$373,000 is affordable for a new outer suburban home?

Ko. said :

I know who he is, it’s just that it’s not a very appealling name for a suburb.

I suppose since we already have Tuggers, we may as well have a Jacka as well.

True on both counts, but I think he really does deserve a suburb named after him.

I think the worst suburb name is Harrison, named after Peter Harrison, a prominent Canberra town planner. A suburb, named after a town planner, in Gungahlin. That’s just a slap in the face.

Hey, that’s cheaper than my 30 year old house in an outer suburb was when I bought 3 years ago. 3bdr on 700m^2, the 700m^2 probably made the difference.

VYBerlinaV8_is_back said :

Genie said :

Affordable housing usually equals investors buying them all up and renting the out for $500+ a week

Or are these actually going to be means tested ?

Why do you say that? As an investor, Jacka is the last place I’d be looking at.

I’ve been trying to buy in West Macgreggor for a few years now and it just seems that all their “affordable” housing is sold to investors and builders who then fancy the place up more and rent them out for $500-$600+ a week or try to then sell them for twice as much as their initial investment.

A 3 beddy property I was going to buy for $389k is now a 5 bedroom “mansion” that recently sold for $600K+

Genie said :

Affordable housing usually equals investors buying them all up and renting the out for $500+ a week

Or are these actually going to be means tested ?

Why do you say that? As an investor, Jacka is the last place I’d be looking at.

puggy said :

Ko. said :

Wait, wait wait.

Jacka?

Yes, Jacka, Albert Jacka. http://en.wikipedia.org/wiki/Albert_Jacka
Some respect would be nice.

I know who he is, it’s just that it’s not a very appealling name for a suburb.

I suppose since we already have Tuggers, we may as well have a Jacka as well.

Ko. said :

Wait, wait wait.

Jacka?

Yes, Jacka, Albert Jacka. http://en.wikipedia.org/wiki/Albert_Jacka
Some respect would be nice.

Affordable housing usually equals investors buying them all up and renting the out for $500+ a week

Or are these actually going to be means tested ?

Wait, wait wait.

Jacka?

mmmich said :

chewy14 said :

screaming banshee said :

devils_advocate said :

3) what size the actual houses are (tiny, with one bthrm and single garage? or something useable)?

My house has one bathroom and a carport, and its suits our family of four with two small kids just fine. Why the hell does everyone think they should start out with a bloody 4 bedroom mcmansion with home theatre room and if they cannot afford it then housing is ‘unaffordable’

Read the description of the houses given by Arescarti.

Yep, Mcmansions those 250m2 blocks. Just huge.

Does it make it easier for you to think that poor people wanting somewhere to live are just greedy?

I earn below the median wage and I have just bought a 2 bedroom, one garage house on a block smaller than 250m2. Why should people expect the government to heavily subsidise a larger house on a larger block?
In a few years maybe I will be able to afford something larger. I certainly don’t expect things to be handed to me on a plate.

Can you point out where I said the government should subsidise anyone?
I don’t think the government should subsidise anyone, although its interesting that a very good argument could be put that the government are currently subsidising existing home owners by their actions propping the housing market up.

My point was that there seems to be a large proportion of people (nearly exclusively homeowners) who have this deluded notion that current generations are lazy/greedy when it comes to buying a house, when in reality, by any reasonable metric its significantly harder to purchase a property now. The property market is high for a number of reasons but to attribute it to people wanting mcmansions is completely wrong.

chewy14 said :

screaming banshee said :

devils_advocate said :

3) what size the actual houses are (tiny, with one bthrm and single garage? or something useable)?

My house has one bathroom and a carport, and its suits our family of four with two small kids just fine. Why the hell does everyone think they should start out with a bloody 4 bedroom mcmansion with home theatre room and if they cannot afford it then housing is ‘unaffordable’

Read the description of the houses given by Arescarti.

Yep, Mcmansions those 250m2 blocks. Just huge.

Does it make it easier for you to think that poor people wanting somewhere to live are just greedy?

I earn below the median wage and I have just bought a 2 bedroom, one garage house on a block smaller than 250m2. Why should people expect the government to heavily subsidise a larger house on a larger block?
In a few years maybe I will be able to afford something larger. I certainly don’t expect things to be handed to me on a plate.

Doc Dogg said :

devils_advocate said :

I note the press release is conspicuously silent on:
1) whether the “homes” are separately titled houses, or units
2) how much land is included in them
3) what size the actual houses are (tiny, with one bthrm and single garage? or something useable)?

