20 May 2009

Housing problems solved by offering sufficiently unattractive houses?

| johnboy
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The ABC delivers us a masterclass in spin based governance. Jon Stanhope is proclaiming success for his multi-faceted housing strategy.

The basis for this claim?

    Sixty cheaper house and land packages were offered for sale at the Brindabella estate at West Macgregor, but Mr Stanhope says only a third were sold.

    The Chief Minister says the clearance rate proves the Government’s affordable housing strategy is meeting demand.

So very few people want to by horrible houses at the edge of no-where and your work is done?

And while we’re at it houses around $360,000 are cheap? You’re not exactly on the bones of your arse if you can swing that kind of finance.

Talk about massaging expectations beyond the event horizon.

2 bedroom flats with rent-to-own schemes, now that’s affordable housing.

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Clown Killer5:20 pm 21 May 09

Weird. My solicitor handled everything, we just turned up signed the docments and left with the keys. Perhaps the solicitor paid it on our behalf and then drew down on the settlement – but that certainly wasn’t my reading of the paperwork.

Ruby Wednesday5:16 pm 21 May 09

Have the rules on stamp duty changed in the lest couple of years? I bought property in the ACT in 2000 and 2002 (the earlier purchase financed ny ANZ) and we certainly didn’t pay a cent of anything, stamp duty included, until settlement day.

The ACT Revenue website says:

Compliance obligations/requirements

Purchasers or their legal representative are required to lodge the contract for the purchase of the property and pay the duty within 90 days of the liability arising, e.g. execution (signing) of the contract. You should be aware that giving false or misleading information is a serious offence.

The bank and the solicitors, it seems, insisted it had to be done earlier. The ANZ guy said the ACT was the one place where they couldn’t roll in the stamp duty as part of the loan, but who knows.

Clown Killer12:34 pm 21 May 09

At least according to ANZ, you can’t have your stamp duty financed in the ACT as it is payable prior to settlement and not at settlement

Have the rules on stamp duty changed in the lest couple of years? I bought property in the ACT in 2000 and 2002 (the earlier purchase financed ny ANZ) and we certainly didn’t pay a cent of anything, stamp duty included, until settlement day.

But I look on the first home owner grant in our case as a pretty inefficient way to transfer money from the Commonwealth to the ACT

This was exactly the case for us too. Get money from Commonwealth, give almost all of it to ACT. And at no point did I get a stamp in exchange for that money. False advertising!!!!

Angryhenry,

find a place and take the plunge. Buy where you can afford, not what you wish you could have. That will come later. The market is as good as it’s going to get.

I’m hearing you and it’s happening. But is it a pipe dream to think that maybe, just maybe, the ACT govt will abolish stamp-duty?

Long-term paying off a really decent house is no problem for us but in the short-term all the associated up-front costs are a massive hurdle to get over and takes away from all that money we’ve saved for a deposit. With a reduced deposit you get slugged roughly $10 grand for mortgage insurance.

I’ve heard of other people really screwing themselves over because of this.

Ruby Wednesday7:13 am 21 May 09

As one of these magical first home buyers, we bought a place for $335K (a townhouse in Belconnen, which serves our needs but is nothing flash) with 2 br and *gasp* only one bathroom. We are quite happy with that and are willing to save or improve the place to make it the house we want (installing air conditioning and eventually refitting the kitchen and bathroom, for instance). This idea that all twentysomething first home buyers want a McMansion straight off the bat is, at least looking at the flats and townhouses my friends and colleagues in the first home owner category have bought, a bit of a strange assertion. No doubt there are some who do, but I would be very surprised if it were most.

As for making it cheaper, stamp duty is really the killer. At least according to ANZ, you can’t have your stamp duty financed in the ACT as it is payable prior to settlement and not at settlement. Thus, our first home owner grant went (save for $3K of it) to the ACT government to cover stamp duty. We missed out on the stamp duty exemption by $1K due to a few weeks of acting I had done earlier in the year. (It is also based on a calendar year and not a financial year, so it’s not that easy to work out if you are not a hoarder of payslips and you have changed jobs in that year!) This exemption doesn’t taper, so you were either in or out. Unfortunately, we were out. But I look on the first home owner grant in our case as a pretty inefficient way to transfer money from the Commonwealth to the ACT.

