This week we have some big news from Australia I thought people might be interested in discussing.

The level of public dissatisfaction with Australia's housing market became abundantly clear today, to myself and thousands of other Australians.

Recent campaigns by renowned advocate group "Get Up!" are championing a First Home Buyer's Strike and also calling for an end to the negative gearing tax break used by many property investors. The campaigns are gaining a huge amount of publicity in the media:

http://www.smh.com.au/business/online-campaign-targets-high-cost-of-housing-20110330-1cfeq.html

Real estate in Australia has exceeded all sensible valuation criteria and we now have some of the most unaffordable homes on the planet according to Demographia, The Economist, and many other respected organisations.

Also gaining much public attention recently is the Get Up campaign support thread and discussion on the Australian Property Forum with robust debate and literally thousands of hits in a few days:

http://australianpropertyforum.com/topic/8506527

If these campaigns works as the organisers plan, property values may reduce to more sensible levels whereby decent hardworking Australian families can once again afford a reasonable home.

Here is the link to the original campaign where thousands of people are casting their votes at an ever accelerating pace:

http://suggest.getup.org.au/forums/60819-campaign-ideas/suggestions/1595687-first-home-buyers-property-buyers-strike

If the bottom rung (FHBs) are taken out then the whole property ladder pyramid scheme may collapse. However, the GetUp Administrator has unfortunately suggested that it is very unlikely they will even accept these campaigns, as explained here:

http://australianpropertyforum.com/single/?p=8116675&t=8506527

Now, whether or not the public believe these campaigns are a good idea or a bad idea, there is no denying the huge level of public interest. The discussion has gone viral across the country on Twitter and other social media sites.

It is important that all property investors and owners consider the impact such a campaign could have on Australian property values.

The public have spoken, and if nothing else, these campaigns will surely be influencing future political decisions about the housing market in Australia.

This has been an important event in the history of the Australian housing bubble.

Matt Cooper

On the demand side we have government bent on high immigration. On the supply side there is a ridiculously restricted, obscure, and unnecessarily complicated development process. Of testament to the inherent corruption of local government, you need only look at the number sacked over the years. Australia stands to suffer substantial economic harm while this continues to be the status quo.

I agree that housing prices have got to ridiculous levels. In the 60s a reasonable house cost about 5 years average salary. This cost becomes less when you remember the average wage attracted less than 10% tax, & housing loans had a set interest rate of 4.25%.

So yes it's tough for kids today. However unless we want hundreds of thousands of hard working young Ozzies going bankrupt, we can't afford to act precipitously on reducing housing prices. Many who have recently become home owners could not survive, economically, if values drop very quickly.

This is Oz, not the USA. There they can walk away free & clear if they find they have negative equity in a home. In Oz, after a default sale, often for less than even current market value, the borrower is still responsible for any short fall in the return to the lender.

I don't think our society could survive a whole generation of young home buyers being sent bankrupt to pay the banks.

If these groups keep pushing to remove the benefits of housing investment, negative gearing being one, then where on earth do you think people who don't own a home (renters) will live.

Many who rent do so simply because they can not secure finance to buy their own home.

Many people today have multiple defaults against their name for items such as 'mobile phone' plans, the result being, they can not get credit.

Just keep one thing in mind. For every action, there is a reaction.

Forcing investors (landlords) out of the property market is one gamble that should be well researched before making that brave move.

Finally, many non home owners have the capacity to become 'home owners', it's just that life style choices often mean that they just can't have everything and, considering a home loan is often a 'for life' decision, this is the option that is often left out of the equation. The old 'it's all to hard' approach comes in to play.

The problem isn't with house affordability. It's a problem of expectations and the variety of housing.

If people are happy to live 20k from the CBD, the price of housing is much lower. If you can accept a house without that 3rd bathroom and movie room.

The land is valuable closer to the city and transport, so every 2 bedroom house is knocked down to create a mansion that first buyers cant afford, or 2 old large block houses are knocked down to create units (If the Nimbys don't kick up too much of a stink).

I live 10kms from the CBD and you can get a 2 bed flat worth about 300k. That's not really expensive. A kid earning 35K living at home for 2-3 years can easily save 60k deposit.

The quality of housing people expect these days is unrealistic. First home buyers expect to moving into a brand new 3+ bedroom house with a big back yard less than 10kms from the CBD.

It's called a property ladder as historically people had to buy what they can afford in the not so nice area, build equity, then renovate or move up the ladder.

Trouble is these days first home buyers want to jump to the top of the ladder.

We want the world and we want it....

Now!

To solve this 'crisis' (There are no problems only crisis these days) improve commuting times and make it more viable to live further form the city, and decentralise cities with multiple 'business parks' close to rail.

*Many who have recently become home owners could not survive, economically, if values drop very quickly.*

Hasbeen, you had better explain that one to me. The general
idea of somebody buying a house, is to have a place to live in.
Once they have bought the place, they still have a house to
live in, repayments are not going to change up or down based
on the change in house prices. So in reality a drop in
house prices should not affect our new home owners, as distinct
from a change in interest rates.

As Houllie points out, what has changed is expectations. The
average house is now twice the size that it was in the 60s.

These days everybody wants everything now and claim they are
hard done by, if they don't get it. Perhaps our baby boomers
are to blame. They gave the present generation too much, too
soon, now they want even more.

Yabby, so many home buyers have very little equity. If that equity goes very far negative our friendly banks will be there calling in the loan.

My sister in law struggled to keep up payments on a house she & her husband built at the top of one of the little bubbles about 15 years ago.

The bank became very nervous after he died, & although she was never behind in payments, they pressured for her to increase her equity.

The pressure became too great, & as soon as she could she got out.

