brendarover

A must watch!!!

http://www.abc.net.au/4corners/speci...bt/default.htm


Scary stuff!!

brendarover

http://www.smh.com.au/opinion/its-br...z.html?page=-1

The Rudd Government's boost to the first-home owners grant stirred up many old wives' tales that have sustained the great Australian dream of home ownership. It's time to dismiss a few of them.

Across the country, baby boomer parents whisper in the ears of their progeny that now is the time to buy. They warn: "You'll never get in if you don't." They say: "You're better off paying off your own mortgage than your landlord's." For those not yet convinced, they resort to the old catchcry: "Rent money is dead money."

What they forget is that average house prices are now seven times the average annual salary, up from about three times when the boomers first bought in. They forget, too, that in the months since the temporary boost to the first-home owners grant - $7000 for established homes and $14,000 for new ones - house prices in the sub-$500,000 category have ballooned.

Seemingly unaware of the false economy, first-home buyers have engaged in a game of mutually assured destruction, and in fact, have been bidding house prices up.

Australians are frustratingly single-minded when it comes to owning property. It's like an affair in which a lover is so besotted by their partner, they forgive all their minor foibles, and even some outright abusive behaviour.

For the record, rent money is not dead money. Renters are paying for a service - shelter and protection from the cold. Hardly wasted money. Worse still, the deriding of rent as "dead money" incorrectly implies that money spent on mortgage interest payments is somehow "alive money", or a useful investment.

Last time I checked, a mortgage holder with a $300,000 mortgage pays $1400 a month in interest payments straight to the pockets of those same banking chiefs we all say we despise. Hate them, but you're paying their salary.

But it's not just parents egging young buyers on, it's politicians. As preparations for this year's budget enter their final stages, the Rudd Government must decide whether it will extend the deadline for the increased first-home owners grant past June 30. I don't think they should, but suspect they will.

Labor has undergone an about-face on housing policy. The contrast between pre-election posturing and the reality in government is stark.

On July 27, 2007, the Labor opposition hosted a "housing affordability summit" in the main committee room in Parliament House. About 150 housing experts from all over the country braved Canberra's winter chill to discuss solutions to the housing affordability crisis.

I was there. There was little agreement on what needed to be done, but summiteers were unanimous in what shouldn't be done. Everyone agreed that increasing the first-home owners grant would simply result in higher house prices.

Labor seemed convinced and produced a discussion paper quoting the chief economist at ANZ, Saul Eslake, saying: "Anything which puts additional cash in the hands of buyers … results merely in more expensive houses."

As the paper concluded: "This analysis suggests that simply increasing the first-home owners grant in isolation may not make housing more affordable in the long run if it leads to inflationary pressures on the cost of homes. It is important that policy proposals designed to assist first-home buyers, are economically responsible so that the benefits are not eroded through additional pressure on house prices."

Labor went on to design a suite of housing proposals to take to the 2007 election including first-home saver accounts, a $600 million National Rental Affordability Scheme, a $500 million Housing Affordability Fund, and a dedicated housing minister.

The key attraction of the first-home saver accounts was that savings would accumulate incrementally over time and not put immediate upward pressure on house prices. Money - plus Labor's co-contribution - could only be retrieved after four years.

What a difference being in government makes.

John Howard once said that political parties always favour improving housing affordability while in opposition, but when in government, always try to stop house prices falling. "A true housing crisis in this country is when there is a sustained fall in the value of our homes and in house prices," he said.

Thanks to the global recession, that is now a real threat. House prices have plunged in many advanced economies, including Britain.

Australia is somewhat different, as we have not built enough new homes to keep pace with demand. But rising joblessness will make it harder for families to keep up with mortgage repayments, meaning forced sales and lower house prices, in some areas at least. It has already happened in the richer suburbs of Sydney, where thousands of finance sector employees have been sacked.

So the Rudd Government, which was elected promising to improve housing affordability, now wants to seek re-election next year as the party which stopped house prices from falling.

They're being egged on by Treasury boffins who think reduced housing affordability for first-time buyers is a small price to pay for the confidence boost that existing home owners get from homes that maintain their value.

It's an argument that politicians are only too keen to hear, because the political sums on housing are simple. Australian households can be divided into three, roughly equal-sized, groups: renters, mortgage holders and those that own their homes outright. While the first group like flat or falling house prices, the second two prefer it if house prices rise.

