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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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Anyone holding out on purchasing a home, hoping the property market will ease, should be warned – a real estate expert warns it could double in the next five years.

Sunshine Coast leading agent and acting REIQ spokesman Tom Offermann said yesterday “there will be no easing in the market”.

“All indications are that our market will pick up in strength and will be very kind to property owners in three to five years,” he said.

“I would expect medium term capital growth rate of between 10% and 15% to continue, which will see a doubling of prices in the next five to six years.”

This would mean a small two-bedroom home in Maroochydore, which was on the market for $420,000, could expect to be worth close to a million by 2012.

While housing affordability was reaching crisis levels on the Sunshine Coast, Mr Offermann said there were many people around prepared to buy.

“A lot of people coming from other states and overseas find that homes in the $400,000 to $600,000 range within in 10 minutes drive from the beach very attractive at a price they’re willing to pay to enjoy the lifestyle,” he said.

Source: thedaily.com.au

ANZ Property Outlook – Jan 2008 – Residential Property

In risk-adjusted terms, residential property has delivered vastly superior returns to all other broad asset classes.

Affordability conditions for new home-buyers and renters will deteriorate further unless appropriate policy action is taken.

A dramatic tightening of the housing market will force already soaring house prices and rents sharply higher.

By 2010 we project a record housing shortage of nearly 200,000 homes which risks becoming an intractable imbalance as renters and first-homebuyers become collateral damage in the Reserve Bank’s ongoing war on inflation.

Safe as houses… Much has been written about reduced yields on investor housing and house price ‘bubbles’ in recent years. However, as an asset class, housing has continued to deliver remarkably strong and relatively stable investment returns.

In raw terms, since 1984, residential property has enjoyed an extraordinary compound annual total return of 13.4%, only slightly below that of equities (13.8%) and far above both commercial property (10.3%) and bonds (9.4%).

But in risk-adjusted terms1, residential property has delivered vastly superior returns to all other broad asset classes.

Source: ANZ

John Maher of Inside Property asks “If some young investors can establish portfolios of 5 or more properties by their mid 20′s is the housing affordability crisis in Australia everything it is cracked up to be?” The article suggests that peoples increased expectations are the issue whereas less than a generation ago people knew that you started small and worked your way up. “People have forgotten, or ignore, that the way to get to the finish is to begin at the start.”

I recently had a trip to Sydney to see “War of the Worlds” musical on stage (in the Acer Arena at the Olympic Village) a couple of days ago. This included a walk around Sydney’s historical “brick pit” . In the history of this facility, which produced the bricks to build Sydney’s houses for many years, the following facts are displayed- At that time a new home was £1,600 (pounds) and the average wage was £220 per year. That means that the average home , probably terraced brick, small and with an outside laundry and toilet, was costing nearly 8 times the average wage and only 30% owned their own. The average wage now is around $52,000 pa – 8 times that would be $416,000 and homes now are bigger, with ensuites, media rooms, garages, and air conditioning. So is this really so different? – Martin

Source: Realestate.com.au

QUEENSLAND is struggling to find enough top-level workers to drive the massive infrastructure projects needed to keep up with the state’s soaring population. The State Government’s investment in major infrastructure projects – about $80 billion over the next 20 years – has created an unprecedented demand for highly skilled engineering and construction workers.

With Queensland facing a shortfall of 40,000 workers within five years, the State Government last year launched a $1.1billion Skills Plan to counter the looming crisis. Figures just released show the number of apprenticeships and traineeships in Queensland increased 6 per cent to more than 55,000 in the 12 months to September. “This is more than 10 times the national trend, where commencements increased by only half a per cent over the same period,” said Education and Training Minister Rod Welford.

Source: The Courier Mail

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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The latest Real Estate Institute of Queensland (REIQ) rental vacancy figures confirm that Queensland’s rental market is in crisis.

The REIQ September quarter figures show people across the state – from the inner and outer suburbs of Brisbane, Maryborough and Gladstone to the southern Darling Downs, Townsville and Rockhampton – are struggling to find rental accommodation.

“With an additional 1,200 people coming to the Sunshine State from interstate or overseas every week, there are simply not enough houses to accommodate everyone,” Mr McGrath said.

“Demand is one of the key drivers of higher rents and this trend is likely to continue with Queensland’s population and resources boom not showing any signs of abating.”