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The Forum > Article Comments > An holistic approach to tackling housing affordability > Comments

An holistic approach to tackling housing affordability : Comments

By Andrew Bartlett, published 23/8/2007

Quick fix, one-off solutions to housing affordability are usually designed more to deal with a political problem than a policy one.

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The only real solution to housing affordability that is environmentally sustainable is to STOP POPULATION GROWTH.
Posted by michael_in_adelaide, Thursday, 23 August 2007 9:52:59 AM
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This kind of initiative is crucial in todays society. Critical.

But...; no votes in it. That's it. Whilst we continue with a political system which allows us no option than to vote in either the New Conservatives or the New Liberals; nothing will change; least of all housing affordability.

The irony of this, is that a disaffected and struggling society is a more expensive society to maintain.

WHEN Rudd takes Government, I will wait with forlorn resignation AND mounting anger as HE finds reasons to back-peddle on most of the promises (HAH!) he has made.

Still; a change is as good as a rest.

And by God!, do we need a rest!
Posted by Ginx, Thursday, 23 August 2007 12:00:33 PM
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introduce legislation to curb the immoral practice of investment purchasing of housing. the is simply no way a young couple can afford a home when the wealthy (& not so wealthy) "investors" buy everything before the young have an opportunity to save up for a deposit. I say no more than two houses per owner & we'll solve the housing affordability problem.
Posted by individual, Thursday, 23 August 2007 1:01:05 PM
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Andrew, posters, stop your bleeding heart and realise that investing in property is one of the only ways the average aussie can create wealth. Most are not share experts, have big money to put into funds and fixed interest, property is the only lifeline in many cases to financial security.

Couple that with inadequate supers, the fact that investment markets can be ruined by factors outside of our control, it is ESSENTIAL that all Australians consider this as a real option and are not crucified for it.

The fact is that without investors, the public housing burden would be immense and no matter who knocks it is a win for the government and a win for the investor, and the renting population gets housed.

As a young person and a person who has property and finance businesses i know how hard the property market is to get into, But it is our consumer society that is robbing the young of opportunites, not the climate. It has never been easier to get a home loan and whilst prices may be quite unaffordable, we must realise dwellings are getting bigger, the number of people per household are dropping, and our expenses have increased, so it is OUR standards that have contributed to the problem. If you want to be in the property market today and you cant afford what you want, thinking outside the square.

Get a group of friends and go tenants in common. Your rights are protected and your asset is quantifyable, saleable, and protected if the other parties default. Use your parents equity if they trust you. Buy something basic, it will still double every ten years.

