Housing affordability crisis worsening according to HIA survey of top home builders

New home sales slipped by 0.8 per cent to 8,321 dwellings in June, a Housing Industry Association (HIA) survey of 100 major residential builders and developers found.
The result was driven by a sharp fall in unit sales, even though more houses were sold in the month.
Multi-unit sales fell 20.1 per cent to 934 dwellings, after posting rises in the previous two months.
Private new detached house sales rose 2.3 per cent to 7,386 following a 6.9 per cent fall in May.
Over the year, new home sales fell 12 per cent during 2006/07.
The HIA said new home sales have now fallen for the past five years, despite strong population growth.
HIA chief economist Harley Dale said record low housing affordability was hurting the building industry.
"New home sales ... shows a considerable
weakening in conditions over 2006/07," Mr Dale said.
"This update is a telling indictment of the impact record low housing affordability is having on the home building industry.
"Addressing the shortfall in supply is critical to alleviating the housing affordability crisis."
Detached houses, which make up the bulk of new home sales, suffered a 13.9 per cent fall in sales during 2006/07.
But the more volatile multi-unit sector posted sales growth of 1.3 per cent in the same period.
HIA managing director Ron Silberberg said infrastructure levies and holding costs paid by developers were to blame for Australia's low housing affordability.
The HIA welcomed federal Labor's $500 million election promise to help reduce infrastructure costs in the building industry, which Opposition Leader Kevin Rudd said would help 50,000 new home buyers.
Dr Silberberg said Labor's plan would reduce the cost of new dwellings and make it easier for first time buyers to afford their own home.
Meanwhile, new homes sales were the worst in Queensland, which experienced an 18.4 per cent fall to 1,952 in June, the worst result in eight months.
The other mainland states enjoyed new homes sales increases in the month, although they also suffered declines during the last financial year.
Sales in NSW rose 16.9 per cent in June and fell by 10.7 per cent in the year.
Source: AAP

First time home buyers pushed to the outer fringes of cities

First time home buyers being in blue-ribbon inner and middle-ring city areas are being pushed to poor-cousin suburbs nearby as affordability continues to bite.
If you are prepared to put up with airport noise, St Peters and Tempe are two inner Sydney suburbs that are still affordable, according to Michael McNamara, general manager of researcher Australian Property Monitors.
With a median price of just under $500,000, these inner western suburbs may still be expensive in national terms, but compared with Sydney's Paddington, where the median price reached $1.17 million in June, they look relatively cheap.
Around the country, there are still suburbs reasonably close to city centres that have been left behind for one reason or another.
Some are finally gentrifying as buyers, unwilling to move to cheaper outer suburbs, venture in.
Macquarie Bank head of property research Rod Cornish says some of these suburbs experienced the strongest price growth of the last boom in the early 2000s, but have only started to see prices growing again over the last six months.
In contrast, house prices in premium suburbs around the country have raged ahead.
Mr Cornish argues that there will be a top-down recovery typical at this stage of the property cycle.
Macquarie Bank is forecasting a 0.25 per cent interest rate rise next month, which Mr Cornish said would delay the housing recovery, particularly in the harder-hit middle and outer suburbs.
Property researcher RP Data found there were at least 10 capital city suburbs within 10km of their respective CBDs that had median prices of less than $560,000, with Sydney still the most expensive city in the country.
Mr McNamara said Waterloo, in Sydney's inner south, was one of the gentrifying suburbs, with the median price of $478,000 moving up six per cent in the six months to June.
"Waterloo had typically had a bad rap due to housing commission (buildings) and a high crime rate, but that's changing and the area is gentrifying," he said.
But while it has some historic streetscapes, Waterloo has slabs of industrial property and it misses Paddington's streets of ornate terraces.
In Brisbane, agent ColliersPRD research director Tim Lawless picks Mt Gravatt, a middle-ring suburb in Brisbane's southwest.
Prices have moved up about nine per cent in the past six months to $398,000 but, Mr Lawless said, proximity to the city and good road systems was likely to kick it along further.
In Adelaide, many of the inner suburbs look promising, he said.
Sydney was more difficult, with many families moving as far as Wollongong in the south and Newcastle in the north for more affordable housing.
Source: Austrailan

