative psychological effects directly related to the rental climate.

Fifty-nine per cent of renters expressed "anxiety" over their renting predicament. Forty-one per cent felt "helpless" in their rental situation and one in five said they felt rage and fury over their situation.

Only 11 per cent of renters are happy with their current accommodation and only 4 per cent feel well cared for by their landlords, the survey found.

But even with a shortage of good accommodation and rents rising by 9 per cent during 2007, the majority of respondents said they would rather stay in less than ideal rental properties then go back into the market.

Fifty-six per cent of prospective tenants were deterred from applying for properties based on the number of people at inspections. More than a third said they felt they would never be able to own a home.

Rent crisis taking psychological toll | The Daily Telegraph

Credit squeeze hits Aussie banks

There you have it -- the banks opened up the credit floodgates 5 years ago, precipitating the boom, and now it's come full circle -- massive levels of foreclosure, housing inflation, indebtedness, borrowing and consumer risk, so they turn tail and restrict credit again. Of course, 'the gummint is managing the economy'. At least APRA could have done something, but they did very little -- it took an international credit squeeze to stop the local largesse.

This could bring down house prices, because

1) people can borrow less, thus reducing bid prices
2) they will probably also have to pay more interest, also reducing how much they are prepared to pay for housing.

Credit squeeze hits Aussie banks

Victoria pulls ahead

So cheaper Victoria is pulling ahead of property price-gouging NSW -- and yet heightened demand in Victoria isn't escalating house prices through the roof! Very interesting.

NSW is losing the economic race to Victoria, with residents fleeing high property prices and dragging down the state's economic growth.

About 25,000 NSW residents leave for other states and territories every year. And the exodus is constricting the state's economy, with NSW slipping behind its southern neighbour, new analysis by the ANZ's head of Australian economics, Tony Pearson, shows.

Mr Pearson said the Victorian economy had grown twice as fast as NSW's in the last two years, in part due to demographic factors.

"What stands out is the much poorer economic performance of NSW against its peers, particularly relative to Victoria."

Victoria pulls ahead

Housing affordability hits new record low

Those hard-working pollies who 'manage the economy' (or so they keep telling us) are at it again, fixing up the housing affordability problem. Anyone would think they just swanned around for a living delivering speeches, attending openings and taking credit for other people's work, and playing political games with developers, big business, and anyone else with loads of cash. The key words are 'tangible policy action':

"The Australian economy is performing well yet an increasing number of Australians are now being left behind as the degree of housing stress being felt by both mortgage holders and renters continues to intensify," Dr Silberberg said.

"The longer we go without tangible policy action, the worse the situation will become, and that's without higher mortgage rates."

Housing affordability hits new record low

Ten's company: what the rental squeeze means for owners

More on the housing/renting/apartment overcrowding debacle -- this is what happens when you leave housing in a capitalist free market with laissez-faire politicians 'running' the country -- out and out exploitation of overseas students, rampant unaffordability, and horrible life experience. When was it decided Australia was the land of the 'fair go', and by whom, particularly since it has become populated with property developers and landlording piranhas, the 'fair go' mums and dads of yesteryear.

Ten's company: what the rental squeeze means for owners

Home ownership now an 'unattainable dream'

HOME ownership has become an unattainable dream for many low- to middle-income earners in Australia, a new report has found.

The Beyond Reach report, undertaken by the Residential Development Council (RDC), examines the cost of owning or renting a house or unit for six household “types”, comprising different family and wage structures, in 16 metropolitan locations across the country.

It shows owning a median-price home in almost any location in Australia requires a combined household income of about $100,000, while the average annual wage for workers is $55,000 a year.

According to the report, not one of the 16 locations studied offered a median-priced home that was affordable on that level of income.

In calculating affordability, the report used two different measures - that no more than 30 per cent of household incomes should go on housing costs, and a property should cost no more than three to four times the median household income.

RDC executive director Ross Elliott said the research provided a more human angle on the affordability crisis.

“If key workers necessary for society and the economy to function are being denied entry to the housing market, or if the option of a single income family is now completely shattered by the price of housing, we are faced with obvious long-term social and economic consequences,” he said.

Home ownership now an 'unattainable dream' | The Daily Telegraph

Why is housing so expensive?

A nice summary article on the speculative real estate market:

Why is housing so expensive?

THE POLITICS OF AFFORDABILITY

A great public service article on Neil Jenman's website (www.jenman.com.au), written by Terry Ryder. A fantastic synopsis, well worth reading in its entirety:

It's almost tragic watching politicians and media puzzling over the two-speed property market and the related issues of low housing affordability and record home repossessions.

The reasons are quite simple.

The common factor pervading these issues is this: Australia's economy is booming but the spoils aren't being evenly shared.

Most of the benefits of the resources-inspired prosperity are being gobbled up by the upper echelons. While the top end is rolling in cash, the average person is no better off than five years ago.

The business elite have never had it so good. Record company profits, generous executive salary packages and a buoyant sharemarket mean those at the top have more dollars than ways to spend them. This is driving the rise and rise of the top end of the residential property market.

But down in the real world, the mainstream where 90% of Australians live, the market is going nowhere fast.

More and more households cannot afford to buy a home, those who already own one are struggling with their mortgages after eight consecutive interest rate rises and banks are repossessing homes at record levels.

The wages report shows that over the period of the economic boom wages have grown at roughly 2% to 3% a year. In other words, not much above the inflation rate. The report states that a significant proportion of households have seen no "real" (after inflation) increase in their incomes over the past five years.

But in the same time frame property prices have doubled in many areas and there have been multiple rises in interest rates.

The problem is this: the typical price has risen a lot, thanks for the recent market boom, and the typical monthly payment has risen greatly also, thanks to all those interest rate rises from the Prime Minister who promised they wouldn't rise if we re-elected him – BUT household incomes haven't kept pace, thanks also to that same Prime Minister who has devoted his life to keeping wages down.

In the property booms of the 1970s and 1980s, prices rose a lot and interest rates were high, but incomes were rising at 8%-9% a year, so affordability didn't suffer too much.

Today, the growing gap between the income needed to get a loan and the actual income earned by the average family is the reason why affordability is at all-time lows – and why we have this strange two-speed property market.

You'll notice that there's no mention in the affordability equation of stamp duty or land supply.

This is a surprise because the development lobby has been desperate to convince us that affordability could be solved overnight if state governments lowered stamp duty and raised the supply of land for new residential development.

It's nonsense but they keep saying it because they have a vested interest in lower stamp duty and higher land supply.

So why is this deception not widely known?

Part of the answer is that media doesn't do its job. There was a time when journalists were proactive in investigating major issues like affordability. Today many journalists simply regurgitate the spin-doctored views of politicians and business lobby groups.

THE POLITICS OF AFFORDABILITY

A housing illusion we buy every time

A reasponable attempt at an analysis of the boom. I particularly like the reference to the stupidity of the sheeple in the following opening quote:

It happens after every housing boom - people go from congratulating themselves on the huge rise in the value of their home to wondering how on earth their children will afford homes of their own. So I've no doubt Kevin Rudd is on a winner with his efforts to focus attention on the deterioration in affordability for first home buyers.

A housing illusion we buy every time

The question is what are the politicians going to do to make homes affordable again? Bring down the price of land? Develop huge tracts of Crown and State land themselves affordably and put price cap covenants on them going forward?

Mortgage stress to hit home at election

Enough said. (And Jessica Irvine at the SMH is not running a RE industry market-pumping story for a change, very strange, what could have lead to this change of heart?)

MORE than a third of NSW families with a home loan live in a state of 'mortgage stress', devoting more than 30 per cent of their gross income to mortgage repayments.
This is a massive increase since the 2001 federal election, when the proportion was less than a quarter. Mortgage stress has since risen in every NSW electorate, unpublished census figures show. As housing affordability firms as an election issue, the figures reveal the high level of financial stress confronting many families.
At the same time, buyers are finding it increasingly difficult to get into the market. A survey of 1000 first-home buyers by mortgage broker Mortgage Choice found almost one-third did not expect to buy a home until they were aged 40 or over, and fewer than two in five expected to have secured a home before 30.
NSW is home to the greatest mortgage pain - the figures show 33.2 per cent of families with a home loan live in mortgage stress.

Mortgage stress to hit home at election

Home loans on tap: no deposit, no inspection

Is this somehow connected to the housing boom that the politicians are so earnestly wringing their hands about in Darwin at the Premiers Conference? What to do, what to do?

THE mortgage stress crisis is being worsened by the boom in easy credit, with lenders approving loans without inspecting properties, offering large amounts to borrowers who have no deposit and encouraging buyers to take on debts that would eat up half their income.

