Why not blame it on the real problem investor's rather then home buyers drive up house prices, negative grearing rules are the main reason. Another thing that Governments need to do is stop the urban rush. I live in a small country town my wife and I are both working in white collar jobs with a household income of 150K+ we paid 80K for our double brick three bedroom home on a full 1/4 acre block. I don't understand why people want to live in big cities for, maddness.

Kenny, the problem is that while many people I'm sure would love to live in regional areas, there are not enough jobs. In fact, Centrelink will penalise you if you move from cities to country areas - even when it's blatantly obvious you can't afford to live in Sydney or Melbourne.

Elizabeth Crouch blames compliance with government regulation as the main problem affecting housing prices. I would have identified lack of space and the influx of people into the cities as the main problems. And say you abolished stamp duty tomorrow. My guess is that the price of houses would quickly rise to accommodate that change. Just as the home owners grant inflated the price of housing.

Relaxing the rules the housing industry has to follow, such as energy ratings, is tinkering around the edges of the housing crisis. As long as there is no comprehensive national affordable housing strategy we'll see more of the same.

Energy ratings are a great way to force budget builders to make adequate insulation allowances, just to name one advantage.

What about livability and a reduction in air conditioning needs? it wont be the pin that pops anything, it is a standard which must be reached to avoid building "glorified housing comission properties with no quality of living".

At the end of a property boom its no wonder affordibility is low, but the time factor will ensure the property market will kick on from 2009.

The government will bring incentives out when it is time to kickstart the market again, and this combined with easier finance availability & criteria year by year, and increasing in building costs, housing standards and land supply and demand will ensure life goes on as it always has.

The industry gets a shot in the arm as required. Home buyers with easier finance options, the changing nature of equity use by parents to help children and rising wages over time is one reason why first home buyers will continue to endevour to purchase. Its just that now, it will more likely be smaller dwellings.

Property is a physical need. Migration and lowering household occupancy ensures dwellings will need to be built regardless, and home ownership is seen as the key fundamental for Australians.

Doom and gloom for this industry is a long way off. The increasing number of people who use property as an investment & wealth vehicle will also mean the proportionate demand will improve.

All is good, get into property with future or value add potential now in this market, and when the growth begins, ride the crest of the wave and use your equity. Insulation and rainwater tanks are important, but not to those who dont have to live there.

Hey David,

I don't think Elizabeth is laying the blame at governmnet's feet simply due to the latest energy ratings. Rather she is highlighting what other authorities etc are saying. That is that the extra cost actually achieves little but does push housing further out of reach or breaks families budgets forcing them out of home ownership.

It's just another ill conceived government attempt at fixing a problem. Clearly done by a committee as the change has all the hallmarks of committee planning. Being focus on minor issues and pass legislation to satisfy a small but loud section of the community to the cost of the majority.

There is one major effect which will come from another direction in regards to housing affordability and the ability to continue meeting mortgage demands.

That is bank fees (including all financial institutuions). These fees have grown by an average of more than 10% per annum since 1998 according to the RBA Bulletins. They cover fees annually with last years report stating that over $10 billion was collected by such organisations as fees. For nothing.

Most people will get angry when they hear about bank fees but they do little about it. Some of us change banks and habits to try and avoid them but the majority do not or cannot. Last years RBA Bulletin stated that the margin made by banks last year is not quite the same as th high interest rate days ( 17% etc ). But closing fast.

We have had a few small interest rate rises in the last year ( 2 from memory ) and fortunately no more as yet. But it will come, and soon. Ask yourself how people will pay increased mortgages plus the fees which banks have used to replace the income they lost out on when interest rates dropped.

In my view our current governments are totally absent when it comes to looking forward as they have all sat on their hands as bank fees have climbed so high. Don't expect banks to drop their fees when rates go up. They haven't so far.

Rates will not go up like forecast, The deregulated banking system and the sensitive current environment will mean a large increase wil not be risked, as the ripple effect on the economy is too much.