From previous releases they will be a mixture of separately titled semi-detached/row houses and units. For the houses you will get about 200-250m² of land. The houses will be 2-3 bedroom, 1 bath, 1 garage places about 120-150m². Not sure about the units, but I’d presume they will be the undesirable 1-3 BR units that have no views or are close to the plant rooms/garbage rooms.

I don’t have access to the data anymore, but the distribution of incomes in the ACT is very different to those of other states. ACT tends to very low numbers of people in the lower income ranges, which skews the median and mean incomes to higher than they otherwise would be. I can only guess as to why the ACT has low numbers of low income earners, but I think the smart money would be that they can’t afford to live here so they live over the border.

I guess it depends on who you want to make the housing affordable to…is it enough to make it affordable for those earning in the first 2 quartiles of the income distribution or should it be limited to those in just the 1st quartile. Then you need to consider the population served by public housing. Should the price be unaffordable for those people (unless they want to save a decent deposit) but then stop those who earn the median wage of higher from buying them?

Those whose earnings are in the lowest quartile are eligible for public housing. Unless their circumstances change dramatically (as some do) they will never be able to afford to buy their own dwelling. And why should they? Having a decent wage and savings patterns are a pre-requisite (or should be) for buying a major asset.

People who are in the second quartile are problematic because they don’t qualify for public housing yet unless they are very good savers they can’t afford to repay a home loan. Innovative often public subsidised developments are necessary to get them into the system e.g. land rent.

The affordable housing that is the subject of this thread is built to a price and reflects the true cost of land and development. It enables people to get on the housing ladder or downsize or for those with modest needs, to avoid paying excessive amounts for location or size they don’t need.

When I were a lad, people needed to save 30% of the home’s cost as a deposit. This in itself kept house prices down. However the world has changed forever and we can’t put the genie back in the bottle.

For the life of me, try as I might I cannot find a downside to houses being built at the lowest practical cost so that people can afford them.

screaming banshee said :

devils_advocate said :

3) what size the actual houses are (tiny, with one bthrm and single garage? or something useable)?

My house has one bathroom and a carport, and its suits our family of four with two small kids just fine. Why the hell does everyone think they should start out with a bloody 4 bedroom mcmansion with home theatre room and if they cannot afford it then housing is ‘unaffordable’

Read the description of the houses given by Arescarti.

Yep, Mcmansions those 250m2 blocks. Just huge.

Does it make it easier for you to think that poor people wanting somewhere to live are just greedy?

the average income in Canberra is only so high because all the poor people were forced to leave town by the high rent.

Well, it’s far more affordable than the other houses being built in Canberra at the moment. In Wright (Molonglo), the starting price seems to be $600k for a modest house on a tiny block. Problem is, the ACT’s land release (aka developer subsidy program) seems to be skewed towards unaffordable McMansion type developments. Yes, the govt is doing some worthwhile things like at Jacka and elsewhere, but the overwhelming majority of detached houses being built area geared towards the higher end and do little to add to the supply of affordable housing. The exception is the large number the apartments and townhouses being built – a good thing, and in part the result of govt policy. But of course not everyone wants to live in such homes.

If you want affordability in Canberra these days you’re much more likely to find it in an established middle or outer suburb, or better still in an apartment or townhouse. You’re least likely to find it in a new house in a new suburb – whereas in the past that’s where the cheapest houses were, and a lot of people who grew up that way are still used to that mode of thinking.

The other issue at play is that many people’s definition of affordability these days is a bit different than in the past. What many people seem to mean now is a house they would like to live in in a decent location – they expect to be able to afford to live in such as house. Whereas in the past there was more of an expectation of comprise. The thinking was ‘ok, i don’t have the money to live in a big house in an ok suburb just yet, but i’ll settle for a scummy flat in a dodgy street because that I can afford right now, in a few years I’ll be able to afford to move into a house in the next suburb, and five years after that I might have the money to live in a nice house closer to the city’. Nowadays young people seem to want an immaculate new house in a good spot straight away, and if it’s beyond their capacity to pay for it they complain about unaffordability

373k is not affordable… even if you make 150k a year, it is not affordable.

The basic average 3 bed one bathroom house should be 2.25 to 3 times average income. So that is between 168k and 225k. Yes at 150k you’d pay it off in a few years, but guess what ! there was a time when people on good incomes paid their homes off very quickly ! The last 5 or so years have just seen ridiculous price increase multiples !

