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The Federal Government will build up to 100,000 new affordable rental properties over the next 10 years with renters saving up to $70 a week as part of an expanded scheme to assist overcoming the country’s housing affordability crisis.

Speaking in Brisbane today, Prime Minister Kevin Rudd said 3,000 to 4,000 would be built over the next 12 months, with the scheme ramping up in subsequent years.

*My first question would be where are they going to get the land? Recent comments are saying that we only have 5 years land supply left in SE Qld (with current guidelines) and most of that is in outer areas. In an article October last year APM’s general manager Michael McNamara commented that Generation Y tenants would rather “pay exorbitant rent in inner city locations than live in what they see as the cultural wasteland of suburbia.” Only time will tell if this government strategy helps ease the crisis.- Martin@investmentmentor.com.au .

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The flaw in Deputy Premier Paul Lucas’s optimism on the 14 years of available land for new Brisbane residents stems from the see, hear and speak no evil approach the Government has regarding housing availability and affordability.

The Government somehow manages to put a positive spin on the fact that a new study shows there is 14 years of available development. 14 years? Without wanting to be completely pessimistic, that amounts to very little.

Think long-term and think generational and you can imagine the problems that start to emerge.

This 14-year best-case scenario also fails to take into account the percentage of the land identified for potential development.

The Government has reduced the usable land by 30 percent because it is currently occupied, mainly by commercial enterprises.

Experts however say the discount should be closer to 50 percent. And that means you can kiss goodbye to usable land in five years.

Where will people live? Where will people be able to afford to live?

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Dwelling approvals fell back sharply in December in the wake of last November’s interest rate rise, according to Master Builders Australia Chief Economist Peter Jones.

He says recovery in residential building will be further delayed as the impact of January’s ‘bank-induced rate’ increases as a result of the sub-prime crisis flows through.
“With the Reserve Bank likely to lift official interest rates again, the prospect of any sustainable upturn this year appears very unlikely,” says Jones.

“The so-called take-off in dwelling approvals looks like being aborted in a similar fashion to previous episodes experienced since the cycle troughed way back in 2004.

Jones says another false dawn means the growing imbalance between residential building demand and supply has the potential to escalate to intractable levels.

If you believe as we do that property prices and rental growth are governed by supply and demand, in areas of increasing demand (eg Queensland) how will this effect the market?

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Yes we are in times of uncertainty, interest rates rising, housing affordability at its lowest, the American subprime crisis having its flow on effect onto the lending institutions, inflation high.

Yet most of us are still wanting to move forward not retreat.
In late January, researcher Michael Matusik asked 300 investors what they would most like out of the housing market in 2008 and close to one-third wanted another investment property.

Yes we are facing difficult economic conditions right now but on the positive side for housing is the chronic shortage. Construction is running at around 30,000 dwellings a year below underlying demand.

Vacancy rates are lower, rental growth stronger and Australians are used to higher mortgage rates, which have been offset by low unemployment, solid wages growth and tax cuts.

And no matter where the hand is on the economic clock the cycle will continue, property will continue to grow, historically every 7 to 10 years, even if that growth is modest to begin with, it always catches up. I’d like to be there when it does.

With this in mind, we know that it is important for you to have the choice of well priced, well positioned property that you can comfortably invest in now and know that it will yield a good return for you in the future.
We have been sourcing property in areas heralded for their growth potential through population increase, infrastructure spending and industry expansion yet in a price range suited to the current economic climate.

If you’d like to find out where you are positioned financially to capatalise on the certainty of property, click here to fill out a borrowing capacity assessment.www.investmentmentor.com.au/bcaoriginal.htm

OWNING a place of your own has been an entrenched part of Australian culture since Federation but the “Australian dream” now seems unattainable for many. The latest in a long line of depressing statistics about the difficulties of buying a home are figures from the Real Estate Institute of Australia showing that in major cities such as Melbourne, a household on average wages cannot afford a median-priced house.

Explanations of the situation often assume that we have a relatively short-term problem. They boil down to economic factors: too much demand and too little supply. Some people suggest that housing markets will ultimately self-correct through declining house prices and, however unpalatable this may be to those who already own a house, this will help people wanting to buy and deal with affordability problems.

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