Its not doom and gloom for first home buyers. the only problem this day and age is that 80% of people under 25 have credit black marks, due to the rise in credit and the consumer society.

The government will not break all the masses, perhaps a few on the cusp, but as a whole we can bear the cost of any rises, albeit small ones.

Good point on bank fees, but there are so many agressive lenders out there that this will be one of the next items being discounted.

Realist & Kenny,
Realist I certainly hope you are correct, because I have friends who, with 3 children are unable to even think about home ownership, because of cost, and the families low income.

Kenny I live on the coast in North Queensland, in Townsville population 230,000 and I can tell you that in 3 decades our population has doubled, in other words, the people who have come here for the parafise that used to exist have found themselves living in a similar environment to the one they left behind. I would love to live in a smaller city or town with hopefully a more relaxed pace, and better quality of life. The income is unimportant to me, as I don't have a mortage, you are missing absolutely nothing by living where you do, except "toooo much choice"

My house is not quite worth 504,000 yet is is my third property of trying to climb the ladder and decades of paying the banker. So if $504,000 is first home buyers median they cannot be doing too badly.

This is a classic private profit argument. The housing industry is trying to make more money off all of us. Do not be fooled.

Here is how the numbers work.

If you buy a 5 star home, it will have achieved this mostly with a solar hot water system. The extra cost is (generously) $3000. You put this on your 15 year mortgage and pay an extra $26 a month. But your electricity bill is cut by $30 a month.

Guess what the woman from the housing industry association did not tell you. You make $4 a month, the bank some proportion of $26 a month, the solar hot water manufacturers and plumbers some money and who misses out? Well, competition between developers probably means they don’t pass on the full costs anyway and that this is the true reason for this ridiculous campaign.

It would be laughable if you did not stop to consider the real greenhouse gas savings from solar electric hot water. Its around 20 to 40% of the household’s electricity’s contribution.

What we should be asking is why an article like this which is such misrepresentative drivel can be approved for publishing in the first place?

I read a piece recently that said that the Australian Securities and Investments Commission is concerned that Australian consumers are taking on too much without knowing the risks associated with their borrowings.

ASIC estimates that many people now have up to three loans with a mortgage, credit card and personal or car loans. The average Australian owes almost $2600 on their credit card.

So while this piece from Elizabeth Crouch may rightly be arguing for greater flexibility for housing and land developers so the costs don’t flow on to home buyers, the real threat is in how personal debt may see thousands of young home makers (in bad debt) renting indefinitely.

But there’s no analysis of this fundamental economic and social indicator in this article is there? I wonder why...mmm?

The death of public housing and especially housing that provides communities of low income earners with a “quality of life choice” – is being totally ignored in this argument to deregulate. More brick and tile urban sprawls as far as the eye can see? Yuk

Perhaps Elizabeth Crouch should offer her opinion on one building practice in Queensland, and probably elsewhere.

This is the noticibly frequent use of black roof tiles on many houses on new housing estastes.

In conjunction with, quite often, a lack of overhanging eaves, these tiles will absorb the maximum possible amount of heat from our record hot summer sun. People inside the house will feel as if they are living inside an oven or else will have to purchase expensive air conditioners and draw record amounts of power from our state's electricity grid.

At the start of summer Queensland Premier Beatty warned that this anticipated unprecedented demand would probably result in blackouts, and for me this warning has already been realised twice, with one blackout in my area lasting 4 hours.

If the builders who build these houses had any environmental understanding and any sense of social resposibility, I would expect that it would be possible to dissuade nearly all of their clients from making such idiotic choices in the colour of their roof tiles.

I think there is plenty of scope for savings in the cost of housing other than in removing sensible energy rating standards. A good many other regulations are written by the Housing Industry Association itsef, and are designed, not to benefit customers, but HIA members or members of related industry groups.

