Zed weeps for the first home buyers

chewy14 said :

VYBerlinaV8_is_back said :

chewy14 said :

Alderney said :

As the owner of more than 1 home, I don’t want housing to be more affordable.

If I can’t make a profit on my investments there’ll be hell to pay for the pollie who strips my assests.

Shouldn’t Zed be spouting some mantra about letting the market be or something? Anyone would think he has developed a social policy conscience.

For Zed’s sake, I hope Tony Abbott doesn’t find out there might be social policy advocates in the Liberal Party.

If the government “Let the market be” in the ACT, there would be significant falls in property prices. The only reason they are so high is due to large amounts of government interference from start to finish.

I disagree. The market is what it is because many Canberrans have good income (relative to the Australian average), and credit is cheaper and easier than times past. This means people have more money to spend. Throw in a lack of new development, and high costs of new land, and you have the recipe for high prices. Prices don’t change until the demand, and means, change.

For example, demand for more expensive property has dropped over the past 6-12 months. As a result, there have been some falls in price in that part of the market. But for more reasonably priced properties, there is still lots of demand, hence no falls.

Why do you think there is a lack of new development and prices for new land is so high?

I’m not saying the government shouldn’t interfere with the market in some ways, I just don’t like when people suggest that the government isn’t already heavily involved.

Who suggested the government shouldn’t interfere in the market? Certainly not me, and that is the comment to which you refer.

If you go back and read my comment I think you’ll find your take on it makes you look a bit of a dill.

chewy14 said :

Alderney said :

As the owner of more than 1 home, I don’t want housing to be more affordable.

If I can’t make a profit on my investments there’ll be hell to pay for the pollie who strips my assests.

Shouldn’t Zed be spouting some mantra about letting the market be or something? Anyone would think he has developed a social policy conscience.

For Zed’s sake, I hope Tony Abbott doesn’t find out there might be social policy advocates in the Liberal Party.

If the government “Let the market be” in the ACT, there would be significant falls in property prices. The only reason they are so high is due to large amounts of government interference from start to finish.

If you knew anything about Australian history you’d know that the powers that be have always been heavily involved in land release. I don’t think 225 years of government policy is going to be changing anytime soon.

Just shows Zed up for being shallow and populist really.

c_c said :

dungfungus said :

The biggest private landord in the ACT is the ANU and they have a touch of the shorts at the moment.
Their enrolments are falling off as well and if this trend continues they may decide to “sell some property surplus to their needs” to get more liquid.

Very interesting, very incorrect.

Firstly ANU enrolments increased 4% this year. I believe all the Canberra universities had increases.

Second, ANU is part of the Commonwealth, so it’s not a private landlord. It certainly wouldn’t be the largest landlord in the ACT. In fact many of the new buildings in ANU Exchange are not owned by ANU, nor is ANU the landlord. 121 Marcus Clarke Street for example is owned by MTAA Super who act as landlord.

If we want to talk biggest landowner though, I can name one – ACT Government.

I think you are missing the point. This issue is about first home buyers who are at the mercy of the supply and demand situation (please, no economics lectures). The ANU residential houses outside the campus may be owned by the Commonwealth and one could argue that because there is no freehold title in the ACT all land (and improvements) are owned by the Territory. A lot of these ANU properties are rented exclusively to their academic staff and if there are cutbacks then some of these surplus these properties may be sold. Thanks for the feedback about one of the Industry Super Funds (MTAA) being a landord for ANU students. Trust they are giving concessional rents and not being rapacious.
And while ANU enrolments were announced yesterday as increasing 4% I think they are trending down but I am receptive to another lecture should I be wrong.

Yes capital appreciation I am a regular reader of canberrahouseprices.com as well as SQM’s stock on market, RP data and macrobusiness. I know it is not really the Australian way VY but I like to feel like I am a trendsetter so when it comes to real estate decisions I am going to be guided by hard data from impartial sources.

Keijidosha said :

Bluey said :

Yes because a couple earning $125,000 are SOOO rich we totally can forgo $14,000 for our slightly outside the 375k $20 stamp duty limit. Sod off and pull your head out of your bum.

Based on current concessions, $14k in stamp duty translates to a purchase price of around $450k, which is a bit more than “slightly outside” the $20 stamp duty cutoff.

Wrong.

380k purchase price.

drfelonious said :

Auction clearance rates are in the toilet – last weekend the clearance rate was around 30 percent. Some recent clearance rates have been so bad that the Canberra Times has not published them – fear of scaring the horses?