After paying 10% deposit, & six years of payments, after selling, & legal costs, she had $1,200, to show for the effort. If she had sold a year or more earlier, she would have been left with a debt.

This was not any great downturn, not the 20 to 30% reduction in prices/values needed to make current stock viable to first home buyers. That sort of reduction would see the banks moving in on tens of thousands of otherwise successful home owners.

*If that equity goes very far negative our friendly banks will be there calling in the loan.*

Not so Hasbeen. If you have a 30 year home loan, then that is what
you have. Banks cannot call in the loan, unless you don't make
your payments.

Where some people get into trouble, is that they go to these
seminars, which tell them that owning 10 houses with small equity,
is the way to Nirvana. Many of those loans are short term,
not long term home loans.

So those speculators will indeed get into trouble. They are
quite distinct from home owners who meet their payments.

When demand outstrips supply, prices will rise.

Economics 101.

Think of the many forces that have increased demand over the years since "a reasonable house cost about 5 years average salary."

The country has become more prosperous. Individuals have become more prosperous, and have decided that they would like to demonstrate that prosperity with a bigger house. Or one that is closer to the CBD. Or (gasp) has waterfront views, across to the Opera House. This increases demand.

And there are many more overseas companies operating here than in the 60s, with ex-pat management who like their company to billet them in a bigger house. Or one that is closer to the CBD. Or (gasp) has waterfront views, across to the Opera House. This increases demand.

As well as this "demand for better" that increases the prices at the top end, which naturally has a flow-on effect down through the chain, we have growing families. They also look around for somewhere to live, can't be arsed to wait till the old folk cark it, and release more demand into the market.

What happens? Prices will increase to the point where demand and supply are in equilibrium.

Conversely, if someone wants to sell their property, and their buyers can't afford it, the price will decrease to a point where they can.

Which is why I maintain that there is no such thing as housing unaffordability. Whenever a house is sold, it is, by definition, affordable.

If, of course, there is some outside influence brought to bear, such as a government that decides to allow people who cannot afford to buy, to buy, by tilting the market (hello, USA), then there will be a brief period where this equation doesn't apply. But it will always correct itself (hello, GFC).

The most effective way to stabilise the price of houses is to increase supply. Or if that's politically unacceptable, increase unemployment by 20%. That'll slow demand, quick smart.

But whatever, you can't mess with Economics 101. It always wins in the end.

"As Houllie points out, what has changed is expectations. The
average house is now twice the size that it was in the 60s."

It seems odd to make such a statement. It makes no sense. Look at the shoe box developments close to the city. There is no shortage of demand for this type of housing. The reality is that with all the restriction people dont have much choice.

A Big Mac type of affordability index would be useful. While posters can make Marie Antoinette like comments about housing affordability, it does not alter the fact that house prices are at historically high levels.

*It makes no sense*

Fester I can only quote you the commonly quoted figures in the
press, and they claim that houses have gone from something like
13 squares to 25 squares.

Right now, quite frankly, I can't even be fagged to dig out the
stats, but they float around in the press fairly constantly.

I'm not sure about your dogboxes, but I assure you that 4 by 2s with
every mon con, remains what today's woman wants and they continue
to build them as fast as they can. Perhaps they are not
classified as houses, more like units or similar.

If it's an issue, I am sure that the ABS can explain, how they
calculate the figures.

You are right Houellebecq.

Hasbeen, Firstly, are you a home owner?

What you don't understand is that borrowers that have to worry about decreasing values have most likely purchased with less than a 20% deposit, therefore they would have 'mortgage insurance', in which case, the banks don't give a rats unless they default on their repayments.

I agree with the others, people today are just to fussy.

One of my workers lives with his partner and two small kids (under 5) in a 'town house' and pays $340 per week.

I told him he could rent a small house on a nice block for under $300 per week, but the misses won't live in an old house. Go figure!

I have often said, we have a 'spending crisis', just as much as a housing crisis.

Do we need taxes and rewards for peoples choices of space?

Penalties for owning more than however many square meters per person.

Reduce all Footprints – Space and Waste.

Jewely......the monopoly is why they breed us and you:) You will see the Mr Scrooges here, and yabby always has the answers. And then, just when you have bought your new home ( along with 1.550,000 others, something happens and the banks have to take it all back.......Oh what bad luck...A..:)

Too the smart one,s.........Question:) What sound does a sheep make?...lol.

Yabby will know this one, A...country boy:)

(Australian First Home Buyers go on Strike!)

I would not borrow/lend to buy a home, unless you have all the cash....Then, all will be fine.

Beat the banks, and save:) Thats how you spoil a rich dinner.

LEAP

It used to work though didn’t it Leap? People got their mortgages, stayed put for 30 odd years and paid them. Wasn’t it working?

Now we want to do the renovations right away/go on holiday/buy that gynormus flat screen so go suck out all the equity and a mortgage becomes something that never ends.

Course I have no idea what I am talking about, I heard that credit card is a better debt to have because it is unsecured or something.

I should be checking this stuff I hear with Arjay. As an individual I have no debt at all, the other side of that is that I own nothing at all which I should probably go sort at some point.

...Owning a house is not what it is “cracked up to be”, is my experience from many years of owning and renting, roughly in equal amounts.
...I now happily rent. What a blessedly simple arrangement. I have cashed up on my Capital gains and simply await the inevitable crash in house prices (currently underway) Ho Ho….

A quote from "E"Journal "Money Morning Australia"...

The Aussie housing market is going down the gurgler right now. And we're seeing more evidence of it by the day. Housing is going back to what it's supposed to be - being a home and not a money-making investment.

Trouble is, it's going to make a whole bunch of people poor along the way...end quote...