Amid concern over the growing practice of loans being approved with no on-site inspection, the Herald discovered yesterday how easily customers can be seduced by quick and simple access to credit.

Home loans on tap: no deposit, no inspection

Housing costs squeeze budgets

SOARING housing costs are squeezing family budgets in Sydney, even though incomes in the city are higher than almost everywhere else in the country, figures from the 2006 census show.

Mortgage repayments in Sydney are 40 per cent higher than the national median and rents 31 per cent more, even though incomes in the city are only 12 per cent higher.

Housing costs squeeze budgets

BIS warns of Great Depression dangers from credit spree

Here comes the fallout from easy credit and borrowing — see the following post concerning the increasing number of foreclosures taking place.

The Bank for International Settlements, the world's most prestigious financial body, has warned that years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump than generally understood.

"Virtually nobody foresaw the Great Depression of the 1930s, or the crises which affected Japan and southeast Asia in the early and late 1990s. In fact, each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators to suggest that a 'new era' had arrived", said the bank.

The BIS, the ultimate bank of central bankers, pointed to a confluence a worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system.

In a thinly-veiled rebuke to the US Federal Reserve, the BIS said central banks were starting to doubt the wisdom of letting asset bubbles build up on the assumption that they could safely be “cleaned up” afterwards - which was more or less the strategy pursued by former Fed chief Alan Greenspan after the dotcom bust.

BIS warns of Great Depression dangers from credit spree

Surge in families forced to sell their homes

Looks pretty grim for the economy, for families, and for the housing boom. Naturally the politicians who pride themselves on 'managing the economy' when times are good (which is an outright lie anyhow at any time) shut up when this sort of thing happens. Never mind that half the reported GDP growth of recent years has been empty inflationary lending on housing at high, unsustainable prices.

HUNDREDS of families have been forced to sell their homes, or lenders have repossessed and auctioned them, in Sydney's west and south-west in the past year, property experts say.

There were a record 1400 auctions in the region in the year to March 31, nearly double the number in 2005, Australian Property Monitors figures show.

Michael McNamara, an analyst with the company, said the spate of auctions pointed to a big rise in distressed sales and repossessions in the region. Mostly, sellers in Sydney's cheaper property markets were going to auction because they had to, not because they wanted to, he said. "The big rise in the number of auctions isn't because the market is going well," he said.

"It's jumped because auctions are the preferred method of sale of trustees in bankruptcy and mortgagees in possession. I think that's a very disturbing figure."

The median price for an auction in south-western Sydney in the March quarter was $318,000, $22,000 less than the overall median house price in the region.

"This just brings home the fact that most of these are distressed sales," Mr McNamara said.

Dara Dhillon, the principle of Dhillon Real Estate in Ingleburn, near Campbelltown, said 95 per cent of auctions in south-western Sydney were mortgagee sales. But he said there were many more forced sales where lenders had encouraged borrowers to sell rather than face repossession. "This type of [forced sale] is a big proportion of sales at the moment," he said.

Mr McNamara and Mr Dhillon estimate that hundreds of families in western and south-western Sydney had been forced to sell their homes, or had had homes repossessed and auctioned by lenders, over the past year.

Meanwhile, the total debt burden on Australian households topped $1 trillion for the first time last month, Reserve Bank figures published yesterday showed.

Debt on housing accounts for about 86 per cent of household debt, with the remainder personal debts like credit cards and personal loans. The ratio of household debt to household income has reached 160 per cent, one of the highest in the world. Interest payments now soak up a record 11.9 per cent of household income, nearly three percentage points more than in 1989 when mortgage rates were 17 per cent.

Surge in families forced to sell their homes

Blogger learns how to monetise hate

I've spoken to Casey in the past, posted on his website, and *tried* to provide sage counsel to him. Now he's visiting Sydney...

Blogger learns how to monetise hate

Update: I ended up having dinner one night with Casey and chatted about various things. I wanted to help him out more in finding accommodation for a few days, but I'm in the middle of relocating myself, so couldn't offer anything much. Travel broadens the mind...

Rents fuel plight of homeless young

What a surprise that the politicians are doing nothing about housing on their $200K salaries and perks and pensions paid from YOUR money. I thought we were paying politicians to do a job...

HOMELESSNESS among people aged under 25 has doubled to 35,000 in the past 20 years, says a commissioner of the first independent inquiry into youth homelessness since an inquiry in 1989.

David MacKenzie, associate professor of sociology at Swinburne University in Victoria, yesterday said youth homelessness now accounted for one-third of all homeless people in Australia.

The problem of homelessness had been worsened by the rental crisis, said the chairman of the inquiry, the David Eldridge, of the Salvation Army. With the pressure on prices forcing out the bottom end of the market, the overflow has been too great for public housing to address.

He said the situation was heightened by governments that favoured the publicity generated by pilot programs over the less 'exciting' job of funding programs that were working.
'The circumstances have all come together at this time to make it a fairly explosive situation,' Major Eldridge said.

Wally Dethlefs, a commissioner who also sat on the 1989 inquiry of Brian Burdekin, a federal human rights commissioner, said: 'It's not just marginalised people, but TAFE and university students ending up in shelters. What we are hearing in this inquiry is [that] because of the increase in rent there is no exit point.'

Rents fuel plight of homeless young

Housing Rebounds, Sky Green - Motley Fool

Try not to step in it today, housing bubble watchers. Once again, the real-estate cheerleaders and compliant 'journalists' out there will be trying to put lipstick on the pig with the bogus headline of the day. It will read 'Housing Rebounds,' 'Home Starts Up,' or some other nonsense.

Don't fall for it.

Quick Take: Housing Rebounds, Sky Green [Fool.com] March 20, 2007

Media Watch: Front Page - Who's Raising The Rent?

Interesting exposé of the REI and the SMH by ABC's Media Watch, who are increasingly moving to the right these days in their reporting.

Media Watch: Front Page - Who's Raising The Rent? (26/02/2007)

Housing costs dim appeal of bright city lights

Shared equity schemes are one of the weakest things you can do in terms of reducing land speculation and land bubbles, but we are coming to expect more and more such neo-liberal policies from a Labor party without any real ideas.

Poor housing affordability in Sydney, Melbourne and Brisbane had forced an increasing number of first-home buyers to flee the city or remain in regional areas, said Simon Tennent, the association's executive director of housing and economics.

Improved job opportunities in many regional areas - highlighted by the lowest national unemployment rate for 30 years - has encouraged this trend.

'The attraction of the bright lights and the big city, like great job opportunities and that sort of thing, has faded somewhat over the past few years,' Mr Tennent said.

Despite recent weakness in parts of the Sydney housing market, it remains one of the most expensive cities in the world relative to average incomes.

Federal Labor's housing spokeswoman, Tanya Plibersek, said on Friday that a Labor government would consider a federal role in shared equity schemes to assist people on low incomes to enter the housing market.

Housing costs dim appeal of bright city lights

Seeking Curbed-Cost Appeal, Builders Cut Homes' Price And Size

Why doesn't NSW 'Labor' do affordable housing on state-owned lands instead of selling them off to the highest bidder in an asset sale to try to reduce its half-billion dollar deficit?

Now that overheated markets such as Miami are cooling fast, Related's talking up another kind of product: affordable homes.

Miami-based Related, the nation's largest condo developer, has trotted out a rebranded "affordable housing division," to build condos for buyers priced out of the market.

The firm has presold 497 of 500 loft condos in a planned downtown Miami high-rise. They're priced from $159,000, about half the median price of existing condos. That's a fraction of the price of many new condos, which often now go unsold.

Related expects to make a return of around 15%. That's about half what its luxury units typically fetch, but the company's not complaining.

"You make less money, but the demand for this type of housing is so great that the volume you can do justifies the concession on the returns," said Oscar Rodriguez, senior vice president of Related's affordable housing division.

Yahoo! Personal Finance

Why renters fat and thin are singing

It's a pretty safe bet the big story in housing this year will be steep increases in rents. The media have dubbed it the "rent crisis", with a leading property market forecaster, BIS Shrapnel, predicting that rents for inner-Sydney apartments will rise by more than 7 per cent a year for the next five years. But you'll hear worse than that before we're through.

Once again, politicians are going to sit by the sidelines while rents escalate. However, unlike mortgage payments, rentals go into the CPI calculation, and many employers peg wage raises to the CPI. Hence, indifferent, laissez-faire politicians will be watching national inflation spiralling out of control, and there is little interest rate rises from the Reserve Bank will do to fix it. The more interest rates go up to 'control inflation', the more new landlords who paid too much for their property will pass the costs on to tenants, and the more inflation will increase in the community. That's capitalist exploitation of property for you, egged on by the politicians...