Gungahlin Al6:09 am 21 May 09

OMG that “industrial estate” off Parkwood Rd is a disgrace. Just been Google Streetviewing it. How is it that the government hasn’t ordered a clean-up there?

OT West McGregor isn’t exactly East Tumut. Lived in Scullin when it first opened up and that’s only 2 burbs over. Besides, on a commute, it’s the last 5 klicks that takes 3/4 of the drive time.

But yes, Mr Stanhope is drawing a VERY low bow with his assertions on this. Perhaps the problem is more their promotion of the sale? Or, as JB said, the product? Things like this perhaps?

i agree with henry angry.

I-filed said :

Why don’t first home buyers buy in Queanbo? $250,000 for a 2-3 beddy fibro I think?

Nope. A friend of mine is trying to buy a place at the moment. There is nothing in Queanbeyan for that price that either he or I have found recently. Cheapest house in Queanbeyan atm on allhomes is $319,950 (with an offer already). I am trying to convince him to buy a unit but, as he is a tradie and works a lot from home, he needs a shed to bang and crash stuff about. Can’t do that in a unit 🙁

There were some bargains in Bywong recently, but they have all been snapped up.

Why don’t first home buyers buy in Queanbo? $250,000 for a 2-3 beddy fibro I think?

My parents look fondly back on their young adulthood. Both got paid to go to College (Tertiary) and had Commonwealth Scholarships. Most teachers did in their day. There were no HECS fees to pay back either.

Then they entered a “Land Ballot”. Where Commonwealth land (I believe) was given away to the lucky ticket holders! Both my parents and my father’s brother got free land to build their houses on – WOW. Because they “owned” the land (99 year lease), they didn’t even have to scrounge up a deposit to build their brand new house.

I think my parents own about 4 houses now. All paid off. They are even gracious enough to allow one of my siblings to live in one of their houses and pay them rent.

VYBerlinaV8_the_one_they_all_copy4:59 pm 20 May 09

I honestly don’t get it, it is a very new experience for me and being a fairly logical and reasonable person I find a lot of things with buying a house beyond logic and reason.

The property market (like many free markets) often contains oddities, which are sometimes bargains. The reason property is so nuts is twofold:
1) For most people, it’s a very emotional purchase, and that’s how they treat it
2) Most people seem to end up buying to the very limit of their budget.

but at least it would be all part of the loan, not a separate slug in the guts when you have finalised your finances with the bank.

Banks will typically include costs in with the loan, but just make sure this doesn’t upset your loan to value ration (LVR), so you unwittingly incur (or add to) mortgage insurance.

VYBerlinaV8_the_one_they_all_copy said :

If the ACT Govt wanted to do something really productive for home buyers they could P*SS OFF STAMP DUTY ALTOGETHER. What the hell is it for anyways? Putting a huge dent in the substantial amount of money you’ve saved for a deposit?

This, unfortunately, would be a good way of increasing the value of most properties by 2.5%.

but at least it would be all part of the loan, not a separate slug in the guts when you have finalised your finances with the bank.

VYBerlinaV8_the_one_they_all_copy said :


This, unfortunately, would be a good way of increasing the value of most properties by 2.5%.

I honestly don’t get it, it is a very new experience for me and being a fairly logical and reasonable person I find a lot of things with buying a house beyond logic and reason.

I can’t help but look at it sometimes like they’re screwing you as soon as you even think about buying something. Then I go back to basically throwing my money into the bottomless pit of rent.