It's not hard to see which way the cards are likely to fall on budget night.

Housing Bears, GIVE ME THAT KARMA!!! No looking at my booty






.

Vash the Stampede

Yes, fiscal irresponsibility is a global phenomenon.

And now we've just been told that those prices are plummeting.

brendarover

Vash me old mukka, your up early?

bcworld

The median price is dropping, however the FHOG & boost is stimulating only the low end of the market - stands to reason that median prices will drop. However there is also plenty of evidence that low end prices have been increased by the boost, which is not a good thing and surely entirely expected.

MartinLuther

We're doomed!


It's fair to say that Aus' economy is up the swanny. Better leave now before the boat sinks.

Vash the Stampede

9:32pm is "early"?

Good choice of links, though. That's the same Four Corners documentary I already posted here.

With the recession kicking in, I can't see low end prices skyrocketing any time soon.

Vash the Stampede

These two paragraphs are pure gold. They should be printed on billboards 20 metres high and paraded around the country until we've all got the message.

People have become so enamoured of "the Australian dream" that renting has virtually dropped off the radar. They forget that renting is often (usually?) an essential first step towards a house of your own.

You don't have to pay for maintenance on the property; you don't pay water or council rates; you can simply bank everything that you'd otherwise spend on those services. That's a pretty good position to be in. And hey, is there such a great need to own a house anyway? Sure, it's a status symbol of sorts, but symbols don't count for much when your bank balance is terminally red.

My wife and I own two houses between us; by contrast, my brother and his wife don't own any property at all, and have been renting quite happily for years. Is that such a bad thing?

Mr Grumpy

I pay water rates.

asprilla

Not right now it isn't. But how about when they are in their mid 60's?

Owning your own home is "forced saving", in that you've borrowed to pay for an asset, and now you are forced to pay it off over 25yrs.

Your brother & his wife will have extra $$$ floating around as a result of their choice to rent...but nothing is forcing them to save. If they choose to save/invest these extra $$$, then in their later years they'll be just as well off as an equivalent homeowner, probably even more well off.

kar-kier

Remember that when you are renting that the owner can decide to sell on and you are out on your ear. We are renting and are not allowed to put anything on the walls, not a thing - the house looks so bare. We are constantly on edge about the kids making any marks on anything. I can't wait till we own our own house again, it's the security of it!

Mr Grumpy

No one is against owning their home, however at what cost?

The price of housing cities like Sydney and Perth is ridiculous and are blatant highway robbery. It simply isnt worth it unless you have plenty of spare cash.

koalakim

Whilst renting does have advantages as stated above including the ability to try out different areas (as we have done since we arrived!) after 2 years I'm fed up with not being able to do anything I like in the house i.e. pictures, painting (I'm itching to decorate again to MY tastes!) and own a pet! I'm too scared to touch anything in case we damage something and the current place has wooden floors so I flinch every time I drop something!

We have just taken on another rental and there could be some issue over pets which wasn't advertised in the details but now it's too late that we've signed, so could be another year without a furry friend .

I guess it depends on your landlord and how flexible they are. We've got friends who moved into a rental which was a sub-divide and the landlord is their neighbour and they've become friends and it's all very easy.

I do get the feeling sometimes that the agents look at you as a bit of a second class citizen when you are renting but although I don't like it, it has allowed us to gain knowledge of areas and the Aussie houses, what we like and don't like...BUT I can't wait to have my own roof over my head however small it ends up being!

We didn't come here for the Aussie dream of a huge house and pool (although wouldn't say no!) but for the lifestyle and a location near the beach.

The trouble with renting is that it is fine all the while you are working and earning but unless you've got enough pension and super to pay that rent when you retire then how do you pay the rent on something decent! That is usually the driving force of owning your own home is that you have a low cost roof over your head on retirement.

Wanting home ownership here is no different to the UK and just as difficult sometimes when house prices have risen faster than wages.

We are selling our UK place and should have a good amount of equity - just need the pound to strengthen against the dollar and then maybe we can have a much bigger house!

dpande

Just get a pet. Read up on tenancy laws in your state- usually the onus is on the landlord to prove the pet is causing a nuisance.

Vash the Stampede

Yes, I agree. Presumably they're sinking their spare cash into super, which is what my wife and I would be doing if we were in their shoes.