Why renters fat and thin are singing

Wind out of sales

This shows the incredibly poor quality of urban planning in Sydney — people don't want to live in the far-flung outer suburbs because they are forced to commute huge distances to the city to work. Housing near the city is unaffordable. Housing further out can't be sold. The free-market free-wheeling approach to allocating housing simply isn't working.

DEVELOPERS have resorted to offering cash incentives and no-deposit finance as they struggle to sell newly built homes in Sydney's outer suburbs.

Multi-million-dollar housing developments on the city's outskirts have taken the biggest hit, with three rate rises in the past year deterring prospective homebuyers.

Housing Industry Association figures show the number of new houses sold in NSW over the past 10 years has slumped by 50 per cent.

The trend continued last year with 14,121 new homes sold around the country, compared with 14,175 the previous year and 39,860 in 1998/99.

The national figures tell a similar story. Last year, 107,145 new homes were sold, down from 110,979 the previous year.

Half-empty streets and rows of for-sale signs are common at some of the multi-million-dollar estates in outer Sydney as developers turn to lavish gifts and no-deposit finance to attract buyers.

Some estates are offering cash incentives of up to $10,000, no-deposit finance, fixed interest rates or free extras such as air-conditioning.

Only 951 new homes were sold in NSW in December, 2006 - down from about 1127 in December, 2005.

Simon Tennent, executive director of housing and economics for the Housing Industry Association, said Sydney prices were driving young couples and families out of the homebuyer market.

"I'm not surprised (at the fall in NSW), with the price of land in Sydney's growth areas,'' he said.

"And at the end of last year, the three interest rate rises and nerves over other prices, like petrol, just took the wind out of the sails.''

HIA figures show the median block of land in Sydney costs about $325,000 while a similar-sized block in Melbourne costs only $150,000.

"I'm not surprised that some estates are struggling,'' Mr Tennent said. "These are great quality homes on excellent estates, but do the simple maths and you can't afford them.''

The Sunday Telegraph visited several major developments last week. One street in Prestons has 19 houses for sale. At another development site, only 32 of 54 lots had been sold - five in the past four weeks.

Michael McNamara, of Australian Property Monitors, said the new estates had become an unattractive option for those working in the city.

"People just don't want to live there,'' he said. "It's so difficult to get from the outer suburbs of Sydney to the city.''

Wind out of sales The Daily Telegraph

Housing surge to favour rich

Mr McNamara said that as the three interest rate rises of 2006 took affect, the impact would be felt more deeply by low-to-middle income earners, creating weak property markets in the mortgage belt areas of Sydney, Melbourne and Brisbane.

"Sadly, forced sales will continue to create an oversupply and flat demand in these areas," he said.

The real story is that foreclosures are up, demand at high prices is down, and the boom is over. The bust begins.

(There is no 'surge', just a slight increase in upmarket properties -- largely due to more profits flowing to the top of business in the new environment.)

Housing surge to favour rich

Harder they fall: Sydney's biggest housing slump

Sydney home prices have suffered their sharpest annual fall on record as the property market continues to slump - and experts are tipping the slide to continue for the next few years.

The price of an average established home in Sydney fell 5 per cent last financial year, the biggest drop since the Bureau of Statistics began keeping records two decades ago.

The results are a far cry from the 20 per cent growth rates during the peak of the property boom, with prices now falling faster than during the recession in the early 1990s.

For Sydney, it is a case of the bigger they come the harder they fall, economists say.

With home prices in the city still about seven times the average annual wage - well above historic ratios of five times typical pay - economists are predicting more falls over the next five years.

Kieran Davies, an analyst with ABN Amro, said: "Given prices are so out of line with wages, it wouldn't be a surprise to see prices remain flat to down for quite a long time - for some five years or longer."

Harder they fall: Sydney's biggest housing slump

Housing not affordable for many workers - Jan. 10, 2007

Americans struggle to afford housing

An annual income of about $85,000 is needed to afford median-priced homes; salaries have not seen modest gains, according to a study.

Real Estate agent schtick

While on the patrick.net theme (following), here is a terrific treatment authored by Patrick Killelea of how the real estate industrial complex convinces people to pay too much for housing: Housing Crash Continues, Bubble Pops

This free market rampage continues unchecked, unregulated and disregarded by our dodgy shyster politicians who pretend to be concerned about everything while doing absolutely nothing about anything.

As reader Sean Olender put it: "Many people have forgotten that their number one restriction on future freedom -- to do what they want, when they want, and to go where they want -- it isn't the Iraqis, or Iranians, or North Koreans, it isn't the axis of evil, it's their mortgage lender."

Renters Gloat Over Housing Slump - Wall Street Journal

An article in the Wall St Journal concerning my good friend and fellow bubblebear Patrick Killelea, founder of patrick.net:

Renters Gloat Over Housing Slump - WSJ.com

The Coming Collapse in Housing

(click to enlarge)

When you look at Robert Shiller's graph of inflation of house prices, adjusted for monetary inflation, over the last 100 years, it seems almost inevitable that there will be a major correction very soon.
Of course, the politicians will just sit back and watch it rise and fall, so they can't be blamed for the outcome of 'irrational exuberance' (although they could be accused of indifference).

The Coming Collapse in Housing

Suffering in silence: a city on the edge of insolvency

Very interesting, NSW 'Labor'. The Joe Tripodis and Frank Sartors clearly really don't care what happens to the average household. The housing 'boom' is partly responsible for this, the subsequent inflation it caused has taken care of the rest.

ONE in three Sydney households is beset by financial worries and almost one in seven is teetering on the edge of insolvency, a church survey has found.

The study commissioned by the Wesley Mission warns financial stress is greatest in the south-west and outer west, but is also pervasive across all parts of the city, including its more affluent suburbs.

Families reported forgoing family activities, borrowing from relatives or friends, failing to pay bills on time or being unable to make minimum credit card payments.

Five per cent said they had had to pawn an item, 4 per cent said they had gone without meals and a similar number could not afford to heat their homes.

The survey of 400 people was carried out in August. Since then last week's interest rate rise - the third this year - has added $40 per month to average mortgage repayments.

Suffering in silence: a city on the edge of insolvency

Homebodies raise the drawbridge to avoid an out-of-control world - National

A telling sign of the times:

IF THE home is our castle then we are raising the drawbridge.

Mounting frustration with the travails of modern life is driving us back into our homes, where we are seeking comfort in watching movies, eating and surfing the internet, a market research study has found.

The study on the mood of the nation by Australia SCAN found scepticism about business and government, a gloomy economic outlook and constant erosion of time and energy are leading to a sense of a loss of control.

Overall he noted a general malaise among the population, with more people less optimistic about the economic outlook and less confident of their personal finances than they were a year ago.

Homebodies raise the drawbridge to avoid an out-of-control world - National

How could Sydney get it so wrong?

Then there's the thriving, hustling metropolis, where every opportunity to show intelligence or courage or (God forbid) altruism is mowed under the determined asphalt of commercial tackiness. Take the huge Carlton & United Breweries site on Broadway. Take Homebush and Rhodes Peninsula, spewing dioxins into the upper atmosphere in order to roll out more third-rate housing. Take Botany Bay, or Cooks Cove, or Green Square, or the vast tackiness spreading up and down the poor old Parramatta River. Take East Darling Harbour, our chance for a real flagship of eco-design, right at our ceremonial front door, now set to become more bottom-line junk, like King Street Wharf, only more, bigger, glassier. Most of them were, or are, Government land; all offered the opportunity for real social and cultural play. What do we get? More of the same.

This is a waste and a belittlement. A waste of our energies, as a city, and a belittlement of our intelligence and enterprise. To a large extent it is driven by the narrowness of our politicians, who talk tough but timidly follow the do-nothing-stay-in-power model of government perfected by Bob Carr and John Howard and become more philistine by the moment.

Blaming pollies is too easy. They're elected, and we elect them. If we wanted to make city-shaping issues into electoral ones, we could. We only have to be sceptical when they talk about conflict between the environment and job creation, and wonder how many jobs we'll have when the air turns to soup and the water laps at our doorstep. We only have to put our votes where our mouths are. We only have to find courage, take the risk, want to - enough.

How could Sydney get it so wrong?

Home ownership slips out of reach

Housing is at its least affordable in almost three years, with spiralling land costs and excessive fees making home ownership more out of reach for Australians.

"Since the national housing cycle hit its peak it has been readily apparent that the triple whammy of spiralling land costs, excessive fees and charges and planning red tape was making a tangible recovery in housing affordability virtually impossible.

"Moreover, a distinct lack of progress in addressing these three factors means that in the higher interest rate climate of 2006, we find ourselves back in the same affordability hole."

