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Psstt.. Want a cheap house in Canberra? Sorry…

By Thumper - 7 August 2007 50

The Canberra Times is reporting that the cost of an average local house had risen from $415,649 to $488,804 over the year, a 17.6 per cent rise. In fact Canberra’s housing affordability problem has soared above the rest of Australia, according to a series of industry reports

This is bad news for Mr Stanhope and his promise to provide affordable housing as $400K is not affordable in my books.

It must also be remembered that Mr Stanhope took over responsibility for the affordability “crisis” from former planning minister Simon Corbell last year and later stripped him of the portfolio altogether which implies a certain underconfidence in Mr Corbell.

A spokesman for Mr Stanhope has said “It is a plan for the next five to 10 years, not five to 10 minutes.”

And true to form, Mr Stanhope has shifted the blame solely on the Commonwealth government citing changes to superannuation laws for damping rental property investment, with prospective investors putting money into super instead.

He said the biggest impact facing home buyers was the possibility of another interest rate rise. This is a lie. The biggest factor facing home buyers is the cost, which is astronomical.

When will state and local governments realise that, although making land supply scarce is a good way to keep up prices and therefore spin money, that it is hurting home buyers.

I despair for the next generation who will be the first in Australias history not to be able to afford their own house.

And this blame can be placed fairly and squarely on greedy State and local governments.

What’s Your opinion?

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50 Responses to
Psstt.. Want a cheap house in Canberra? Sorry…
toriness 11:29 am 07 Aug 07

exactly right, VY, exactly right. the first home owners scheme (both the grant and stamp duty discount in NSW) did the same thing to the lower end of the property market. people just go ‘whoopee there’s X thousand more i can put in a bid to get that property i want before someone else does!’

VYBerlinaV8 now_with 11:25 am 07 Aug 07

It also worth noting that reducing taxes on land and housing will do nothing more than increase demand, as more people will perceive that they can buy a property. What happens when demand increases? That’s right, up go the prices!

Ralph 10:59 am 07 Aug 07

Australia’s ridiculous concessional taxation arrangements for housing are a big part of the problem as well.

Indeed they are. No government will touch that hot potato though.

jellen 10:43 am 07 Aug 07

I find myself in the unusual situation of not completely disagreeing with something Thumper has said. Housing prices are outrageous, and supply and demand is a big part of the problem, but if you look overseas for comparison, it becomes evident that supply and demand is only part of the problem. Australia’s ridiculous concessional taxation arrangements for housing are a big part of the problem as well.

captainwhorebags 10:31 am 07 Aug 07

I agree with bonfire. Find a way to make higher density living affordable, practical and desirable. Promote areas of high density green living with good public transport, good amenities close by, things for the kids to do.

Some city planning/sociology boffins would need to come up with a plan so that any high density areas wouldn’t become the slums of the next generation.

Some time in the not too distant future, all the practically available land in the A.C.T. will be released. Either significant infill will need to occur (Monaro Hwy corridor at Symonston?), development will have to spread south into the national park, or Canberra will spread across the borders & Qbn will expand. We’ll all have to drink our own urine at that point too.

toriness 10:16 am 07 Aug 07

Some more issues you have to consider which contribute to ACT’s high cost of housing is that we do have a high average income, in fact remaining the highest in Australia (at State/Territory level) still as revealed in the latest census I believe. This high level of income helps drive prices up.

Also we have a blue collar skills shortage, so the actual cost of building new homes is high here as we are importing a lot of tradesmen from interstate, and the demand for our own tradesmen is so high, they can charge pretty much whatever they like if they’re half decent. This jump in tradespeople income was also supported by some recent studies/surveys I’ve read about in news articles over the past year or so. If I had time I would find some links but I think you know what I mean!

Another factor I suspect is helping drive up ACT house and rental prices is Commonwealth related – ie the trend earlier on in the Howard Government to cut the APS and use consultants/contractors instead. So we have a large ‘transient’ population whereby people come in for a time whether it be one week or one year to undertake a particular task or project outsourced by Commonwealth departments. So this has put pressure on the rental and housing market in terms of providing accommodation for these people. At the same time, the APS has been built back up to pre-Howard levels!