There was a time when the main expense of life was living…. not paying off mortgage.

Every time I fly into Canberra or go for a bike ride up a hill I am reminded of just how much spare land we have in this city. There is land – lots and lots and lots of land – and no need to fence us in. If you doubt me I recommend you go for a walk/ride up your closest hill this weekend. Yet somehow or other our government has concocted a situation whereby it is necessary to cough up nearly $400k for a tiny place on the outskirts of the city.

George Orwell gave us the army aka the Ministry of Peace

George W Bush gave us No Child Left Behind, and not to be undone

Andrew “George” Barr has brought us “affordable” housing in Canberra.

devils_advocate said :

what size the actual houses are (tiny, with one bthrm and single garage? or something useable)?

Dude, I live in an ‘affordable housing’ package. It’s 12 kms from Civic – same distance as Woden. Yes, we have a small block. Yes we have only three bedrooms, a single bath and a single garage. Yes, our family of four is a bit cramped. But it’s our first house: we’re stoked and not bitching.

screaming banshee said :

devils_advocate said :

3) what size the actual houses are (tiny, with one bthrm and single garage? or something useable)?

My house has one bathroom and a carport, and its suits our family of four with two small kids just fine. Why the hell does everyone think they should start out with a bloody 4 bedroom mcmansion with home theatre room and if they cannot afford it then housing is ‘unaffordable’

An intriguing question…

devils_advocate said :

I note the press release is conspicuously silent on:
1) whether the “homes” are separately titled houses, or units
2) how much land is included in them
3) what size the actual houses are (tiny, with one bthrm and single garage? or something useable)?

From previous releases they will be a mixture of separately titled semi-detached/row houses and units. For the houses you will get about 200-250m² of land. The houses will be 2-3 bedroom, 1 bath, 1 garage places about 120-150m². Not sure about the units, but I’d presume they will be the undesirable 1-3 BR units that have no views or are close to the plant rooms/garbage rooms.

I don’t have access to the data anymore, but the distribution of incomes in the ACT is very different to those of other states. ACT tends to very low numbers of people in the lower income ranges, which skews the median and mean incomes to higher than they otherwise would be. I can only guess as to why the ACT has low numbers of low income earners, but I think the smart money would be that they can’t afford to live here so they live over the border.

I guess it depends on who you want to make the housing affordable to…is it enough to make it affordable for those earning in the first 2 quartiles of the income distribution or should it be limited to those in just the 1st quartile. Then you need to consider the population served by public housing. Should the price be unaffordable for those people (unless they want to save a decent deposit) but then stop those who earn the median wage of higher from buying them?

Ok folks, here are the details. All of you who assumed that “homes” implied anything closely resembling a typical detached suburban house were way off.

A total of 67 affordable dwellings will be built, a whopping 12 of which will sit on spacious 250m^2 separate title blocks. The other 55 are all unit title.

Just to clarify those comments on household income in the ACT, according to the 2011 Census, median household income was $1920pw (or $99,840 annually). For those unfamiliar with medians, it means that 50% of households earn less than 1920pw, and 50% of them earn more than that.

Looking at whether $340,000 to $373,000 is actually affordable, there are two metrics I am familiar with. One is dwelling price as a multiple of income, the Demographia International Housing Affordability Survey classes median multiples of less than 3 as affordable. So by that metric, these dwellings are affordable for households with incomes between $113,000-$124,000 and higher, which is considerably less than half of Canberra households.

The other judges housing as affordable if it consumes 30% or less of household income. With a 10% deposit and an interest rate of 6.95%, monthly repayments for for those dwellings would be $2026-$2222, making them affordable for households with annual incomes of $81,000 – $89,000.

So my conclusion is that these dwellings are only affordable for middle to high income households (using the outlined metrics at least).

Nice work ACT Government. The price of land in this city is a complete joke.

devils_advocate said :

there are 60 homes – dunno if that amount of supply will actually affect “affordability” except for the 60 specific families that get those houses.

I note the press release is conspicuously silent on:
1) whether the “homes” are separately titled houses, or units
2) how much land is included in them
3) what size the actual houses are (tiny, with one bthrm and single garage? or something useable)?

So I am assuming postage stamp land, tiny house, unit title and sharing walls with neighbours.
And living out in the sticks as well.

