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Housing crisis call for help

By anonymouse - 16 October 2010 17

I moved to Canberra expecting boulevards, backyards and an easier, cheaper lifestyle, and I’ve found myself in the middle of a housing crisis. And it really is that – a crisis. Most of us simply can’t afford to buy here and so we’re trapped in the rental realm. With such a captive audience, most of the renters I know seem to have stories of exploitation. The media, meanwhile, isn’t exposing what’s going on. That’s why I’ve come here. I need your advice.

I have a horror landlord. He’s actually quite mad. So the lease and the Tenancy Act mean nothing to him. So what can us poor sods who rent (and pay properly and keep the house immaculately) do?

How do we bring about change or get our voices heard?

The problem seems to be that The Canberra Times is dependant on real estate advertising, the ABC’s audience must be comprised of home owners, the Tribunal doesn’t have an enforcement mechanism, and the union is trying to help but the lawyers there are swamped.

Friend after friend of mine has left because of it. What are other people’s experiences? Do you have any idea about what can be done? Should we write to the Minister? Should we rally in the streets? Or should we simply move away too?

What’s Your opinion?


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17 Responses to
Housing crisis call for help
2604 10:59 pm 17 Oct 10

@George – sorry, I meant look at 4-500 on allhomes. I reckon the number of true “bargains” out there (ie houses priced for sale below their true market value, the kind I would be interested in :-)) is probably only 1 in 4-500.

@JC – the fact that ppl might lose money is no reason not to phase out negative gearing or increase the supply of land to the market IMO. Every type of investment has an element of regulatory risk.

georgesgenitals 8:47 pm 17 Oct 10

Fair call 2604. But looking at 4-500 properties? Wow – I looked at 4-5 initially, and then have looked only at properties I’ve thought were good value (and generally bought without looking at others). I buy more than half the properties I actually view.

You’re right about the Rich Dad Poor Dad bit though – it trivialises the work required quite dramatically.

JC 5:45 pm 17 Oct 10

georgesgenitals said :

Not sure why people think it’s investors pushing the price up so much. Investors aren’t generally the group that pays top dollar – that would be upgraders. Investors typically buy what they perceive to be well priced properties, definitely not properties that set new price records. Further, only about a third of properties are owned by investors (I think the breakdown is about a third rent, a third paying down a mortgage, and a third own outright).

It’s also worth noting that investors ‘expecting double digit capital gains year after year’ is nothing more than an expectation. It doesn’t impact the market at all.

If you want to look for reasons as to why property here is expensive, I’d be looking more at reasons such as:
1) Land is scarce, and sold at high prices
2) Builders and tradies are expensive, especially when compared with 10 years ago
3) Average dwelling size is 50% larger than 30 years ago
4) Fixtures and fittings in dwellings are better and more expensive than ever before.

What this adds up to is that it is very expensive to build a new home. As such, the price of existing stock gets pulled upward. Add to this Canberra’s high average income, and property is expensive.

Of course, this explanation doesn’t make it any easier or nicer for first home buyers, who have a big hill to climb to buy a home.

There was an article in one of the papers about this the other day, in particular the expectation that people will get double digit capital returns every year. Now sure normal people realise that isn’t or shouldn’t be the expectation, BUT when it has been happening for the last 10 years it HAS become the expectation rightly or wrongly, which leads to more investors in property which HELPS push the prices to levels that are far too high. Of course the other reasons you gave are also very valid, BUT it comes back to the will of the government to do something that will adversly effect the thousands that have paid too muc and who will loose money if they were to do that.

2604 5:14 pm 17 Oct 10

I agree with your four points, GG.

But I do think that you’re ascribing waay too much rationality and sophistication to the average property investor. For every discerning, sophisticated property investor who looks at 4-500 properties before selecting one to purchase as an investment, there’s at least one who is a speculator – someone who’s read “Rich Dad Poor Dad”, believes that property doubles in value every 7 years without fail, and thinks that anything he or she purchases will increase in value. Such people have no idea about what constitutes “well priced property”.

Also, the bit about expecting double digit capital gains year after year does impact the market – this kind of expectation encourages investors to purchase property, which increases demand.

georgesgenitals 4:43 pm 17 Oct 10

I should also add that credit has become far easier to get, and at better rates, over the past decade.

georgesgenitals 3:53 pm 17 Oct 10

Not sure why people think it’s investors pushing the price up so much. Investors aren’t generally the group that pays top dollar – that would be upgraders. Investors typically buy what they perceive to be well priced properties, definitely not properties that set new price records. Further, only about a third of properties are owned by investors (I think the breakdown is about a third rent, a third paying down a mortgage, and a third own outright).

It’s also worth noting that investors ‘expecting double digit capital gains year after year’ is nothing more than an expectation. It doesn’t impact the market at all.

If you want to look for reasons as to why property here is expensive, I’d be looking more at reasons such as:
1) Land is scarce, and sold at high prices
2) Builders and tradies are expensive, especially when compared with 10 years ago
3) Average dwelling size is 50% larger than 30 years ago
4) Fixtures and fittings in dwellings are better and more expensive than ever before.

What this adds up to is that it is very expensive to build a new home. As such, the price of existing stock gets pulled upward. Add to this Canberra’s high average income, and property is expensive.

Of course, this explanation doesn’t make it any easier or nicer for first home buyers, who have a big hill to climb to buy a home.

2604 9:22 am 17 Oct 10

enrique said :

For this state of affairs to change at least two things will need to happen – more land gets released (thus lowering the price to purchase your own place) and incentives for investing in property will need to be reduced/removed (i.e. negative gearing). I don’t see what government would have the balls to remove negative gearing, and the current ACT government makes too much from stamp duty to want to reduce property prices. Paradoxically, reducing investement incentives may have the effect of reducing the supply of rental accommodation in the short-term and thus raising the rental price.