Hope for first time home buyers as Rudd promises to probe housing supply as Howard sneaks out of Australia unexpectedly

Kevin Rudd gave hope to potential first time home buyers today and says labor wants to tackle housing affordability, [as Howard suddenly sneaks out of Australia on his 68th birthday for an unexpected trip to East Timor. Howard's trip was so sudden there were no reporters available at such short notice to travel with him.]
Opposition Leader Kevin Rudd says a federal Labor government would set up a housing supply research council as part of its plan to address the chronic housing shortage.
Labor is today holding a housing affordability summit in Canberra, bringing together industry players to nut out issues affecting housing affordability and availability.
Mr Rudd says a research council would publish a yearly state of supply report.
"In terms of the data, it would provide levels of immigration as I said before, movement of people between states, medium and long-term demographic changes, the adequacy of current and future land supply, market distortions and possible future shortfalls, housing construction and availability of diversity of housing and response to demand," he said.
"We think this is an important research body for the future.
"It would also, as I indicated before, be in a position to provide policy advice to the government of the day, in terms of what would constitute an appropriate set of policy settings to deal with this challenge for Australian families into the future."
'Crisis point'
The Housing Industry Association (HIA) says the lack of affordable housing has reached crisis point.
HIA spokesman Darren Disney says urgent action is needed at both a state and federal level to ease mortgage and rental stress.
"What it comes down to is land costs [which] are very high, as there needs to be more land released," he said.
"Fees, taxes and charges on new housing is very high, up to $30,000 on a new house in Victoria, and we also have planning delays that are leading to holding costs and affecting the costs of new houses as well."
Mr Disney says there are a number of initiatives that could help the situation.
"Some of the solutions we will be putting forward are a low-tax savings account for first home buyers, to encourage them to save for a deposit, higher depreciation rates for investors in low-cost properties and a $3 billion residential infrastructure fund to bring down the the development levies on new housing," he said.
Long-term problem
Earlier today shadow treasury spokesman Wayne Swan said Labor's housing summit cannot do anything to reduce housing costs in the short-term.
"We don't think there's any magic solution when it comes to housing affordability, there's nothing we can do today or tomorrow that will necessarily solve that problem next week," he said.
"What we've got to do is get the setting in place for the long-term, for the next 10 years, not the next 10 weeks."Source: ABC

First time home buyers may have to pay half income for a roof over their heads.

Many first time home buyers and renters will be forced to pay half their income just for housing if Queensland's housing affordability is not addressed quickly.
And the situation is already so bad it will take at least 10 years to fix even if governments take action now, according to a new report.
Renters won't escape, with half of tenants in urban and regional areas tipped to be in financial stress within three years due to rising rents caused by a shortage of rental housing, the Housing Industry Association says.
Speaking at the launch of a report into housing affordability, Queensland Community Housing Coalition executive director Mike Myers said governments at all levels had been too slow to react to the crisis.
"The Federal Government hasn't reacted yet at all," he said.
"The first announcement that we've heard about from the Federal Government about this in 10 years is that they want an audit of government land. We certainly should welcome that. But that's not a housing policy.
"Without a national housing affordability policy we're not going to get very far.
"It's a fair bet to say that we will end up in the situation where a very significant number of people in this country will be paying more than 50 per cent of their incomes in housing costs."
The new report is entitled Evolving a Planning Approach to the Provision of Affordable Housing: An Exploration of Potential Policy Directions for Achieving Affordable Housing Outcomes.
But Mr Myers said it was by no means designed to offer a quick fix or "magic bullet" to solve the housing crisis.
"It will take another 10 years years to really make a substantial impact on the problem but we do have to start now because the problem becomes more and more expensive to fix the longer that we leave it," he said.
The report – a joint venture by the QCHC, Bond University and LandPartners – also calls for
the establishment of a state land development corporation as well as a state-led affordable housing agency to co-ordinate action and measures to improve the efficiency of the planning system.
HIA senior executive director Chris Lamont said
Queenslanders would be the hardest hit on the rental front.
He said the HIA research indicated the rental pain would affect all parts of Australia.
Source: AAP, Courier Mail