Any or all of these facts don’t help the fact that, and yes you are right, $400K+ for a house is beyond the reach of so many people. But keep in mind this is an average, there are a lot of decent properties below that. And I guess it’s a matter of choosing type of property and location and compromising on those to fit your budget. A couple of years ago my partner and I were looking to buy a house and we could afford one but it would have meant living outside the area we lived in, and that we wanted to continue living in. So the compromise was buying a townhouse – location and budget checked off, the type of property wasn’t what we wanted ideally but as meatloaf says 2/3 ain’t bad. I think people just need to be a bit more realistic about their approach to property and accept that when you’re first starting out or getting your foot in the door, it’s not going to be the place you stay in for the rest of your life, it doesn’t have to be perfect.

dusty 10:16 am 07 Aug 07

The high price also affects renters, as the rental prices soar because not even investors are going for these prices.

Steve666 10:11 am 07 Aug 07

“I see a shape in the crowd
I turn to know where you are
But all around me’s the stench of high density housing: – MGF

bonfire 9:46 am 07 Aug 07

id liek to see ‘land supply’ land no longer released.

install high capacity public transport, such as light rail and then redevelop along the routes for multilevel apartments and high density housing.

you provide solutions to several problems:

retain greenspace (our citys lungs)
remove the NEED for extra cars
cater for an expanding population
centralise services reducing cost delivery
maximise use of existing infrastructure

if ‘developers’ had any vision, this is the type pf future they would promotye, instead of endless appetite demands for land to be turned into poorly designed under serviced car compulsory new suburbs.

Thumper 9:44 am 07 Aug 07

Point taken Tori,

More land release, the need for more infrastructure which costs money, thus it would seem prudent to hold back the land release to ensure higher prices which in turn can pay for the infrastructure.

it makes sense, but it doesn’t help the home buyer in the end.

Im saying that it’s a widespread problem in that States have been reticent to release land as it will drive the prices down thus the governments miss out on massive amounts of money.

Stanhope has done exactly the same. Hold back land so the cost increases due to the lack of supply.

A good start would be greater land releases to bring the cost down. Surely other taxes, such as rates, which have increased immensely, can cover the infrastructure. And in time the new dwellings would pay for themselves anyway.

NSW is no different, nor is Victoria, etc.

Either way, over $400K is not affordable unless, like me, you have built up a fair bit of equity in a current house.

toriness 9:34 am 07 Aug 07

Thumper usually you and I seem to agree on issues but I just can’t agree with you on this one.

House prices are increasing dramatically across the whole of Australia, so I don’t think you can blame the Stanhope government for it – at the very least not 100% of the blame. I think State governments across the board could help in bringing down the cost of buying property by reducing stamp duty – but they can’t abolish it completely, it is an important part of government revenue to continue government services.

Land release is a tricky issue. In my mind it makes sense that it is a gradual process so that government can afford (both money and timewise) to build/facilitate the building of reasonable infrastructure into that land such as roads, electricity, gas, ICT etc.

VYBerlinaV8 now_with 9:34 am 07 Aug 07

Housing price is pure supply and demand. Notice there’s not much land being released in inner areas, which is where the demand is? Yep, prices go up. Trouble is, the prices being asked for land in the outlying areas where new development is occurring are too high (thanks ACT gov), hence people say “why would I live in Gungahlin when I can live in the city for 10% more”? Hence, demand increases, and prices continue.

The cold reality is that desirable areas will increase in price as the population grows – there will always be a percentage of people who want to live in a premium area. What’s needed is some leadership from our local council to set sensible land prices based on location and target demographic, rather than simply charging what the market will bear.

That said, I think prices have a long way to run before they truly hit the peak. Also, there are still suburbs that seem obviously underpriced.

Thumper 9:27 am 07 Aug 07


Housing is a state responsibility, as is land.

Don’t release land and you increase prices. Increased land price leads directly to increased house prices.

As I said, simple.

Bad planning and management over the years and a greedy grab by State and local governments has increased the prices ridiculously.

And it would be nice to see you address the rest of the post rather than just pick a selective bit.

Please tell me how the Stanhope government has helped keep housing prices down?

What’s that? They haven’t?

Woody Mann-Caruso 9:21 am 07 Aug 07

And this blame can be placed fairly and squarely on greedy State and local governments.

Why? Saying it doesn’t make it so. This pot claims that the Stanhope government is making land scare, but there’s a post above this one that claims mass land sales are driving up house prices. Both ignore the fact that abundant land availability in other states has done little or nothing to mitigate rising house prices. I wish you people would explain what you mean.

apehammer 9:15 am 07 Aug 07


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