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Canberra’s housing affordability the worst in the country

By johnboy - 30 April 2012 37

The ABC has a story on Anglicare’s latest data showing Canberra, despite multi point government plans announced with much backslapping and fanfare, is the worst place in the country:

Anglicare’s National Rental Affordability Snapshot examined about 50,000 properties for rent across Australia, testing how affordable the private rental market is for households on government payments and the minimum wage.

It defined an affordable rental as one which took up less than 30 per cent of household income.

The report found not one capital city passed the test.

Anglicare ACT manager Jenny Kitchin says only 1 per cent of Canberra rental properties are affordable for families on a minimum wage income.

“Canberra would be one of the worst in the country,” she said.

“We found only about 20 properties in the whole of the Canberra rental market that a family living on a minimum, two people living on a minimum wage, could afford.

“But even in those situations, quite often you’d probably have to share to actually boost up the income to be able to afford to pay the rent.”

And that’s after 12 years of Labor Government?

What’s Your opinion?


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37 Responses to
Canberra’s housing affordability the worst in the country
1
CitizenK 12:53 pm
30 Apr 12
#

Duh – is this telling us something we didn’t already know? On average, (and as a Territory) we are the highest earners in the country. This necessarily means that all our costs go up commensurate with our capacity to pay (and remembering we have the restrictive leasehold system which doesn’t help).

It is obvious then that the poorest sods (of which there are less in Canberra than any other city in the country) are going to struggle.

It’s getting so they can’t even afford Queanbeyan either.

That’s why the nearest el cheapo (and probably el crappo) ‘affordable’ housing is in Goulburn and beyond.
It’s not rocket science, and it’s certainly nothing new.

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2
VYBerlinaV8_is_back 1:07 pm
30 Apr 12
#

The issue is not much housing for the masses, as housing for those on low incomes. There is practically nothing available under about $250/wk, which for people reliant on welfare is a lot of $$.

So the govt has a choice: it can encourage the development of low cost housing, or it can put more people in govt-provided housing (or both).

Unfortunately, the view of ACT govco seems to be to collect as much revenue as possible from land sales (ie high prices) as it can. The new NSW suburb/town of Googong has much better land prices (http://googong.net/sales/lot-size-and-price-ranges) but the trade off is that it’s further out so more travel is required.

It’s a difficult situation that doesn’t have a cheap or easy solution.

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3
EvanJames 2:35 pm
30 Apr 12
#

I think this kind of report is important, as people here seem to convince themselves that it’s not so bad really. There’s a story comes out saying housing prices fell 2% over a quarter, and now the median is “only” $550k, yippee, affordability! Which doesn’t really look at the real issue, that many people on normal non-EL1 incomes just cannot afford to buy, or rent.

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4
VYBerlinaV8_is_back 3:10 pm
30 Apr 12
#

EvanJames said :

I think this kind of report is important, as people here seem to convince themselves that it’s not so bad really. There’s a story comes out saying housing prices fell 2% over a quarter, and now the median is “only” $550k, yippee, affordability! Which doesn’t really look at the real issue, that many people on normal non-EL1 incomes just cannot afford to buy, or rent.

The biggest disservice that the whole property debate does is trivialise the margins by focussing on medians and averages.

For some people, property is and will remain an impossible dream. For others, it’s not much effort at all. Unfortunately, this usually gets lost in the discussions.

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5
Tetranitrate 3:42 pm
30 Apr 12
#

CitizenK said :

Duh – is this telling us something we didn’t already know? On average, (and as a Territory) we are the highest earners in the country. This necessarily means that all our costs go up commensurate with our capacity to pay (and remembering we have the restrictive leasehold system which doesn’t help).

It is obvious then that the poorest sods (of which there are less in Canberra than any other city in the country) are going to struggle.

It’s getting so they can’t even afford Queanbeyan either.

That’s why the nearest el cheapo (and probably el crappo) ‘affordable’ housing is in Goulburn and beyond.
It’s not rocket science, and it’s certainly nothing new.

Oh rubbish, it’s entirely due to the difficulty of getting redevelopments approved and the artificial scarcity of land. With Canberra rents as they are (and have been for 7+ years) we should be seeing far more development on the margins – capitalizing the $500-650 a week you can get for a new 3 or 4 bedroom house leaves plenty of room for building costs and a reasonable price for land. The fact is that there is scarcity because the ACT government has chosen to create scarcity, not because Canberran’s have high incomes on average. Canberrans have had higher incomes for *decades*, including the first decade of self government.

Effectively, what the ACT government has been doing is to use tokenistic programs and public housing to try and prevent serious social problems arising at the bottom and pretend it’s doing ‘something’ while otherwise allowing for the maximum extraction of surplus from the rest of the landless peasants.

VYBerlinaV8_is_back said :

It’s a difficult situation that doesn’t have a cheap or easy solution.

Well actually it has many easy and highly effective solutions, it’s just that they’re all politically suicidal.
example: the government won’t massively open up tracts of land for development while upping rates for revenue because it would negatively impact those who’ve already bought in.

Of course if Abbott does get in and carries out a ’96 style gutting, I’d imagine that the problem will solve itself in a satisfactory manner.

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6
Diggety 3:51 pm
30 Apr 12
#

Agree with Tetranitrate.

Government is the problem, and it will take a politician with a lot of guts to fix it.

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7
EvanJames 4:31 pm
30 Apr 12
#

Diggety said :

Government is the problem, and it will take a politician with a lot of guts to fix it.

It’s ironic that Abbott might be the saviour of the very poor, and the average incomes in with them, while harming the currently well-off, as it’s the housing at the top of the market that will feel the pain first.

