Wednesday, March 27, 2024

Tag: Housing Affordability

Housing Affordability: Would a Foreign Buyer Ban Make a Difference?

While home values have steadily retreated from their pandemic peak in recent months, they remain at near-record highs, posing an ongoing challenge for many Australians who want to own their own home.

In the September quarter of last year the national average home price sat at $889,800, data from the Australian Bureau of Statistics shows – 33% higher than in September 2019 ($668,800).

Joey Moloney, a senior associate at the Grattan Institute, says that the affordability of housing in Australia has been deteriorating for years though.

Read the full article at Money Magazine

Australian Property Forecast: What’s In Store For 2023?

The property market took a hit in 2022 as mortgage rates started to increase much faster than initially expected, rising eight times to end the year at 3.1%. To put this into context, the cash rate was sitting at just 0.1% at the beginning of 2022.

“I think what we saw in 2022 was a bit of a roller coaster really in terms of property prices in the property market because we started the year with record prices and then moved into a downturn quite rapidly,” chief of research and economics at Domain, Nicola Powell, told ForbesAdvisor.

Earlier in 2021 the RBA governor, Phillip Lowe, had said that it would not be raising rates until 2024—a comment Lowe has since stepped back from and apologised to borrowers who took out heft loans on the basis of his erroneous advice.

“The RBA kept on insisting that they wouldn’t lift rates until 2024. Now we were skeptical that they could keep to that promise,” SQM Research owner and managing director, Louis Christopher, added.

In 2023 property experts are cautiously optimistic that as interest rates plateau that stability will return to the market. Here’s what we may expect to see…

Read the original article at forbes.com

How housing made rich Australians 50 per cent richer, leaving renters and the young behind

How housing made rich Australians 50 per cent richer, leaving renters and the young behind — and how to fix it

Compared to the rest of the world, income inequality is not particularly high in Australia, nor is it getting much worse — until you include housing.

Rising housing costs have dramatically widened the gap between what Australians on high and low incomes can afford. Rising home prices paired with plummeting rates of home-ownership are driving up wealth inequalities.

If we want to address inequality, we will have to fix housing.

Key points:

  • Housing is draining the incomes of the poor
  • Housing is driving wealth inequality
  • Housing is driving up capital income
  • Housing is creating a “Jane Austen world”
  • The Federal Government needs to fix taxation
  • Australia needs to build more houses

Read the original article at The Conversation

What’s Going to Happen With the Cost of Living Crisis in 2023?

2022 was a year of turbulence. With the war in Ukraine sparking a global energy crisis, our Reserve Bank raising interest rates to their highest levels in decades, and lettuce somehow costing more than some street drugs, we were all watching our wallets and wondering where it was going to end up.

Now that we’re into the bright and shiny year of 2023, those factors are still very much with us. But just how far this cost of living crisis and economic unrest will go over the next 12 months is still a little hazy.

Inflation is still the driving factor in the cost of living crisis, with the price of virtually everything soaring. As the government and the RBA grapple to get it under control, there are policy interventions that may help people weather the storm. But how long it keeps raining for will again depend on global, environmental, and individual factors, which are all very hard to map economically.

So, here’s what the financial forecast looks like between now and next year, and precisely how much financial anxiety you should be feeling.

A tsunami of homelessness is about to hit

Rising rents, eight interest rate hikes, surging living costs and natural disasters inflamed what was already among world’s least affordable rental markets Australian prime minister Anthony Albanese has announced.

Belinda has applied for more than 100 rental homes in the past year and been rejected every time.

The 39-year-old Australian single mother of four now lives in a temporary shelter in Campbelltown, southwest of Sydney, and has six months to find a home that costs under 500 Australian dollars a week, or risk ending up sleeping rough.

“I don’t know where I’m supposed to go after that. I have got a house full of furniture that I don’t really want to get rid of. I don’t really want to get rid of my cat or my puppy,” says Belinda. “It is a bit scary to tell you the truth.”

Relentlessly rising rents, eight consecutive interest rate hikes, surging living costs and devastating natural disasters in the past few years have inflamed what was already among the world’s least affordable rental markets.

How Covid turned home ownership into the Great Australian Fever Dream

When Covid hit the Australian property market, house prices skyrocketed, people were priced out of the market, supply chain issues hit construction sites, bankruptcies and insolvencies plagued the building sector, and rather aptly, Australians’ aspirations to own a home became the Great Australian Fever Dream.

As the residential sales market raged red-hot rental vacancy rates plunged to record lows and won’t be letting up soon, and industrial real estate also never shook the superlative “record” – sounding rather like a broken record.

The eye of the storm: House prices still have a long way to fall

It’s a nail-biting period for homeowners. The rate of decline in house prices eased again in September suggesting a softer landing for the market but if the consensus of economists is to be believed, it’s not over yet.

We could be in the eye of the storm. And if house prices experience a peak to trough fall of between 15 per cent and 20 per cent, as many economists expect, we are less than half way there given the national market is off only circa 6 per cent.

Even if the Reserve Bank of Australia, which places a more conservative 11 per cent estimate on house price devaluation, is closer to the mark, there is still a long way to go before the market cools down. […]

Read the original article at SMH

Young Australians staying with their parents to save for a house deposit

Young Australians live with their parents to save for a house deposit

The rising cost of living, including a lack of affordable housing, has changed the financial landscape for Australia’s youth.
According to the Young People’s Financial Strategies: Insights from the Australian Youth Barometer report from Monash University, young Australians often defined financial security as being able to afford material needs without worrying about money.

Saving and investing were listed as their main strategies for financial security, but many factors could influence that in a negative way, including paying for housing.

Interviewees said the prospect of living independently, especially paying rent, was a potential threat to their ability to save.

Getting serious about affordability

Higher-density housing is needed, and stamp duty and negative gearing have to go, according to KPMG Australia partner and chief economist Brendan Rynne.

In order to improve housing affordability, the government must institute reforms to allow for higher-density housing and remove market distortions like stamp duty and negative gearing, according to KPMG.

Speaking at The Australian-Melbourne Institute Economic and Social Outlook Conference, KPMG Australia partner and chief economist Brendan Rynne said the government needed to institute a combination of regulatory and tax reforms to address the affordability crisis. Rynne warned that the reforms should be instituted in unison to avoid an “investment freeze” that could only worsen the situation.

Zoned Out: How Land Use Restrictions Divide The Nation

Housing policies ensure continual wealth gains for current home owners while leaving renters and potential buyers locked out of the market.

Housing policy is a battle between the haves and the have-nots. The haves are the current generation of wealthy home owners. They have enjoyed large capital gains over the past few decades and are sitting on property worth hundreds of thousands – often millions – of dollars. They support the policies that have delivered these windfalls.

The have-nots are renters and future generations of potential home owners. These groups are disproportionately young and on lower incomes.

Read the full article on John Menadue’s Pearls and Irritations