First time home buyers warned that housing affordability will only get worse

Housing supply will slow over the next 10 years because fewer people will be able to afford a home, putting a dent in demand and lowering housing affordability even further, a report has found.
The Housing Industry Association (HIA) national outlook for the June quarter says record low housing affordability was stopping a growing number of Australians from owning their own home.
If the affordability crisis was unchecked, fewer homes would be supplied until the end of the decade.
”Residential construction is flat in a climate of user pays funding for new housing, a lack of affordable land and increasing planning and red tape hurdles,'' HIA chief economist Harley Dale said.
”Without a concerted all-of-government approach to rectifying the affordability crisis, the build-up in unmet demand will intensify,'' he said.
Need to be smart
The HIA said it supported the recently launched residential infrastructure plan, to help state and local governments meet the cost of building and upgrading essential infrastructure in regional and urban centres.
”It's time to be smart and fair about housing affordability, particularly with forecast growth in housing starts of only 3 per cent over 2007/08 - a result that will barely touch the sides of the required lift in housing supply,'' the HIA said.
”This under supply, however, has provided a significant boost to renovation activity as potential home buyers stay put and add floor area to existing homes rather than face the prohibitively high transaction costs associated with moving house.''
The HIA expects total investment in renovations in 2006/07 is expected to have hit a new record of $28.6 billion and growth of more than 3 per cent is forecast for 2007/08. Source: AAP

First time home buyers expect more from their first home

Most first time home buyers expected greater quality of housing than their parents, Deputy Prime Minister Mark Vaile said today. [This seems to be a slap dash response to pressures from Kevin Rudd's well thought out Labor Party proposals to Australia's housing crisis.]
But the Federal Government needed to look at what it could do to improve housing affordability, Mr Vaile said.
"Expectations in recent years in terms of first home buyers have risen," he said.
"First home buyers are looking at more expensive homes today than they did say 15, 20 years ago." [Weren't all homes less expensive 5 years ago, let alone 20 years ago?]
Mr Vaile said state governments and local authorities had, historically, had the most responsibility for housing.
"But certainly we need to look as a national government at what we can responsibly do to assist in that area," he said.
"Whether that be in the area of planning, whether it be in the area of infrastructure investment remains to be seen.
"It is incumbent upon all levels of government that we tackle this issue."
He called on the NSW Government to release a reported 34,000 blocks of land it holds in Sydney.
"From my past history in the property industry, if they were released that would put downward pressure on prices."
Before entering politics, Mr Vaile ran a real estate and stock and station agency in rural NSW [out bush Australia].

First time home buyers will have to compromise on real estate location and house size or both