The manifest failure of government to act at any level on housing affordability in Australia simply beggars the imagination. It's so appalling that one begins to suspect a 1984-style conspiracy on the part of Ministers — "imagine a boot stamping on a face — forever".

Home ownership slips out of reach

Sydney's pay-later poor

Sydney's pay-later poor The Sunday Telegraph

DEBT-stricken families with new homes, cars and plasma televisions in Sydney's sprawling housing estates are relying on charity handouts to buy food.
Welfare agencies report a worrying increase in the number of middle-income families with big mortgages seeking help to pay grocery, electricity and gas bills.

Dubbed the 'pay-later poor'' by St Vincent de Paul, they live in homes boasting cable television and the latest electrical goods and use credit cards to meet basic living costs.

Many of the families live in so-called McMansions.

Rising interest rates and petrol prices have hit them hard, with the latest figures showing soaring personal debt levels and bankruptcies.

How the housing bust went west - Opinion - smh.com.au

Looks like the spruikers' stories caught the slower Westies out. When interest rates went to an all-time low, shrewd investors in the eastern and northern suburbs probably saw a price boom coming, and bought early, possibly to sell at the top. Once the seminar gurus got up steam and convinced the Westies to negative gear, because 'it always goes up', it was too late -- the tulip boom was busting.

Does the NSW 'Labor' government care about any of this? No way, they're too busy bailing themselves out of their countless screw-ups and aiding and abetting their capitalist cronies, many of whom are in property development themselves...

How the housing bust went west

We of the never-never home loans

THE RESERVE Bank is alarmed at the rise of interest-only home loans, warning of negative equity for borrowers who fail to make inroads into the principal of their loans while house prices fall.

Sydneysiders who bought at the peak of the property boom and have faced the sharpest falls in property values are most at risk of negative equity, where the size of the debt exceeds the value of the home.

Despite not having to make principal repayments, borrowers with interest-only loans were found to be twice as likely to fall behind on their payments. "The [nationally] higher arrears rate is hardly surprising, given the general lowering of credit standards that has occurred since the mid-1990s," the Reserve Bank said.

Fierce competition among banks for market share has led to an increase in interest-only loans being offered to people who previously may not have been considered creditworthy. A third of sub-prime borrowers - those who do not meet standard income or credit history requirements - choose interest-only payments.

But by lowering upfront repayments, these loans encourage already at-risk borrowers to take on more debt, the Reserve says.

Its review also found evidence that mortgage arrears are on the rise. NSW suffered the largest increase in loan arrears over the past year, consistent with other signs of stress, including a doubling in repossessions.

We of the never-never home loans

Bought for $262,500 in 2003, sold for $95,000 last week

The boom is busting — a little. State and Federal govts do nothing to control such capitalist boom/busts based on irrational exuberance, of course, although, when you think about it, just about every single other aspect of property is controlled — what you can build, how high, how densely, to what standard, etc. Why do they let prices go free-floating to the detriment of the economy and individuals?

Macquarie Bank property research analyst Rod Cornish said defaults among mortgage brokers and low-documentation loans were higher than major banks.

However, he said Australian Prudential Regulation Authority figures showed the number of loans across Sydney in default with the major banks had begun to rise.

'You would expect the price impact on homes would be worse in the outer western suburbs where the rates rises and fuel rises would have a higher impact,' he said.

Elliott Shiner First National real-estate principal Angela Elliott said: 'Everything that is selling now is selling for $40,000 to $50,000 less than it was in 2003. Properties have dropped by a good 30 per cent in value.

'You can pick up properties in the Mount Druitt area for $180,000 to $200,000. There are real bargains to be had, but where are the buyers?'

Bought for $262,500 in 2003, sold for $95,000 last week

PM told he's wrong on house prices

PM told he's wrong on house prices

Housing booms and unaffordability are multi-factorial. The Federal Coalition is as much to blame as anybody for keeping negative gearing on investment properties and halving the rate of capital gains tax – these are just two of the inputs to housing price increases. Other factors include liberalised credit products from lenders, low interest rates, a shaky share market, and the 'psychology of booms' or irrational exuberance. However, no government in Australia has done anything particularly meaningful yet to alleviate the housing boom or make life easier for first home buyers, but appear to be cheerleaders who want to join the club in uncritically celebrating every price rise as an 'increase in household wealth'.

Mr Robertson said the needs of first-home buyers were being ignored because most voters were home owners and therefore had an interest in higher, not lower, property prices.

'Neither the Coalition nor the Labor Party in Canberra show any sign of going out of their way to make any significant difference – [First-home buyers] are not a big enough priority for Canberra to do much beyond blaming the states for not releasing enough land,' he said."

Priced Out Of House And Home

The Register-Guard, Eugene, Oregon, USA:

There is one clear solution to the affordable-housing crisis: a real estate crash. It's the one housing issue that attracts media attention - because it would hurt the Owns. But while an easing of prices could be devastating for lower-income Owns with risky mortgages, it probably wouldn't bring home ownership within reach for many Own-Nots. Prices have too far to fall; in 2000, two-thirds of the home sales in Fairfax were for $250,000 or less, but last year, fewer than one-twentieth were. And even a modest price slump could trigger a construction slowdown that would make shortages of affordable housing for moderate-income families even worse.
Eventually, politicians may rediscover housing - not as an urban poverty issue, but as a middle-class quality-of-life issue, like gas prices or health care. Homeownership is often described as the American dream, but these days many workers would settle for a decent rental that won't bankrupt their families.

Boom and bust on the home front - smh.com.au

The state government (ministers, advisers and sundry flacks), speculative investors, lenders, and voters should really have a good, hard think about this:

Boom and bust on the home front - National - smh.com.au

Of course, the PM is now suddenly worried about the problem of low housing affordability, whereas a few short years ago in a televised radio interview he shrugged, looked bemused, and said, "none of my constituents are complaining that their house values have gone up"... just another typical backflip from the PM...

Home owners find equity a spent force

Tried to warn them:

THE stagnant property market has taken a toll on a favourite Australian pastime: converting bricks and mortar into cash.

The boom in equity withdrawn from housing and used to boost superannuation, bolster share portfolios and buy cars, overseas holidays and plasma televisions has petered out, a report by the Reserve Bank says.

Robert Mellor, of BIS Shrapnel, said Sydney house prices might fall a further 5 per cent this financial year because of higher interest rates, pushing more households into negative equity. However, the strength of the labour market was helping to prevent a surge in forced sales, he said.

Home owners find equity a spent force

Consumer hopes dive as prices weaken pay rises

THE Coalition pinned 10 years of legitimacy on the fact that low and stable interest rates made for comfortable consumers. But mortgage pressure is rising everywhere and consumers have suffered the sharpest loss of confidence in 17 years.

So this week the Coalition dumped the political strategy of reassurance for a claim that it can manage adversity better than Labor.

The housing 'boom' chickens are coming home to roost...

Consumer hopes dive as prices weaken pay rises

The Daily Telegraph | Suburbs' rent chaos

The Daily Telegraph | Suburbs' rent chaos: "SYDNEY'S rental crisis has spread west as outer suburb vacancy rates spark unprecedented competition among homehunters.
In some areas of Sydney desperate renters are panic bidding and offering to sign 18-month leases in an attempt to secure a home.
Other exasperated homehunters are so frustrated they have given up and turned to living in share accommodation with strangers instead."

The Daily Telegraph | Land sale cover-up

Land sale cover-up: "THE State Government has been caught out trying to cover up its secret plans to sell off parts of the 5500ha Western Sydney parklands."

Do you think there was going to be any allowance for mandated affordable housing in this land sale to developers? Given that the NSW Labor government has no policy on this.

Aussies sinking deeper into money crisis

Does NSW Labor really care about the plight of workers in the state? Not really. Otherwise they would have done something about housing costs along time ago...

"Australians are sinking deeper into financial crisis, with petrol prices soaring and higher interest rates making it more difficult for consumers to pay off their debts.

And financial counselling services across Australia are finding it difficult to cope with the growing number of people needing their help.

Mike Young, a financial counsellor with Lifeline Western Sydney, said debt crisis was not unique to low income earners.

But the effect of this month's interest rate rise on Australians was yet to be seen, he added. Other factors were also hurting household budgets, Mr Young said. "We are seeing the start of the effect of the new industrial relations laws," he said. And recent changes to debt recovery laws were not helping, Mr Young said."

Aussies sinking deeper into money crisis

The global housing boom - In come the waves - The Economist

"NEVER before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stockmarket bubble burst in 2000. What if the housing boom now turns to bust?"