A third possibility is that house prices will stagnate for a while, due to higher interest rates and already sky-high prices impacting on affordability. There are currently more houses for sale on allhomes (~2200) than I remember for quite some time.

A fourth is that people will come to their senses and stop buying investment property, which makes zero economic sense at the moment. House prices are so high relative to rents, if we rented our own house out as an IP we’d be looking at a net loss of nearly $600 per fortnight. The rent would need to increase by close to 50% for it to be a postively-geared investment.

earthrepair 1:06 am 17 Oct 10

“I moved to Canberra expecting..” Maybe you should have visited before you settled here and checked situation here re property/ boulevards etc. Of course that does not excuse greedy corrupt landlords but that is capitalism; extract what you can. Situation is being caused by population boom today and migration not some hippy or yuppy so called baby boomer smoking a joint or taking acid 30 years ago.. Unless the population stabilises situation will get worse not better. Canberra is fast loosing it’s bush capital image and they are rolling new suburbs out and ruining by degree the environment but can’t keep pace obviously with a population that doubles each 30 to 40 years. It is unsustainable – like the mess they have made of the Darling river Basin, but then people push for more of the same.. We ca’t live lightly on the land it seems WE ARE TOO DUMB. What size will Canberra be. What population, and when? I don’t think our politicians have the faintest idea, or care. Perhaps it will grow all the way to Goulburn before we collectively wake up, and drought sets in? Up in Asia it is worse, far worse, they are choking to death.
Sorry it does not help your accommodation needs right now. If he is breaking some tenancy law then hold him to account. How about finding a lawyer who is not a post-acid babyboomer and will work pro bono, or employ one, or do it yourself in tribunal.

Monster of the Deep 11:14 pm 16 Oct 10

Do you have any juicy stories about your loopy landlord, Anon? 🙂

JC 9:32 pm 16 Oct 10

Enrique is spot on it is market forces at work. Too many people buy investment properties forcing the price up expecting double digit capital gains year after year. I think we have now reached the point where if prices go any higher people won’t be able to afford to buy AND rents on investment properties will be too low to service investment mortgages and too high for people to afford. The only solution would be a market collapse, but that would be unpalatable to the government as it would mean many people either loosing houses or have negative equity. Personally, I hope the arse falls out of the market, and this is coming from soneone who owns a house and which has gone from $150k in 2000 to about $450k in 2010. Would be happy for the price to drop to a more realistic $275-300k.

georgesgenitals 8:58 pm 16 Oct 10

Can you tell us what sort of property you want to rent?

enrique 5:34 pm 16 Oct 10

As much as I hate to hear myself say it, the unfortunate truth is that this is one of the side effects of a market economy. The market in Canberra has a demand that is fuelled by a community with one of the highest average incomes in the country. We also have a relatively transient population. The combintation of these factors and others leads to what you are currently observing – high rental prices, and even more ridiculously high property prices.

In this case, it is not a true market however since the supply is constrained by government restriction of supply.

For this state of affairs to change at least two things will need to happen – more land gets released (thus lowering the price to purchase your own place) and incentives for investing in property will need to be reduced/removed (i.e. negative gearing). I don’t see what government would have the balls to remove negative gearing, and the current ACT government makes too much from stamp duty to want to reduce property prices. Paradoxically, reducing investement incentives may have the effect of reducing the supply of rental accommodation in the short-term and thus raising the rental price.

Unfortunately ANONYMOUSE, this is just the way of the world in this town at the moment and I doubt much could be done to change it in the short term. I’m sorry to hear you’re stuck where you are at the moment. It does indeed worry me since I wonder how much harder it is going to be for the incoming generations.

I do have faith though that when the greedy baby-boomer generation starts dropping off the perch things might level out a bit. Remember, these are the people that brought us the 80’s – prior to that they were young adults in the 70’s off their face on acid and weed. Let’s face it, we’re probably not going to be getting much sense or empathy out of them and even less now that they are starting to go a bit loopy with age. Hang in their – your time will come.

Deref 5:04 pm 16 Oct 10

Sorry, can’t give you any advice but I can commiserate. Housing prices in Canberra are a disgrace.

moneypenny2612 4:47 pm 16 Oct 10

In early-2008, the ACT Government invited public submissions for a review of the Residential Tenancies Act. http://www.chiefminister.act.gov.au/media.php?v=6584&m=53&s=5

As far as I can recall, the Government has still not finished the review and has basically done SFA since the middle of 2008. (Certainly it appears not to have published any review outcomes or findings).

Which is astonishing, really, when there are reports that homelessness in the ACT has doubled since 2008.
http://www.canberratimes.com.au/news/local/news/general/act-homeless-rate-skyrockets/1872076.aspx.
Insecurity of tenure for renters and sky high rents would contribute to homelessness, as well as contributing to people leaving the ACT.

Perhaps renters and other concerned citizens could start by writing to the Chief Minister and the Attorney-General to ask them what they’re doing to ensure that all Canberrans have access to housing that is affordable and secure. Perhaps the pollies need reminding that it is not just home owners who vote.

MrPC 4:12 pm 16 Oct 10

If we want anything to be done, we need to get off our backsides and march. Clicking “Like” won’t change anything. Have a read of this blog post from someone in Melbourne who’se been a public transport activist for a decade or so:

http://www.danielbowen.com/2010/10/13/stop-slacktivism-now/

I for one would love to help start up a community group to lobby for and organise events prompting the need for appropriately priced shelter for those on median salaries. Is anyone else interested?

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