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How’s the affordability?

johnboy 4 January 2012 306

Apparently somewhere in the ACT Treasury resides a document claiming that Canberra is ‘Australia’s most affordable capital city’.

This has prompted the Liberals’ Vicki Dunne to let rip:

“In my electorate, the median house price in Canberra’s cheapest suburb of Charnwood is more than $160,000 higher than the equivalent suburb in Sydney (Canberra Times, 15 December 2011). In Dunlop, rates have increased by 132 per cent. This is anything but affordable and it’s time ACT Labor acknowledged this fact,” Member for Ginninderra Vicki Dunne said today.

“Overall, the average cost of a first home in Canberra has risen by more than $20,000 in the last financial year to over $400,000.

“Since ACT Labor came to power, ACT property rates and charges have increased by over 75 percent and rents have increased by 68 percent.

“ACT Labor is responsible for a substantial proportion of these cost pressures and if they can’t acknowledge the problem they can’t fix it.

At the heart of all this is an assumption that all people are on average or median incomes, where in fact the average is formed by a great number of people earning well under it.

Basically if you’re a double income public service family Canberra is quite affordable. And if you’re not then you should be.


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306 Responses to How’s the affordability?
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GeneralMonash GeneralMonash 1:07 pm 16 Feb 12

Futureproof said :

Isn’t Charwoood where they filmed Mad Max? There was no need for special sets and burnt out car bodies, they were already in place.

and Gallipoli i imagine.

Futureproof Futureproof 3:39 pm 12 Feb 12

Isn’t Charwoood where they filmed Mad Max? There was no need for special sets and burnt out car bodies, they were already in place.

GBT GBT 2:11 pm 02 Feb 12

chewy14 said :

It also mentions their own index that takes into account these factors. Care to post a link to that index? I mean according to you it should show that housing affordability hasn’t decreased right?

Because it would be so difficult to look at the post directly above mine which I was replying to.

Also, maybe you should try actually reading my previous posts where several times I did mention that affordability has decreased but that doesn’t necessarily equate to being severely unaffordable, which some people have tried to claim.

dpm dpm 12:18 pm 02 Feb 12

poetix said :

(I can comment here again now that the Mully has been lost to this thread. I’m probably at least a three post nut-job here, but as this thread will never die, does it really matter?)

So, since you cracked the 300, your 3 posts make up 1% of the total. No need to stress about that – I think ~90% of the post were made by 2-3 people!

poetix poetix 11:56 am 02 Feb 12

Holden Caulfield said :

OpenYourMind said :

Oh, and as for colourbond fences. Like em or hate em, they actually proved to be incredibly good fire breaks during the January 2003 Canberra fires.

Yeah, I can appreciate their good points. They’re just bloody ugly. A bit like vertical blinds, really.

Colourbond fences really make an emphatic statement about boundaries, whereas old grey wooden fences are far more gentle, and allow for glimpses of next door as they warp. Also possums don’t like colourbond, which I think is a bad thing, as I like them.

(I can comment here again now that the Mully has been lost to this thread. I’m probably at least a three post nut-job here, but as this thread will never die, does it really matter?)

Holden Caulfield Holden Caulfield 11:39 am 02 Feb 12

OpenYourMind said :

Oh, and as for colourbond fences. Like em or hate em, they actually proved to be incredibly good fire breaks during the January 2003 Canberra fires.

Yeah, I can appreciate their good points. They’re just bloody ugly. A bit like vertical blinds, really.

devils_advocate devils_advocate 11:14 am 02 Feb 12

Maxwell said :

Easy to say that in retrospect. What about the idiots who bought 800k inner city houses they now can’t sell for 670k ?

What about those idiots? For that matter, what about the idiots that bought worthless “dot.com” securities in companies that had no assets or sustainable business model?

Should we as a society be worrying about idiots with more money than sense (even if that money is borrowed)?

milkman milkman 7:23 am 02 Feb 12

Maxwell said :

b.c the bank comes asking for the difference.

If they’re making their payments, there’s no reason for this to occur. Contrary to what some people believe, banks don’t come and ask for the difference if the price drops.

Maxwell said :

b.c they lose thier job, or suffer a pay cut.

they get sick

any number of reasons..

Irrelevant to the value of the property.

Maxwell said :

perhaps they decide they’d rather not pay most of their income in interest?

A decision that needs to be made before purchase, and again irrelevant to the value of the property.

