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THE price of home ownership in Queensland has now escalated beyond the financial reach of many young families, even those earning two incomes.
A new study of housing affordability — looking at six typical Queensland households – reveals most could not afford an average-priced home.

While that has boosted the wealth of established home owners, Residential Development Council executive director Ross Elliott warned it could lock a whole generation out of the housing market.

“Unless they get an inheritance or win lotto, Generation Y are basically going to be a rental generation,” he said. “It is nearly the case now that it takes a six-figure income to buy a house and that is beyond the reach of many, many workers.”

Source: The Courier Mail

AUSTRALIA’S rental vacancy rate has fallen to the lowest level in almost 40 years, with pressure mounting on the Federal Government to address housing affordability in the May 8 budget. Figures from the federal Treasury show the rental vacancy rate fell to 1.36 per cent in the December quarter — the lowest since the series began in 1969.

Source: The Age

Housing affordability is the barbecue stopper of today. Or, at least it would be if inner-city residents had the space for a camp stove, and if outer-suburban families had the time to spend around the turbo six-burner that drove them into mortgage distress and a third job.

More experts believe Australia is moving into a post-mortgage era. The future, they say, is more European, with greater numbers of long-term renters spending their lives as tenants.

As they gather momentum, it’s clear the great Australian dream is entering the twilight zone. “The horse has bolted on home ownership.” That comment was made by Julian Disney, chairman of the National Affordable Housing Summit. But the same words were used by someone at the other end of the spectrum, Macquarie Bank’s interest rate strategist, Rory Robertson: “The horse has bolted and there’s no getting it back”.

“Renting your home and staying flexible does wonders for your chances of always finding an interesting job,” the report concluded. Disney agrees that the need for mobility – “which will become more and more important with globalisation” – is just one of the many reasons why “renting will be crucial in this debate”.

And the contagion has spread: what was once confined to Sydney is now felt countrywide. For instance, the Matusik affordability index shows that an average income earner in Brisbane can only afford 7 per cent of the housing in Brisbane (down from 74 per cent five years ago). It’s not just a problem for the mortgage belt. This week, Australia’s rental vacancy rate fell to the lowest level in 40 years – 1.36 per cent – leading to an even-tighter rental market and higher rents.

Source: afr.com

• Rental prices are rising up to twice as fast as inflation
• Australia one of the least affordable housing markets

RENTAL prices have been rising at more than twice the pace of inflation, a housing affordability report to be released today shows.

The report shows Australians are paying $44 a week more in real terms for a three-bedroom house than they were in June, 2001.

Research conducted by report authors, Australians for Affordable Housing, shows the national median rent for a three-bedroom house would have been $232 in the last quarter if rents had only risen with CPI. However, the national median rent for December 2006 was $276.

“For renters, decent accommodation is difficult to find,” Australians for Affordable Housing spokesman David Imber said yesterday.

“People looking to rent are being forced into auction situations, where the highest bidder wins.”

Source: The Adelaide Advertiser

SYDNEY is in the grip of a second property crisis with the supply of new houses falling to levels not seen since 1975 and research forecasting rents to rise by as much as 40 per cent within two years.The results of a study, by BIS Shrapnel, has shown construction of new homes in Sydney has hit an historical low, rivalled only by the slump of the mid 70s.

Coupled with housing affordability, low to middle income earners are being warned that prices are likely to spike again within four years with “steep price increases”.

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DWINDLING affordability looks set to force more first home buyers out of the property market in 2007, paving the way for an investor-led recovery. The tighter the rental market, the more scope investors have to raise rents. This is particularly beneficial for investors who bought during the upside of the previous property cycle in 2001-03 when capital growth was strong and rental returns were 3 to 4 per cent.

They have now held their properties long enough to experience the second phase of the cycle, when capital growth has slowed but rental returns are firming around 4 to 5 per cent. With improved cash flow, they are in a solid position to buy again and take advantage of the next full growth cycle. This cycle began in the second half of 2006 and will start to accelerate in 2007.

A change of trends in rents and interest rates will also influence this investor-led recovery. In 2006, rents rose and interest rates did too, so there was no impetus for investors to re-enter the market. In 2007, rents will continue to rise because of the growing first-home-buyer affordability crunch. However, it’s probable that interest rates will stabilise or, ideally, fall.

The Reserve Bank must take decisive action to reduce interest rates if there is to be a sustained improvement in these figures.In turn, lower interest rates will further improve cash flow, luring more investors back into the property market.

Source: theage.com.au

SOUTHEAST Queensland is facing a critical land shortage that will have a ‘calamitous’ effect on housing affordability, a leading industry body predicts.

The latest land supply report released by the Property Council of Australia said that within 20 years the region would face a ‘disastrous’ land shortfall.

Residential Development Council executive director Ross Elliott said the cost of housing would continue to increase as the land shortages became worse in the next two decades. “Currently, the shortage is just under 13,000 lots. In 20 years that will be 185,076 or almost 15 times worse,” said Mr Elliott.

“Imagine how that will affect housing affordability if we don’t make changes now.

The REIQ president, Peter McGrath, said the population had ‘exploded’ in the southeast corner and the market had been unable to keep up. “The South East Queensland Regional Plan underestimated the rate of release,” he said. “The last six years have been incredible. We have seen massive growth.

The Courier Mail newspaper ran a similar story about the report and said “The report, the first of its kind in Australia to look into the future of land supply, found state and local governments would need to revise current policies and release additional land or face an “unprecedented disaster” in housing affordability.” As investors perhaps “unprecedented disaster” should read “unprecedented opportunity”?

Source: GC Weekend Bulletin

The 2007 PRDnationwide report has now been released and Mr Lawless said two trends – the outer-lying areas close to working nodes and industrial precincts, and suburbs with unique aspects including acreage blocks, river frontage and infrastructure plans – would continue to push higher-than-average growth.

“People working in these areas would like to live close by and are being locked out of the housing market due to low levels of affordability.
“We are also seeing a lot of investors in these outer working areas because the rental yields are typically very high, due to a low buy-in price and high rental rate.”

“We have found that the growth appears to be returning to the marketplace relative to 2004-05, with the number of suburbs recording at least 10 per cent growth over the year almost double from last year’s low of just 18 suburbs to 33 suburbs.”

“Two thousand and seven will be similar to the second half of 2006, with now being a good time for buyers to position themselves strategically in the marketplace for the higher levels of growth likely to return at the end of 2007 and into 2008.”

Source: Courier Mail Newspaper