The ACT housing market is leaving too many behind

Ian Bushnell 22 October 2020 22
Home building

The new homes market is not providing enough choice. Photo: File.

It’s a fantastical experience poring through real estate websites, looking at the numbers so casually attached to the would-be dream homes.

That’s after you finally scroll through those for auction which, unless you’re lucky, have no guide whatsoever to the fortunes needed to secure a home.

And even if there is a guide, that’s usually pitched low to lure the punters in, who invariably are blown out of the water by the real, cashed-up buyers on the day.

It’s not supposed to happen but who’s to say it’s not the market in action?

Then there is the loan application, and again the way half a million to a mill or more is thrown around with such careless ease can be other-worldly for anyone without an account in the Bahamas.

The fact is, buying a home in the ACT, even with our high average incomes, involves intimidating deposits and terrifying debt.

Don’t get out of bed for anything less than $400,000 and that’s for apartments and townhouses under three bedrooms and the tangle of strata agreements and body corporates.

There are plenty of them around, but if you want a separate title and you have less than $500,000 to spend, then the hunt is well and truly on.

Family homes are rare as hen’s teeth at that level, and there aren’t many products in the market pitched at that particular sector.

How many young couples or even families concede defeat and accept a property that will not suit them, only to be a holding space until they have more cash for the inevitable upgrade?

The housing industry and government need to ensure there are more properties to fill this gap.

The ACT Government is requiring 15 to 25 per cent of new developments offer affordable homes, and some are offering undetached separate-titled homes.

Yes, the block is small but it’s yours, and the house itself is compact but can still contain three good-sized bedrooms.

There are usually too few to be sold directly so potential buyers face a ballot.

Surely there is a hunger for cheaper, well built and designed homes that make best use of land available, and aren’t out of the reach of people of average means?

There seems to be an array of choice for those who don’t mind living in the sky and have bought in to the whole living in the city vibe but for those wanting the low-rise, quiet and green of the suburbs the situation is stark.

Chief Minister Andrew Barr hinted at the lack of choice this week, talking about infill and new development, lamenting that it’s no wonder prices are high when people want a four-bedroom home with two bathrooms on a big block as a first home.

There is some merit in the case for more measured ambitions but a growing family may not want to be moving again for some time.

He was not so keen to mention the price of land but when pressed, commented that he did not want to see homeowner equity suffer from any sudden collapse in prices, although he suggested there were ways of getting more affordable blocks to market.

With a rare 320 square metre block in a new suburb like Taylor costing $280,000, one can easily see how that new home price starts looking unattainable.

If the price of land isn’t going to fall, the government needs to look at the planning, zoning and approval side and industry needs to start thinking more creatively and innovatively about what it can offer.

We need more people owning their own home and being in charge of their own destiny.


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22 Responses to The ACT housing market is leaving too many behind
HiddenDragon HiddenDragon 9:06 pm 24 Oct 20

The emboldened Greens may well have some success in getting priority for social housing but, important as that will be for some, it would still only be a marginal solution to the problems outlined in this post.

To the extent that broader solutions are within the control of the ACT Government (rather than the federal government and central banks), it’s very difficult to see much changing because of its heavy reliance on property-related revenues and because of the limits on what existing residents (of all political persuasions) will tolerate in terms of infill/densification.

That being the case, the most practical thing that could be done to support housing choice and affordability in the Canberra region would to improve cross-border transport – not just expanded roads, but also better and more flexible public transport options.

bd84 bd84 9:32 pm 23 Oct 20

On the one hand the Barr Government is requiring 15 to 25 percent of new developments to be affordable housing, but on the other they don’t actually enforce it, and when it does it’s a 300m2 block big enough for a 2br house that no family wants to buy and they’re flogging it for $350,000 to bring in as much money as possible. On top of this, they’re loaned the Suburban Land Agency $100million to keep afloat, and taking $4million per year from a community housing provider that would have otherwise used it to increase supply in the market. Money money money for the government and no affordable housing, but hey we’ve got them back for 4 years to keep doing the same thing.

assiduous assiduous 7:16 pm 23 Oct 20

The situation is a ponzi scheme. It’s financial exploitation and rent seeking. Its evidence of falling living standards. The article makes it clear that andrew barr proritises protecting home owner equity over addressing growing homelessness and indebtedness. Judging by our laws, recent elections and the housing market, it would seem Australians would rather take a cut of someone elses paycheck than work or sacrifice a little to extend a comparable standard of living to future Australians. I tell you this, don’t expect Australians who are not given fair opportunity to own their piece of Australia to be very generous, or happy. Anyone who thinks land prices going to infinity is a good thing needs to join the flat earth society.

