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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.”

I counter with the fact that Stanhope will no longer be in office in 10 years, and has not made any improvements to the situation whilst he has been in power.

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…
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“Unfortunatly with the low land availability, first home buyers are competing directly with investors who are desperate enough (and wealthy enough) to buy at ever increasing prices. Helps if you already own a house or ten, relying on income alone is almost hopeless unless you earn $100k plus and that seems to be just the starting point.”

Not really true. Most investors try to buy properties at below market rates, and are nowhere near as emotional about such purchases as owner occupiers. It’s the people who ‘just have to have’ that beautiful house with the white standard roses who end up paying above market value, thus pushing up prices for everyone.

Believe me, most investors wouldn’t too concerned about a drop in housing prices – we would just use it as an opportunity to buy more property before the next cycle peak!

Thumper 9:16 am 09 Aug 07

Ah, charnwood that is…

Thumper 9:13 am 09 Aug 07

Even little toilet blocks in Cahrnwood are pulling $270 and up…

ant 10:16 pm 08 Aug 07

Queanbeyan used to be cheap, but no longer. Quite horrible little houses are in the high $300k range. A few years back, they were $100 and $200k. 1 bedroom flats were $50k. Now those flats are hovering around the $100k rate. And none of them is worth it.

Maelinar 4:18 pm 08 Aug 07

I can just imagine the squealing from the finance industry if a lending cap was introduced.

Even better, lets get super draconian and impose a COMBINED lending cap, where your current debts plus your intended loan cannot go over a certain figure.

The problem with this idea, of course, is that remaining, there is no cure for stupid. Hiding the problem will not fix it.

flyingblind 4:05 pm 08 Aug 07

noodle, agree with you on the pleasing aesthetics of the development out at the AP, but the iron fist of the owners is something to be believed – or experienced.(shudder)

noodle 12:03 am 08 Aug 07

A further thought. Developers have got to be better at what they do than the Stanhope government. Take a look at Civic some time, and then compare it with the office development at the airport. Civic, which has the outcome controlled by government planners = still mostly beige in 2007 + ugly. The airport, on the other hand, with virtually no planning controls, builds some of Australia’s best green buildings. I’m not particularly an advocate for the airport but, really, take a look ..

noodle 11:59 pm 07 Aug 07

ant, I have to disagree – the last thing we need in Canberra is for the government to get more involved with development. look at the land development agency, set up under Corbell’s reign. what a disaster! the solutions to the housing affordability question are complex, but I agree government should increase land supply, and let the developers develop. Of course they make a profit. But put some conditions around what they do, stipulate certain outcomes. and government should do something about tax on housing too!

cranky 8:56 pm 07 Aug 07

Roberto,

Agree 100 percent. This whole situation would not occur if lending institutions collectively decided to restrict their product to those best able to service the debt, using very conservative criteria.

If this resulted in a fleet of buyers with $250K to spend (because lenders had established that this was the maximum prudential limit), I would bet that properties of this value would suddenly pop up for sale.

People will move heaven and earth to pay home mortgages, and lenders are well aware and will trade on this trait, in the ever present quest for greater profits. Prudential limits have gone by the board, to the detriment of the majority of borrowers.

Senor Roberto 7:43 pm 07 Aug 07

No one has mentioned easy credit yet. I think it’s one of the prime causes of the recent boom and subsequent unaffordability problems. Land release, as mentioned, is also another prime cause.

Increasing the amount people can borrow by banks and other lenders relaxing traditional lending criteria has allowed people to purchase properties previously beyond their reach. Prices have kept rising because people have been able to keep borrowing to keep up with the prices. I keep saying to myself ‘They can’t possibly go up any more – who can afford it?’ Well, it’s the people taking on stupendous mortgages (i.e. stupendous risk) who can ‘afford’ it. A house is only worth $500k if someone can pay it. If the bank will lend anyone $500k then there’s going to be support for that price in the market. If lending criteria was tightened, less people would be afford to take out ridiculous mortgages and demand would be reduced since less people would be able to finance the purchase.

Of course, there are many factors contributing to the current situation, but I do think that easy credit is one which is often overlooked.

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