In another sign that house prices aren’t doing well, allhomes haven’t updated their median house prices since October last year (http://www.allhomes.com.au/ah/act/research/property-report/view?st=y). Previously they used to update this every month, but it looks like they’ve given up after a decline in median house prices from $543,000 to $500,000 over the course of last year.

dungfungus said :

The biggest private landord in the ACT is the ANU and they have a touch of the shorts at the moment.
Their enrolments are falling off as well and if this trend continues they may decide to “sell some property surplus to their needs” to get more liquid.

Very interesting, very incorrect.

Firstly ANU enrolments increased 4% this year. I believe all the Canberra universities had increases.

Second, ANU is part of the Commonwealth, so it’s not a private landlord. It certainly wouldn’t be the largest landlord in the ACT. In fact many of the new buildings in ANU Exchange are not owned by ANU, nor is ANU the landlord. 121 Marcus Clarke Street for example is owned by MTAA Super who act as landlord.

If we want to talk biggest landowner though, I can name one – ACT Government.

random said :

Remember the hilarity a few years ago on hearing that families on $250k were “battlers”? No-one ever thinks they’ve got it easy.

Ha, it wasn’t even that long ago. http://www.abc.net.au/unleashed/2614076.html

capitalappreciation said :

Any ideas where one could obtain data on how many purchases were made last year using the land rent scheme? There is also the OwnPlace Program, which is a an affordable house and land package for under $337K. Presumably some of these sales last year may have scraped under the magic $300K.

My suggestion would maybe get in contact with the ACT Economic Development Directorate or maybe the ACT Revenue Office.

The biggest private landord in the ACT is the ANU and they have a touch of the shorts at the moment.
Their enrolments are falling off as well and if this trend continues they may decide to “sell some property surplus to their needs” to get more liquid.
In a town the size of Canberra it only takes one significant event to create a chain reaction in the real estate market. In the background there are going to be ongoing reductions in the size of the public service no matter who is in power Federally (the nation is busted financially in case you haven’t been following the news) This is not good news for first homebuyers as the lenders will be asking for more buyer equity and lending less against declining values.

drfelonious said :

Oh VYBerlina – how about some full disclosure – you have skin in the game here in the form of investment properties and you are talking up your book!

But you must think the potential buyers out there have the intelligence of a gnat if you think they will buy what you are selling. I coughed up my drink when I saw your claims that $650k houses are in demand and it is hard to see values crashing. Furthermore I suspect deep down in your bones you know exactly what you are selling but sorry mate all the gnat buyers bought in 2010 – now the buyers are getting smarter.

Here are the facts:
Real estate agents in this town are partying like it is 1995 because the number of houses sold last year was reminiscent of 1995. Saw an agent driving a car that looked it was from 1995 the other day too.

Unsold stock on the market is going through the roof.

Auction clearance rates are in the toilet – last weekend the clearance rate was around 30 percent. Some recent clearance rates have been so bad that the Canberra Times has not published them – fear of scaring the horses?

Without banks lending like drunken sailors at the bottom of the market, we have reached a debt ceiling for first home buyers. This means they simply cant afford to keep feeding the ponzi = collapse or Japanese style deflation.

Baby boomers are starting to offload their excess negatively geared properties to fund their retirement = more supply.

No more ‘milky-wilkies’ in the form government handouts for negative gearers are likely given the focus on making a surplus next year.

When the Liberals get in next year, there will be even more carnage in the market, just as there was after Howard and Fraser’s elections. Why would any APS renter pay record setting prices for houses if (a) they might be out of a job next year and (b) if they keep their job, they will have their pick of the houses for sale from those keen to get out of town with their redundancy package.

Dr – I’ve posted here many times that I’m a property investor and have been for years. Talking up my book? Why even try? People who make major financial decisions based on information from any anonymous web site are idiots! And to save you looking at other posts I’ve made, no I don’t negative gear, my portfolio is cashflow positive.

You have to bear in mind that most of Canberra’s property ‘crash’ has already happened. High end property has already taken a beating. Middle and low end stock has not. Go shopping for a 3 bedroom home around the $400k market, or a 4 bedroom 2 bathroom at $550k and let me know how you go.

Tell me, what happened when the big PS cuts happened in the 90’s? Did property crash? No, it did not. High end property got cheaper, other property dropped a little, but much of it stagnated for quite a few years. Also, basing your property analysis on the behaviour of real estate agents seems a bit silly to me. There are some that do well, some that don’t. In a market that isn’t rising they find it tougher (and bear in mind the market uses only rises for about a third of the cycle).

