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Land releases and affordable housing in Canberra?

Watson 14 June 2011 25

I looked at an affordable land and house package at Springbank Rise on the weekend. Then I decided I’d have another look to see if there is a chance that I could get a similar deal closer to where we live now.

I discovered that the government has a policy that states that 20% of all released blocks must be sold as “affordable housing” and that there is a plan to release more land in Watson in 2012-13.

So I called the LDA who told me that the land would be sold by auction as multi-unit sites and that they did not know what would be built on it (ie. units or townhouses).

And I couldn’t find anyone who could confirm this 20$ affordable houses policy and if that applies to all land released, so including this Watson release.

I’d rather not move that far away from my kid’s school and my work if there’s a chance that I could buy something closerby if I patiently wait.

Does anyone know anything about this?

To clarify, I’m not talking about the first home buyer affordable housing (only available in Bonner at the moment). I’ve bought a house before but don’t own one now.


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25 Responses to Land releases and affordable housing in Canberra?
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arescarti42 arescarti42 6:37 pm 15 Jun 11

Holden Caulfield said :

So you’re taking in a six month timeframe that concludes, at worst, any falls will be moderate. Against a good 15 years or so of generally solid growth.

This to counter my claim than waiting for house prices to drop is a poor medium-long term strategy (assuming any slide would need at least two years to meet most people’s criteria of what is affordable).

http://www.allhomes.com.au/ah/act/property-research/watson/121465110

According to that link there’s been two drops in the Median Property Price in Watson over the last 15 years; but an overwhelming upward trend (as would be the case in most Canberra suburbs I expect).

You never specified medium to long term. The OP said they were looking to wait until more land was released in 2012-2013. 1-2 years is short term, not medium to long term.

All I was pointing out is that if prices are currently falling at an accelerating rate, and the consensus among the relevant authorities is that prices will at best go side ways for another 6 months, why on earth would anyone buy a house now and not buy one for less in 6 months time having saved themselves 6 months worth of interest payments.

Without a doubt the last 15 years have seen phenomenal growth in property prices. Take a look at this graph from ABS/RBA/REIA data and tell me if you think the last 15 years were typical of historical house price growth in Australia, or were sustainable given the growth in incomes in the same period.

Holden Caulfield said :

And, even if prices do fall, they fall to what? Will they plummet to what would be considered “affordable housing” by today’s standards?

I don’t know, I can’t predict the future. I can tell you that a repeat of the last 15 years is physically impossible, that growth was fed by increasing debt and at the moment people are all maxed out. I personally think in the medium to long term at best we will see nominal prices go nowhere (real prices falling) whilst incomes play catch up.

Holden Caulfield Holden Caulfield 4:20 pm 15 Jun 11

arescarti42 said :

Holden Caulfield said :

Yes, it’s a well proven strategy in real estate: The longer you wait, the cheaper it gets.

[/sarcasm]

You are evidently not aware that that prices have been falling in every Australian capital city since late last year, and that all the relevant authorities (ABS, SQM Research, RP Data and all the major banks) expect at best flat-lining in the market and at worst moderate falls.

So you’re taking in a six month timeframe that concludes, at worst, any falls will be moderate. Against a good 15 years or so of generally solid growth.

This to counter my claim than waiting for house prices to drop is a poor medium-long term strategy (assuming any slide would need at least two years to meet most people’s criteria of what is affordable).

http://www.allhomes.com.au/ah/act/property-research/watson/121465110

According to that link there’s been two drops in the Median Property Price in Watson over the last 15 years; but an overwhelming upward trend (as would be the case in most Canberra suburbs I expect).

Let’s revisit this in a year or two and see how the trend has developed.

I would agree that the market in Canberra is priced too high in general terms, but this hasn’t happened overnight. It’s been bubbling away on that path for several years now. It shouldn’t be a surprise.

And, even if prices do fall, they fall to what? Will they plummet to what would be considered “affordable housing” by today’s standards?

Chop71 Chop71 3:34 pm 15 Jun 11

Buckaroo_Banzai said :

Ah, thanks for that!

I decided they can keep their kit home boxes anyway. I’d rather buy a “renovator’s dream” in a cheaper established suburb.

Agreed, you can always do up a renovator’s dream, but a dog box will always be a dog box.
It’s just can you last the years to be able to afford to renovate? That’s the model I am working on.

