Real Estate Expert
The latest Housing Affordability Report published by The Real Estate Institute of Australia and Adelaide Bank showed an improvement in housing affordability nationwide.
The report, which is based on data from all major lenders for the September 2017 quarter, showed the proportion of income required to make loan repayments had fallen in every state and territory over the previous 12 months.
image via McGrath
First home buying had also increased nationwide, with the number of young Australians buying their first home up by 32.6% in September 2017 compared to September 2016.
The biggest change was in NSW where first home purchasing rose by 70.9% – no doubt a reflection of government incentives introduced in July to make first home ownership easier, including significant stamp duty savings.
It’s great to see affordability improving based on these particular measures but it’s cold comfort to young buyers who can’t even get the deposit together. Their ability to make the repayments, based on their income, is often good but it’s the 20% deposit that makes life difficult, especially in a boom market where prices are rising faster than they can save.
Affordability is one of my main concerns in the Australian marketplace today, primarily for first home buyers.
As outlined in our recent Annual McGrath Report, I believe both first home buyers and governments need to take responsibility if a solution is to be found.
Attempting to reduce values materially will never work as that would require major artificial manipulation and would negatively impact millions of existing home owners around the country, not to mention lenders and other stakeholders.
I believe the solution needs to work from all sides. My key points on the road to affordability are:
1. This is a supply issue not a demand issue. We shouldn’t attempt to dissuade Australians from buying property, instead we should increase the supply so we can all live the Great Australian Dream
2. As the workforce becomes more skilled and moves away from its industrial base, workers need access to work hubs and therefore infrastructure and planning are keys to the resolution
3. The tax treatment. The current burden of stamp duty is impacting many Australians’ ability to move to the most appropriate home for them. We need an enlightened look at the major tax structures that impact property (stamp duty, negative gearing, land tax and capital gains) in order to deliver a fairer, and most likely broader based sharing of the tax burden, especially around stamp duty
4. Local government approval process. The delays experienced by developers to obtain complying development approvals is absurd. It is clogging up the system and causing billions of dollars in delays across the country. This must be addressed to clear the blockage
Having worked in this wonderful world of property for some 35 years now, it would give me great comfort to see the housing affordability crisis resolved. I believe this can happen through a joint effort between all stakeholders.
So, let’s all get mobilised on this issue so every young Australian can fulfil the dream of home ownership.