As for a Japan style crash – I highly doubt it. Property yield in Japan just before their crash was at around 0.2%pa. We are nowhere near that. Not even on the same planet. Also, banks are now starting to loosen their credit requirements again.

Will we see a return to the crazy market of the noughties? I doubt it. Several years of stagnation is the most logical outcome. Incomes slowly catch up, other prices rise, rents increase then the cycle begins again.

arescarti42 said :

capitalappreciation said :

So have RP Data got it wrong and mistakenly counted some house only or land only sales in these new suburbs? Or are these legitimate house and land sales that have been subsidised by the ACT government’s affordable house and land package for low income earners? If it’s the former then the percentage of property sales under $300K is much lower than 8.8%. If it’s the latter, it says a lot about ACT housing affordability if the ACT government has to help to boost the number of property sales under $300K.

My initial suspicion would be that they are homes sold under the ACT land rent scheme, I imagine they would still be counted as sales, but they wouldn’t include the land component in the price. The scheme only applies to previously unleased land, which would explain why all the under $300k sales occurred in new suburbs.

Any ideas where one could obtain data on how many purchases were made last year using the land rent scheme? There is also the OwnPlace Program, which is a an affordable house and land package for under $337K. Presumably some of these sales last year may have scraped under the magic $300K.

drfelonious said :

Unsold stock on the market is going through the roof.

Auction clearance rates are in the toilet – last weekend the clearance rate was around 30 percent. Some recent clearance rates have been so bad that the Canberra Times has not published them – fear of scaring the horses?

Dr Felonius, Sounds like you’ve been reading http://www.canberrahouseprices.com

If you haven’t… some very astute observations.

djk said :

A couple earning $60k each is living the high life?

From memory, the median household income in the ACT is only around $100k. Compared to the households below the median — like those earning $60k, or $45k, or $25k — yes, a couple on $120k are very comfortable indeed.

Remember the hilarity a few years ago on hearing that families on $250k were “battlers”? No-one ever thinks they’ve got it easy.

capitalappreciation said :

So have RP Data got it wrong and mistakenly counted some house only or land only sales in these new suburbs? Or are these legitimate house and land sales that have been subsidised by the ACT government’s affordable house and land package for low income earners? If it’s the former then the percentage of property sales under $300K is much lower than 8.8%. If it’s the latter, it says a lot about ACT housing affordability if the ACT government has to help to boost the number of property sales under $300K.

My initial suspicion would be that they are homes sold under the ACT land rent scheme, I imagine they would still be counted as sales, but they wouldn’t include the land component in the price. The scheme only applies to previously unleased land, which would explain why all the under $300k sales occurred in new suburbs.

Oh VYBerlina – how about some full disclosure – you have skin in the game here in the form of investment properties and you are talking up your book!

But you must think the potential buyers out there have the intelligence of a gnat if you think they will buy what you are selling. I coughed up my drink when I saw your claims that $650k houses are in demand and it is hard to see values crashing. Furthermore I suspect deep down in your bones you know exactly what you are selling but sorry mate all the gnat buyers bought in 2010 – now the buyers are getting smarter.

Here are the facts:
Real estate agents in this town are partying like it is 1995 because the number of houses sold last year was reminiscent of 1995. Saw an agent driving a car that looked it was from 1995 the other day too.

Unsold stock on the market is going through the roof.

Auction clearance rates are in the toilet – last weekend the clearance rate was around 30 percent. Some recent clearance rates have been so bad that the Canberra Times has not published them – fear of scaring the horses?

Without banks lending like drunken sailors at the bottom of the market, we have reached a debt ceiling for first home buyers. This means they simply cant afford to keep feeding the ponzi = collapse or Japanese style deflation.

Baby boomers are starting to offload their excess negatively geared properties to fund their retirement = more supply.

No more ‘milky-wilkies’ in the form government handouts for negative gearers are likely given the focus on making a surplus next year.