House prices and demand are redefining the Australian dream of home ownership for first time home buyers.
Buying a home for the first time is never an easy decision to make, and the convenient location of real estate at an affordable price is getting tougher as more home buyers want to achieve the same thing. A home well located to work, transport , schools and shops and other services, with a mortgage that leaves you some money to buy the other necessities of life, with a little left over for the little pleasures that we have grown used to as renters.
The Federal Government has given first time home buyers a leg-up with the fits home buyers grant, but this in the end has created its own problems, because it has created a larger demand for housing than the land releases and home construction has been able to supply.
So until we get a concerted attack on exceeding demand with supply prices will grow ever higher. And here is the problem. If your were a builder or a land developer would you want to have more competition than buyers for your products? Its in the best interest of land developers to lag home buyer demand because that's where the profits are, in meeting unmet demand.
So demand-side solutions will only feed the need and giving fits time buyers an increase in the grant to say $25,000, an amount which in my opinion is realistic based on the objective of the first home owners grant in the first place, [to compensate home buyers for the cost to them of the introduction of the GST] .
Were this to happen then more first time homebuyers would simply enter the market with you and this means competing with more people for the available housing stock. Not only that, but savvy investors would also buy in because they know that real estate is essentially about supply and demand and the increased demand will give them a profit. This would worsen any demand problem.
The restricted land supply has been with us for several years and this has created prices rising than they otherwise would. And the governments, federal, state and local that have gotten used to the windfall revenues that these higher prices have created don't want to give them up.
The nut of the issue is that house prices are being pushed up by competition for housing in the locations in which people actually want to live, and they want big homes on large blocks, close to the centre of cities and to the coast, with short commuting times to work and access to the entertainment, educational and cultural amenities that these places offer.
First time home buyers on lower incomes have been pushed towards the periphery of our cities and beyond, 'priced out' of the market for well-located family homes. But hasn't this always been the case?
The problem is that Australia's state capitals, and growing regional areas such as the Gold Coast South of Brisbane, the Sunshine Coast, north of Brisbane, and the Central Coast in NSW are high-demand coastal centres, and so are prone to be relatively expensive."
This demands a different sort of supply-side policy solution effectively shrinking distances in our cities through better transport and decentralisation and increasing housing supply closer to the city centres through more medium and high-density development.
The most promising approaches involve improving transport infrastructure, to reduce commuting times and effectively increase the quantity of "well located homes". It also involves creating jobs closer to plentiful lower-cost housing land by promoting suburban and regional economic development and encouraging decentralisation of major employers in both the public and private sectors.
And there needs to be new approaches to planning regulation and a change in expectations among some first time home buyers themselves especially accepting the new reality of apartment living instead of a house on a quarter-acre block.
For those first time home buyers priced out of the market for well-located family homes, the best practical advice remains to look further afield or to start thinking about apartments.
The Great Australian Dream is still alive, but it has changed with the desires of younger Australians who value social and cultural interactions more than having five kids and big back yard. Location means being closer to lifestyle wants more than work needs these days.

First time home buyers consider co-ownership to get into the home market

If you are a prospective first time home buyer on average incomes and in the major capital cities of Australia you might be thinking that the sun is going down on your dream.
As home prices have soared, the concept of co-ownership has become a reality in Australia. A recent survey of first time home buyers showed 35 per cent of prospective purchasers would consider buying a home under non-traditional co-ownership arrangements.
Jeremy Levitt, of PodProperty - a new service that assists groups of co-owners to buy property - says Pod's clients include parents helping out children to buy their first home, friends teaming up to buy an investment property and siblings buying a holiday home.
PodProperty recently organised the co-ownership of a holiday property in Queensland involving five Australian couples living in Indonesia, the Northern Territory and Victoria. Pod assisted another group to buy in Japan.
Levitt, a former corporate lawyer who started PodProperty last year with business partner Jonathan Stambolis, says the firm's clients include owner occupiers who plan to live together. "There are a lot of generation Xs and Ys who would rather buy together than rent," he says.
Levitt says buying a property with others has advantages such as being able to split stamp duty, conveyancing and other costs. It can speed up mortgage repayments and enable prospective purchasers to buy a better quality property than they could otherwise afford.
How to get started.
The most common way to buy a property with two or more people who aren't married is through a tenants-in-common arrangement where the shares in the property do not have to be equal and, if you die, your share of the property can be left to a person of your choice. By contrast, if you purchase a property under a joint ownership arrangement (as is typical for married couples) your share of the property is automatically left to your spouse.
Most real estate agents are familiar with tenants-in-common arrangements. It is simply a matter of obtaining the signature of all parties involved following the purchase of the house, whether at auction or through private sale. The proportionate stake that each party owns in the property is noted on the sale contract.
SOme of the pitfalls.
Buying as tenants-in-common has its pitfalls however, which is why most legal experts agree it is imperative to sign what is called a co-ownership agreement - a legal agreement that sets out the rights and obligations of each person with a share in the property. It can help you decide, for example, what happens if someone wants to sell out or doesn't make their mortgage repayments on time, or it might mean determining when and how a holiday home will be shared during peak holiday times.
Ideally, a co-ownership agreement should be drawn up by a solicitor. PodProperty offers a pro-forma 50-page legal agreement at $250 per person.
Borrowers also need to be aware that while most lenders are willing to lend money for tenants-in-common purchases, tougher rules apply. Being a co-borrower or guarantor can also make it harder to get a future loan for another property. For example, if you and another party each borrow $200,000 to buy a $400,000 property, you will be assessed by the bank as having a $400,000 mortgage.
Most tenants-in-common are required to be co-borrowers or guarantors for each other's loans so they are jointly and severally liable for repaying each other's loan in the case of a default - if one party goes bust, the other party or parties is liable to repay the loan.
While each party's liability is limited to the value of the underlying security (that is, the property) penalty interest payments can still apply and the lender can force a sale of the property if loan repayments cannot be met.
This is where a co-ownership agreement becomes important, says Levitt, adding that such agreements can be applied retrospectively (that is, they can be back-dated to the date of purchase). "If one party misses consecutive repayments, a comprehensive co-ownership agreement should give the other co-owners a power of attorney to act on behalf of the defaulting party to buy their share from them, or to refinance and pay out the defaulting party's mortgage obligation, minus penalty interest and other costs arising from such default."
The First time home buyer Grants.
The NSW Government has announced that first home buyers can purchase property with friends or relatives and still receive a duty concession (First Home Plus One). To qualify, the first home buyers in the group must buy at least 50 per cent of the property .
In Victoria, if you purchased a home with your partner or friends, stamp duty exemption is available only if each group member satisfies the criteria of being a first home buyer.
Source: Sydney Morning Herald.