The fact is, a 2 tiered society of affordable housing and regular housing only further creates haves and have nots, and caps the value of the asset purchased by the battler, in effect loosing the real benefit of home ownership. Have we also not learnt from the mistakes of public housing? Leave things the way they are, increase densities and start bringing through larger batches of stock to the market.
Posted by Realist, Thursday, 23 August 2007 1:29:12 PM
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A semi-detached flat in Mosman Sydney could be bought for $13,000 and in Brisbane then a House on 607m2 could be bought for $6000.Young couples in 1967 started to be in competition with dealers and speculators who bought and sold for up to 400% profit in 6 months. The cashed up dealers sometimes borrowed and went broke when they did'nt anticipate the market correctly. But it was about then in Australia that the rich became richer and the poor became poorer and both married partners had to go to work to afford a mortgage. Nowadays they want a house as grand as Dad and Mums have which took them 30 years to own,council standards have increased the costs but the land is what has gone up to unanticipated prices.The supply and demand ratio is increasing exponentialy. Europeans live in rented apartments never buy a house in a lifetime.Our Governments must come into the market. That creative accounting error giving the Treasurer an extra 3 billion to spend, could buy enough real estate to compete with a lot of rich dealers and developers! The Gov't could then sell their portfolio to young couples on affordable terms.
Posted by TINMAN, Thursday, 23 August 2007 2:08:24 PM
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The economics of house prices work like the economics of anything else – if prices go up, it’s usually because demand growth is faster than supply growth. Measures to address the social consequences of housing stress are appropriate and necessary, but the fundamental problem won’t go away until impediments to supply are addressed. A lot of those impediments are a result of Green ideology which constrains the development of new low-cost housing on the urban fringes.
Posted by Rhian, Thursday, 23 August 2007 2:36:52 PM
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Individual, we actually need MORE investors at the moment, as we have a rental crisis (ie not enough houses owned by someone else to rent out). As other posters have pointed out, its a supply and demand issue, and in this case demand is outstripping supply for both investors and home buyers. To solve it, either demand needs to decrease (slow or stop immigration, at least for a while), or free up more land for development. Create smaller living spaces, not larger (more houses in the same area). Home buyers also need to be realistic about what they can afford. Buy a 2 bedroom house instead of a 4 bedroom one. You can always do a reno later (if you choose the right property to start with). Make do with 60's fittings (as distasteful as they can be) instead of having to have your house looking like it came out of the pages of a glossy mag. People's standards are simply too high. When I was little, we used to have bats fly in and out of the holes in our bathroom wall. Mum and Dad lived with that for about 15 years before they could afford to do a reno. Eventually, I will do a reno on the little 2 bedroom house that I own, and update the narrow limegreen benchtops in the kitchen, and open up the living space so the we have some room to move, as well as add a spare bedroom. But not before I can at least afford the additional repayments that I'll need to make, and that mightnt be for some time yet. Until then, the kids will just have to share a room (it didnt kill me).
Posted by Country Gal, Thursday, 23 August 2007 3:11:48 PM
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Country Gal,
I wholeheartedly endorse your argument re "buy what you can afford". Of course investment is one of the most important factors in an economy however, how do you suggest the rental crisis can be solved in this scenario. A State government sells off most of it's staff accommodation & then, when this accommdation is needed again, this same Government pays any amount of rent that is being asked for. Because of this, other landlords can now up their rents & it is this trend which then causes rent unaffordability for private individuals seeking accommodation. Do you really approve of $500.- to $1600.- a week to house a public servant ? Or $250.- to $300.- a week for a crappy room ? I don't think you'd get too many people to happily accept that. How about a couple being supplied with a $115.-/day Motel room by a Govt. department whilst their house is rented to that same Department for $520.- a week. Or how about people receiving up to $500.- rental allowance to live in their own home ? Or how about $ 500.000.- taxpayer funded 5-8 bedroom houses for $ 75.- a week. Or how about a $ 250.000.- taxpayer funded weekender. Good investments ? I'm sure that's not the kind of investment you support or is it.
Posted by individual, Thursday, 23 August 2007 6:06:44 PM
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Andrew Bartlett is off in ga ga land.We have a shortage of housing because we have too many bureaucrats and Govt. In NSW Govt taxes and charges add $170,000.00 to the cost of a house/land package.

Increase the supply of land,develop rapid transport systems so people can live in rural areas and abolish State Govts.Problem solved.
Posted by Arjay, Friday, 24 August 2007 12:16:37 AM
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No individual, that is not the sort of investment that I support. Governments dabbling irresponsibly in markets almost always skews the action of those markets to determine a fair price. I didnt realise that this was happening. I dont have a problem with govts regulating markets if need be (if there are unfair market advantages to one side, for example), but if they are doing what you suggest, then their actions are only inflating the situation. Private landlords rarely make enough rent to cover the interest costs of borrowing, let alone make the capital repayments. The rents have been so low in relation to the cost of property, that the eventual result was that they were going to have to go up, or the price of houses/units go into freefall. Neither is ideal, but bound to happen when prices get unrealistic.
Posted by Country Gal, Friday, 24 August 2007 9:51:18 AM
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I have tried to avoid this thread simply because of the solecism-du-poseur (an holistic...? do me a favour!) in the headline, but in the end I couldn't resist.