When the Liberals get in next year, there will be even more carnage in the market, just as there was after Howard and Fraser’s elections. Why would any APS renter pay record setting prices for houses if (a) they might be out of a job next year and (b) if they keep their job, they will have their pick of the houses for sale from those keen to get out of town with their redundancy package.

mezza76 said :

* remove stamp duty (decrease state/territory revenue)
* replace stamp duty with a broad base income for states/territories (a share of income tax for example)

In fact…here’s one we’ve prepared earlier.
http://taxreview.treasury.gov.au/content/FinalReport.aspx?doc=html/publications/papers/Final_Report_Part_1/chapter_12.htm

They should implement a land tax based on land value. It’s one of the broadest based, most economically efficient taxes they can implement.

It’s worth reading the actual RP Data article from which Zed Sesilja takes his information.
http://blog.rpdata.com/2012/03/where-can-you-buy-a-home-under-300000/

The article does quote that 8.8% of property sales in the ACT in 2011 were less than $300K. I thought that this sounded impossible as there are very few homes for sale in the ACT less than this value. I questioned RP Data’s Tim Lawless on the ACT statistics presented in the article and to his credit he did reply within 10 minutes of my question. He’s also removed the ACT data as a result of my query. The data that were removed showed that most of the houses that sold for less than $300,000 were in the newer suburbs of Bonner (57 house sales), Casey (94 house sales), Crace (91 house sales) and Forde (80 house and 2 unit sales). These 4 suburbs claimed more than 50% of the 613 total ACT sales less than $300K, yet on allhomes there are no properties with land for sale in any of these suburbs for less than $300K.

So have RP Data got it wrong and mistakenly counted some house only or land only sales in these new suburbs? Or are these legitimate house and land sales that have been subsidised by the ACT government’s affordable house and land package for low income earners? If it’s the former then the percentage of property sales under $300K is much lower than 8.8%. If it’s the latter, it says a lot about ACT housing affordability if the ACT government has to help to boost the number of property sales under $300K.

mezza76 said :

housebound said :

Alright then. What would you do to make homes more affordable in the ACT? Serious question.

* remove negative gearing (increase in Cth revenue) or limit it to a dollar figure
* remove stamp duty (decrease state/territory revenue)
* replace stamp duty with a broad base income for states/territories (a share of income tax for example)
* review zoning/infrastrcuture charges

In fact…here’s one we’ve prepared earlier.
http://taxreview.treasury.gov.au/content/FinalReport.aspx?doc=html/publications/papers/Final_Report_Part_1/chapter_12.htm

That would be an excellent start. The other thing from the Henry review worth mentioning is replacing stamp duty (which is a ridiculously inefficient and antiquated tax) with a broad based land tax, which would reduce land prices and discourage speculation.

housebound said :

Alright then. What would you do to make homes more affordable in the ACT? Serious question.

My instant ideas (without the effort of thought or even water) would include removing negative gearing for housing (phased to avoid a mass dump of homes onto the market, that could spook the pollies) and removing the concession in capital gains tax. Both of these are Federal issues. Perhaps that means Zed (and others) should be lobbying the Feds at COAG to take these steps.

But a result would be that housing would fall in value (the aim), which means that stamp duty revenue would fall to the levels in 2000 (or thereabouts). That would mean the ACT Government would have to take a long, hard look at what it is doing and cut something.

Cuts might be less scary than you would think. A productivity Commission report found that a very large proportion of all the extra GST revenue was spent by the states on administration. Even without falling house prices, GST take is going down, so something has to go anyway.

Locally, all they have is land release. There was some effect on prices of Corbell’s inability to release land between 2003 and 2005, but it has now been far overwhelmed by other factors.

Any other ideas?

* remove negative gearing (increase in Cth revenue) or limit it to a dollar figure
* remove stamp duty (decrease state/territory revenue)
* replace stamp duty with a broad base income for states/territories (a share of income tax for example)
* review zoning/infrastrcuture charges

In fact…here’s one we’ve prepared earlier.
http://taxreview.treasury.gov.au/content/FinalReport.aspx?doc=html/publications/papers/Final_Report_Part_1/chapter_12.htm

Bluey said :

Yes because a couple earning $125,000 are SOOO rich we totally can forgo $14,000 for our slightly outside the 375k $20 stamp duty limit. Sod off and pull your head out of your bum.

Based on current concessions, $14k in stamp duty translates to a purchase price of around $450k, which is a bit more than “slightly outside” the $20 stamp duty cutoff.

Bluey said :

devils_advocate said :

Watson said :

I don’t get the comments about stamp duyt? http://www.revenue.act.gov.au/home_buyer_assistance/home_buyer_duty_concession/1_January_2012_-_30_June_2012

I paid $20 in stamp duty for my 2-beddy pre-fab box. Very happy about that!