Maxwell Maxwell 10:05 pm 01 Feb 12

milkman said :

Maxwell said :

Easy to say that in retrospect. What about the idiots who bought 800k inner city houses they now can’t sell for 670k ?

Why would a person who bought a home in the inner city sell? Sure, it may have gone down now, but give it time, it will grow. If it’s a home to live in it doesn’t really matter anyway.

b.c the bank comes asking for the difference.

b.c they lose thier job, or suffer a pay cut.

they get sick

any number of reasons..

perhaps they decide they’d rather not pay most of their income in interest?

milkman milkman 8:48 pm 01 Feb 12

Maxwell said :

Easy to say that in retrospect. What about the idiots who bought 800k inner city houses they now can’t sell for 670k ?

Why would a person who bought a home in the inner city sell? Sure, it may have gone down now, but give it time, it will grow. If it’s a home to live in it doesn’t really matter anyway.

OpenYourMind OpenYourMind 7:40 pm 01 Feb 12

Maxwell and co., when you talk about the bubble bursting, can you explain how you think this may occur in Canberra?
Take a look at the ACT Property reports for the past 15 years:
http://www.allhomes.com.au/ah/act/research/property-report/view

Something has to change to make this ‘bubble’ as you call it burst. What?

Oh, and as for colourbond fences. Like em or hate em, they actually proved to be incredibly good fire breaks during the January 2003 Canberra fires.

Maxwell Maxwell 6:53 pm 01 Feb 12

VYBerlinaV8_is_back said :

Watson said :

VYBerlinaV8_is_back said :

Watson said :

…But it will have my name on the papers, they can’t chuck me out, I won’t have to put up with inspections and I will throw my money at the bank instead of the landlords. And maybe one day it will really be mine and I may even make a profit out of it and be able to buy something I like slightly more.

Congratulations on your purchaseof your home, I hope you have many happy times there!

Thanks! It still scares the proverbial out of me because I had to stretch myself as far as I could financially to afford to buy the cheapest house on the market in Canberra. I am on one income though, so it’s harder for me than for the traditional couple on two incomes.

The first few years are the hardest. Over time inflation will carry your income (and indeed house value) upward, and the loan repayment will become relatively smaller. Eventually you will own it outright, and will never have to pay rent or loan repayments again.

Although it’s difficult for you (and you probably already know this), any extra that you can pay off in the early years pays big dividends down the line with lower overall interest cost and reduced loan term.

Easy to say that in retrospect. What about the idiots who bought 800k inner city houses they now can’t sell for 670k ?

Maxwell Maxwell 6:53 pm 01 Feb 12

Capitalism indeed… most boomers don’t have enough to even think about retiring and they’ll need to sell their homes to live because of inflation this will force prices down.

Homes are over priced at the moment and investors on this forum are just trolls sticking the boot in. They’re trying to take advantage of you and rip you off just before things drop and stagnate and drop some more.

Thats how capitalism works, be careful, and smart.

Watson Watson 6:49 pm 01 Feb 12

Holden Caulfield said :

Bramina said :

…Although it might be hard to imagine now, there was a time when blocks of land were readily available for the equivalent of $50,000 and less in today%u2019s dollars. That is affordable. Now in Crace, the cheapest block is $250k. That is unaffordable…

I put down a deposit for a 680m2 block in Nicholls/Harcourt Hill in early 1999 that was priced at $72K. By the time I legally owned the block some six months later (try being that lax today, haha), the developer reckoned he could flog it off for comfortably over $100K if it was handed back.

That’s not a brag story, but simply shows how quickly the “value” of land started to accelerate a bit over 10 years ago.

At the time I do think land in Canberra was undervalued, but the over correction has been spectacular and gone too far.

It cost $130K to build a modest 3br house on that block that just scraped over the minimum size for Harcourt Hill’s development conditions, which meant I walked in the door in early 2000 for a smidge over $200K, make it $220K by the time window furnishings were added and the garden was landscaped.

Now, 12 years later, you’d need to add another 200% on my original spend, at least, to get a similar size block and house in Gungahlin. I work in a field that doesn’t allow a lot of scope for promotion outside of business ownership and my wage has only increased by a bit over 50% in the decade and a bit.

I think that puts things in perspective.

Lots of people my age bought just before that boom. I wasn’t in a position to buy then having fairly recently migrated here. And I will forever be stuck with this sour feeling that I missed that boat.