James Nomis James Nomis 5:16 pm 23 Oct 20

You should contact SLA and feature this initiative in a future article

bj_ACT bj_ACT 4:47 pm 23 Oct 20

The outrageous house prices can be laid at the feet of ‘both’ ACT and Commonwealth Governments.

Federal Government should be incentivising low cost rentals through their negative gearing tax policies (ie reducing the tax advantages for high rent, high value investment properties).

The ACT Government needs to actually back up what they say and properly enforce property developers to provide 15-25% low price housing within developments. Too often developers get to simply bypass ACT Government policy without much effort or pushback from the government.

ACT Government also has to develop far better development plans and spatial plans for suburbs and precincts. The ridiculous motherhood statement filled plans they have at the moment. Words along the line of “Make spaces more activated and ensure proper and effective access for all the community”

A_Cog A_Cog 12:59 pm 23 Oct 20

Over 300 homes sold within the last 12 months in ACT and QBN for under $400K. Over 150 of those were 2 bedders or more. Over 30 were 3 bedders for under $400K.

If you increase your price ceiling to $550K (ie, $250 per week in interest on an 80% mortgage at 3%) and pick only houses (no townhouses or apartments), there were 200.

Have a play with the filters: https://www.realestate.com.au/sold/in-queanbeyan,+nsw+2620/map-1

    bj_ACT bj_ACT 10:34 pm 23 Oct 20

    Just something to be aware of. having investigated and worked on some of this property data previously. Some sales reported are artificially low because they were part of divorce settlements, business exchanges or deceased estate sales to a family member. Not all these houses were fully on the open market. (Even if the sale was through an agent).

ssek ssek 11:08 am 23 Oct 20

Good. More Labor voters won’t be able to afford to live here between large mortgages, hugely increased rates, and both of those factors driving rent up.

    Capital Retro Capital Retro 11:15 am 23 Oct 20

    Stuff the Labor voters not being able to afford to live in Canberra in the future, what about self-funded retirees and others on fixed-incomes?

    ssek ssek 12:04 pm 23 Oct 20

    Canberrans voted to screw them over.

    chewy14 chewy14 2:11 pm 23 Oct 20

    Capital Retro,
    A self funded retiree couple by definition has over $850k in assets excluding a house that can be of unlimited value.

    How on earth do you think a self funded retiree wpuld struggle to afford to live in Canberra.

    ssek ssek 2:34 pm 23 Oct 20

    What about people on pensions and unemployment benefits, chewy? Low income earners in general? I notice you ignored the “fixed income” part….

    chewy14 chewy14 6:02 pm 23 Oct 20

    Ssek,
    I didn’t ignore it, Capital Retro regularly comments about his personal situation as a self funded retiree, so that’s what I commented on.

    But if you want to talk about other areas, no dramas.

    Firstly, pensioner couples can also own a property of unlimited value and up to $876k in other assets ($583k for singles), so they are also not necessarily poor.

    Other people on low fixed incomes (or less well off pensioners) are welfare recipients and so are unlikely to own property and have access to a myriad of other services commensurate with their circumstances. As I’ve already commented, not everyone will be a homeowner and it’s not actually a desirable outcome to try.

    Australia has a robust welfare safety net. I personally believe that Newstart should be higher but that is a federal issue, perhaps you should take it up with the Liberals?

    ssek ssek 10:11 am 24 Oct 20

    Yes, a couple on the pension CAN own a home and have up to 876k in assets. How many do you realistically believe to be in that position, while also being entitled to a pension?