[insert comment about first home buyers wanting a 5 brm mcmansion without having to work or save for it]

Yes because a couple earning $125,000 are SOOO rich we totally can forgo $14,000 for our slightly outside the 375k $20 stamp duty limit. Sod off and pull your head out of your bum.

FYI there is a sliding scale up to $470k if your house is just over $375k.

random said :

Can someone whinging about stamp duty please explain why they are not eligible for the whopping concessional duty of $20? If the place costs less than $375,000 and you’re going to live in it, that’s all you pay. I reckon most buyers can cover it.

If you’re just earning too much to be eligible, I’ll file this one with “the rising cost of monocle polish” under Problems Rich People Have.

A couple earning $60k each is living the high life?

random said :

Can someone whinging about stamp duty please explain why they are not eligible for the whopping concessional duty of $20? If the place costs less than $375,000 and you’re going to live in it, that’s all you pay. I reckon most buyers can cover it.

If you’re just earning too much to be eligible, I’ll file this one with “the rising cost of monocle polish” under Problems Rich People Have.

$120k a household is hardly tycoon money. It’s a mid-level cop married to a registered nurse (im not aware of either being big buyers of monocle’s either)… and with most houses starting at $500-600k, I’m surprised that any one in this town can afford to be either.

arescarti42 said :

Unemployment is certainly low at the moment, but I personally think the direction of that trend is very uncertain moving forward.

Kind of like everything in life…

Alright then. What would you do to make homes more affordable in the ACT? Serious question.

My instant ideas (without the effort of thought or even water) would include removing negative gearing for housing (phased to avoid a mass dump of homes onto the market, that could spook the pollies) and removing the concession in capital gains tax. Both of these are Federal issues. Perhaps that means Zed (and others) should be lobbying the Feds at COAG to take these steps.

But a result would be that housing would fall in value (the aim), which means that stamp duty revenue would fall to the levels in 2000 (or thereabouts). That would mean the ACT Government would have to take a long, hard look at what it is doing and cut something.

Cuts might be less scary than you would think. A productivity Commission report found that a very large proportion of all the extra GST revenue was spent by the states on administration. Even without falling house prices, GST take is going down, so something has to go anyway.

Locally, all they have is land release. There was some effect on prices of Corbell’s inability to release land between 2003 and 2005, but it has now been far overwhelmed by other factors.

Any other ideas?

Bluey said :

Yes because a couple earning $125,000 are SOOO rich we totally can forgo $14,000 for our slightly outside the 375k $20 stamp duty limit. Sod off and pull your head out of your bum.

I promise to perform a rectal cranium-ectomy on myself if you promise to buy an irony dector and switch it on before posting. The square brackets and “insert comment” should have tipped you off but hey clearly I’m the one with the issue.

Really everyone should be thanking me for summarising about 3 pages worth of postings before they occurred.

devils_advocate said :

Unemployment is low in absolute terms (low 5’s is approaching or coming below the NAIRU, which of course we don’t know precisely where it is but it’s low) and trending down since last year. Also canberra has a large bulk of stable and well paid APS jobs, which I think is the key factor distorting the market, as was suggested above.

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0

Some very reasonable points there, particularly about the APS jobs in Canberra. You could also argue that the jobs we are most likely to lose (retail, service industry, construction etc.) are probably low paying and don’t employ a lot of people with mortgages anyway.

Unemployment is certainly low at the moment, but I personally think the direction of that trend is very uncertain moving forward.

devils_advocate said :

Watson said :

I don’t get the comments about stamp duyt? http://www.revenue.act.gov.au/home_buyer_assistance/home_buyer_duty_concession/1_January_2012_-_30_June_2012

I paid $20 in stamp duty for my 2-beddy pre-fab box. Very happy about that!

[insert comment about first home buyers wanting a 5 brm mcmansion without having to work or save for it]

Yes because a couple earning $125,000 are SOOO rich we totally can forgo $14,000 for our slightly outside the 375k $20 stamp duty limit. Sod off and pull your head out of your bum.

arescarti42 said :

Yes, it becomes a real issue when people lose their jobs. I don’t know which economy you’re living in where job losses aren’t an issue, but in the Australian economy, job losses are on the cards for just about every industry except mining.

Unemployment is low in absolute terms (low 5’s is approaching or coming below the NAIRU, which of course we don’t know precisely where it is but it’s low) and trending down since last year. Also canberra has a large bulk of stable and well paid APS jobs, which I think is the key factor distorting the market, as was suggested above.