The global housing boom - In come the waves - The Economist

Real estate bubble and the housing spin

Here's an article for the idiot politicians to think about as they refuse to regulate or gag the 'sunny Jim' REI and PCA types:

Real estate bubble and the housing spin - 'I Want My Bubble Back!'

There's nothing funnier or more satisfying (for me, at least) than watching the National Association of Realtors (NAR) change its tune these days. The latest news release from this sunny-Jim industry group finally fesses up to its past fiction, but even when it admits the bubble's going to pop, it can't muster the courage to just come out and say it."

By Seth Jayson (TMF)

Realtors Using "Econ" to Push Overpriced Homes

Real estate agents seldom differ the world over...

patrick.net Blog - Realtors Using "Econ" to Push Overpriced Homes

No room at the inn - Online Opinion

Federal Labor Senator Kim Carr on 'the problem of homelessness' and reader comments, including some of my own:

No room at the inn

Reader comments

There appears to be an absence of policy ideas from Federal Labor on homelessness, and also a conspicuous lack of an affordable housing strategy.

Riotous Real Estate

ZNet |Economy | Riotous Real Estate

Last February the sirens howled in Hollywood as the LAPD rushed reinforcements to the 5600 block of La Mirada Avenue. While a police captain barked orders through a bullhorn, an angry crowd of 3000 people shouted back expletives. A passerby might have mistaken the confrontation for a major movie shoot, or perhaps the beginning of the next great L.A. riot.

In fact, as LAPD Captain Michael Downing later told the press: "You had some very desperate people who had a mob mentality. It was as if people were trying to get the last piece of bread."

The bread-riot allusion was apt, although the crowd was in fact clamoring for the last crumbs of affordable housing in a city where rents and mortgages have been soaring through the stratosphere. At stake were 56 unfinished apartments being built by a non-profit agency. The developers had expected a turnout of, at most, several hundred. When thousands of desperate applicants showed up instead, the scene quickly turned ugly and the police intervened.

This could happen in NSW under NSW Labor - not that they make any affordable housing projects available at present...

Neil Jenman News Articles

You can see why governments like to leave real estate transactions, the largest transaction many people will ever conduct, in the hands of the private sector, usually without scrutiny. Governments like to trust real estate agents and property developers to act as their policy agents in the area of housing.

News Article "GRANDMA RIPPED OFF"

Article "THE WESTPOINT DISASTER"

Australian Securities and Investments Commission chief, Jeff Lucy, said of the financial planners who steered their clients into Westpoint, “They should have known better.”

Yes, indeed, it was all so predictable. Now, it’s all so tragic.

ASIC useless after the fact, as usual.

And finally, a suggestion for Westpoint investors.

Do not feel stupid or embarrassed. [Even the New South Wales branch of the ALP reportedly invested $100,000.]

What a surprise, that the right-winger property ghouls in NSW Labor fell for a get-rich-quick property scam...

DEMOGRAPHIA: 2nd Annual Demographia International Housing Affordability Survey (2006)

DEMOGRAPHIA: 2nd Annual Demographia International Housing Affordability Survey (2006)

Many analysts and much of the business press have followed the unprecedented housing cost price escalation with seeming glee, while ignoring the reality that household incomes have not been inflating at a corresponding rate. This superficial approach is both naïve and irresponsible. Any number of products might be imagined that might be converted into objects of financial speculation, at the same time as rendering a nation less prosperous. For example, massive and unprecedented price escalation, from speculation in food products or medical markets might serve the short-term interest of investors, while imposing broad detrimental effects. There is a public interest in maintaining house prices within the economic means of most households.

Oddly, the most affordable markets have sometimes been characterized as 'poor performers'. There are many losers when home prices become decoupled from the underpinning income realities. Middle income and lower income households find it impossible to afford the higher prices and may be relegated to renting for many additional years, if not a lifetime. The equity that they would have built up instead goes to the pockets of landlords. Others fortunate enough to afford the higher prices must settle for more modest houses, which are likely of lower quality. Many of households will be able to afford their own houses only through financial assistance from their parents, while those with less affluent parents will remain in rental units. Already there is evidence that the average age of first homebuyers is rising.

By reducing the share of households that can afford to buy homes, high Median Multiples inevitably lead to greater income disparity. Thus, to think of rising house prices as a good thing while ignoring the incomes that support them is to miss the point completely. Australian Reserve Bank Governor Ian MacFarlane emphasized this point in parliamentary testimony with reference to the unaffordable housing prices in Sydney.12 The reality, of course, is that the more affordable markets are the better performers by virtue of the higher standard of living that they facilitate for more households. However, the reality is that declining housing affordability has reached crisis proportions in many markets.

Poor little rich city

Poor little rich city - National - smh.com.au

Sydneysiders' living standards have fallen over the past year, eaten away by higher petrol prices and falling home affordability.

The Sydney prosperity index, the only comprehensive measure of material well-being in Australia's biggest city, also exposes a huge and widening gap between those who own assets, such as property and shares, and those who don't.

The economic quality of life of these 'have-nots' has been sliding for the past two years and they have fallen twice as far from their prosperity peak as the asset-rich.

Sydney is still Australia's most expensive property market and it is still hard for new buyers to afford a home. In last year's December quarter, a worker on the average wage would have needed 492 weeks (9½ years) to earn enough to buy the typical Sydney house, compared with 398 weeks (a bit more than seven years years) in 2000. In March 1987, that worker would have needed 243 weeks (a little more than 4½ years) to earn enough money.

The capacity to pay the typical monthly mortgage in Sydney has deteriorated in the past two years to levels last seen in the early 1990s.

Interesting how governments allow fallout from the stockmarket crash of 1987 to adversely affect so many in the next generation when it comes to buying their own home.

Costello hails revival while economy struggles

Costello hails revival while economy struggles - National - smh.com.au

Australia has undergone an economic revival under his watch, Treasurer Peter Costello says, despite the latest figures showing the economy is struggling and homeowners are continuing to shun malls and shops.

And he said this was largely because of the way he and the federal government had overhauled the nation over the past decade.

But Mr Costello's revival is hitting problems, with the latest national accounts showing the economy grew by a weaker than expected 0.5 per cent in the December quarter.

The growth rate makes Australia one of the slowest growing developed nations in the globe, with annual growth now at 2.7 per cent.

There were downturns in consumer spending with the public, stung by the downturn in the property market and higher petrol prices, continuing to shun the nation's retail outlets.

Costello has done nothing for the economy in the last 10 years, he has basically sat back and watched the private sector operate by itself, taking the credit whenever poorly reported GDP 'growth' figures look cheery. Treasurers do very little to 'manage' any economy, their principal job is to collect taxes for the government and look concerned. It's a myth that they 'manage the economy', and if you listen to and read their speeches very closely, you will realise they never actually make that claim, but they like naive journalists to present that notion to the public for them.

Cheery 'GDP growth' figures were always a sign of empty internal domestic inflation in the housing market, they had nothing to do with increased productivity or real wealth creation for the country as a whole, just more borrowings from the banks. Now the boom has fizzled, the country has to stand on its industries for that elusive glow of 'economic growth'. It's very lucky newly emerging industrial giants like China have pushed commodity prices higher for Australia, or growth would be negative by now. So now the spruikers are advising the horde of slavering property investors to 'invest in Darwin and Perth.' The exploitation and dollar chasing never ends.

Hyperinflated prices for property have impoverished the next generation, who can now no longer afford to shop retail. And remember the Federal Government (Peter Costello) retains negative gearing on investment properties and halved the rate of capital gains tax, making his own contribution to the housing bubble, and doing nothing to prevent it. Also, the First Home Owners Grant (FHOG) also probably further inflated prices in an uncapped free market without government intervention or regulation.

The next thing that will happen while property prices remain so high is that there will be increasing upwards pressure on wages - industrial action from wage workers, and inflationary retail prices from small business.

Finally, the current young generation who were locked out of the housing market and could never afford to invest in the equity of their own home will become pensioners reliant on the Federal Government to pay their rent and otherwise subsidise their old age after they have retired, whereas the current generation of retirees who could afford to buy a house have much lower ongoing living costs. Oh, and there will be the 5% of rich investors who purchased all the housing out from under everyone else as 'investment properties'.

House prices recover, but it may yet be a blip

House prices recover, but it may yet be a blip - National - smh.com.au

Since prices have dropped marginally, a few young hopefuls and avaricious 'investors' are getting back into the market, pushing prices back up a little. However, since the housing vampire has drained every drop of blood from the economy, there are a lot more genuine would-be owner-occupiers still out in the cold.

(Thanks for doing nothing still, state government. Keep up the good work. Keep handing out taxpayers dollars to speculators, Federal Government. Ditto.)

What's a fair price for property?

