Property values across Australia gather momentum with dire consquences for first time home buyers

Property prices have continued to soar across the nation, putting further pressure on first time home buyers and renters already living under the thumb of a housing affordability crisis.
Australian Property Monitors (APM) says the already dire situation is set to worsen for many low and middle-income earner homeowners with interest rates tipped to rise again next month.
Figures released by APM showed house prices have continued to surge over the past 12 months with Melbourne home to the hottest market, recording house price growth of 19.5 per cent in the 12 months to September.
The Canberra property market also is booming, with house prices having jumped by 17.7 per cent over the past year, while Brisbane posted strong growth of 16.7 per cent.
In Sydney, Australia's largest property market, annual house price growth was a more modest 4.6 per cent.
Unit prices, meanwhile, posted strong gains in most capital cities with Sydney the only city where prices remained flat over the 12 months to September.
Adelaide posted the strongest growth in unit prices, with prices surging by 14.4 per cent.
And with prices continuing to rise, the housing affordability crisis already plaguing the nation looks set to worsen with inflation figures released this week strengthening expectations that the Reserve Bank will raise interest rates next month.
A rate rise of 25 basis points on November 7 would take the official cash rate to 6.75 per cent.
It would be the sixth rate rise since John Howard was returned to office in 2004, and the 10th since 2002.
Michael McNamara, general manager of APM, said the combination of strong growth in housing values and rising interest rates would deal a huge blow to would-be home owners and lower to middle-income mortgage holders.
"The spectre of the 10th interest rate rise since 2002 will cause further financial pressure to would-be home owners and struggling mortgage holders," Mr McNamara said.
"We anticipate that this expected rise in the cash rate will push additional mortgage holders against the wall, (while) a glut of properties at the lower end of all our capital city markets will deeply affect house values in those areas."
Mr McNamara said that while more affluent mortgage holders would cope quite well with another rate rise, for others, it would cause huge burdens on family budgets.
"Rising interest rates will affect, much more profoundly, lower to middle-income earners, as they tend to pay a greater proportion of their disposable income to service mortgage repayments," he said.
"In the property market this will mean that in an environment of tightening monetary policy, the rich will continue to get richer and the poor will continue to get poorer."Source: AAP

Housing affordability figures for first home buyers to hit renters

A housing lobby group says today's record low in housing affordability figures is a tragedy for renters as well as home buyers.
The First Home Buyer Affordability Index by the Housing Industry Association and the Commonwealth Bank, is at its lowest level since it was started, and more than 8 per cent lower than a year ago.
Adrian Pisarski from National Shelter says the further deterioration and an increase of 1.7 per cent in the median first home price over the quarter will have an adverse flow-on effect.
"The real problem will be the knock-on effect in the rental market. We get a lot of frustrated potential first home owners who stay in the rental market," he said.
"Now unfortunately the lower income households either have to rent up and get into really unaffordable rentals, or they get displaced completely and end up homeless which is increasingly the case."
Mr Pisarski says rental stress and homelessness is the result of a decade of neglect by the Australian Government.
"The neglect has been a failure to recognise the inflationary impact of the Government's policies on home owners and potential home owners," he said.
"At the same time they've taken now something like $3.5 billion out of the public housing system over the last 11 years."

Housing affordability index hits 23-year low

he housing affordability index is down more than 8 per cent on a year ago. (File photo) (AAP: Alan Porritt)A key measure of housing affordability has sunk to its lowest level ever.
The First Home Buyer Affordability Index, compiled by the Housing Industry Association and the Commonwealth Bank, has fallen 2.1 per cent in the September quarter.
The index is down more than 8 per cent on a year ago and the lowest level since the series was started in 1984.
The further deterioration is a result of the August interest rate rise and an increase of 1.7 per cent in the median first home price over the quarter.
HIA chief economist Harley Dale says it is the worst possible news for prospective home buyers, especially with another interest rate rise potentially on the way.
"It's providing a clear indication and I think an accurate indication that affordability has reached record low levels and it's getting ... increasingly difficult for aspiring first homebuyers to break into that housing market," he said.
Source: AAP and ABC