I don’t know what the solution is. I am grateful for every little bit of assistance that I get, even if it is just that affordable housing scheme that forces developers to build some smaller houses in amongst the MacMansions.

Holden Caulfield Holden Caulfield 5:23 pm 01 Feb 12

Bramina said :

…Although it might be hard to imagine now, there was a time when blocks of land were readily available for the equivalent of $50,000 and less in today%u2019s dollars. That is affordable. Now in Crace, the cheapest block is $250k. That is unaffordable…

I put down a deposit for a 680m2 block in Nicholls/Harcourt Hill in early 1999 that was priced at $72K. By the time I legally owned the block some six months later (try being that lax today, haha), the developer reckoned he could flog it off for comfortably over $100K if it was handed back.

That’s not a brag story, but simply shows how quickly the “value” of land started to accelerate a bit over 10 years ago.

At the time I do think land in Canberra was undervalued, but the over correction has been spectacular and gone too far.

It cost $130K to build a modest 3br house on that block that just scraped over the minimum size for Harcourt Hill’s development conditions, which meant I walked in the door in early 2000 for a smidge over $200K, make it $220K by the time window furnishings were added and the garden was landscaped.

Now, 12 years later, you’d need to add another 200% on my original spend, at least, to get a similar size block and house in Gungahlin. I work in a field that doesn’t allow a lot of scope for promotion outside of business ownership and my wage has only increased by a bit over 50% in the decade and a bit.

I think that puts things in perspective.

VYBerlinaV8_is_back VYBerlinaV8_is_back 5:17 pm 01 Feb 12

Watson said :

VYBerlinaV8_is_back said :

Watson said :

…But it will have my name on the papers, they can’t chuck me out, I won’t have to put up with inspections and I will throw my money at the bank instead of the landlords. And maybe one day it will really be mine and I may even make a profit out of it and be able to buy something I like slightly more.

Congratulations on your purchaseof your home, I hope you have many happy times there!

Thanks! It still scares the proverbial out of me because I had to stretch myself as far as I could financially to afford to buy the cheapest house on the market in Canberra. I am on one income though, so it’s harder for me than for the traditional couple on two incomes.

The first few years are the hardest. Over time inflation will carry your income (and indeed house value) upward, and the loan repayment will become relatively smaller. Eventually you will own it outright, and will never have to pay rent or loan repayments again.

Although it’s difficult for you (and you probably already know this), any extra that you can pay off in the early years pays big dividends down the line with lower overall interest cost and reduced loan term.

Watson Watson 5:00 pm 01 Feb 12

VYBerlinaV8_is_back said :

Watson said :

…But it will have my name on the papers, they can’t chuck me out, I won’t have to put up with inspections and I will throw my money at the bank instead of the landlords. And maybe one day it will really be mine and I may even make a profit out of it and be able to buy something I like slightly more.

Congratulations on your purchaseof your home, I hope you have many happy times there!

Thanks! It still scares the proverbial out of me because I had to stretch myself as far as I could financially to afford to buy the cheapest house on the market in Canberra. I am on one income though, so it’s harder for me than for the traditional couple on two incomes.

Watson Watson 4:48 pm 01 Feb 12

Holden Caulfield said :

Thank god you can’t afford Colorbond fencing. It’s the scourge of modern day society, haha.

They’re just so damn ugly.

But so good at keeping the dog in!

chewy14 chewy14 4:17 pm 01 Feb 12

GBT said :

It also states a fact which a lot of people on this thread prefer to ignore as it doesn’t support their position that housing is now crazy unaffordable for practically everyone.

“As a measure of housing affordability, “house price to income? ratios alone are imperfect as they do not take into account interest rates. Ultimately, home purchase affordability relates to debt servicing costs of which interest rates are a key driver. This not only means that „house price to income? ratios are fundamentally defective as a measure of housing affordability but also makes intertemporal and cross border comparisons of these ratios redundant (given varying interest rates, tax regimes, population concentrations, quality of housing stock, etc).”

It also mentions their own index that takes into account these factors. Care to post a link to that index? I mean according to you it should show that housing affordability hasn’t decreased right?

Chop71 Chop71 2:36 pm 01 Feb 12

GBT said :

that housing is now crazy unaffordable for practically everyone.
quote]

everyone???? 70% don’t think so, same % for 30+ years

http://www.abs.gov.au/ausstats/abs@.nsf/2f762f95845417aeca25706c00834efa/8cba7b65667c8d59ca25779e001c481d!OpenDocument

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