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Housing Affordability hits stress level for Australian Families
by Fiona Yip

As winter comes to a close, I have noticed ‘For Sale’ signs are starting to appear more common around Sydney suburbs. Housing affordability issues has been raised during conversations within my circle of friends.

It has been discussed that there has been a decline in the number of home buyers found around Sydney suburbs, and prices for houses are constantly marked down, but is there an answer to all this? The figures for debt and housing loans are a sad story. It has been voiced clearly that many families are facing ‘housing stress’: a stress that is voiced through the difficulties for homebuyers. As interest rates go up, mortgage payments are at stake. The economic outlook is uncertain, housing is becoming unaffordable and a deep turmoil in money markets has made money more expensive and has also affected the willingness of banks to lend. Families and individuals find it hard to afford properties, especially for first time homebuyers. The fear of job losses because of an economic slowdown will add more stress to current property owners and ‘would be’ buyers. The question on everybody’s mind is: ‘Will the Australian housing market bubble burst?’

Housing prices have risen everywhere across states and territories in Australia. House owners are borrowing more. Households are finding all ways to save more to reduce debt. However, there is a limit to how much a household can save. Although negativity has permeated the housing market, there are also optimistic views. Instead of the usual negatively-toned property story, I have canvassed an opinion from an up and coming young property buyer in his early 30’s.

Interview with Aaron Wong, of Sydney, a prospective homebuyer.

As a homebuyer, how have you been cutting back on expenditure?

“I have actually learnt to cut back on expenditures as one of my main priorities is to save more money for the long run. It is pretty daunting but I have come up with a few ways to save. I dine out less, and am always on the watch out to buy the cheapest groceries if possible. I cook more often, as $50 worth of groceries could last me a week. I like buying DVDs and magazines, but I have cut back on that too. My driving style has also changed, I drive with a gradual acceleration now and I usually fill my petrol on cheap Tuesdays or Wednesdays”.

Since times are so bad, will you still be thinking of buying a new home or will you wait for a while since the economy outlook is uncertain.

“There are good opportunities right now in terms of properties. There are lesser competitions, so it’s more of a buyers’ market now. I have recently bought an investment property in the outer western suburbs where prices are more affordable as compared to the more expensive eastern suburbs.”

Do you have holiday plans ahead? Has this affected you in any way? Why?

“Yes, quite a lot actually. I usually take my parents overseas at the end of each year, but this year we have decided on a change to cheaper destinations. I guess right now, I would spend less when possible. With the uncertain economic conditions, cash is king.”

Recent studies regarding the housing crisis

Another recent study from the World Socialist Web Site reports on interviews with working class migrant homebuyers. These families go through difficult times in their lives even though purchases have been very carefully made, and credit cards have been less used to reduce further debts. Husbands have been hiding their financial difficulties from their wives. This highlights the crisis that families have been facing and raises the question of how children are going to be brought up with the right kind of support and education for the next generation? If times are so difficult now, it is scary to think of the troubles Australia’s next generation would face.

What can these families look forward to? Recently, there was some relief when the Reserve Bank of Australia reduced interest rates and banks also reduced mortgage interest rates. Hopefully, the employment situation will remain stable so that the middle class can hold on to their jobs to support their mortgage payments. Meanwhile, there are signs that property prices are dropping. But this is a double-edged sword: house owners will find it difficult to sell at a profit or generate enough cash from a sale although new homebuyers may find it easier to purchase a home.