Thanks John Howard-Houses to dear to buy

[Benno From Berwick]

HOME affordability is at its lowest level in 22 years, with more than a third of a family's income needed to make average mortgage repayments, the Real Estate Institute of Australia (REIA) says.

The Deposit Power/REIA Affordability report for the September quarter found 36.6 per cent of household income was needed to cover average home loan repayments.

Affordability dropped in every state and territory, except Tasmania, with a 2.2 per cent decline in the quarter and 8.1 per cent over the previous 12 months.

New South Wales was the most expensive state with 38.3 per cent of a household's income needed to meet average repayments, as affordability fell 0.8 per cent in the quarter and 5.4 per cent over the year.

The Australian Capital Territory had the lowest amount of family income, 20.7 per cent, needed to pay a loan, despite affordability falling one per cent in the quarter and 8.3 per cent over the year.

The proportion of family income needed to meet home loan repayments is calculated on the median family income, the average home loan size and the average variable interest rate over the September quarter.

With a central bank interest rate rise this month and with more increases expected, home affordability is likely drop in the near future, REIA president Noel Dyett said.

"Purchasing a home has never been more difficult in the past 22 years," Mr Dyett said.

Both major parties have duirng the federal election campaign announced plans to address the housing affordability crisis, but any results would not be seen for a while, Mr Dyett said.

"Whichever party is elected to Government this weekend must heed the danger signals inherent in an economy where people are increasingly stretched financially to meet housing costs," he said.

Benefits of schemes such as home savings and land release programs will only appear in the longer term, he said.

"However, it appears that little to be done to ease the immediate problems, which are getting worse."

 

[mantis]

You can add to dear to rent as well.

 

[Belnakor]

The only reason housing prices are so high are because interest rates were low and people made bad decisions. Perhaps howard should have kept interest rates at 17%

 

[Benno From Berwick]

The only reason housing prices are so high are because interest rates were low and people made bad decisions. Perhaps howard should have kept interest rates at 17%

Howard doesn't control interset rates.....he can barely influence them.

Look at the OECD figures....

Freakin WA, should have stayed out of the Federation. Freaking muppets all of you.

 

[bob_neil]

No, the reason housing prices are so high is because the Federal Government took numerous steps that allowed people to increase their purchasing power (ie First Home Owners Grant) and did nothing to increase the supply of housing.

It has nothing to do with people making bas decisions, many people choose to put themselves in housing 'stress', the issue is those on low to moderate incomes who seek reasonable housing for pruchase or rent and can not do it because of the governments interaction with the market.

 

[MSR273]

This has been debated a lot and I am yet to see one good suggestion from anyone about what Howard could have done.

Even the election promises for first home buyers from Rudd were more token measures than anything. So don't expect much relief when he gets in.

People like you seem to expect the government should be able to control everything and if something goes wrong, then lets blame the government. Even god hasn't been able to supply us with a perfect world, what makes you think governments will do any better?

 

[Scotland]

Freakin WA, should have stayed out of the Federation. Freaking muppets all of you.

I could handle all the wealth generated by WA staying in WA, that would do me just nicely.

Seeing as we are doing generalisations, what is it with stupid Victorians and not understanding the distinction between 'to' and 'too'?

 

[Scotland]

An average of 36.6% of household income really isn't unmanageable.

It's those spending 50% and above that are in real trouble.

I have little sympathy for those who took out low or no deposit loans for unmanageable amounts who can't handle one or two interest rate rises.

As for those who are earning average money as singles, and as couples, who can't afford to get into the market at all, I don't know what the solution is, but it's worrying when your teachers, nurses etc. can't afford to own houses.

 

[Ripper]

It is a bit of a worry.

I think it is because everyone wants everything to start with instead of starting small and building equity over time.

We have a couple Houses (a 4 .2 and a 3 x 1) rented out very positively to Govt departments and they are paying for a block in Geraldton which we will build another rental on when the building boom slows.

Being empty nester's we have put the houses to work for us instead of us working for the house and live in a donger on site at our business premises.

When interest rates go up a couple more times that will shake out a lot the negatively geared investors and a fair chunk of housing will come on the market.

I don't think it is good practice to buy at the top of the market , you are better off getting cashed up and waiting for the next slump.

 

[Benno From Berwick]

I could handle all the wealth generated by WA staying in WA, that would do me just nicely.

Seeing as we are doing generalisations, what is it with stupid Victorians and not understanding the distinction between 'to' and 'too'?

to or too....big deal

Non core spelling issue....

 

[TheBloods]

Is basic education too expensive too?

 

[TheBloods]

And why is it Howard's fault?

 

[year of the cat]

A large reason for the problem is that neither side of politics would have the courage to stop the tax advantages of negatively gearing property. This allows cashed up people who are already in the market to keep purchasing solely for investment purposes. Unwind negative gearing and you will stop the rising housing price crisis overnight.

 

[TheBloods]

I don't think this has been conclusively demonstrated and also it raises the problem of sufficient rental properties.

 

[Scotland]

I don't think it is good practice to buy at the top of the market, you are better off getting cashed up and waiting for the next slump.

No one wants to do this any more. Banks are just as irresponsible as individuals too.

A mate of mine inquired about buying a $350k 3 x 2. He could easily afford the repayments on his wage, but as a sub contractor was required to provide a 20% deposit to gain approval. $70k is a fair whack, but fair enough I guess.

Another mate (on a permanent salary) bought a $500k place with a deposit of around $5k. His repayments would eat up at least 80% of his wages. Ridiculous by both parties, but not a rare event IMO.

There seems to be no impetus to save any more coming from the banks or the individuals.