It really does the Democrats no favours to be associated with such a poorly thought-through piece. Given the author has never actually worked outside the protection of the public service, though, I suppose it should be predictable.

Housing is an emotive issue, but that does not excuse woolly thinking. By definition, every house that sells is affordable. To an individual, or a family, or a developer or a landlord. There is absolutely no mystery to it.

And as Realist points out, we have (as a society) gradually upgraded our accommodation, and with it our expectations, as we are individually occupying more housing space than ever before.

The answer is not subsidies, or grants, or unnaturally low interest rates. We simply build new properties that meet the demand of the expanding aspirations of our population. Why is that so difficult to understand?

The people who balk at this are either "single-issue fanatics", such as the ban-immigration people, or the reduce the population people, or are straight-out NIMBYs, who object to other people having what they regarded as a right, thirty years ago.

If we let the market decide, prices will settle at a level where demand and supply are in balance, just as they do in every unregulated market.

Mr Bartlett is doing exactly what every other politician is doing, and that is turning a straightforward market issue into a political football. Exactly as he accuses his political opponents of doing.

If he's around watching this, Mr Bartlett might like to point out to us how his policies avoid his own charge of being "[q]uick fix, one off solutions... designed more to deal with a political problem than a policy one."
Posted by Pericles, Friday, 24 August 2007 12:28:28 PM
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Many of you blame young people who want to live in palaces for rising house prices. There is no question that the average house is more lavish than 30 or 40 years ago. If this were the main explanation, though, you would expect house prices to be higher, but the land component of the house price to be smaller, especially since block sizes are considerably smaller, on average, than they were then. A previous article on OLO

http://www.onlineopinion.com.au/view.asp?article=4811

shows that real building costs are about the same as in 1973, but that the cost of the land the house is built on has skyrocketed, up by nearly 700% in Sydney. The government has restricted supply by abandoning decentralisation and by rationing land for housing, then boosted demand with government sponsored population growth. The resulting high house prices buy acquiescence from existing homeowners towards neoliberal economic policies, which, of course, suit the rich "donors" to the major parties to a T.

The only way to restore housing affordability is to give the politicians real pain at the ballot box (by putting incumbents last) until these growthist policies are reversed. Senator Bartlett's policy might help some people, but would see all of us heavily taxed to provide windfall profits for the owners of land on urban fringes, since the land can't simply be expropriated.
Posted by Divergence, Friday, 24 August 2007 2:07:33 PM
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Divergence , population growth is not the problem.Supply,discipline,Govt waste and no planning is the problem.We are the most sparcely populated country on the planet,yet we have some of the highest house prices..

Let's lighten the load and rid ourselves of our self serving,useless wasteful State Govts.
Posted by Arjay, Friday, 24 August 2007 7:52:52 PM
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Housing affordability comes down to a staes problem.

At the moment we have a greater number of people trying to buy than the market has, thus people will go past their limit on affordability.

The reason is hasnt anybody noticed how the state run the housing commision rentals.

How much does the states get each fortnight. I sort off figured roughly say we have a 100.00 in state housing, given fortnightly rents are 150 dollars. I will let you do the math but where is the states putting this money. My reference is for one state only but refering to all regarding monies.

Now wages dont cost that much and to what i have seen maitainance is somewhat when they get there.

Where is this money.
This should be reinvested back with more housing.
Another issue is immigration, i can accept refugees through the front door but otherwise immigration should be stopped until such time when we become more sustainable.

It comes down to states government lacking and as Kevin Rudd once said about the Joe government is queensland it is the states responsibility and if the states where not labor he would say this again.

Stuart Ulrich
Independent Candidate For Charlton
Posted by tapp, Friday, 24 August 2007 9:00:44 PM
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Alan Moran's OLO article "No Opportunities on the Property Ladder" http://www.onlineopinion.com.au/view.asp?article=4811 , and its 61 comments, would repay study in this context of taking an holistic approach to tackling housing affordability.

