Homes across Australia are now at their most affordable in two years as falling interest rates and a slide in house prices put property ownership in reach of more households.
A key housing affordability index that tracks the relationship between household income, mortgage costs and price of housing shows conditions are beginning to tilt back in favour of those trying to enter the housing market.
The HIA-Commonwealth Bank housing affordability index recorded an improvement in housing affordability for the fifth straight quarter in March. The index rose to 61.8 points from 57.3 points two years earlier.
Among the major cities, Melbourne showed the most improvement over the three months to March with its affordability index rising 7.3 per cent.
But housing in Sydney and Perth became even less affordable over the period after their indices fell 1.0 per cent and 1.8 per cent, respectively.
The argument regarding affordability is ‘can an average joe still afford to buy a house big enough to raise a family in?’
Who cares if he can’t buy? All ‘average Joes’ I know, single mums included, can afford to rent a place and do not forgo life essentials (meals, health care, etc.) to do so or go without housing because they can’t afford it. If so, you’d see many more on the streets and those who are there now are primarily there as a result of other societal failings (domestic abuse, mental illness, etc.), not because of “affordability”. The “average Joe” may aspire to buy, not rent, but the “average Joe” in that case is also irrational because the goal (roof over one’s head) can be obtained for much less (in most cases) if it’s rented.
Comparing Australian housing with third world slums is not a valid comparison. There are some exceedingly run-down places in Australia, I agree with that, but even the humblest home here (and I live in an exceedingly humble one myself) is plumbed, wired and if maintained by the occupants, generally sanitary.
If prices are irrational, get an attitudinal adjustment and embrace achieving the goal (by renting), not the aspiration (buying), rather than becoming irrational with the rest. If buying is a better proposition for you – stability, gardens, pictures, raising a family – then buy, but realise you’ll pay a premium for holding those values. Should you be punished (by paying a premium) for harbouring those values? Arguably not, but dem’s the rules people are playing by right now and the goal posts have shifted since the 60s/ 70s/ 80s when a house was a home not an “investment”. I don’t make the rules, I’ve just made my peace with them and have thrown in my observations about the attitudes of others my age.
Housing affordability and it's context is a skewed thing depending on ones perception of who it's affordable for. I believe the idea of a single mum, low income earner or a single medium to low income family owning a home has finished forever. If you had to check median income against median house price then you will inevitably come to the conclusion that it's unaffordable, a disaster waiting to happen even.
The reality is these people have been replaced by investors and given the way NG is structured as these 'investors' need constant loses to get maximum benefit they will buy more and more and this will become more and more prevalent.
Soon the minority will own the majority. It makes affordability a mute point because the minority are dictating the prices now and into the foreseeable future, they can afford it and they are cutting out and making null and void the lower demographic that see housing as 'unaffordable'.
The scary part is if and when the minority speculate so wildly that they can't afford it, then we're in steaming mess if that happens
Housing affordability and it's context is a skewed thing depending on ones perception of who it's affordable for. I believe the idea of a single mum, low income earner or a single medium to low income family owning a home has finished forever. If you had to check median income against median house price then you will inevitably come to the conclusion that it's unaffordable, a disaster waiting to happen even.
The reality is these people have been replaced by investors and given the way NG is structured as these 'investors' need constant loses to get maximum benefit they will buy more and more and this will become more and more prevalent.
Soon the minority will own the majority. It makes affordability a mute point because the minority are dictating the prices now and into the foreseeable future, they can afford it and they are cutting out and making null and void the lower demographic that see housing as 'unaffordable'.
The scary part is if and when the minority speculate so wildly that they can't afford it, then we're in steaming mess if that happens
Ive spent time in areas that are now almost wholey owned by 'Investors' and these traditional working class areas are becoming very run down and semi derelict. Lots of drug adicts, cop cars/sirens all day and night etc etc. I suggest they will get little return on investment and no captial gains from 3 years ago on. A millstone perhaps they deserve.
I don’t make the rules, I’ve just made my peace with them
There is a kernel of truth in this. We can't fight the RBA. If the RBA wants higher house prices it will get them. Can you recall a recent time when a central banker didn't have his way with the public? Don't fight the RBA. Sleep with them instead. Let them get on top of you and do their business with you. It's easier that way.
There is a kernel of truth in this. We can't fight the RBA. If the RBA wants higher house prices it will get them. Can you recall a recent time when a central banker didn't have his way with the public? Don't fight the RBA. Sleep with them instead. Let them get on top of you and do their business with you. It's easier that way.
The RBA don't want higher house prices. The RBA are trying to avoid a recession. The thing is they need to work with the govt, but they are not allowed to be political. So they are between a rock and a hard place.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
The RBA don't want higher house prices. The RBA are trying to avoid a recession.
You are correct that they are trying to avoid a recession. I think you are wrong to say the RBA doesn't want higher prices. They need higher dwelling prices to stimulate construction — with the usual caveat, of course, that buyers should "take due care".
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
You are correct that they are trying to avoid a recession. I think you are wrong to say the RBA doesn't want higher prices. They need higher dwelling prices to stimulate construction — with the usual caveat, of course, that buyers should "take due care".
Won't increasing supply lower demand and hence lower prices?
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
The RBA don't want higher house prices. The RBA are trying to avoid a recession. The thing is they need to work with the govt, but they are not allowed to be political. So they are between a rock and a hard place.
+1 Higher house prices is merely a by product
newjez
14 Feb 2014, 09:10 AM
Won't increasing supply lower demand and hence lower prices?
But what lever does the RBA have to increase supply?
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