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8
VYBerlinaV8_is_back 4:54 pm
30 Apr 12
#

EvanJames said :

Diggety said :

Government is the problem, and it will take a politician with a lot of guts to fix it.

It’s ironic that Abbott might be the saviour of the very poor, and the average incomes in with them, while harming the currently well-off, as it’s the housing at the top of the market that will feel the pain first.

The top of the market has already dropped, in some cases by up to 30%. I can’t see the middle or lower ends falling off too much, though, as there is still a lot of demand out there.

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9
Bramina 6:02 pm
30 Apr 12
#

CitizenK said :

Duh – is this telling us something we didn’t already know? On average, (and as a Territory) we are the highest earners in the country. This necessarily means that all our costs go up commensurate with our capacity to pay (and remembering we have the restrictive leasehold system which doesn’t help).

That’s not quite right. Prices are not a sole function of people’s ability to pay. Even if they were there should be segments of the housing market that catered to lower income households.

In fact the housing market is notionally a competitive market. It has so many buyers and sellers that nobody can set a market price. In these situations prices tend to reflect the production cost.

Since prices are inflated, something fishy must be going on.

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10
milkman 6:54 pm
30 Apr 12
#

Bramina said :

CitizenK said :

Duh – is this telling us something we didn’t already know? On average, (and as a Territory) we are the highest earners in the country. This necessarily means that all our costs go up commensurate with our capacity to pay (and remembering we have the restrictive leasehold system which doesn’t help).

That’s not quite right. Prices are not a sole function of people’s ability to pay. Even if they were there should be segments of the housing market that catered to lower income households.

In fact the housing market is notionally a competitive market. It has so many buyers and sellers that nobody can set a market price. In these situations prices tend to reflect the production cost.

Since prices are inflated, something fishy must be going on.

The ‘fishy’ bit is location premium, which many people put a very high value on.

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11
taninaus 8:02 pm
30 Apr 12
#

another case of using statistics to make the argument you were going to make anyway – I listened to Jenny this morning and she quoted the 20 places and then went on to say how many were in other places – but didn’t alighn the total population, or any other comparison that would make the statistics meaningful. Just because Canberra has 20 and Sydney has 100 doesn’t mean Canberra is worse off – Sydney has a bigger population and per capita the comparison might look very different.

it is tough though for low income and I wouldn’t want to be one in the current market. Yes it is tough having to share but many of us have been through it as a means to an affordable bed, despite this being not our preferred arrangement. As our universities have expanded, particularly in the overseas student population, a lot of the lower cost accommodation has been taken up, or competition has gotten greater.

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12
LSWCHP 8:39 pm
30 Apr 12
#

VYBerlinaV8_is_back said :

EvanJames said :

Diggety said :

Government is the problem, and it will take a politician with a lot of guts to fix it.

It’s ironic that Abbott might be the saviour of the very poor, and the average incomes in with them, while harming the currently well-off, as it’s the housing at the top of the market that will feel the pain first.

The top of the market has already dropped, in some cases by up to 30%. I can’t see the middle or lower ends falling off too much, though, as there is still a lot of demand out there.

A friend of mine has been trying to sell a “top of the market” house for about 7-8 months now with no luck, which has left her enormously baffled. She hasn’t realised that the market has dropped and she’s not going to make a big profit on her “investment”. In fact, I reckon she’s going to sell it for less than she paid for it, but she hasn’t come to that realisation yet.

Eventually she’s going to have to face the fact that the place isn’t worth what she says it’s worth, it’s worth what someone will pay for it. And in these difficult times, people are not prepared to pay the amounts for upmarket houses that they were 6-7 years ago.

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13
Tetranitrate 9:46 pm
30 Apr 12
#

milkman said :

The ‘fishy’ bit is location premium, which many people put a very high value on.

Which totally explains entirely why little dumps out the back of Dunlop that would have been lucky to cost 150k to build seem to be ‘worth’ $400k or more.

Irony being that the assessed value of the land doesn’t come close to matching up.

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14
Filipio 11:55 pm
30 Apr 12
#

I don’t see this as a specifically Labor government problem — the ‘after 12 years’ remark seems pretty gratuitous in this context.

Housing affordability is a problem in all Australian cities, and has been building for years. Some earlier posts have pointed to contributing elements, but to my mind, the biggest inflationary factor in housing has been a decade or so of cheap credit and an eager rush into ever increasing indebtedness masquerading as ‘aspiration’. Generous negative gearing provisions have only boosted this sentiment (as did popular media frenzies built on the notion that a quick buck was there to be made: home improvements, auction squads, blocks etc).

And ‘inflation’ is what this issue is about. Seems to me the Anglicare study is a timely reminder that housing is, first and foremost, a basic human need (i.e. shelter). And over the last 15 years the cost of meeting this need in Australia has risen at a pace entirely outstripping increases in wages.

One suggestion from Anglicare in terms of responding constructively is to build incentives into the way negative gearing operates that directly support construction of lower-cost housing, framed as investors ‘giving something back’ for what is essentially a government subsidy. They are also suggesting that large public super funds could play a role (typically these have been share-heavy).

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15
wildturkeycanoe 5:19 am
01 May 12
#

Lower cost housing starts with cheap land, which there isn’t any of. Then you have cheaper building costs, which there aren’t because all the people involved in building the house are trying to finance their own inflated basic living costs. Then the red tape from the government has to be dealt with and the environmental issues such as green energy ratings which put the price up substantially more. If you were allowed to dump a basic 3 bedroom transportable home on a vacant block and simply plug it in to the grid there would be much less strain on purse of the owner. Yup, I blame the government too!

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