I had shrunk, as I all so frequently do, from putting into words the obvious key to the solution to this problem. Then I stumbled across Alan's article of 23 August 2006. He had taken the words right out of my mouth almost exactly a year before I had thought about not saying them!

Alan said, toward the end of his article: "One of the secrets of low German house prices is a constitutional right German landowners have that means they can do with their land as they wish. The onus is reversed in modern Australia - the landowner may do nothing with his or her land unless the government gives regulatory approval."

Its as simple as that. Repeal, and don't replace, all land use planning legislation. Then just watch a free market sort the problem in double-quick time.

I look forward more with relish than with trepidation to the wholesale sacking out of the bludgocracy that has run this regulatory imposition upon Australian society. Think also of the paradigm shift for the financial sector! It will have to actually learn about lending: real lending, not the making of mere riskless advances against the security of ever-appreciating first mortgage residential owner-occupied real estate. Political slush-funding would dry up almost overnight. What pure joy!

BTW (and off-topic), Pericles,

The captain of HMS Gloworm apparently was recommended for the award of the VC by the German captain of the Hipper. See: http://forum.axishistory.com/viewtopic.php?t=46837 - post by Alf well down the thread. I thank you for your passing remark that led to the eliciting of this information. I had, prior to your mention of a medal, only had in mind the imagery of that famous photo from the war at sea of the Gloworm emerging from its smokescreen to ram the Hipper.
Posted by Forrest Gumpp, Saturday, 25 August 2007 11:44:51 AM
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Arjay,

Australia does look big on the map, but most of it is effectively uninhabitable desert. From CIA World Factbook figures 6.15% of Australia is arable, and even then only if you include 27 million hectares of cultivated grassland. 33.46% of France is arable, and the average quality of the land is much better. We have some very serious environmental problems, according to the Factbook:

"soil erosion from overgrazing, industrial development, urbanization, and poor farming practices; soil salinity rising due to the use of poor quality water; desertification; clearing for agricultural purposes threatens the natural habitat of many unique animal and plant species; the Great Barrier Reef off the northeast coast, the largest coral reef in the world, is threatened by increased shipping and its popularity as a tourist site; limited natural fresh water resources"

The CSIRO 2002 Future Dilemmas report recommended stabilisation of the population at 20 million. Dr. Barney Foran, one of the lead authors, said at a conference that year that even this would require a 60% per capita reduction in pressure on the environment to achieve sustainability.

Even if you were correct and Australia could support a much larger population, there is only so much land within commuting distance of a capital city, and much of that is being withheld from the market by government policies. Do you really think they are too incompetent to know what they are doing?

Pericles,

Speaking just for myself, I would like to see a population that is big enough to maintain our civilisation, but not so big that ordinary people cannot enjoy good, free lives without trashing the environment or exploiting people in other countries. Who are the real fanatics? People like me, or those who want to turn Australia and, indeed, the whole world into a factory farm for people, and to do this at any environmental or human cost?
Posted by Divergence, Monday, 27 August 2007 12:29:41 PM
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Divergence,

I don’t accept that sustainable population is anything like as closely linked to agricultural productivity as you infer, but let’s assume you’re right.

Australia covers an area of 7,741,220 km2, and France an area of 551,500 km2.

So assuming your data are right, the 6.15% of Australia that is arable covers an area of 476,085 km2, some 86% of the whole of France, and 2.6 times larger than France’s arable area of 184,532 km2 (again using your 33.46% estimate).

Taking France’s population per km2 of arable land as a benchmark, that would mean Australia would accommodate a population of 2.6 times that of France’s. France’s current population is just over 60 million and Australia’s is just over 20 million, so one could infer that Australia’s sustainable population is about 156 million, or nearly 8 times its current level.