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0

johnboy said :

erm?

Willie Horton?

That’s the one JB, though in reference to the now infamous ad used by a SuperPAC for Bush rather than Horton himself.

The ad cleverly played into the confused way media consumers digest information by juxtaposing images of Dukakis and Horton with a number of disparate statistics. The result was viewers leaping to very inaccurate conclusions by blending the key words and images together in their minds.

Media Releases like this try to do the same thing. Skim it and the key words and parties listed will prompt the inference Labor makes houses expensive, Liberals will bring the prices down. In reality, there is no such claim, no promise to lower land prices and ease supply constraints. It simply mentions some adjustments to the system and keeps it abstract enough that they can’t be held to much.

c_c said :

Exactly, it allows, but does Zed promise to ease supply side pressures on price?
No, he doesn’t.

He carefully avoids it, hiding behind populist and cliched phrases like “improved infrastructure” and behind very non committal concepts like a “land bank.” The release is clever because it make the reader infer he’ll make it cheaper without actually committing to or suggesting he will.

Smooth move Willie Horton.

Well I guess it’s kind of like a “build it and they will come” type argument. For example a lot of the outlying areas of gungahlin out by horsepark drive and on the other side of the pond were removed from anything with no good shops, and to get to the city you had to weave through narrow suburban roads, (i.e. in early 2000s before horsepark dr connected with the highway). It was crap living out there, and people preferred to buy older houses closer in to the city with facilities (and rightly so). Put in some infrastructure and facilities and it might actually make expansion feasible and make people want to live out there.

It would be a bit much to expect any politician to give a categorial guarantee that they are single handedly going to crash the property market.

devils_advocate said :

Why are people up s–t creek with negative equity if prices fall? In the absence of anything else, they continue to make the repayments and the only real problem they face is the nagging feeling that they could have bought for less.

Maybe. I imagine that having more debt than you do assets inflicts some pretty unfortunate financial mobility problems on people. For a start, it probably means that you’re trapped in your current house.

devils_advocate said :

The real issue would be negative equity COMBINED with a job loss. But in the present economy job losses seem unlikely, efficiency dividends notwithstanding.

Yes, it becomes a real issue when people lose their jobs. I don’t know which economy you’re living in where job losses aren’t an issue, but in the Australian economy, job losses are on the cards for just about every industry except mining.

devils_advocate said :

RE: the stamp duty issue, the original post seems to be suggesting that supply side constraints are driving the price up. If that’s true, then it’s too much money chasing too few houses. Eliminating stamp duty won’t do anything, because the ability to pay of the demand side (and therefore the price) will just increase by the same amount as the stamp duty saving. So, abolishing stamp duty won’t do much at all.

Exactly, demand side measures such as cutting taxes or implementing things like first home buyer’s grants do nothing but push up prices further when supply is unresponsive.

chewy14 said :

Why do you think there is a lack of new development and prices for new land is so high?

I’m not saying the government shouldn’t interfere with the market in some ways, I just don’t like when people suggest that the government isn’t already heavily involved.

There’s a few reasons:
1) Land costs a lot because the ACT govt feels it needs to get as much as possible for new blocks, given that this is a major source of revenue (and they want to avoid the perception that ‘other Canberrans’ aren’t getting a good return when ACT land is sold)
2) Tradies cost a lot in this town, much more than they used to
3) Developers generally won’t be able to get financing if they can’t demonstrate a reasonable profit margin on the project, so a bit of warmth is needed in the market for development to continue.

I think the biggest of these issues is the price of new land. Looking at Molonglo Valley, the costs are huge. It would be difficult to buy land and build a decent 4 bedroom home for much less than $650k. As such, people look for other alternatives, such as existing homes. Even if the existing home is not as good (size, fittings, heating, etc) as a new home, having a better block (size, location) often more than makes up for it, and provides an easier upgrade path for the future.

Bottom line, 3 and 4 bedroom homes priced under $650k are in demand. It’s pretty hard to see their values crashing.

c_c said :

Smooth move Willie Horton.

I think you may be a little confused…

random said :

If you’re just earning too much to be eligible, I’ll file this one with “the rising cost of monocle polish” under Problems Rich People Have.

That could potentially be the name of a new blog, along the lines of “things white people like” and “things bogans like”.

devils_advocate said :

Well it enables them to increase supply, which all else being equal should reduce prices.

