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Housing affordability falls almost 10pc
By Karlis Salna | December 21, 2007
HOUSING affordability declined by almost 10 per cent over the past year, a report shows, and there appears to be little relief in sight for renters and those looking to enter the property market.
While welcoming the renewed focus on the issue of housing affordability, the Real Estate Institute of Australia (REIA), which this week released its annual summary of residential and commercial real estate markets, warned that renters and buyers alike still faced an uphill battle.
"The REIA looks forward to the introduction of the Rudd Government initiatives including the first home saver scheme, housing rental scheme, and housing affordability fund,'' REIA president Noel Dyett said.
But Mr Dyett said more needed to be done to address the affordability problem after what it said was a turbulent year for renters and buyers alike.
"The Federal Government should also consider including home ownership as the fifth pillar in the Government policy on superannuation and self-funded retirement, together with mandatory superannuation savings, voluntary savings, and aged pensions,'' Mr Dyett said.
The REIA report showed dwelling sales reached $209 billion in the past financial year - the highest level on record.
Investors and first home buyers made a tentative return to the housing market during 2006-07, although their numbers were still comparatively subdued, the REIA said.
Housing affordability declined by 8.3 per cent over the financial year, with yet another quarter where more than 30 per cent of a median family income was required to repay an average mortgage.
The REIA said rental affordability has also declined, with vacancy rates tight across the country.
"As a result, rents have increased by an average of 12 per cent during 2006-07,'' the REIA said.
The REIA said Australian Bureau of Statistics data showed that 24.8 per cent of all renters spend 30 per cent or more of their income on housing.
And with interest rates widely expected to rise again, possibly as early as February, the affordability problem is likely to worsen.
"Increasing rates is going to do nothing for helping housing affordability - that's obvious,'' Mr Dyett said.
"It very much depends on what sort of initiatives the new Federal Government comes up with.''
Mr Dyett said a large part of the housing affordability issue was the lack of supply, adding that developing initiatives that encouraged more people back into property investment would help alleviate the problem.
"And one factor that may be of significance is the current uncertainty in the share market - that may in fact encourage more people back into property investment, direct investment rather than the listed property trusts.''
He said the lack of supply of rental properties, while contributing to the housing affordability problem, may, however, also have a positive spin-off.
"Although interest rates are increasing, the scarcity of of rental properties is of course pushing up rental returns.
"The pendulum may move into a position where people think that with rents increasing, and if they're not highly geared ... they can get a reasonable return out of property and increase the supply.''
By Karlis Salna | December 21, 2007
HOUSING affordability declined by almost 10 per cent over the past year, a report shows, and there appears to be little relief in sight for renters and those looking to enter the property market.
While welcoming the renewed focus on the issue of housing affordability, the Real Estate Institute of Australia (REIA), which this week released its annual summary of residential and commercial real estate markets, warned that renters and buyers alike still faced an uphill battle.
"The REIA looks forward to the introduction of the Rudd Government initiatives including the first home saver scheme, housing rental scheme, and housing affordability fund,'' REIA president Noel Dyett said.
But Mr Dyett said more needed to be done to address the affordability problem after what it said was a turbulent year for renters and buyers alike.
"The Federal Government should also consider including home ownership as the fifth pillar in the Government policy on superannuation and self-funded retirement, together with mandatory superannuation savings, voluntary savings, and aged pensions,'' Mr Dyett said.
The REIA report showed dwelling sales reached $209 billion in the past financial year - the highest level on record.
Investors and first home buyers made a tentative return to the housing market during 2006-07, although their numbers were still comparatively subdued, the REIA said.
Housing affordability declined by 8.3 per cent over the financial year, with yet another quarter where more than 30 per cent of a median family income was required to repay an average mortgage.
The REIA said rental affordability has also declined, with vacancy rates tight across the country.
"As a result, rents have increased by an average of 12 per cent during 2006-07,'' the REIA said.
The REIA said Australian Bureau of Statistics data showed that 24.8 per cent of all renters spend 30 per cent or more of their income on housing.
And with interest rates widely expected to rise again, possibly as early as February, the affordability problem is likely to worsen.
"Increasing rates is going to do nothing for helping housing affordability - that's obvious,'' Mr Dyett said.
"It very much depends on what sort of initiatives the new Federal Government comes up with.''
Mr Dyett said a large part of the housing affordability issue was the lack of supply, adding that developing initiatives that encouraged more people back into property investment would help alleviate the problem.
"And one factor that may be of significance is the current uncertainty in the share market - that may in fact encourage more people back into property investment, direct investment rather than the listed property trusts.''
He said the lack of supply of rental properties, while contributing to the housing affordability problem, may, however, also have a positive spin-off.
"Although interest rates are increasing, the scarcity of of rental properties is of course pushing up rental returns.
"The pendulum may move into a position where people think that with rents increasing, and if they're not highly geared ... they can get a reasonable return out of property and increase the supply.''
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