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Home loans made clear

Canberra Housing Prices, as good as it gets?

By eblue 16 March 2010 88

Housing prices in Canberra continue to soar, as evident today by the sale of a three bedroom house in Canberra’s inner North for almost $700,000. This begs the question – will Canberra’s property prices become affordable to the hundreds of first home buyers in the region? If not, how can this be achieved?

In the short term, its anyone’s guess as to whether prices will fall or continue to rise. What is certain is that $700,000 can buy you a two bedroom ocean front property on the NSW north coast; a beautiful three bedroom unit on Melbourne’s North Bank Yarra, or a high level, two bedroom unit overlooking the Brisbane river and a stone’s throw to the CBD.


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Canberra Housing Prices, as good as it gets?
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Clown Killer 10:26 am 19 May 10

And you lot thought Canberra was expensive!

Whilst $1.3m might seem like a lot consider the return. I wouldn’t be surprised if the 10% quoted was after costs like property management, insurance and maintenence. You’d get half a dozen mine workers in at $3000 a week ($500 per person per week is pretty standard for Port Hedland) and laugh all the way to the bank.

BimboGeek 10:00 am 19 May 10

merlin bodega said :

People talk about home ownership when they mean secure housing. What is it with this country that it’s impossible to get a lease longer than 12 months and landlords can throw you out any time they feel like it?

Kill all the property managers! (No not literally!! Just put them in a cupboard or give them great jobs as bus drivers or something.)

My modest townhouse is rented privately, suits me perfectly, hosts my business, and I intend to stay there for 5-10 years. My landlord wants me to stay in his house for a long, long time and treat it with care as if it was my own house.

By renting privately to the “right person” rather than through a property manager to some cashed up chump, he’s secure that his house is being cared for, I’m secure that I don’t have to lose my house (and business) soon, I take care of the simple repairs, he takes care of the plumbing and other stuff I can’t do, and he doesn’t raise the rent whenever property managers decide they deserve more money.

Most landlords and most renters would be happy with this kind of arrangement. If anything is killing housing in Canberra it’s property managers!

Clown Killer 9:14 am 19 May 10

Looking at the price of houses in Canberra, I just about fell over. What are the prices like if one paid cash for the property they want

No different. If I’m selling a house for $650,000 I’m still going to get my $650k whether you pay for it with a bank cheque or a wheel barrow full of cash – although if it was payment in cash I’d slug you an additional 10% to count it and for the inconvenience.

    johnboy 9:22 am 19 May 10

    To say nothing of the watch lists you’d end up on once the red flags went up.

feebee1965 4:14 am 19 May 10

Looking at the price of houses in Canberra, I just about fell over. What are the prices like if one paid cash for the property they want .

2604 10:18 pm 29 Mar 10

DeadlySchnauzer said :

And something to make you cry… the $1.33m for 13 Yapunyah was after it last sold in 2005 for $430k.

$1.33m to live in a dive like O’Connor? LOL. Fools and their money are soon parted.

If you want a way to stop yourself ever accumulating any real wealth, splashing out on a bigger and better primary residence every few years is a great way to go about it.

DeadlySchnauzer 3:19 pm 29 Mar 10

And this is for pretty much original houses with only kitchen/bathroom renovations! Admittedly both those million plus O’Connor sales were houses with nice panoramic views… that’s always been something that makes Canberra buyers froth at the mouth because its relatively rare to find in the inner city suburbs.

And something to make you cry… the $1.33m for 13 Yapunyah was after it last sold in 2005 for $430k.

Holden Caulfield 1:54 pm 27 Mar 10

House prices look set to rise for a while yet if today’s auction result for 13 Yapunyah St, O’Connor is anything to go by. It just sold for $1.33m.

Two weeks ago the nearby 1 Nardoo Crs sold for $1.265m.

I know the Nardoo Crs result was comfortably over the vendor’s expectations and I would expect the same would apply for the Yapunyah sellers as well.

The GFC came and went pretty quick, didn’t it!

Thumper 2:42 pm 25 Mar 10

There should be more incentives for investors, not less

Agreed.

sloppery 1:20 pm 25 Mar 10

Investors don’t typically bother defending themselves either. They have other things to do.

Funky1 12:51 pm 25 Mar 10

wycx said :

Merlin,
How about rewriting the laws so that negative gearing only applies to newly constructed dwellings, and then only applying for the first 5 years after construction. Property investors then have five years to get the investment positively geared. If not, then too bad, you paid too much. Prices and rents might make more sense relative to each other under that regime.

So tell me then what heppens when investors stop buying properties and offering them for rent? Rental properties become even more scare and rental rates do what? They go up even more (simple supply and demand).
There should be more incentives for investors, not less. It seems everyone loves blaming investors for the current prices.

Holden Caulfield 12:13 pm 25 Mar 10

@74 – I think that’s a good point, rental prices are high and it probably wouldn’t hurt to try and address that.

However, if you make it less attractive for people to invest in property, where are the people who don’t want or are unable to purchase a house going to live? Surely if there are less investors, and therefore less rental stock, then that will only drive rental pricing up.

wycx 11:15 am 25 Mar 10

Merlin,
How about rewriting the laws so that negative gearing only applies to newly constructed dwellings, and then only applying for the first 5 years after construction. Property investors then have five years to get the investment positively geared. If not, then too bad, you paid too much. Prices and rents might make more sense relative to each other under that regime.

merlin bodega 10:34 am 20 Mar 10

People talk about home ownership when they mean secure housing. What is it with this country that it’s impossible to get a lease longer than 12 months and landlords can throw you out any time they feel like it? There is almost no publicly owned housing and what there is has got it in the neck with this ludicrous National Housing Rental Affordability Scheme, destroying their security of tenure and a gentrification by stealth of the last areas where the poor can live.