And then I drink, heavily…

VYBerlinaV8_the_one_they_all_copy4:37 pm 20 May 09

If the ACT Govt wanted to do something really productive for home buyers they could P*SS OFF STAMP DUTY ALTOGETHER. What the hell is it for anyways? Putting a huge dent in the substantial amount of money you’ve saved for a deposit?

This, unfortunately, would be a good way of increasing the value of most properties by 2.5%.

I agree with you on that point Chewy, it shouldn’t have been developed in my view either.

Me too. You go out there and take a look. It’s just crap, it really is. I’ll be looking for something substantially older in an established suburb.

MacGregor has powerlines running right through it and a massive substation smack dab either in the middle or on the edge of it (I can’t remember, it was a pretty forgettable experience visiting one of those display homes). The place sucked. I wouldn’t want to bring up a family under those powerlines.

“Wow, your kids craniums just wont stop growing will they? They’re humungous, and their hair seems to be falling out!”

“Yeah, we’re from MacGregor! What’s your excuse?”

“Oh I’m just old and have been yammering on about how things were harder back in my day.”

If the ACT Govt wanted to do something really productive for home buyers they could P*SS OFF STAMP DUTY ALTOGETHER. What the hell is it for anyways? Putting a huge dent in the substantial amount of money you’ve saved for a deposit?

As someone who has worked extremely hard to get to a stage where they are almost capable of buying into the market I find the whole situation extremely disheartening.

Jim Jones said :

chewy14 said :

Close to sewage treatment plant

Absolutely nowhere near it actually…

<5kms. For a major treatment plant thats pretty close, although most of Holt is actually closer.
and as mentioned earlier, possible odours from Parkwood eggs.

You’re infinitely more likely to get noxious odours close to the city.

Seriously bud, if you don’t like the area or whatever, fine. But ‘possible odours’ is complete tripe.

The reason i don’t like the area is because it was never meant to be developed.
The area was designed (along with the small industrial area) as an infrastructure corridor, with a buffer zone to the suburbs. The buffer is now gone.
I don’t want to hear any complaints from the people who choose to live there in the future.

chewy14 said :

Close to sewage treatment plant

Absolutely nowhere near it actually…

<5kms. For a major treatment plant thats pretty close, although most of Holt is actually closer.
and as mentioned earlier, possible odours from Parkwood eggs.

You’re infinitely more likely to get noxious odours close to the city.

Seriously bud, if you don’t like the area or whatever, fine. But ‘possible odours’ is complete tripe.

Entry level housing is too much if the land price is being inflated as a general revenue raising measure by government. A tax. Under these circumstances those getting into housing are subsidising previous buyers (who paid only what the land cost to develop) by causing the value of housing to rise excessively and having others (first home buyers and renters) keep down the rates and taxes they would need to pay if it wasn’t being ripped off those not yet in the market or who got into the market later.

The people who profit most are the developers and investors. We paid virtually nothing for our land 25 years ago. If we sell we have to buy elsewhere at the same inflated prices.

chewy14 said :

Close to sewage treatment plant

Absolutely nowhere near it actually…

<5kms. For a major treatment plant thats pretty close, although most of Holt is actually closer.
and as mentioned earlier, possible odours from Parkwood eggs.

Never had any problems with odours from Parkwood or the treatment plant (or the former landfill, or current organic recycling depot), and I’ve been in my place since October 08.

Close to sewage treatment plant

Absolutely nowhere near it actually…

<5kms. For a major treatment plant thats pretty close, although most of Holt is actually closer.
and as mentioned earlier, possible odours from Parkwood eggs.

VYBerlinaV8_the_one_they_all_copy1:46 pm 20 May 09

Australian houses are massively over priced compare to what you can get for similar money elsewhere.

That’s a big generalisation, and not necessarily true. Let’s break it down into something more manageable. How many western countries have more affordable housing in their capital cities? We might be hearing about ‘price crashes’ on the news, but go and try to buy good quality property in inner London, for example, and tell me what the prices are like…

I’ve said this before, but I’ll repeat it for simplicity: the market is just past the top of the cycle, there’s no point comparing it with ten years ago when it was at the bottom of the cycle. Prices won’t grow much over the next few years, I think, but this just builds us towards the next boom.

