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Housing affordability hits stress level for Australian families

This contribution has been submitted to Webdiary by a student in the Online Journalism unit for the Masters in Media Practice and Masters in Publishing courses at The University of Sydney as part of the unit's assessment. The topics covered in the pieces awaiting publication are interesting – and diverse. We hope that Webdiarists will enjoy reading them, as well as giving these aspiring journalists plenty of constructive commentary.


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.


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The demand curve

Fiona Reynolds: "Why so shocked, Eliot Ramsey? Just another exemplar of that good ol' law of supply and demand."

It was the demand side I wasn't expecting. But shit, Seaman Dan is right. It's a beautiful place, isn't it?

No place to run

Jenny Hume: "Sydney will be no place to live, or rather the there is no place to live problem is going to get much bigger over the next 20 years if we take the Premier at his word. 900 000 new homes needed in that period - really?"

I was shocked to see on SBS News last night that population pressure on Thursday Island, yup Thursday Island, has pushed even low grade housing rents up above the $500 a week mark.

If Seaman Dan (Australia's only living cultural treasure) feels he can no longer afford to live there (he's left the Island), then what hope any of us?


Why so shocked, Eliot Ramsey? Just another exemplar of that good ol' law of supply and demand.

Housing shortage deliberately engineered by developers

"AUSTRALIA'S biggest migration boom is exacerbating the rental crisis, while house prices are overvalued by between 5 per cent and 15 per cent, the International Monetary Fund has said."
"Immigration added a record 199,064 people to Australia over the year to March - the biggest annual rise in history, figures released yesterday by the Bureau of Statistics show. This surpasses the boom after World War II, which peaked at about 149,000 people in 1950."
The property development and real estate industry openly promotes massive population growth as a means to ever greater profits.

No place to live - surely soon to be a declining problem

Sydney will be no place to live, or rather the there is no place to live problem is going to get much bigger over the next 20 years if we take the Premier at his word. 900 000 new homes needed in that period - really?

Falling revenue from stamp duty due to property value falls, falling GST due to economic downturn - so NSW is told transport infrastructure programs have to go and health spending etc will also take a hit, but the housing shortage will get much worse. Something is wrong with the latter assumption to me.

It is claimed the vast number of immigrants coming into this country is adding to the problem. So why are we bringing so many in? If is labour shortage, will not the NSW recession and likely rising unemployment mean that shortage can soon be met from existing residents in Sydney? Should we not be urgently reviewing the immigration program right now in terms of overall numbers in the face of certain economic downturn over quite a long period?

We are told Sydney is estimated to need 900 000 new homes over the next 20 years or so to cope with this population growth -  yet we are told that in NSW economic growth is slumping and will continue to slump, and that people are leaving Sydney at an increasing rate.  Something wrong there too I think. 

I wonder also does that 900 000 estimate take into account the homes that will become available as the older generation pop off at an accelerating rate over that same 20 years? Ours will possibly become available in that period no doubt, so there's one and there are a lot more in the pipeline on our heel - all those baby boomers, and Depression era kids. Two of my such siblings have already gone with two houses becoming available in recent years. With the baby boomers gone, be they dead or in nursing homes in the next 20 years then surely that will ease the pressure enormously. Most of their kids have houses of their own and fewer kids of their own, many of which already have their own, albeit heavily mortgaged homes. Being able to sell up baby boomer mum and dad's home will surely help a lot.

So do the planners in Sydney take this expected influx of properties into account, or do they think that we are all going to live forever and that Sydney needs to keep on expanding in the way it is to cope?

There will certainly be an increased need for more nursing and retirement villas, but then there will be sharp decline in demand for such as well as the boomers pop off, freeing up those establishments for students and immigrants, easing any continuing housing shortage.

Yes baby boomers you are going to make a large contribution in terms of easing the housing crisis in my opinion over the next 20 years.  A parting gift to the nation for all that extravagance you are accused of. But are the planners taking note? I doubt it.

Homelessness? And housing affordability? Is there a link?

Marilyn Shepherd: "900 million people in the world are homeless and we are whining about eating out less."

According to estimates, 100 million people worldwide are homeless.

The following according to Mission Australia Chief Executive Toby Hall;

“It’s fantastic that housing affordability is becoming a major issue in the lead-up to the federal election,” he said.

“But while much of the focus has been rightly on how to help families juggling mortgage repayments or rent, the sharp end of the debate seems to have gone missing – how the lack of housing affordability is impacting on homeless numbers,” he said.

“In South Australia, as in our services across the country, we’re seeing an impact at both ‘ends’ of supported accommodation,” he said.

“We’re seeing more people who need emergency support because they’ve lost the roof over their heads for a variety of reasons. But we’re also having more trouble helping them to move back into the community when they’ve addressed their own personal issues because there’s simply nowhere affordable for them to go.”

Now, do rent prices have an impact on poor people's diet?

Good lord what is this nonsense

Housing affordability. 900 million people in the world are homeless and we are whining about eating out less.

Good lord.

What nonsense

Marilyn Shepherd, 900 million sounds more impressive than 100 million, just the facts ma'am please.

Hate to burst the bubble

 Fiona, it's interesting to read how this crisis has been affecting individuals who are looking at buying property, but it would have been good to include some stats in your story rather than just linking to them. Eg. you mention rising debt levels and high interest rates, but don't give any specifics - personal debt levels in Australia have more than doubled in the past 5 years!

 It would have been good to get a quote as well from an authority on the subject as well as the case study, ie someone from the Department of Housing, or even a real estate agent, on the rising price of housing.

I know that Webdiary doesn't support photos, but some images of for sale signs, and hopeful buyers would have supported the story well, and it would have been nice to have some audio with vox pops, as literally the voice of the people on the topic.

Here's something you won't read on the World Socialist Web Site

Thirty-three per cent of dwellings in Australia are fully owned - down from 40 per cent in 2001

MELBOURNE could need to house another 1.2 million people over the next 25 years amid an unexpected influx of migrants that is helping to swell Victoria's population at a record rate.

The population explosion will compound anxiety about urban congestion, housing affordability and water security, while adding to pressure on the State Government over how to manage it.

The Housing Industry Association's Victorian director, Caroline Lawrey, said the supply of new houses was clearly "totally insufficient" to meet the state's population growth, and called for greater incentives for medium and high-density accommodation.

"We are already building fewer houses than we need for the current population," she said.

"We are getting quite concerned that in Victoria … as demand increases and supply decreases we will be seeing increasingly unrealistic prices."

MELBOURNE is the fastest growing city in Australia, adding 272,748 residents in the past five years, compared with 156,107 in Sydney. Brisbane grew by 191,267 people.

Sydney's rate of growth is well below that of other capitals. Brisbane grew 2.2 per cent, Melbourne 1.5 per cent and Brisbane and Perth 1.8 per cent.

My tip? Housing affordability will be worse in Melbourne while it will improve slowly, but not by very much, in Sydney.

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