Canberra housing is so high because there is too little competition in building, the quality of housing is very high and the mugs buying the houses are richer than anyone else in the country. The real scandal (yes the real one) is the rental rip off. People its not too hard. All the Government needs to do is to impose some conditions on all those rental losses they allow to be used as tax deductions each year. What about delaying until sale of the rental property any losses arising (including those beautiful building investment allowances) until the property is sold if the rental term is less than 5 years? That’s just a starter.

Is it too tragic to impose a condition or two on something that is a bigger item in the Federal Budget than Defence spending?

Watch the money roll in or watch people get secure housing instead of being pinned down to places where there are no jobs. Home ownership pins people down. I bet the home owners from the closed abattoirs in Young are wishing they could move at the moment. The renters are already heading out of town to where the work is.

Grail 5:15 pm 19 Mar 10

Hrm… since 1985, how many families have become dual income?

@Tetranitrate: during the period of 1985 to 1995, the interest rates were certainly above 10%, and that graph doesn’t show the wide range of interest rates that were being charged at the time. I remember one bank advertising 18% variable rates during that time.

There is more money to spend due to dual income families, loans are cheaper due to lower interest rates, there are more financial institutions trying to get your business, and I’m sure that in the interval some new rules about negative gearing made property investment a much more attractive option.

Releasing more land isn’t going to solve the problem, building more houses isn’t going to solve the problem, though perhaps reducing the working population (or average incomes) by about 50% will help bring house prices down.

rb 10:41 am 19 Mar 10

@DavoDavo – I have a 2nd hand Wii that my sister gave me for free, I do not own a plasma – I play my Wii on my parents television, I do not drink beer, or other alcohol for that matter unless it is a speial occasion, I do not go out partying, clubbing, dinner, movies unless it is a special occasion.

I have many wants, but hardly any of them are fulfilled becaus my main want (& need) – a house – is my priority, and I am willing to put my social life on hold to save up for a deposit.

@Vg – Yes a whole 18 months of all of the above, plus no shopping sprees, no new clothes unless needed, no music festivals or concerts, no new car, no holidays, the list goes on.

But I am not complaining about that, because as I said above, I am willing to sacrifice that for a house deposit.
It is just hard to get into the market these days.

And I do not expect any help from the government, although $14,000 – $21,000 would have been nice.

Clown Killer 9:48 am 19 Mar 10

The first home buyers grant was simply a shrewed politiccal response by the Howard government – Gen Y’ers were leaving school and moving into the big world – Howard recognised that a policy that continued the spoon feeding they demanded was going to be a vote winner.

Tetranitrate 11:56 pm 18 Mar 10

15% is cherry-picking and nothing more.
http://www.loansense.com.au/historical-rates.html

Rates were most certainly not 15% for most of the 70s and 80s. Utter bull.

Secondly, throughout the 70s and 80s central banks struggled to bring inflation that originated with the oil crisis(arab oil embargo following the yom kippur war) under control – the tool they used of course was higher interest rates. Acting as though the rates that existed at that time are somehow an example of ‘normal’ long term rates is patently absurd.

As usual baby boomers twist the truth past breaking point to justify what they’ve done and continue to do to younger generations.

dvaey 9:08 pm 18 Mar 10

Tetranitrate said :

Surely you aren’t so silly to think that the first home buyers grant actually makes housing more affordable…

All that it’s done is bump up the average price by several times the size of the grant –
give people $7000 dollars, they take it to the bank to put on top of their deposit and borrow another 60k or more.
Even outside of that, it should be blatantly obvious that subsidizing the demand for something simply increases the price – it should be called the first home *sellers* grant.

Maybe its the ignorance in me, having never bought a house before, but I was under the impression the first home buyers grant was brought in around the same time as GST or stamp duty or somesuch tax, as when you sell a house you recover that fee/tax, but if youre buying without selling, you get a one-off help with the tax?

Why would you want to bump up the price by ‘several times the size of the grant’, just because a small minority of people who look at your house, might be eligible for government assistance? That instantly puts off a majority of potential buyers who dont get the grant and will buy the house next door who didnt jack the price up so much.

urchin 9:05 pm 18 Mar 10

arescarti42 said :

VYBerlinaV8_the_one_they_all_copy said :

DeadlySchnauzer said :

One thing people need to remember when making
Very plausible point. Consider also that incomes have been growing faster than inflation, so people potentially can afford to pay more.

Very plausible points, the only problem with them is that they are all wrong–as I showed using real numbers and real data on the previous page (instead of basing my conclusions solely on smugness).

repayments, even including inflation, are around 33% higher than they were 15 years ago. There is a much greater chance of rates going up than down at this stage and, going by predicted rate rises, one can expect repayments to be at least 50% higher than 15 years ago. Houses are bigger… but houses depreciate. Land is what grows in value and land in new releases… is smaller! You wouldn’t know it by the price though because the price/m2 is considerably higher than in surrounding older suburbs. why not just build a smaller house? good question! why doesn’t the gov’t give individual owner occupiers first cut at the land release pie when selling new land instead of funnelling the lion’s share to developers who hoard it and sell it in drips and drabs but only on the condition…. you guessed it! that you build a honking big house with “stone counters and splashbacks” etc., etc. because in doing so they maximise their profits.

old boys networks are screwing over younger generations and driving them into enormous debt, but that’s ok I’m sure people buying playstations and plasma tvs is by far the bigger cause (when did you last try to buy a CRT TV from a store? good luck finding one)..

as far as wages growing faster than inflation… have you data for that? how about wage growth vs. house prices? that would appear to be the more relevant comparison, wouldn’t it? I doubt very much that you will find wages have tripled over the past 10 years, but housing prices have come quite close to it…

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