You only need your property to increase in value by an average 5% per year for the value to double every 14 years! When inflation is a couple of percent (at least), and new houses are built out at the suburban edges, even this rate of growth is easy to achieve.

In a couple of generations, Australian cities will be like much of Europe – a small percent of the population are the landlords, and everyone else rents.

Having purchased a house recently, we looked at West Macgregor. While I had no problem with the houses in West Macgregor, my wife did. And apart from very few houses in canberra, there were none below the 360,000 mark. We lost out on a few that were listed at or close to the 370,000 mark but ended up going for closer to 395,000.

Before any says something, we walked away from quite a few that were in my uneducated opinion, overpriced. Having said that, yes most people inlcuding my wife, want the ensuite, double garage, big yard etc because that is what they grew up with in the established suburbs. But some of the properties out there are overpriced for the market and anyone who says otherwise hasn’t been looking seriously at buying.

Close to sewage treatment plant and possible odours.

I suspect that odours from the Parkwood Chicken place, or the former landfill, or the organic waste recycling might all be a bigger problem then the LMWQCC.

And only 1 minute to the sewage treatment plant.

Wow, you must break the speed limit even more then me….

Before buying a house a couple of months ago we considered West McGregor.

What we did buy was…

Similar sized house,
Thirty years older,
Couple of suburbs closer in,
Little bit more money,
Over twice the size block,
very nice established gardens,

We weighed up all these things and made our choices. The cost is more then we would like to be paying, but with the consideration of kids in the near future (not just yet), we didn’t want to be in a 2br flat or town house and wanting to move in five years, when there were many other things in our lives.

screaming banshee1:19 pm 20 May 09

Australian houses are massively over priced compare to what you can get for similar money elsewhere.

out comes the old….if you don’t like it leave. Seriously though if you discount recent collapses in some markets, where can you buy housing with comparable amenity and quality of life for significantly cheaper than Australia. If you dare say US then I will ask you to please go there……..but leave riotact, I need somewhere to vent and rant

And that’s the reverse of the situation just a generation ago.

The real blame lies with the failure of funding to state governments ever since the feds took the income tax powers in WWII.

not sure i understand what this might have changed and frankly wonder why we have a mid level government anyway

But shouting and what you think of as stupid kids won’t make housing any better value in this country.

who’s shouting?

Jim Jones said :

chewy14 said :

West Macgregor is 15 minutes from the city centre. On a bad run it may take you 20 minutes.

And only 1 minute to the sewage treatment plant.
Ah the serenity.

You’ve never been there, have you?

Yes i have. I looked around all the houses in this development, and have been in the area playing golf at the Belconnen club many times.

Bad Location
High Voltage Sub station
Close to sewage treatment plant and possible odours.
Overpriced (my opinion)

These houses may be good for some, but i think ill look elsewhere.

Every generation faces similar issues with buying into housing. It just feels a bit rough right now because of the recent housing boom. This isn’t the first boom and it won’t be the last. The people complaining now that things are unfair will be the same people who won’t have the money or won’t see the value in buying when prices are more reasonable.

Most people who own there own house made huge sacrifices to do so.

Australian houses are massively over priced compare to what you can get for similar money elsewhere.

And that’s the reverse of the situation just a generation ago.

The real blame lies with the failure of funding to state governments ever since the feds took the income tax powers in WWII.

But shouting and what you think of as stupid kids won’t make housing any better value in this country.

Poor Sic, not being able to afford a house straight away. 20 years ago on a less than 20K income I scraped all my savings together for the deposit to buy the crappy one bedroom unit which I sold a year or so after I’d paid off the mortgage in order to buy the house I live in today. I find it interesting that you appear to be turning up your nose at the humble unit.

