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Crazy Green Plan – Make affordable housing affordable

By johnboy - 19 October 2010 5

The Greens’ Amanda Bresnan is getting a bit wide eyed and suggesting that housing costs which can only be serviced by double executive level incomes aren’t really “affordable”.

“The Government has this year referred to prices of $328 000 for a property or $400 per week for student accommodation as ‘affordable housing’, but for many these prices remain way out of the price range.

“This double-speak has made the affordable housing debate more difficult, and a clearer definition will allow us to look at the housing stress on a broader section of the community.

“There are some much more realistic definitions and measures of affordable housing, including the ‘30/40’ rule used by the Australian Housing and Urban Research Institute which looks at how many of the bottom 40% of income earners are paying more than 30% of income on housing.

We can only hope.

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5 Responses to
Crazy Green Plan – Make affordable housing affordable
avengerness 11:54 pm 20 Oct 10

I managed to purchase in the government Affordable Housing Scheme when it first started (ceiling cost at $300G) and managed it on a single wage (not very high, just high enough to get over the bottom threshold) and with a combination of savings, the amazing $21G FHOG and of course, $20 stamp duty.

I have noticed now though that the prices have gone up, reduced FHOG and the program was NEVER well publicised. I consider myself incredibly lucky and there is no way I could buy a house now! With the upper cost in the mid $300G, who on a low wage COULD afford that, especially with the roll back of FHOG and the increase in interest rates. I also think over $300G purchase price, means that these affordable houses get hit with thousands in stamp duty.

I also happen to know that some people may have ‘fudged’ facts about themselves to get into the program originally. Many of the people who did buy affordable housing also sold or rented immediately after their 6 months at a much higher inflated cost (some sold for over $430G when their purchase price was under $300G) Talk about helping to float the housing bubble!!

I also think something needs to be done to address those people who are aging, can’t afford to get a deposit/pay stamp duty (can afford mortgage repayments) but got their FHOG over 20 years ago and lost their homes in that awful 80’s interest rate debacle. The pressure that will put on public housing and welfare very soon, is sure to make life even harder for those struggling to get ahead.

You have to wonder why this topic isn’t WAY more prominent.

georgesgenitals 6:10 pm 19 Oct 10

Grail said :

Georgesgenitals – the 30/40 rule attempts to address the issue of “disposable income” noting of course that information such as salary is available from the ATO while information about “disposable income” is not. I put “disposable income” in quotes to reflect the fact that it is at best a nebulous concept. One person may consider a TV as an essential item, the next might have no TV and also be growing their own vegetables.

A mathematically derived measure such as the 30/40 rule, accompanied by knowledge of median house prices, will provide a better indicator of “affordability” than inventing some measure of “disposable income”.

Completely understand that ‘disposable income’ is hard to pin down, and varies from person to person. But I guess that is exactly the point – the more a person makes the more disposable income they will have, and the relationship between the two is not linear.

The 30/40 rule probably works quite well for lower income earners, but it doesn’t really measure affordability for the other 60%, especially taking into account that 60%’s different wants and needs.

Ultimately, there multiple ways to measure affordability, but few tell the whole story, I think.

Grail 5:08 pm 19 Oct 10

Georgesgenitals – the 30/40 rule attempts to address the issue of “disposable income” noting of course that information such as salary is available from the ATO while information about “disposable income” is not. I put “disposable income” in quotes to reflect the fact that it is at best a nebulous concept. One person may consider a TV as an essential item, the next might have no TV and also be growing their own vegetables.

A mathematically derived measure such as the 30/40 rule, accompanied by knowledge of median house prices, will provide a better indicator of “affordability” than inventing some measure of “disposable income”.

georgesgenitals 10:40 am 19 Oct 10

I read an article some time ago that suggested that % of income wasn’t necessarily a good way to measure housing affordability, but rather to use % of household disposable income. Using this method shows that housing is REALLY expensive and difficult for those earning at the lower end of the spectrum, while for higher income earners housing shouldn’t really be a stress at all.

Housing in Canberra is, of course, pretty expensive right now. The only way I see that being fixed is to significantly increase land release (at current prices), and wait a few years for this to work through. It will take some time before builders and tradies can get new stock finished, but I suspect they aren’t flat out busy right now.

housebound 9:22 am 19 Oct 10

It’s about time this made it onto the political radar. The question is now whether this is a pretty piece of granstanding by the Greens, or whether they will actually do something about it.

For that matter, what would the Greens actually do about it, anyway? Putting out an attention-grabbing press release about the definition of ‘affordable’ won’t force prices down.

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