So you want something that’s 900 sq M, in the heart of Griffith for under $200,000?

Nice. If you a) want to live on the Northside and b) on a block of land no larger than a dog’s kennel.

A: housing in Australia is still extraordinarily overpriced and can go nowhere but down.
and
B: Tony Abbott will in all likelihood be Prime Minister by the end of next year.

You’d have to be a real sucker to buy a house in Canberra right now.

screaming banshee said :

devils_advocate said :

3) what size the actual houses are (tiny, with one bthrm and single garage? or something useable)?

My house has one bathroom and a carport, and its suits our family of four with two small kids just fine. Why the hell does everyone think they should start out with a bloody 4 bedroom mcmansion with home theatre room and if they cannot afford it then housing is ‘unaffordable’

Agreed,

The real issue is the houses themselves. Though I haven’t seen them, I can only imagine they are the standard quarter acre dream if they are costing that much, that far from the city. Is Barr getting behind developers/ architects willing to tackle inner city affordability?

devils_advocate said :

3) what size the actual houses are (tiny, with one bthrm and single garage? or something useable)?

My house has one bathroom and a carport, and its suits our family of four with two small kids just fine. Why the hell does everyone think they should start out with a bloody 4 bedroom mcmansion with home theatre room and if they cannot afford it then housing is ‘unaffordable’

Chop71 said :

Was this part of the lego challenge?

Well played!

How does “average ACT income” prove that these are affordable? How are averages arrived-at? is everyone on the “average”? No, to get the average, significant numbers are below the average.

Serves them right, I guess. Losers. How dare they expect their own homes. Build a bridge… for them to live underneath. And all the people doing those low-income jobs, in hospitality and retail and allied services, they can drive an hour or so each morning and night, commuting in from Goulburn, Yass, Cooma, Braidwood.

Grail said :

Average household salary is around $100k, this is only 4 years worth of dual income salaries. Compare that to house prices way back when average household salaries were $8k.

Of course, when I was a child (one of four) my parents child care costs were precisely zero per cent of that household income.

Was this part of the lego challenge?

Grail said :

Average household salary is around $100k, this is only 4 years worth of dual income salaries. Compare that to house prices way back when average household salaries were $8k.

I wasn’t sure about your maths, so I followed your instructions and made that comparison, and you’re quite right. The average household income was around the $8k mark in about 1975 (lucky my guess at the date was within a decade of that otherwise I’d have been looking for ages), and the median house cost at the time was $33k; again four years worth of salary (ish), same as your calculation for today, and that surprised me.

BUT then I realised that when Mr Barr says these are ‘affordable’ houses, what he means is they’re the cheapest, not the average. And it’s not as if you can get a thirty-year-old house any cheaper. So the comparison of the cheapest housing now available with the current average income doesn’t make perfect sense.

The relationship between the national average house price in 1975 and the national average income in 1975 (ACT specific data is not available for 1975) is roughly equivalent to the relationship between the cheapest ACT house price in 2012 and the average ACT income in 2012, whereas comparing averages with averages makes this a far less favourable comparison.

I still agree that housing at that price is pretty decent, but I don’t think the comparison stacks up. The average time to earn the cost of an average house is double what it was in 1975. Of course the average 2012 house is twice as good, too, so that’s not bad at all!

wow, glass half empty much?

there are 60 homes – dunno if that amount of supply will actually affect “affordability” except for the 60 specific families that get those houses.

I note the press release is conspicuously silent on:
1) whether the “homes” are separately titled houses, or units
2) how much land is included in them
3) what size the actual houses are (tiny, with one bthrm and single garage? or something useable)?

So I am assuming postage stamp land, tiny house, unit title and sharing walls with neighbours.
And living out in the sticks as well.

Is that the full price for the house and land? Or is that just for the house alone, with the land having to be paid off later via the land-rent scheme?

Based on the median income of a family in Canberra, I’d say that it is indeed affordable. Of course you will need to save up a bit first, and the first few years will be a bit lean.

For those who think it is too expensive, the price charged for land by the ACT govt is a major factor here.

Average household salary is around $100k, this is only 4 years worth of dual income salaries. Compare that to house prices way back when average household salaries were $8k.

Yes, <$400k is "affordable". Blame the dual-income families.

If you are single, live in a group house. Save up some dosh, buy a rental investment when you can afford to. Then a few years down the track you will have the equity for your own place.