I was able to purchase a good house in a good street and got some good neighbors. I am not saying how much it cost, but we are pretty happy with it. now, we need to move into a bigger house, and are looking around the same areas in tuggeranong – belco doesn’t have any appeal for me or my wife. but then, we both grew up there.

screaming banshee12:46 pm 20 May 09

Sic,

Yes there was a boom but house prices were basically stagnant for almost 10 years before that so when you average out over the long term the growth is reasonable. Also if you found yourself in a position where you needed to sell the market was so slow it was not unusual to have a house on the market 6 months or longer before it would sell.

Then you have to take into account the interest rates of a early 90’s, could you imagine trying to pay of your home loan of 80-100k at 17% interest on an average wage of $25k

As much as you might like to deny it many of the older generation worked hard and sacrificed much in order to put themselves in the position they are in today.

Now don’t get me wrong, I’m only 30 so I wasn’t in a position to take advantage of the boom either but I do recognise that having anything is better than having nothing and got into the market as soon as I could.

If you were to purchase a $360k property today, in 20 years time providing the long term trends continue you will own a property worth around $2 million and 2029’s mid twenties will be crying about how 2 million dollar properties aren’t affordable and how your generation had it so easy.

West Macgregor is about getting a foot on the housing ladder. It is an entry level suburb now and it will always be in the future because of it’s location. However I don’t think that’s a bad thing as when circumstances change and the first buyer is ready to move on to a closer suburb, there’ll always be some young couple/family with only just enough finance to buy there.

11 years ago we bought a new house and land package at Dunlop – 550m2 block, 4 br, ducted gas, DLUG etc – for $140,000. Within 3 years circumstances had changed so we could move to a prestigious inner north Tuggeranong(!) address and had lots of interest from first home buyers at the time of sale (at $210K). Access to local shops, a town centre (Belconnen) and even Civic are much closer than “lifestyle” estates like Royalla, Elmslea and the like so no great hardship there. As long as you don’t see these places as “forever homes” I think they’re much better than renting in a closer location.

In what world is $360,000 “affordable housing”. Just because it is entry level doesn’t mean it is affordable.

The house I am renting last sold for $120,000 in 1998, today that house would be worth between $380,000 to $420,000 to buy and it’s very much nothing special.

I am absolutely sick to death of hearing the older generations, sitting happy in their expensive houses they paid stuff all for telling us to save harder like they had to, and how we have it lucky to be able to get a 0% deposit loan. They never had to put themselves into the gigantic amount of debt required today for home ownership. I would NEVER want to buy a house with a 0% deposit loan, but an entry level house in Canberra in a high crime area is $300,000, that’s a $60,000 deposit!

While I agree buying a cheaper house and working your way up is the way to do it, the people telling us to do this bought houses for under $100,000 and made a small fortune during the housing boom. $300,000 to buy a house you would never want to live in, in an area you wouldn’t want to live in is a considerably high amount of money.

There is something very wrong with our current system which is built to protect the home values and voting power of rate payers, with no real consideration given to “affordable housing”.

chewy14 said :

West Macgregor is 15 minutes from the city centre. On a bad run it may take you 20 minutes.

And only 1 minute to the sewage treatment plant.
Ah the serenity.

You’ve never been there, have you?

screaming banshee12:01 pm 20 May 09

chewy14 said :

Where are these small reasonably priced houses?
$360000 for a crap house in West McGregor is not cheap.

Perhaps you’d like to see what $360k will buy you 15 minutes from the centre of any other major city then

West Macgregor is 15 minutes from the city centre. On a bad run it may take you 20 minutes.

And only 1 minute to the sewage treatment plant.
Ah the serenity.

VYBerlinaV8_the_one_they_all_copy11:51 am 20 May 09

How do you know the houses are crap?

I thought they were brand new.

VYBerlinaV8_the_one_they_all_copy11:50 am 20 May 09

What young people dont understand is that like vy the ‘wealthy’ large homeowners of today purchased small reasonably priced housing when they were young rather than buying the 4/5 bedroom 2.5 bathroom with home theatre monstrosity straight up. All the while running old cheap cars.