What's a fair price for property? - Opinion - smh.com.au

There are thousands of owners of five-acre lots in the two growth areas. I talked to some in Leppington two weeks ago. Many are migrants who bought their land for relatively modest prices in the 1970s, and hope a big increase in value will fund their retirement. The political implications if this doesn't happen could be considerable.

How much would they lose? In 2004 property developer Peter Lowry told the Productivity Commission, in a public hearing on first home-ownership affordability, by his estimate land owners in the new growth areas stood to make $10 billion from the rezoning of their land. If they ended up losing up to $6 billion of this due to the levy pushing down the price of their land, would that be unfair? How much of a windfall do they deserve from a stroke of a rezoner's pen?

Interesting article. Also interesting is how people sitting on 5 acre blocks expect the sale to fund their retirement — still the same old 'easy money for property', 'why should I work for a living?' mindset that fuelled the property boom in the first place. And all endorsed by your government as the very best way to make housing affordable and provide for a socially just outcome for all...

Behind locked doors - the deadly epidemic of fear

Behind locked doors - the deadly epidemic of fear - National - smh.com.au:

'Most people keep to themselves here because of the crime. A lot are elderly and are frightened to go out. They don't even want to know if their neighbour has died, let alone get to know them,' he said.

The Redfern Police Commander, Superintendent Catherine Burn, said Mr Newman's death was 'sad and tragic' but the circumstances were inevitable when elderly people lived alone."

Oh, well, if it was inevitable, then there's nothing to be done, is there? Given the fear of crime that exists in Waterloo/Redfern, surely the best thing that the government could do is gradually bring in a mix of new arrivals from all backgrounds, rather than letting their friends the developers build a pile of yuppy box fortresses with steel bars to the street, creating a clear dichotomy of 2 extremes of class in the area: public housing and yuppies desperate to meet their inflated rents. Maybe everyone would relax a little more if a large number of 'affordable' residences were built and the more decent middle classes could start moving in and altering the character of the neighbourhood.

So, the state will begrudgingly give you supported accommodation if you're on a low income - but the price you will pay will be living in a state-created ghetto, living a life of fear from crime in the area, no matter how decent you are. That's the limit of creativity and imagination from the government, I'm afraid.

Bird flu threatens misery for millions

Bird flu threatens misery for millions - National - smh.com.au:

A separate Treasury study, also to be released today, says a bird flu outbreak that kills 40,000 Australians would cause a recession 'about half the size of the Great Depression'. However, earlier claims about 'the dire economic effects' of bird flu had been overstated.

But in the long run, those who survived would benefit from the assets of those who perished.

There you have it - a solution for hard-pressed governments who simply can't figure out a way to solve housing hyper-inflation and affordability problems - wait for a natural disaster to strike! That way they don't have to tamper with the market at all, just let nature take its course. Unless they want to get embroiled in WWIII instead, or something, that would also be a good way to solve problems of free market hyper inflation and supply and demand problems.

Note that governments agonise over the 'pig in the python' baby boomers dying off, who will then be leaving a pile of old decrepit houses behind - what will that do to housing prices, with a sudden relative over-supply on the market? Doubtless that will be the signal to governments to open the 3rd world floodgates to prop up prices to keep their rich landlord cronies happy. (Note that the Australian Property Council loves immigration, it keeps a steady supply of near-impoverished renters coming in for its landlords to feed off. Vacancy rates are at an all time low!)

If a bird flu epidemic occurs, then I suppose those who 'benefit from the assets of those who perished' can go back to being landlords and fleecing people in the market all over again, and the spruikers can have a whole new run, although market prices for housing should be lower according to normal economics theory. At least governments will be happy at last, and, after all, the citizens are just here to keep government happy, isn't that the way it's meant to work?

Thousands on the dole leads to one thing: recession

Thousands on the dole leads to one thing: recession - National - smh.com.au:

RECESSION haunts NSW as it struggles with the rise and fall in Sydney property prices.

Debt-laden households, confronted with property prices going down, have been cautious in their spending for some time. This is taking a toll on jobs.

NSW's jobs figures add to a litany of poor economic indicators. The state has had fewer building approvals in December than Victoria, Queensland and even Western Australia. Its small businesses are the nation's most pessimistic and are demanding lower taxes and less red tape. The state's share of the national economy is down from 36 per cent in 2000 to 34.3 per cent in 2004-05 - the lowest state ratio records began in 1989-90.

ANZ's chief economist, Saul Eslake, said the Premier, Morris Iemma, had a huge job ahead of him to clean up after Mr Carr, whose lack of interest in economic policy was "rather redolent of Whitlam".

Mr Eslake said the state economy would take five years to recover from Mr Carr's legacy, which included the ill-timed vendor tax, a misconceived desalination plant, infrastructure neglect and discouragement of population and economic growth.

The bigger the empty housing boom, the harder the recession. I doubt whether the NSW Labor government has a single practical economist amongst them. These idiots presided over 12 years of uncontrolled housing boom, and are now facing a jobs downturn from the fact that no-one has any discretionary money left to spend on the retail and wholesale sectors. It's all gone into empty inflation in passive bricks and mortar. Hope NSW Labor are pleased with themselves, given that the Labor right gave up representing the interests of 'labour' years ago.

Talk about an 'ill-timed vendor tax' - if they had put it in 10 years earlier, they would have had a chance at forestalling the empty housing boom, which is causing so much distress, and now causing a recession, mass unemployment, and mass migration away from the city of Sydney. Of course, such a tax is only going to be offsetting the generous Federal tax giveaways of reduced capital gains tax and negative gearing allowances on investment property that helped stimulate the bubble and offered generous terms to the average punter to speculate wildly in property at the taxpayers expense.

Sack them all and start again with a people's government. If they're not just incompetent, then they must be downright malicious. Either way, you don't want these clowns running the state or the country.

Officer buried property scam

Officer buried property scam - National - smh.com.au:

Graham Wade, a former property sales manager in the then Home Purchase Assistance Authority within the department, has told the ICAC that he had planned to sell surplus government properties at as low a price as possible to friends, and split the profits when his friends resold them at a higher price.

Instead of making State govt land available to do price covenant-controlled affordable housing, the NSW State govt (Labor) have corrupt officials selling it off in a scam instead... land that could be redeveloped into affordable housing... it's good to see how Labor looks after the battling working poor...

Call to double first-time buyer's grant

Call to double first-time buyer's grant - National - smh.com.au

The federal government is under pressure from its own ranks to more than double the first home owner's grant.

Queensland Liberal MP Steven Ciobo said the grant, introduced at the same time as the GST to boost home ownership, should be increased from $7,000 to $15,000.

Mr Ciobo, a member of a coalition group lobbying for tax reform, said the grant's eligibility criteria should also be tightened to ensure it does not go to wealthy people to buy multi million dollar homes.

While Mr Ciobo's concerns are admirable, and he has pinpointed the problem of housing affordability extremely well, providing ever higher government grants without caps on house prices in the market place is only going to fuel further inflation — real estate agents and developers are simply too oily to let an opportunity like that pass by without ratcheting up prices some more.

The real answer is in halting so-called 'market forces' by using price covenants, controlling the cost of land and construction, and finding other ways to cool down housing prices. Otherwise, not only will individuals continue suffering, but the entire economy is at risk of collapse from over-borrowing and over-indebtedness, largely drawn from overseas funds. Further, governments should distinguish between investors and owner-occupiers, and discourage spruiking and real estate investment drivel and hype in order to better house citizens affordably.

I would point out that PM John Howard in radio interviews has shown complete indifference to the problem, arguing that 'none of his constituents are complaining that their house values have gone up.'

Further, both Howard and Treasurer Peter Costello continue to allow 'negative gearing' tax deductions on investment properties and 'half-price' capital gains tax on sale of a property, which has lead to a continued speculative boom funded in part by the taxpayer. When state governments then levy land taxes on investment properties, they are lambasted by greedy real estate lobbyists and upset investors in the business of exploiting renters for all they are worth...

Huge rise in repossession

Huge rise in repossession - National - smh.com.au

THE number of properties repossessed by banks was higher last year than after the recession of the early 1990s, as a growing number of overstretched investors were burned by Sydney's house-price slump.

There were a record 4873 cases lodged in the NSW Supreme Court's Possessions List in 2005 - a 59 per cent rise on 2004, and more than double the number of cases in 2003.

This compares with 3287 cases in 1991 as the economy recovered from deep recession.

Young investors defaulting on home loans was one factor behind a surge in legal action against borrowers last year, a court spokesman said.

But property always goes up 10% every year without fail! That's what the spruikers and real estate agents told me! I paid $5 000 for a 3-day course!