    And if you believe raising the dole will do anything to make rent more affordable, you’re being deliberately deceptive. Raising base incomes leads to price rises for everything, and you know it.

    chewy14 chewy14 11:09 am 24 Oct 20

    Ssek,
    I’m glad you asked. The answer is lots, specifically because it’s so easy to tailor your finances around receiving the pension due to the ridiculous generosity of the pension assets tests.

    Research shows that pensioners have home ownership rates of around 73%, with over 255000 owning homes worth more than $1million and another 600000 owning homes between $500k and $1million.

    Just think about that for a second. Over $6.4Billion a year in welfare is going to people who have assets worth over $1million.

    https://www.google.com/amp/s/amp.news.com.au/finance/money/wealth/anu-research-reveals-18-per-cent-of-pensioners-own-a-home-worth-more-than-1-million/news-story/f4090118f973ff9fc9564fa4d58d8425

    And whilst I don’t believe raising the dole would hugely increase rental affordability, it would have an impact. Greater impacts would be achieved by changes at the federal government level to reduce the tax advantages for investors and at the state level through increased land releases ( or infill opportunities) and reform of the public housing sector amongst others.

    Capital Retro Capital Retro 4:30 pm 23 Oct 20

    Assume that $850K is their savings which they use to generate income. Currently, a 6 month term deposit rate is .50%pa. Try living on $4,250.00 for a year. It doesn’t even pay the rates.

    chewy14 chewy14 6:10 pm 23 Oct 20

    Capital Retro,
    We’ve repeatedly been over why placing all your assets in fixed income term deposits is a ridiculously conservative position that does not represent a reasonable investment position.

    Particularly not when that person is fully backed up with an increasing part pension as their assets decrease. They also have the ability to access the equity in their homes, which as above is excluded from pension assets tests.

    Average equity returns are more like 7-10% over the longer term, so even taking a much more conservative return of 5%, leaves your pensioner couple with income of a minimum of $43000 per year and a house of unlimited value.

    But realistically, as they should be eroding their asset base to receive higher pension payments, their actual income should be $60k+ whilst not even touching the house value.

    So either you are being deliberately disingenuous or you want to reward people for ignorance. Neither is reasonable.

    JC JC 8:10 pm 23 Oct 20

    I would be fairly sure that a self funded retiree wouldn’t have they money invested at cash. So a rather moot point comparing to the cash deposit rate.

chewy14 chewy14 9:28 am 23 Oct 20

“We need more people owning their own home and being in charge of their own destiny.”

Why?

There are numerous issues that drive the current price of housing in the ACT but another part of the issue is the expectation that everyone should be able to own their own home. This is an unrealistic expectation and actively harms many people who over extend themselves when they would be better off remaining as renters.

Yes, there are things that both the local and federal government’s could and should do to increase housing affordability but it’s never going to be truly affordable for many and we should accept that.

Capital Retro Capital Retro 9:22 am 23 Oct 20

What a pity it is that this article wasn’t posted a few weeks ago.

ace2279 ace2279 8:38 am 23 Oct 20

This Govt LOVES the ridiculous price of houses in the ACT as it means more revenue for them at all levels. Anything about “affordable housing” is merely lip-service to appease those who dare speak up about the inequity endorsed by their blatant money-hungry policies. A safe place to live is a basic human right, one which is already unattainable for most in this city. It’s not OK that people have to go into so much debt to simply own a place to call home. Sure, we could all lower our expectations a little of what we “want” but when its almost impossible to afford what we “need” then we have a serious problem.

    JS9 JS9 9:19 am 23 Oct 20

    Your comment should be framed as ‘the governments’ – as it equally applies at the Commonwealth level too. For getting towards 3 decades, primarily a period in which its mainly been the LNP in power, household debt has skyrocketed as policies specifically designed to ensure ever increasing house prices have taken impact.

    The whole policy settings at both Territory and Federal level need urgent overhaul, to move back towards a home being a ‘shelter’ and not seen as a massive money making ponzi scheme.

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