Time for first home buyers to stop renting as stamp duties force rents to rise

The Australian states' addiction to the revenue stream created by increasing property prices and therefore stamp duty has driven up rents by almost $20 a week and forced growing families to pay half a year's disposable income to move into a bigger home.

The combination of stamp duties and other policies restricting land release have significantly distorted the housing market and fuelled urban sprawl - a situation that will worsen as the population ages.

According to an economic study commissioned by Liberal think tank the Menzies Research Centre, stamp duties have accounted for half of the rental increases between December 1999 and December last year.

Across Australia, the average increase in stamp duty in the seven-year period was a staggering 184 per cent.
Source: The Australian

In Sydney, Perth, Melbourne and Canberra, stamp duty on the median house is between $15,000 and $19,000.

Melbourne had the lowest increase, a still-substantial 58 per cent.

Sydney rose 105 per cent, Brisbane 159 per cent and Adelaide 175 per cent.

Perth had the largest rise, with stamp duty up 334 per cent, while in Canberra it rose 233 per cent and in Hobart 224 per cent.

The study by Tim Hird, a former Treasury official now with consulting firm National Economic Research Australia, argues stamp duty is unfair because it taxes many people who are forced to move because of growing families, age, illness and family breakdown.

"Taxing people who need to move to manage worsening health or due to loss of employment would appear to be clearly inequitable," he said.

"Moreover, those households that, for reasons beyond their control (such as health deterioration, disability, employment or family break-up) move house often pay more stamp duty."

The rise in stamp duty means property investors pass the costs on in higher rents.

On average, presuming a 16-year investment, the additional cost is $11 a week in Melbourne, $15 in Adelaide and Brisbane, $18 in Sydney, $22 in Canberra and $29 in Perth.

Dr Hird said that in the capital cities the average family that wanted to move must save half a year's disposable income just to pay for stamp duty.

"The inevitable result is that people continue to live in a home that no longer suits their needs. These are the hidden costs of stamp duty," he said.

First home buyers set to struggle as more Aussies use debt to live.

First time home buyers in Australia are set to struggle as more Australians are choosing to load up debt to make ends meet despite many working harder and longer hours, research from internet auction site eBay reveals.

The research shows Australia's love affair with credit was strong, with more than two-thirds of Australians happy to borrow money to maintain their lifestyle.

The nationwide survey of about 850 people revealed that seven out of 10 Australians were working longer and harder in an effort to meet obligations and negotiate some of life's bigger financial hurdles.

The researchers found that one-third of first-time car buyers used some form of credit to finance their car, while three out of 10 Australians used either a credit card or bank loan to fund moving out of home for the first time.

The survey also found that 45 per cent of new parents said that despite planning financially for their baby, they still had to fork out for unexpected costs.

EBay, in partnership with the founder of savings tips website SimpleSavings.com.au, Fiona Lippey, have produced the Stages of Life Survival Guide.

For more information on the eBay Stages of Life guide visit www.eBay.com.au/stagesoflife.

Australian home building market will grow in 2008

Australian building and construction products and sugar giant CSR expects the residential housing market to lift early next year, breathing some short-term life back into its property and building products operations.
At a press conference in Sydney today, the company's newly-appointed managing director Jerry Maycock said demand for commercial development had been high for quite some time.
But the demand for residential development, which had been low, particularly in New South Wales, should also pick in early 2008.
This would provide short term relief to the balance sheet.
"We are reasonably confident that next year will provide an uplift in residential development," he said.
"In New South Wales the demand drivers are there ...(but) we are not too opportunistic this calendar year."
Mr Maycock said overall, the company had invested $450 million in the last few years and remained "bullish" about medium term growth.
His comments today's came after CSR reported EBIT for its property business fell 7.8 per cent to $69.7 million.
A sluggish housing market also hit CSR's building products division, which includes brands such as Gyprock and Bradford insulation.
Building products EBIT was down 16.7 per cent to $84.5 million, after excluding a $20.6 million one-off cost connected to two plant closures booked in the previous year.
"The residential construction market is forecast to remain relatively flat in the eastern states, although the Queensland market may show some signs of recovery later this year," CSR said.
CSR's full-year net profit fell to $273.3 million for the year ended March 31, from $305 million in fiscal 2006.
Source: AAP

Rising Rents are a worrying sign for would be first time home buyers

Rents are on the rise, according to the Budget papersn, and this will be a worrying sign for First time home buyers trying to save their deposit.
Although the Budget prediction will put more pressure on renters already dealing with record low vacancy rates, the forecast could convince people to invest in property.
"Low vacancy rates and ongoing solid demand for housing suggest that rental yields are likely to rise, largely through increases in rents," the Budget says. Between 2001 and 2003, "house prices rose much faster than rents, resulting in a sharp decline in gross rental yields".
Investor activity in the housing market has as a result been discouraged by increases in the cost of borrowing - rising interest rates - low rental yields, low growth in house prices and strong returns on alternative investments such as shares.
However, don't hold your breath. Even Treasury is "uncertain about the timing and effect of any rental rise".
High interest rates and low rental yields also mean new dwelling investment is likely to be led by alterations and additions, such as home renovations, not new houses.Source: The Australian

Australian Democrats call for low cost public housing on Adelaide inner suburb factory site

The South Australian Democrats want the State Government to acquire the old Clipsal factory site at Bowden in Adelaide after it is vacated.
Electrical company Clipsal is moving to new site in Bowden next year.
Democrat MP Sandra Kanck believes it is an ideal location for affordable housing, which could also run on solar power and recycled water.
Ms Kanck says it could be sustainable and affordable.
"Why should people who are on lower incomes not have access to this technology, why should it be available only to the rich?" she said.
"I think this Government, if they're talking about sustainable housing, owes it to these people to make sure that they can have the same sorts of things that are going in the long run to make cost savings."
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