Tag archive: Housing

Australia’s Housing Crisis to Continue for Another 40 Years, Report Finds

Australia’s housing crisis could last for another 40 years unless changes are made to the market, a report by the Committee for Economic Development of Australia (CEDA) found.

CEDA said housing affordability is unlikely to improve for the foreseeable future, especially in capital cities. “Barring any major economic jolts, demand pressures are likely to continue over the next 40 years and supply constraints will continue,” said CEDA.

The report said the current structure of land release discourages house developers from getting more supply in the market, leading to increasing numbers of Australians retiring without owning a property.

The committee said changes are needed now at all government levels to avoid longer-term consequences. It made eight recommendations to ease the demand, including providing stronger legal protection for tenants, replacing stamp duty with land-based taxation, increasing capital gains tax and relaxing house planning restrictions.

CEDA research and policy committee chairman Rodney Maddock emphasised the latter, saying the government needs to allow more and bigger residential buildings to be built.

“We’ve got a free market on the demand side but all sorts of restrictions on the supply side,” said Maddock.

“Overall, the conclusion must be that our housing system has been designed – inadvertently, of course – to supply new additions at a lesser rate than needed to keep housing prices and affordability within acceptable limits,” said CEDA.

News: Rising House Prices Put Pressure on Sydney and Hobart Renters

Increasing house prices in Australia are putting pressures on renters as rental affordability in Sydney reached a record low.

The latest report from Rental Affordability Index found that despite the stability in some parts of the country, low- and moderate-income households are still largely priced out of all metro markets.

Sydney and Hobart are found to be the most expensive cities for renters while Melbourne and Perth are the most affordable. Sydney renters spend an average of 29 per cent of their household income on accommodation, while those in Hobart spend 28 per cent.

 

City Per cent of household income Six-month trend
Sydney 29 -3.8 per cent
Hobart 28 -5.4 per cent
Adelaide 25 -0.7 per cent
Brisbane 25 -0.3 per cent
Melbourne 24 -0.1 per cent
Perth 21 +6.2 per cent

Source: National Shelter, Community Sector Banking, SGS Economics and Planning

 

“Lots of frustrated renters can’t get into home ownership and they stay in the rental market,” said Adrian Pisarski, executive officer at Australia’s peak housing body National Shelter.

“Those people tend to rent down as low as they can so they can save a deposit to meet the gap in terms of housing purchase, and what that does is displaces lower income households in the rental market.”

The index found that despite the negative conclusions, rental affordability has remained stable in most parts of Australia.

“What we found overall nationally is that rental affordability has not improved, it hasn’t declined overall either, except in Sydney and Hobart, where it is worse than it was six months ago,” Pisarski said.

“For most of the rest of the country [it] is pretty stable, but having said that, rental affordability is very bad across the nation.”

Tenants NSW senior policy officer Ned Crutcher said renters, who made up one-third of households in the state, were largely ignored by the government. “Rents are going up and wages are not. On top of that, renters have very little security of tenancy – they can be kicked out at any time,” he said. “This stuff keeps people awake at night.”

Australian Housing Market Has ‘Peaked’, According to UBS

The Australian housing prices boom has reached its peak, investment bank UBS said.

“After housing activity rose consecutively for over four years, its longest ever boom, we are now calling the top and think that housing activity has already peaked,” UBS economists Scott Haslem, George Tharenou and Jim Xu wrote in a note.

“Mortgage rates are rising, and sentiment of home buying collapsed to a [near] record low… Hence, we are ‘calling the top’, but stick to our forecasts for [dwelling construction] commencements to ‘correct but not collapse’ to 200,000 in 2017 and 180,000 in 2018.”

National house price growth is currently at 13 per cent, the highest in seven years, but UBS expected the growth to fall to 7 per cent this year, and 0-3 per cent next year. “We see a moderation ahead amid record supply and poor affordability, with the new buyer mortgage repayment share of income spiking to a decade high,” UBS said.

While house prices will still be out of reach from first home buyers, the bank said more rental options will be available following completion of units this year, allowing rents to rise more slowly than incomes.

The bank also warned that while the risks for housing slump are low, considering strong population growth and stable employment, the country’s record household debt and high housing prices could still cause trouble.