First-home buyers suffer stress and depression

The stress of buying a first home is mounting and could have lasting effects on those who are trying to crack the housing market.
New research has found Queenslanders are feeling "distressed" and "depressed" and experts fear it will affect house-hunters' health and jobs. Statistician Paul Dickson, from Enhance Management, said the study found people from young professionals to single mothers were suffering emotionally during a first home purchase.
"The emotional impact was intense," he said, adding that some people suffered "status anxiety" when they realised they could no longer afford the suburbs where they wanted to live.
"As this issue continues to emerge as a growing problem, we are going to see a greater depth of impact," he said.
"For those people enduring long-term emotional stress because they keep missing out on a home, that can have an impact on their health and capacity to work."
Real Estate Institute of Queensland figures show Brisbane's median house price increased by 9.5 per cent between the March and June quarters – the highest quarterly increase in four years.
Suncorp general manager for lending Tim Buckett, who commissioned the study, said the August interest rate rise and limited housing supply was making entry into the already spiralling housing market really challenging.
"The white-collar workers are not so stressed about getting access to debt – they're more stressed about what they'll have to give up to repay the debt," he said.
"They're just stressed about having to give up going down to the pub every Friday night and giving up the brand new car or plasma screen."
Blue-collar workers were more concerned about getting a loan, he said.
"Buying your first home should be an exciting time, but our findings revealed that for many it's quite the opposite," Mr Buckett said.
"It's frustrating for first-home buyers. They can see the research that says that investing in property in Queensland is a good thing to do, but they keep hitting these hurdles."
Single parent Karen Allfrey, 47, found trying to get on the property ladder "really impossible".
The mother of two sons aged 10 and 13 is renting at Upper Coomera, on the Gold Coast, and has struggled to get finance for her own home.
"I found banks didn't even want to look at me," she said.
"To pay all the bills and pay the enormous amount of rent and save for a deposit is fairly impossible."
Ms Allfrey, who works in the travel industry, said she felt "disappointment and distress" about being knocked back: "I have to be with someone to get a house. It's not fair."
Source: Sunday Mail

Home building shortage drives up rents

Home building approvals fell more than expected in August and the lack of home building will force rents and house prices higher amid a lack of supply.
Building approvals fell 1.7 per cent to 12,751 units in August, seasonally adjusted, from a downwardly revised 12,974 units in July, the Australian Bureau of Statistics said today.
Over the year to August, building approvals fell 0.1 per cent.
UBS senior economist Adam Carr said housing construction was below national needs, and would drive up housing costs.
”The bottom line is we're still building beneath our estimate of underlying requirement … so that's going to continue to put pressure on house prices and rents,'' Mr Carr said.
Pressure on interest rates
Higher rents and house prices would likely to add to inflation and force interest rates higher, Mr Carr said. He predicted interest rates would rise again in February, after nine rate rises in just five years.
”The pressure is for the Reserve Bank to tighten. We don't think they'll do that this year, because we think that the uncertainly surrounding the global economic and financial outlook is sufficient to put them on hold.''
ICAP senior economist Matthew Johnson said there were no good stories coming from the slump in building approvals.
”On the one hand, a lack of available housing is forcing up rents with the result that CPI (consumer price index) is also inflated,'' he said.
”On the other hand, if residential construction was to bounce, this would force up inflation as there simply isn't the spare capacity available to service increased housing demand.''
”There was a rate hike in August, and a locking of the mortgage market, so it was always likely that approvals would slip a touch,'' he said.
The Reserve Bank of Australia (RBA) raised interests rates by 25 basis points to 6.50 per cent in August.
Mr Johnson said the trend in approvals is now solidly negative at minus 2.2 per cent.
Investors to return
Commonwealth Bank of Australia economist Joseph Capurso said the fall in August building approvals was driven by the downturn in the unit and flats category.
But Mr Capurso said eventually, more investors would return to the property market which would boost supply.
”Investors, they should be encouraged by lower yields and rising rents,'' he said.
Source: AAP