Watson Watson 1:41 pm 15 Jun 11

Buckaroo_Banzai said :

When I was looking at The Fair at Watson, the 20% ‘affordable’ ones were tiny 1 bedroom apartments. Which meets the criteria (which as far as I can tell was purely price based, and didn’t specify a minimum size).

Ah, thanks for that!

I decided they can keep their kit home boxes anyway. I’d rather buy a “renovator’s dream” in a cheaper established suburb.

GBT GBT 1:01 pm 15 Jun 11

I belive the $328,000 refers to a house and land package, so at the very least a townhouse with some sort of backyard, so apartments wouldn’t qualify.

Buckaroo_Banzai Buckaroo_Banzai 12:40 pm 15 Jun 11

When I was looking at The Fair at Watson, the 20% ‘affordable’ ones were tiny 1 bedroom apartments. Which meets the criteria (which as far as I can tell was purely price based, and didn’t specify a minimum size).

rosscoact rosscoact 6:32 am 15 Jun 11

yeah, bring back the good old pre-deregulation days when we had to save 30% deposit to buy a house. That kept prices down and people’s ambitions in check.

Chop71 Chop71 12:56 am 15 Jun 11

Today’s affordable government housing = tomorrow’s slums.

Watson Watson 9:31 pm 14 Jun 11

Classified said :

chewy14 said :

Chop71 said :

There are plenty of affordable houses in existing suburbs, but the generation of today want everything new and someone else to provide it for them (or lock into a 30 year loan).

…and if you don’t get your 3-4 bedroom with ensuite in Inner North government subsidised you’re probably the 1st to put your hand up and whinge about the price of houses in Canberra.

/rant over

Bahahaha.
Yeah because $500k for an old crappy house in an existing suburb is completely reasonable.
Or
$400k for a small house on a postage stamp sized block in a new suburb.
7-10 times the average wage is easy to pay for.
This current generation just don’t want to work hard like the boomers did when houses were 2-3 times average.
Lazy buggers.

AWOTE for ACT (as at Feb 2011 http://www.treasury.act.gov.au/snapshot/AWOTE.pdf) is $1477.50, or about $76,800 a year. Thus that $400k place is actually about 5.2 times the average individual income.

Do we still think property will crash? I keep hearing it will happen but I’m not sure when.

And weekly repayments for a $400k place (30 year loan, paying 5% deposit) would be $573 weekly. After tax, you’d have about $1100 pw left (very rough calc!)? So you’ll be paying more than 50% of your income to repayments.

I’ve been hearing house prices are bound to go down for years. The GFC gave me hope, but nothing…

Classified Classified 8:57 pm 14 Jun 11

chewy14 said :

Chop71 said :

There are plenty of affordable houses in existing suburbs, but the generation of today want everything new and someone else to provide it for them (or lock into a 30 year loan).

…and if you don’t get your 3-4 bedroom with ensuite in Inner North government subsidised you’re probably the 1st to put your hand up and whinge about the price of houses in Canberra.

/rant over

Bahahaha.
Yeah because $500k for an old crappy house in an existing suburb is completely reasonable.
Or
$400k for a small house on a postage stamp sized block in a new suburb.
7-10 times the average wage is easy to pay for.
This current generation just don’t want to work hard like the boomers did when houses were 2-3 times average.
Lazy buggers.

AWOTE for ACT (as at Feb 2011 http://www.treasury.act.gov.au/snapshot/AWOTE.pdf) is $1477.50, or about $76,800 a year. Thus that $400k place is actually about 5.2 times the average individual income.

Do we still think property will crash? I keep hearing it will happen but I’m not sure when.

Watson Watson 6:46 pm 14 Jun 11

djk said :

Most of that 20% will go through OwnPlace, which is basically for first home buyers.

Of the remaining X%, the majority will never be offered to the public as developers will snap them up quick smart from their developer mates to build cheap and nasty spec homes on.

So do I interpret this completely wrong then?

“In order to enable an exciting new range of affordable housing options, the ACT Government now requires 20 per cent of new housing in new estates to be priced under $328,000.”

That sounded like any developer wanting to build on new estates could only do so if they sell 20% as affordable housing? It doesn’t say “LDA estates” or “ACT Govt estates”. Just that the ACT govt requires…

I thought the main difference with Ownplace is that that land is owned and sold by the LDA directly. And it is indeed for first home buyers only.

The LDA could not answer my questions, so I’ll call LAPS tomorrow.