Exactly, it allows, but does Zed promise to ease supply side pressures on price?
No, he doesn’t.

He carefully avoids it, hiding behind populist and cliched phrases like “improved infrastructure” and behind very non committal concepts like a “land bank.” The release is clever because it make the reader infer he’ll make it cheaper without actually committing to or suggesting he will.

Smooth move Willie Horton.

chewy14 said :

If the government “Let the market be” in the ACT, there would be significant falls in property prices. The only reason they are so high is due to large amounts of government interference from start to finish.

+1

Restrictive land use policies operated by the government played a big part in causing the problem.

VYBerlinaV8_is_back said :

chewy14 said :

Alderney said :

As the owner of more than 1 home, I don’t want housing to be more affordable.

If I can’t make a profit on my investments there’ll be hell to pay for the pollie who strips my assests.

Shouldn’t Zed be spouting some mantra about letting the market be or something? Anyone would think he has developed a social policy conscience.

For Zed’s sake, I hope Tony Abbott doesn’t find out there might be social policy advocates in the Liberal Party.

If the government “Let the market be” in the ACT, there would be significant falls in property prices. The only reason they are so high is due to large amounts of government interference from start to finish.

I disagree. The market is what it is because many Canberrans have good income (relative to the Australian average), and credit is cheaper and easier than times past. This means people have more money to spend. Throw in a lack of new development, and high costs of new land, and you have the recipe for high prices. Prices don’t change until the demand, and means, change.

For example, demand for more expensive property has dropped over the past 6-12 months. As a result, there have been some falls in price in that part of the market. But for more reasonably priced properties, there is still lots of demand, hence no falls.

Why do you think there is a lack of new development and prices for new land is so high?

I’m not saying the government shouldn’t interfere with the market in some ways, I just don’t like when people suggest that the government isn’t already heavily involved.

VYBerlinaV8_is_back said :

I think you’ll find about a third of people live in homes owned outright, a third are living in a home being paid off and a third rent.

Of the third of people paying off a home, I’d expect there to be a range of situation, from almost paid off through to just making first payment.

Yes, this is my understanding also. My point was that it is in the interest of 2/3rds of households for prices to not decline, and thus highly unlikely that any government would deliberately implement policy to financially disadvantage the majority of households.

c_c said :

devils_advocate said :

c_c said :

Improving competition in the market, will Zed abolish the LDA stranglehold?

Also curious is Zed again making reference to improved infrastructure. How does improved infrastructure make homes cheaper, if anything one would think it bumps up the costs to developers and government which are then passed on in rates and land costs? Then again this is the same infrastructure policy that he promises to be see all and be all.

Improved infrastructure makes it possible to have houses further out from the city and still have some semblance of livability.

Of course, but how does it help with affordability?

Infrastructure just let’s them put postage stamp size blocks priced like acreage further out.

Well it enables them to increase supply, which all else being equal should reduce prices. Tearing down old houses in the inner suburbs and putting up apartments is still pretty expensive.

Can someone whinging about stamp duty please explain why they are not eligible for the whopping concessional duty of $20? If the place costs less than $375,000 and you’re going to live in it, that’s all you pay. I reckon most buyers can cover it.

If you’re just earning too much to be eligible, I’ll file this one with “the rising cost of monocle polish” under Problems Rich People Have.

devils_advocate said :

Watson said :

I don’t get the comments about stamp duyt? http://www.revenue.act.gov.au/home_buyer_assistance/home_buyer_duty_concession/1_January_2012_-_30_June_2012

I paid $20 in stamp duty for my 2-beddy pre-fab box. Very happy about that!

[insert comment about first home buyers wanting a 5 brm mcmansion without having to work or save for it]

Indeed. If you can afford the deposit and mortgage repayments on a $470K+ house and/or your household income is $120K+, I don’t see why you would need any concessions.

devils_advocate said :

c_c said :

Improving competition in the market, will Zed abolish the LDA stranglehold?

Also curious is Zed again making reference to improved infrastructure. How does improved infrastructure make homes cheaper, if anything one would think it bumps up the costs to developers and government which are then passed on in rates and land costs? Then again this is the same infrastructure policy that he promises to be see all and be all.

Improved infrastructure makes it possible to have houses further out from the city and still have some semblance of livability.

Of course, but how does it help with affordability?

Infrastructure just let’s them put postage stamp size blocks priced like acreage further out.