New land releases for housing only the tip of the housing market crisis

Australian housing groups have warned new land releases for residential housing is only part of the solution to the country's housing affordability crisis - an issue that could haunt the Federal Government in this year's election.

Housing affordability is back on the front page after the Opposition announced a national summit on the topic on July 26 in Canberra and issued a paper with ideas to solve the problems facing people trying to enter the market and ways to ease soaring rents.

Rising interest rates, ballooning house prices over the past decade and a lack of housing stock and rental accommodation have all contributed to the problem.

The Government, conceding first-time home buyers are finding it tough, announced yesterday it would conduct an audit of commonwealth-owned land to determine areas that could be released for new housing to ease the affordability crisis.

The Federal Government called on the states to work in conjunction with the Commonwealth to undertake an audit of all land.

"We're asking the states to join the Commonwealth in an audit of all available land including our own, we do have some land but the states have a lot,'' Mr Howard told the Nine network today.

"We hope they join us because this will help. I hope it will be very, very soon.''

National Shelter, the housing organisation for the disadvantaged, says housing affordability could be the Howard Government's election iceberg, but land supply was just the tip.

"The Federal Government, obsessed with blaming states and leaving the problem to market corrections, at last sees the iceberg looming,'' National Shelter chairperson Adrian Pisarski says.

Affordable home ownership was only part of the problem and land supply only one element of that, he said.

"The greater problem is in the rental market where those unable to purchase are forced to endure high rents for longer, so they never save a deposit even if their incomes can meet mortgage payments,'' Mr Pisarski said.

National Shelter, along with the Housing Industry Association, ACTU, Australian Council of Social Service and the Community Housing Federation, want institutional investment, from the likes of banks and investment houses, to boost the supply of affordable rental housing under a national affordable rental incentive scheme.

In Labor's paper - New Directions for Affordable Housing - it proposes to tackle increasing rents by introducing a tax credit scheme for potential landlords who offered cheaper rental accommodation.

"Housing rents are going through the roof and it is preventing first home buyers from getting into the home ownership market,'' Labor leader Kevin Rudd said today.

Mr Rudd also rejected claims by Treasurer Peter Costello the states were to blame for not releasing enough land for housing.

"I don't believe in cost shifting, blame shifting,'' he said.

"Everyone has got partial responsibility here but what I do notice is the State Governments are rolling up their sleeves to do what they can ...

"And I don't see the Commonwealth with its sleeves rolled up.''

However, the Residential Development Council (RDC) welcomed the Government's land audit, saying it was a positive start to the housing affordability solution.

RDC national executive director Ross Elliott noted Mr Rudd also had raised land supply as an issue.

"For that reason alone, Costello's announcement deserves bipartisan support,'' Mr Elliott said.