And the rant about the lazy generation wanting it all… The last thing I want is a McMansion. Couldn’t care less about what the house looks like, as long as it has some sort of outdoor area for the dog and the tramp.

But if there is the slightest possibility that I could avoid moving relatively far away from my daughter’s school and the only community she’s known, I will grab it.

Apart from that, do you really believe it should be so hard to buy a house, even a tiny one? Even on the outskirts? Prices more than tripled in 10 years time. Unfortunately our wages didn’t. It sounds a bit like “what we need is a good war” argument to me.

arescarti42 arescarti42 5:50 pm 14 Jun 11

Holden Caulfield said :

Yes, it’s a well proven strategy in real estate: The longer you wait, the cheaper it gets.

[/sarcasm]

You are evidently not aware that that prices have been falling in every Australian capital city since late last year, and that all the relevant authorities (ABS, SQM Research, RP Data and all the major banks) expect at best flat-lining in the market and at worst moderate falls.

There are plenty of affordable houses in existing suburbs, but the generation of today want everything new and someone else to provide it for them (or lock into a 30 year loan).

…and if you don’t get your 3-4 bedroom with ensuite in Inner North government subsidised you’re probably the 1st to put your hand up and whinge about the price of houses in Canberra.

/rant over

I agree with Jethro, this is just generation bashing crap.

You reckon there’s heaps of affordable housing in the existing suburbs? Well consider this, if you’re lucky you might be able to buy a total shitbox in an older outer suburb for $350,000. The median household income in Canberra according to the ABS is $91,624 a year, straight off the bat tax takes that down to $76,436. Interest alone on that $350,000 shitbox is $25380 a year before you even think about trying to pay off some of the loan. Affordable housing is defined as requiring less than 30% of household income, so that shitbox house at 33% of household income is unaffordable.

Remember, that household income figure is for the MEDIAN household, which means that 50% of Canberra households have incomes lower than that.

chewy14 chewy14 5:32 pm 14 Jun 11

Chop71 said :

There are plenty of affordable houses in existing suburbs, but the generation of today want everything new and someone else to provide it for them (or lock into a 30 year loan).

…and if you don’t get your 3-4 bedroom with ensuite in Inner North government subsidised you’re probably the 1st to put your hand up and whinge about the price of houses in Canberra.

/rant over

Bahahaha.
Yeah because $500k for an old crappy house in an existing suburb is completely reasonable.
Or
$400k for a small house on a postage stamp sized block in a new suburb.
7-10 times the average wage is easy to pay for.
This current generation just don’t want to work hard like the boomers did when houses were 2-3 times average.
Lazy buggers.

djk djk 5:07 pm 14 Jun 11

Most of that 20% will go through OwnPlace, which is basically for first home buyers.

Of the remaining X%, the majority will never be offered to the public as developers will snap them up quick smart from their developer mates to build cheap and nasty spec homes on.

Jethro Jethro 4:44 pm 14 Jun 11

Chop71 said :

There are plenty of affordable houses in existing suburbs, but the generation of today want everything new and someone else to provide it for them (or lock into a 30 year loan).

…and if you don’t get your 3-4 bedroom with ensuite in Inner North government subsidised you’re probably the 1st to put your hand up and whinge about the price of houses in Canberra.

/rant over

I get a little sick of this generation stereotyping crap. Plenty of young families (mine included) buy a small, dingy, older place on the city’s outskirts and sacrifice a hell of a lot to do so.

John100 John100 4:33 pm 14 Jun 11

I suggest you go to
http://www.laps.act.gov.au/affordable_housing/looking_for_affordable_housing_in_the_act

Where you’ll find that the ACT Government requires 20 per cent of new housing in new LDA estates to be priced under $328,000.

Chop71 Chop71 4:23 pm 14 Jun 11

There are plenty of affordable houses in existing suburbs, but the generation of today want everything new and someone else to provide it for them (or lock into a 30 year loan).

…and if you don’t get your 3-4 bedroom with ensuite in Inner North government subsidised you’re probably the 1st to put your hand up and whinge about the price of houses in Canberra.

/rant over

Classified Classified 3:20 pm 14 Jun 11

johnboy said :

the market can stay irrational longer than you can stay solvent

Thanks for the insight, Professor Keynes.

johnboy johnboy 2:46 pm 14 Jun 11

the market can stay irrational longer than you can stay solvent

Classified Classified 2:43 pm 14 Jun 11

I thought house prices were supposed to have crashed by now.

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