Thanks spruikers, thanks real estate agents, thanks state and federal governments who do nothing about capitalist waves or even offer inappropriate tax breaks to speculators, thanks ASIC, a paper tiger who turns a blind eye to get-rich-quick spruikers, thanks banks for offering interest-only loans to desperate young owner-occupiers or 'investors' and huge amounts of credit. You're all to blame. And further you think it's funny, because you've walked away with these people's money at virtually no risk to yourselves. Nice one.

Land tax prices to go through the roof

Land tax prices to go through the roof - National - smh.com.au

PROPERTY owners will be hit with higher land tax bills thanks to rises in official valuations on top of a new higher tax rate.

I don't have a huge problem with this, unless it feeds into higher rents - landlords will pass on land tax increases to tenants, although with a $330 000 threshold, the landlord would need to own multiple properties or expensive properties for it to bite. However, in an essentially free property market, there is nothing stopping landlords from passing it on as a 'fair increase' in rent.

What really annoys me is that the State Government has the resources to value every single property in the state and levy such taxes, but does nothing about controlling housing prices to benefit the community — as per the OECD report published recently (immediately below) demonstrating houses are overvalued by around 50% across Australia.

Australian house prices 'world's highest'

House prices 'world highest' - National - theage.com.au

AUSTRALIA has by far the most overvalued houses in the Western world, with prices 52 per cent higher than justified by rental values, the OECD says.

In a new analysis of the housing boom sweeping developed nations, the OECD also says the price of housing relative to incomes is 50 per cent higher in Australia than in other countries as a group.

Well, there it is, in black and white, from an OECD study... No wonder everyone's so tense and surly...

In the meantime, governments refuse to do anything about it, PM John Howard says 'none of my constituents complain when their house values go up' and outfits like the Centre for Affordable Housing in NSW cannot produce a single outcome in the form of an affordable house, and the Australian Financial Review points out that the NSW government absolutely relies on stamp duty revenues from over-priced housing to stay in the black... Doesn't look good, does it?

The REI, spruikers and shonky real estate agents should be held to account as criminals for continually talking up the market and making the next generation suffer for their short-term profits. Not to mention what will happen when Sydney gets too hot to live in (see 'Heat is on' below) and the baby boomers die off in the next 10-20 years leaving loads of empty houses in a population vacuum. But politicians never think outside of the next 3-year window of electoral opportunity, so what do they care?

PDF OECD housing price developments
PDF Measuring housing stress

KENNETH DAVIDSON Heat is on
YOUR SAY House prices

Sydney rents hit $500/wk

Thanks for doing NOTHING about housing affordability worth talking about, State and Federal governments...

Sydney rents hit $500/wk Business Breaking News 24/7 - NEWS.com.au (29-11-2005)

"Mr Christopher believed there would be more rental increases to follow for the next 12 months, which is good news for suffering property investors but bad news for tenants.

Reflecting the pressure on inner-city rents, median rents for two-bedroom units rose 5.7 per cent in inner suburbs over the year, 4.0 per cent in middle areas and 4.3 per cent in outer suburbs.

Two-bedroom flats in Auburn recorded the largest annual increase in median rents (up 13.6 per cent), followed by Leichhardt (up 11.4 per cent) and Blacktown (up 10.5 per cent).

The largest annual increases in median rents for two-bedroom houses within Sydney were recorded in Canterbury (up 12.0 per cent) and Auburn (up 8.2 per cent).

Rents have climbed sharply in Sydney and across Australia as people seek to rent rather than buy homes with housing affordability hovering at historically low levels.

Mortgage dreams drift off the plan

Mortgage dreams drift off the plan

THE number of properties seized and sold by lenders after mortgage defaults is on the rise after more than $60 billion has been slashed from the value of the Sydney property market since the city's house prices peaked two years ago.

The respective governments of this country really don't care what happens to you, when it comes down to it...

Kareena Ballard (REI President) outlines a plan to improve housing affordability

Kareena Ballard outlines a plan to improve housing affordability - On Line Opinion - 6/10/2003

"While there are some indications that the upward trend may be starting to slow, urgent answers are needed to address the increasingly tough market conditions for first homebuyers and low-income earners.

Deterred by rising prices and the consequent large mortgages and income required to service these loans, however, a significant sector of the Australian community may be unable to become home-owners unless governments, state and Commonwealth, take housing affordability seriously. Others may not be able to commence home purchase until so late that they continue to have substantial mortgage debt into retirement.

In addition, a number of economic and social changes in Australian society are making it more difficult for Australians to purchase their own homes, including the changing employment profile in Australia, later and second family formation, divorce, greater longevity and changing consumption trends supported by unprecedented levels of household debt."

To this list I would add more and more singles in the market, estimated to continue to increase as a social trend by the ABS, whereas the housing 'market' prices even 1 bedroom apartments to a double income.

Regarding Kareena's policy suggestions, and adding to the list, I have indicated the direct control and policing of housing prices in a protectionist way. After all, the Valuer-General already happily values every single house there is, it therefore can't be too hard to add another level of control over pricing with very few extra resources required.

It's a matter of trust: but we don't even like our neighbours

It's a matter of trust: but we don't even like our neighbours - National

Note that:

"Dr Hughes said the lowest levels of trust were found among those in public housing and the second lowest was among those renting privately.

'Those people who feel more vulnerable in society are more cautious, along with those people who feel more vulnerable and those people who have lower levels of health and lower levels of financial independence and education,' he said."

Governments like to prop up landlords with huge tax giveaways, and do their part to prevent affordable home ownership, at the cost of this loss of trust and security in the community. Clearly capitalist governments like to work against the interests of the community, despite all their fine, empty words at speech-making and voting time...

Long hours disconnecting families: Goward

Housing costs, excessive commuting times from the affordability belt and the NEED for 2 incomes in families to keep their heads above water certainly feed into this picture:

Long hours disconnecting families: Goward - National - smh.com.au

Long work hours are making men grumpy, while women are struggling to balance uncertain hours with family commitments.

That's what Sex Discrimination Commissioner Pru Goward has been told in submissions to a report about balancing work and family responsibilities.

"The most important challenge for men is the huge hours that men are working," Ms Goward said.

"I thought it was just a problem for middle managers, really, but it's much more widespread than that."

Ms Goward said men who worked long hours were often "disconnected" from their wives and children - something that may be contributing to Australia's "alarming" divorce rate.

Ms Goward said more women were employed in casual work and many had trouble with the uncertainty of their hours, making it difficult to arrange child-care and family commitments.

Ms Goward was also concerned the Government's proposed industrial relations reforms would result in worse working conditions for women on low incomes.

"I think for low-income, low-skilled people the flexibilities will inevitably lead to more precarious working hours, particularly for women, and that was a big complaint from women," Ms Goward told ABC Radio today.

Show me the money: financing more affordable housing

Some solid policy suggestions at last...

Show me the money: financing more affordable housing

Here's a link direct to the policy Word document on the web:

Show me the money: financing more affordable housing (Word)

The main barrier to progress appears to be that housing continues to lie off-centre from the main economic, social and political concerns of governments at all levels. In part, this involves an inertial lag effect. For most of the post-War period, the vast majority of Australians have been well housed by historical and international standards. Housing, labour and financial markets worked together to ensure that housing standards were adequate or better for perhaps 85 per cent of the population. A similar proportion of the population became home owners at some time during their lives. The fact that this dominant housing career and expectation has broken down over the past 20 years appears to have eluded many policy makers, who still look to the housing market operating within conventional parameters to meet housing needs for all but a tiny residualised group in the population.

It is this dominant view – along with the tendency to uncritically celebrate house price inflation as a sign of a healthy economy and domestic world – that needs to be taken head on by people concerned with both Australia’s long term economic sustainability and the immediate social problems of declining housing affordability for an increasing number of Australians.

Finally, there appear to be some promising signs on the policy horizon. It is true that the current Federal Government has done little to advance matters here. The First Home Owners Scheme was introduced in mid 2000, not as an explicit housing affordability measure, but to offset the one-off cost impacts of the introduction of the goods and services tax. Nevertheless, given its timing, FHOS almost certainly reinforced the underlying speculative boom conditions in the housing market, without improving affordability for those most in need of assistance (on both points, see Productivity Commission [2004], pp. xix-xx; pp. 215-221). The government’s less than enthusiastic receipt of the recommendations of the Productivity Commission’s final report on First Home Ownership and silence on housing matters to date in the run up to the Federal Election suggest that this situation is not about to change soon.

Inquiry on First Home Ownership - Submissions

This is a link to the public submissions made to the PC Inquiry on First Home Ownership, whose draft and final reports were something of a fudge to let the Federal Treasurer off the hook, and take a broadside at Labor state govts for good measure. Handy that, given that generous Federal govt tax handouts to people who don't need them seem to have stimulated the housing bubble even further.

