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    Default Low and medium-high income earners priced out of property market

    Low and medium-high income earners priced out of property market
    Pia Akerman | September 14, 2009
    Article from: The Australian

    A STUDY of national home ownership rates has painted a grim picture of the difficulties both low and medium-high income earners face getting into the housing market, as average house prices have trebled since 1996.


    Researchers from Flinders University, led by adjunct professor Joe Flood, today released their findings, concluding that Australia's housing market is in "a very dangerous and unstable situation''.

    Despite strong economic growth and relatively low interest rates between 1996 and 2006, overall home ownership only grew by 0.8 per cent.

    "The country that promised limitless land, cheap housing and near universal home ownership to all comers now has the most expensive housing in the world amid very tight housing and land markets and little prospect of restoring the balance,'' Dr Flood said.

    The study - based on census data - found home ownership fell by 15 per cent between 1986 and 2006 for both low income earners over 45 and medium-high income earners under 45.

    As expected, the First Home Owners Scheme boosted home purchases for people under 25, but the study found many lower income earners between 25 and 44 were unlikely to ever own their own homes because baby boomer parents were spending their inheritances and housing prices remain high.

    "As long as the government, the public and the media remain in denial, and self-congratulatory rhetoric continues that Australia has cleverly avoided the housing market correction it needed to have, there is little chance that matters will improve,'' Dr Flood said.

    "The only ways that this would happen are through a US-style price collapse or a complete re-evaluation of the situation and a coordinated effort by governments, planning and financial institutions to restore the balance between housing supply and demand - or tax away the imbalance - so that all Australians may benefit.

    "If rises in national income continue to disappear into higher house prices as they did during the study period, Australia will have to get used to being a country of low home ownership, people living with their parents, and small houses by international standards."
    Last edited by Perry; 17-09-2009 at 12:08 AM. Reason: fixed formatting


 

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