Big rent increases squeeze renting families

Welfare and housing groups are demanding limits on how much - or at least how often - landlords can increase rents, amid reports of rent hikes as high as $90 a week.The latest statistics from the Residential Tenancies Authority show the median weekly rent for a two-bedroom flat in Brisbane jumped $30 in the year to the end of September.
But with a critical shortage of rental accommodation in Queensland, the housing advocacy group Queensland Shelter said many families were now being hit with much bigger rent increases.
"We're hearing quite a few stories where rents are being put up $50 a week," Queensland Shelter executive director Adrian Pisarski said. "It's extremely worrying, especially in the lead-up to Christmas, because it will almost certainly lead to an increase in homelessness."
One West End family is among those facing difficult decisions this Christmas, after receiving notice of a fourth rent hike in two years.
From this Thursday – just four days before Christmas – Kate Raiti and her family will have to find another $30 a week to pay their rent.
"There will have to be a lot of adjustments," Ms Raiti said. "We'll have to cut back on groceries."
Ms Raiti is reconsidering whether she can afford to stay at home to look after her daughter.
Tenants Union Queensland co-ordinator Penny Carr said thousands of families – especially those on very low or fixed incomes – were facing even more difficult choices.
"We constantly get calls about rent increases. The largest one I've had to deal with was a $90-a-week rise," Ms Carr said. "People out there are really struggling."
The Tenants Union has asked the Queensland Government to limit the number of times landlords can increase rents in any one year, while the Queensland Council of Social Service wants the Government to consider capping rental increases.
QCOSS director Jill Lang said that would help combat alarming reports of bidding wars for rental properties.
"We are getting into a sort of dutch auction situation where the rental property goes to the highest bidder," she said. "The sky's the limit in that situation and those on low incomes will miss out every time."
But Real Estate Institute of Queensland chairman Peter McGrath said any cap on rent increases would backfire.
The Queensland Government is expected to release an options paper on changes to the laws governing residential tenancies in March.

Source: Herald Sun

New home buyers spared rate rise by the Reserve Bank of Australia

The Reserve Bank has left the official interest rate on hold at 6.25 per cent, giving home buyers some relief after three increases this year.

The central bank said last month its decision to raise interest rates in November, August and May may have curbed inflationary pressures.

Official interest rates are now sitting at a six-year high and the big banks' standard variable lending rate is set at 8.07 per cent, again a six-year high.

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Most economists had believed the bank would take a wait-and-see approach until its board reconvenes in February, saying there needed to have been some some strong economic activity for it to hike rates for a fourth time this year.

Third-quarter national accounts will be released today, with economists expecting annual economic growth to have slipped to a subdued 2 per cent from an already tepid 2.2 per cent in the second quarter.

Citigroup economist Shane Lee said the decision was in line with market expectations.

"The main reason for that is they've just tightened three times in about the last three months and there are signs that that is starting to slow consumer spending and also slow the lead indicators of housing as well,'' he said.

"We also expect the December quarter inflation data to show some signs of weakness.'' Mr Lee said he expected some of this weakness to spill over into 2007.

"So, in this sort of environment we wouldn't really expect the Reserve Bank to need to tighten policy,'' he said.

Mr Lee said rates should be on hold for the first half of next year, but a possible acceleration of US economic growth in the second half could prompt more rate rises.

Source: AAP

New home construction drops again s housing affordibility slides

Housing construction dropped for a second consecutive month in November as rising interest rates continued to bite, a private survey showed today.
The Australian Industry Group-Housing Industry Association Performance of Construction Index (PCI) fell 1.6 points to 47.6. A reading below 50 indicates construction activity is generally declining.
"Three rate rises this year have combined to dent activity in the housing and apartment sectors, particularly in the mortgage heartland of the largest capital cities," said Ai Group associate director, economics and research Tony Pensabene.
However, the report found that commercial construction activity rose to its highest level in the past 15 months.
Mr Pensabene said strengthening activity in commercial and engineering construction is providing a floor under what could have been deeper consequences for the construction sector from recent interest rate increases.
The central bank raised interest rates in May, August and November. It left rates on hold this week, and will not review rates again until February.
"Despite an underlying shortage of housing supply, consumers and industry will need a period of stability in order for confidence and demand to grow," Mr Pensabene said.
The PCI data was the latest in a number of housing indicators pointing to soft conditions continuing to prevail in the Australian residential construction sector.
"Very low levels of housing affordability are preventing a recovery in resource-poor areas of Australia and are dampening activity in resource-rich areas of the country," said HIA executive director, housing and economics, Simon Tennent.
"That is hardly an environment where contemplation of a further rate rise is required," he said.
Both activity and new orders declined following falls in the previous month, leading to a reduction in employment and a higher rate of decline in supplier deliveries.
Source: AAP

Australian Dream of homeownership is alive and well sharing the home loan mortgage.

The great Australian dream of home ownership may not necessarily be dashed after all.
Despite the flattening of the market in Sydney, house prices are still very, very high for people trying to buy their first home, and rising interest rates make the challenge harder.
But if you don't mind sharing, then the costs of entering the market and maintaining the loans can be divided by two, three, even 10 times.
It's an appealing idea for many young people who are still comfortable with the notion of house sharing.
And with the average Sydney house still hovering around the $500,000 mark, halving or dividing the burden even further will make things a lot easier.
This sort of pooling arrangement is known as tenancy in common, a legal relationship that allows each tenant an individual share in the same piece of property.
But drawing up the documents has often been a problem. And getting documentation right can be expensive.
However, a couple of mates who met while working at the law firm Allens Arthur Robinson, have drawn up papers easily modified to meet the needs of particular groups wanting to buy together.
"It takes about $2000 for someone to draw up this sort of documentation from scratch," says Jeremy Levitt, co-founder of PodProperty. "Because we've already done it, we can modify it for just $250."
The documents need to be an iron-clad agreement between all the parties which have the capacity to allow for situations such as when one member of the party defaults on their obligations, then others can step in.
And it needs to offer enough flexibility for one member of the group to move out or sell out if they should want to.
"It's important to protect the interests of all the people involved," Mr Levitt says.
PodProperty was set up about six months ago by Mr Levitt and his friend Jonathan Stambolis, both aged 26.
"Housing affordability is a crisis in Australia," says Mr Levitt. "Sharing allows young groups to get into the market five years earlier than if they were to go it alone."
Having drawn up the documentation, they now have a co-ownership guide that explains how the system works, all the advantages and bonuses, and how to get out.
They get from 30 to 40 enquiries a day for the guide and since they set up shop they have helped 26 groups get the property they want.
These have ranged from groups of first-time buyers, groups of property investors and groups of families wanting holiday homes.
"The holiday home thing was a great surprise," says Mr Levitt. "But it makes sense. Holiday homes are not used 100 per cent of the time so if a group of families or friends get together they can make more efficient use of the place."
As well, the pair can help the group get finance and assist with the conveyancing.
He says they even made a group from scratch as many aspiring investors feel even a modest investment is out of reach for them on their own.
Source: Daily Telegraph