Even if we assume that Australia’s agricultural productivity is only half of France’s – and I’d guess it’s more than that – we could still support a population of 80 million at French benchmark levels. Incidentally, that’s not too far from estimates of the number of people we do feed from our agricultural industries, given that a large proportion of agricultural output is exported.

I don’t think we will, should or even can have a population of 80 million, but I don’t see arable land as a meaningful consideration in our population debate.
Posted by Rhian, Thursday, 30 August 2007 9:10:38 PM
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It is interesting to read the great variety of suggestions on this subject.I was unaware that Germany has no regulation on use of land. Who pays for head works, roads, electricity etc.? I don't criticise developers and investors entering the market.It's a free country, but the Government should be free to enter the industry and then produce land in competition and build city apartments and make them available on long terms to the disadvantaged in our society.Where councils and states have done this in Queensland it was overall successful.The public servants to do the work can be recruited from industry and be as competent as anyone.We don't want the "STATE CONTROL" of Communism but the loss of the Comonwealth Bank,the State governmentr Insurance Office, Telstra etc has been a retrograde step in my opinion.They could still be Government owned and able to influence the market place like "free enterprise" corporations.Houseing Commissions, State owned, could and should be as efficient in this computer age.The old idea of location of a Commission Area in a suburb is obselete.Did you know the Qld.Housing Commission owns houses in NOOSA!They did, anyway!
Posted by TINMAN, Friday, 31 August 2007 1:24:32 PM
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Rhian,

There is an older paper I found (also on the Web): K.C. Sharma, D.S. Rao and W. F. Shepherd, Agricultural Economics 4 (1990) 1-12. Figures from a table in this paper puts the ratio between France and Australia for value of production per unit are of arable land at 7.5:1 in France's favour (as of 1980). Of course labour per unit area is also much higher. I have seen claims before that equate the arable land of Australia with that of France, presumably after correcting for productivity. I would just make two points on this. First, people need more than just food. Those agricultural exports help to pay for the imports needed for a larger domestic population. Second, a lot of our agricultural practices are not sustainable, even if we ignore peak oil and climate change. (See Mark O'Connor's book "Tired Brown Land" on this.)

That said, I don't think high house prices are related (yet) to limits to growth, although Stalinist urban planners often justify forcing people into higher density housing on the basis that it preserves agricultural land. We are running up against such limits with regard to water supplies in our cities, all of which, except maybe Hobart, have permanent water restrictions.

Tinman,

Your solution implies that governments want to solve the problem. They don't, because of bigger fees and charges on more expensive houses and because the high prices give existing homeowners a stake in the high population growth and neoliberal economic policies that suit Big Business. Governments have deliberately engineered this situation. It doesn't matter how much suitable land Australia has, if the vast majority of jobs are in a few capital cities and housing must be within commuting distance.
Posted by Divergence, Monday, 3 September 2007 12:54:13 PM
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Having suffered the horrors of housing dislocation and the residential tenancy market I feel compelled to speak out. Housing affordability is more than policy failure although this certainly contributes to the problem. It is a public health issue yet this aspect of the problem has received scant attention. I have compiled a survey for tenants at
www.housingsurvey.com.au which I hope to incorporate into public health action. It is simply unacceptable that this rich nation promotes housing as a tool of wealth creation, yet fails to protect the vulnerable via tenancy acts that are actually workable, or habitation standards that ensure the landlord/agent relationship is not exploitive. Housing is a human right.
Posted by monash, Wednesday, 10 October 2007 9:29:41 PM
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TO Rhial.
YOU ARE PROBABLY RIGHT ABOUT GOVERNMENTS, WE HAVE LOTS TO SHOW HOW DESPERATE THEY CAN BE TO RETAIN POWER...RECENTLY....AND THERE'S MORE TO COME!LETS HOPE RUDD AND CO.WILL COME UP WITH SOME GOODIES IN THE HOUSING SOLUTION "TINMAN" they are at tight odds!
Posted by TINMAN, Thursday, 11 October 2007 6:09:27 PM
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