One is that any glass in a door, which has been broken, must be replaced with shatterproof glass, and not ordinary glass. As a consequence my sister had to pay over $1000 dollars to have glass in a second hand sliding dooor replaced. This was more than she could afford and the expense is completely out of proportion to the risk. In any case, it should have been up to her to choose whether to or not to take the risk.

It is these sorts of regulations that have helped to drive the cost of housing so far beyond the means of ordinary Australians. Another, of course is the disease of property speculation.

Elizabeth Crouch makes some good points and I do think that regulation is running mad.

However by far the biggest home ownership cost component that people face stems from cost of land not the cost of house construction. And land prices relate mainly to population growth and zoning laws.

I think we'd be better off if government's turned their attention to the development of infrastructure before land is released for housing development. This would be more useful than making rules about what sort of glass you can put in your sliding door. Railways, parklands, space for shops and services and so on should be in place before the houses go in. As it is, all this is done in an ad hoc manner and as an afterthought. Look at North-West Sydney. Try living there without a car. And even then, you have to drive several suburbs away before you find a shopping centre - let alone a railway station.

That said, the sort of planning I've mentioned doesn't create affordable housing. That can only come by governments either setting aside affordable housing or creating incentives so the housing industry does. An affordable housing strategy must include an affordable renting strategy so people can save money for future housing. The alternative is more of the same and Sydney will have the same rate of home ownership as somewhere like Tokyo. And maybe even a strata of working homeless like the big American cities.

Hey Realist,

Your point about interest rates not going up due to deregulation doesn't gel with the 17% period. That was after deregulation.Wasn't that the highest such interest rates have been?

Re discounting bank fees. Have you seen any evidence of such? There isn't any I'm aware of. In fact the interest rate increases last year were accompanied by one of the highest years fees rises in the last decade. If discounting were to occur it must be side by side with interest rate rises otherwise...

DavidJS makes a good point about infrastructure preceding occupation of new land releases. Governments just don't bother do they? And of course in Brisbane they are now talking about "air space" rather than new estates etc. That is apparently meant to refer to taller and taller buildings but "air space" is a spin doctors term to cloud the issue (pun intended).

For Daggett,

As a fellow Brisbanite I must sympathise with you re electricity. We haven't had other than 1 two minute blackout this season, to date anyway, and the reason for this is that our suburb has electricity undergound rather than sitting up high among the gum trees. David's point re infrastructure is relevant here. Rather than spending the endless maintenance costs the QLD energy provider and government should be replacing above ground electricity as a matter if urgency.

DavidJS, RobbyH and Terje,

Thanks for your input. The HIA has clearly a lot to answer for for the total shambles that passes for housing policy and urban planning in Australia these days.

Of course, as Terje points out, both population growth and zoning laws have played a big part in housing hyper-inflation of recent decades.

Property speculators openly and shamelessly advocate population increase as a means to raise the value of their investment. As an example, an article in the Courier Mail of 18 Feb 2005 is entitled "Migration brings steady growth". It states "... with migration to the Sunshine coast flourishing and rental and housing yields in the region increasing by up to 7 percent in a year, the commercial market is nipping hard on the heels of this steady growth."

It is precisely this same kind of "steady growth" that has long ago placed secure detached housing completely beyond the means of many living in the larger cities.

So, far from facilitating true economic growth as nearly all of the economisits have been asserting with deafening loudness for the last thirty or so years, migration has simply been a crude means to facilitate the transfer of wealth from the rest of the community, as well as from poor countries, into the pockets of property speculators and related business interests.

One knee-jerk reaction to the problem of housing unaffordably would be to simply force the councils to allow ever more subdivision and urban sprawl. However, this could quickly lead to the further loss of much bushland and farming land on the outskirts of the existing metropolises, and if we fail to effectively control our population levels, it would only be a matter of time before we are right back where we are today in regards to housing affordabiity.

I agree that some more land should be made available to meet the needs of Australia's current population, but it needs to be done carefully and in such a way that land speculators don't continue to benefit at everyone else's expense.