New land releases for housing only the tip of the housing market crisis

Australian housing groups have warned new land releases for residential housing is only part of the solution to the country's housing affordability crisis - an issue that could haunt the Federal Government in this year's election.

Housing affordability is back on the front page after the Opposition announced a national summit on the topic on July 26 in Canberra and issued a paper with ideas to solve the problems facing people trying to enter the market and ways to ease soaring rents.

Rising interest rates, ballooning house prices over the past decade and a lack of housing stock and rental accommodation have all contributed to the problem.

The Government, conceding first-time home buyers are finding it tough, announced yesterday it would conduct an audit of commonwealth-owned land to determine areas that could be released for new housing to ease the affordability crisis.

The Federal Government called on the states to work in conjunction with the Commonwealth to undertake an audit of all land.

"We're asking the states to join the Commonwealth in an audit of all available land including our own, we do have some land but the states have a lot,'' Mr Howard told the Nine network today.

"We hope they join us because this will help. I hope it will be very, very soon.''

National Shelter, the housing organisation for the disadvantaged, says housing affordability could be the Howard Government's election iceberg, but land supply was just the tip.

"The Federal Government, obsessed with blaming states and leaving the problem to market corrections, at last sees the iceberg looming,'' National Shelter chairperson Adrian Pisarski says.

Affordable home ownership was only part of the problem and land supply only one element of that, he said.

"The greater problem is in the rental market where those unable to purchase are forced to endure high rents for longer, so they never save a deposit even if their incomes can meet mortgage payments,'' Mr Pisarski said.

National Shelter, along with the Housing Industry Association, ACTU, Australian Council of Social Service and the Community Housing Federation, want institutional investment, from the likes of banks and investment houses, to boost the supply of affordable rental housing under a national affordable rental incentive scheme.

In Labor's paper - New Directions for Affordable Housing - it proposes to tackle increasing rents by introducing a tax credit scheme for potential landlords who offered cheaper rental accommodation.

"Housing rents are going through the roof and it is preventing first home buyers from getting into the home ownership market,'' Labor leader Kevin Rudd said today.

Mr Rudd also rejected claims by Treasurer Peter Costello the states were to blame for not releasing enough land for housing.

"I don't believe in cost shifting, blame shifting,'' he said.

"Everyone has got partial responsibility here but what I do notice is the State Governments are rolling up their sleeves to do what they can ...

"And I don't see the Commonwealth with its sleeves rolled up.''

However, the Residential Development Council (RDC) welcomed the Government's land audit, saying it was a positive start to the housing affordability solution.

RDC national executive director Ross Elliott noted Mr Rudd also had raised land supply as an issue.

"For that reason alone, Costello's announcement deserves bipartisan support,'' Mr Elliott said.

First time home buyers and home owners get support from Australia's opposition leader

Australia's leader of the Labor party, Kevin Rudd plans national summit on housing affordability.Federal Labor Opposition Leader Kevin Rudd says he will hold a national housing affordability summit later this month to look at ways to ease the mortgage burden on families and first time home buyers.

Releasing a paper in Brisbane entitled New Directions for Affordable Housing, Mr Rudd said representatives from the finance and property development industries and state governments would be invited to the summit in Canberra to work on solutions to the growing crisis of housing affordability especially for first time home buyers.

Mr Rudd said land release strategies, urban infill, high government infrastructure charges and skills shortages in the building sector would be examined.

``Once we've had this national summit on housing affordability, we then want to work through the individual responses from the finance sector, from the housing sector and others, to then define and shape exactly the proposals we'll take to the next election,'' Mr Rudd said.

Mr Rudd said one new initiative raised in Labor's paper was allowing for new home deposit savings vehicles, which allowed higher returns and tax advantages to ``supercharge'' the savings capacity of young Australians.

Contributions would be made from pre-tax dollars and earnings could be taxed in the same way as super nest eggs with the money only able to be withdrawn to buy a first home.

``Our national government has to show leadership to find better ways of making it easier for working families to save for a deposit on their first home, and to deal with the overall problem of affordability,'' Mr Rudd said.

Source: Courier Mail