A lot of people here would laugh if they saw the pieces of $hite cars we had in those days. One of them was so bad that one of the partners of the firm I worked for then asked me not to park it in front of the office!

How do you know the houses are crap?

screaming banshee said :

And while we’re at it houses around $360,000 are cheap?

For a house, yes. If that’s too much for you then consider a unit/townhouse/duplex/dual oc.

Put’s on old man hat….

What young people dont understand is that like vy the ‘wealthy’ large homeowners of today purchased small reasonably priced housing when they were young rather than buying the 4/5 bedroom 2.5 bathroom with home theatre monstrosity straight up. All the while running old cheap cars.

It seems the current generation of first home buyers think they must have the huge house straight away while also have a car each less than 5 years old…then when such a dream is out of reach financially they cry that housing isn’t affordable.

Where are these small reasonably priced houses?
$360000 for a crap house in West McGregor is not cheap.

screaming banshee11:36 am 20 May 09

And while we’re at it houses around $360,000 are cheap?

For a house, yes. If that’s too much for you then consider a unit/townhouse/duplex/dual oc.

Put’s on old man hat….

What young people dont understand is that like vy the ‘wealthy’ large homeowners of today purchased small reasonably priced housing when they were young rather than buying the 4/5 bedroom 2.5 bathroom with home theatre monstrosity straight up. All the while running old cheap cars.

It seems the current generation of first home buyers think they must have the huge house straight away while also have a car each less than 5 years old…then when such a dream is out of reach financially they cry that housing isn’t affordable.

Standope loves massaging the figures to suit his own agendas

“The Chief Minister says the clearance rate proves the Government’s affordable housing strategy is meeting demand.”

or

That the ‘affordable’ housing you provide is not affordable

Remember people, you voted for him

Clown Killer said :

We were worried that our world might end when we moved from the inner north to the south, that friends would be too far away and the places we like to visit too hard to reach. Looking back, I can’t imagine what we were worried about.

Yep, I had a similar thing going.

Nothing’s really that far away in Canberra.

Honestly, I’d hardly call West Macgregor ‘the edge of nowhere’. It’s 10-15 minutes away from the City Centre by car.

Clown Killer10:47 am 20 May 09

We were worried that our world might end when we moved from the inner north to the south, that friends would be too far away and the places we like to visit too hard to reach. Looking back, I can’t imagine what we were worried about.

for first home buyers to the market, west macgregor may well be perfect. For my family, it is just too far out of the loop of our friends and family. We haven’t even contemplated west macgregor as an option. we are currently engaging in item 2 of vy’s list.

VYBerlinaV8_the_one_they_all_copy9:58 am 20 May 09

If people are still buying 400k plus houses, yet there are 360k houses lying unsold, then the implication is that we have a crisis of aspiration, rather than affordability. Of course everyone wants the classy inner city home or unit, but most people have to start somewhere, and West MacGregor seems a good place to me to do so.

If you can’t afford the home you want, you have a few options:
1) Live somewhere very cheap and do what you can to save and improve your income;
2) Buy somewhere cheap and continue to work hard, then in a few years upgrade; or
3) Rent.

I hear the comment too about 2 bedroom units, but there are currently 2 BR units available to rent for under 300 a week, or to be bought for less than 300k.

Also, I offer this advice having spent several years living like a pauper on the edge of town to save for the deposit for my first home, so it’s not like I haven’t been through this myself.

Clown Killer9:42 am 20 May 09

I agree that $360k is a lot of money, but it’s still cheap for a new house in this market. Whether or not it’s genuinely ‘entry level’ is up for debate. That said, I think that the Government should try to help bring down the cost associated with all forms of housing but cutting red-tape, removing stamp duty etc. not by wasting tax payers money on subsidies and handouts.

If you can’t afford your own home, then you can’t afford it – work harder and save more. It’d what most people had to do.

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