However, the submissions made by decent and honest people, real Australians with a social conscience, are worth perusing.

PC Inquiry on First Home Ownership - Submissions

Communique: A Call for Action

National Summit on Housing Affordability

Communique: A Call For Action

Affordable housing is crucial to Australia’s future. Without it, people are impoverished, families and communities are eroded, jobs are lost and the economy is weakened. A creeping crisis in affordability has been developing for many years. But housing affordability in Australia is now at its worst-ever level.

Keeping the Dream Alive - Professor Julian Disney

What can be done to improve affordability? First, it is crucial to acknowledge the gravity of the situation and the longer-term outlook in the absence of vigorous action. Refusals to heed warning signs more than a decade ago have already caused possibly irretrievable harm.

This damage must not now be aggravated by further denials of reality and continuing lack of political integrity. The economic and social problems caused by the crisis make it as great a problem as any facing Australia's long-term future.

Some of the more readily achievable improvements would be of greatest benefit to lower-income renters. In any event, they have been suffering from unaffordable housing for very lengthy periods. And help for them could relieve pressure higher up in the rental market.

The supply of low-rent housing could benefit greatly from targeted tax incentives or other subsidies to attract large financial investors. Processes for keeping the housing affordably occupied by low-income people would need to be strengthened, especially by expanding the use of non-profit housing managers, as is common in Europe.

Public housing can be a highly cost-effective way of helping low-income renters.
There is a strong case for restoring funding to the levels of a decade ago. This should enable wider availability for working families, even if for limited periods, rather than increasing confinement to the most desperately disadvantaged people.

Elizabeth Crouch says that sustainability requirements are making new housing unaffordable. - On Line Opinion - 20/9/2005

Elizabeth Crouch (HIA’s senior executive director) says that sustainability requirements are making new housing unaffordable. - On Line Opinion - 20/9/2005

'The bust is over' — typical unhelpful hype from self-interested spruikers

Bust is over so sit back, wait for the next boom - National - smh.com.au

Bust is over so sit back, wait for the next boom
By Michelle Singer, Property Writer
September 18, 2005
The Sun-Herald

The slide is over. Property experts say the Sydney market has "bottomed out" - though it is unclear how quickly it will climb, or how far.

That's right, Michelle — publish a 'good news story' in the Sunday paper for property investors and desperate hopefuls to try to encourage more real estate sales. Never mind that others say that the market will plateau or decline for several years to come, even within the same article — run with the 'bull' headline instead.

Who makes money out of it?
- Developers
- Lenders
- Real estate agents
- Spruikers
- So-called 'property researchers' such as APM, BIS Shrapnel, and so on, whose predictions should be taken with a grain of salt.

If I was running the place, all these people would be either shot or sent to re-education camps for a very long time, for destroying the fabric of society for their own selfish gain. They care not one whit for sustainability or affordability or social justice, they live only for the next commission or sale. Clearly inflationary spikes increase their commissions and profits, ignoring the fact that house prices and rents have to be underwritten by wages, and therefore cannot continue to rise disproportionately without household structural changes or overcrowding. One of those changes has been a shift to fewer children in families, and why? For affordability reasons... It's a vicious cycle. Therefore, the property industry and the greedies are feeding the artifact of negative population growth...

How tax system egged on property speculation - Alan Kohler - www.smh.com.au

Five years ago Treasurer Peter Costello told Australians: "Work for a living and we'll tax you at close to 50 cents in the dollar; speculate and we'll only take 25 cents.

"Not only that but, as a special deal - while stocks last - we'll pay half your speculating costs."

Naturally a million Australians have started speculating on real estate. When the money ran out they borrowed more, much more. Prices doubled, so did debt.

As Professor Cameron Rider of the Melbourne Law School put it to a recent Productivity Commission public hearing into the problem: "Everyone was exuberantly rational."

Macquarie Bank's Rory Robertson, however, describes the halving of the capital gains tax rate in 1999 as "the elephant in the living room".

To quote last week's report on first home buyers by the Productivity Commission: "Like many participants [in its inquiry], the commission has concluded that these general taxation arrangements [capital gains tax, negative gearing, capital works deductions and depreciation provisions] have lent impetus to the recent surge in investment in rental housing and consequent house price increases."

Even on its own terms, cutting capital gains tax by half in September 1999 was an egregious mistake.

How tax system egged on property speculation - Alan Kohler - www.smh.com.au

Landlords and speculators reap billions from tax rule changes - Business - www.smh.com.au

Tax breaks for property investors have delivered a far greater boon to speculators than previously thought, gouging billions from tax revenues with the benefits going overwhelmingly to the rich.

The 2002-03 Taxation Statistics show capital gains tax revenue plunged from $5.3 billion to $3.3 billion in three years following radical changes to the system in 1999. The changes were touted as revenue neutral at the time.

The Tax Office figures, published on Friday, also show the national negative gearing gap between rental tax deductions and rental income more than doubled in just one year.

The figures show it is now far more tax-effective to buy and sell assets than earn a salary, as investors receive generous tax breaks from rental losses and further tax breaks when they sell.

The capital gains tax changes announced by the Treasurer, Peter Costello, in September 1999 - against Treasury's advice - gave individuals a 50 per cent tax discount on assets sold after being held for more than one year.

The changes were a "grossly unfair give-away to the rich" and had shifted the tax burden from property owners to salary earners, said Professor Chris Evans, director of the ATAX tax school at the University of NSW.

Landlords and speculators reap billions from tax rule changes - Business - www.smh.com.au

Can the housing affordability crisis cause obesity in young women?

Obesity: the new crisis for women - Health - Specials - smh.com.au

It sounds a little strange, but the last 7 years have seen an upswing in obesity in 20-something year old women. By a coincidence, that maps to the recent so-called 'housing boom' upswing. Some of the prime culprits appear to be the amount of time young women must spend in sedentary jobs to meet their costs of living (i.e. increased housing costs), and their often very long commute times to get to their place of work. Both these problems are artifacts of over-expensive housing and inequitable allocation.

More than half of middle-aged women are also revealed as being overweight in the study, which highlights greater female participation in the workforce, longer hours spent behind desks, and increasing difficulty balancing work and family commitments as key reasons for the unhealthy trends.

"It's astounding," said Christina Lee, the co-ordinator of the Commonwealth-funded study, which will follow the fortunes of the same 40,000 women for at least another decade. "The younger women have already caught up with the older generation. We are going to have higher rates of heart disease and diabetes."

The Australian Longitudinal Study on Women's Health - launched by the federal Health Minister, Tony Abbott, yesterday - found that women in their mid to late 20s weighed an average 67.4 kilograms in 2003, compared with 62.6 kilograms when the same women were weighed in 1996. The weight of women in their early 50s had risen an average 2.4 kilograms to 71 kilograms over a five-year interval.

The young women's weight would inevitably climb even further, as only one in three had already had children - and pregnancy and new motherhood were typically times of major weight gain, said Christina Lee, who is professor of health psychology at the University of Queensland. Women gained weight "after getting married, moving from study into work, making those transitions into adulthood … perhaps they give up playing netball with their friends on a Friday night".

"You feel a bit wrong, the way you feel in clothes," said the 19-year-old receptionist. She spends more than two hours travelling by train between her home in Penrith and her city office every day. Work is hectic so she tends to choose fast food - "Hungry Jack's, Coke, sometimes I'll grab a bag of chips for lunch if I'm flat out".

By the time she gets home it is dark and she is "just too tired to exercise, and I don't have time to prepare a decent meal to take with me the next day … I'm trying to lose weight now but it's hard to find time or energy. Gyms can be really expensive, too."

So, in other words, the Commonwealth govt is commissioning studies showing these problems and highlighting them as a dreadful health risk, and on the other hand, doing nothing about housing affordability, including making housing affordable closer to where people work, preferring to just 'leave it to the market', except when they actively work to fuel housing price inflation by generous negative gearing benefits and low capital gains tax. State govts also have no interest in 'key worker' placement or changing the pattern of very expensive, cramped real estate near the high rise cities where the jobs are, and the fact of people having to commute from places like Penrith or the mid-North coast due to affordability reasons. Instead, they conveniently leave it to 'the market' to allocate housing, and watch and laugh as people die from diabetes and heart disease at ever younger ages, have children at ever older ages, but then wring their hands in public with these studies. That's how much your governments really care.

But remember, Peter Costello wants you to 'have 3 children, one for the mother, one for the father, and one for your country'. As though your country really cares for you, when all it wants to do is exploit you as a unit of labour and to make a developer or landlord wealthy in retirement.

Yes, "It's astounding", as Christina Lee said.