Watson said :

I don’t get the comments about stamp duyt? http://www.revenue.act.gov.au/home_buyer_assistance/home_buyer_duty_concession/1_January_2012_-_30_June_2012

I paid $20 in stamp duty for my 2-beddy pre-fab box. Very happy about that!

Good work.

I just bought a house that cost me 42 and a half grand in stamp duty.

chewy14 said :

Alderney said :

As the owner of more than 1 home, I don’t want housing to be more affordable.

If I can’t make a profit on my investments there’ll be hell to pay for the pollie who strips my assests.

Shouldn’t Zed be spouting some mantra about letting the market be or something? Anyone would think he has developed a social policy conscience.

For Zed’s sake, I hope Tony Abbott doesn’t find out there might be social policy advocates in the Liberal Party.

If the government “Let the market be” in the ACT, there would be significant falls in property prices. The only reason they are so high is due to large amounts of government interference from start to finish.

I disagree. The market is what it is because many Canberrans have good income (relative to the Australian average), and credit is cheaper and easier than times past. This means people have more money to spend. Throw in a lack of new development, and high costs of new land, and you have the recipe for high prices. Prices don’t change until the demand, and means, change.

For example, demand for more expensive property has dropped over the past 6-12 months. As a result, there have been some falls in price in that part of the market. But for more reasonably priced properties, there is still lots of demand, hence no falls.

Watson said :

I don’t get the comments about stamp duyt? http://www.revenue.act.gov.au/home_buyer_assistance/home_buyer_duty_concession/1_January_2012_-_30_June_2012

I paid $20 in stamp duty for my 2-beddy pre-fab box. Very happy about that!

[insert comment about first home buyers wanting a 5 brm mcmansion without having to work or save for it]

I don’t get the comments about stamp duyt? http://www.revenue.act.gov.au/home_buyer_assistance/home_buyer_duty_concession/1_January_2012_-_30_June_2012

I paid $20 in stamp duty for my 2-beddy pre-fab box. Very happy about that!

c_c said :

Improving competition in the market, will Zed abolish the LDA stranglehold?

Also curious is Zed again making reference to improved infrastructure. How does improved infrastructure make homes cheaper, if anything one would think it bumps up the costs to developers and government which are then passed on in rates and land costs? Then again this is the same infrastructure policy that he promises to be see all and be all.

Improved infrastructure makes it possible to have houses further out from the city and still have some semblance of livability.

arescarti42 said :

Alderney said :

As the owner of more than 1 home, I don’t want housing to be more affordable.

If I can’t make a profit on my investments there’ll be hell to pay for the pollie who strips my assests.

IIRC, about 2/3rds of households “own” their home, many of which bought with tiny deposits and would be totally up s*** creek with negative equity if prices were to fall to affordable levels, which is why any political party promising to make housing more affordable by deliberately reducing prices is totally full of s***.

Why are people up s–t creek with negative equity if prices fall? In the absence of anything else, they continue to make the repayments and the only real problem they face is the nagging feeling that they could have bought for less. It’s not like the bank is randomly going to come around and do a revaluation on the house and ask for more money. It would be against their own interests to do so. The real issue would be negative equity COMBINED with a job loss. But in the present economy job losses seem unlikely, efficiency dividends notwithstanding.

RE: the stamp duty issue, the original post seems to be suggesting that supply side constraints are driving the price up. If that’s true, then it’s too much money chasing too few houses. Eliminating stamp duty won’t do anything, because the ability to pay of the demand side (and therefore the price) will just increase by the same amount as the stamp duty saving. So, abolishing stamp duty won’t do much at all.

Alderney said :

As the owner of more than 1 home, I don’t want housing to be more affordable.

If I can’t make a profit on my investments there’ll be hell to pay for the pollie who strips my assests.

Shouldn’t Zed be spouting some mantra about letting the market be or something? Anyone would think he has developed a social policy conscience.

For Zed’s sake, I hope Tony Abbott doesn’t find out there might be social policy advocates in the Liberal Party.

If the government “Let the market be” in the ACT, there would be significant falls in property prices. The only reason they are so high is due to large amounts of government interference from start to finish.

arescarti42 said :

Alderney said :

As the owner of more than 1 home, I don’t want housing to be more affordable.

If I can’t make a profit on my investments there’ll be hell to pay for the pollie who strips my assests.

IIRC, about 2/3rds of households “own” their home, many of which bought with tiny deposits and would be totally up s*** creek with negative equity if prices were to fall to affordable levels, which is why any political party promising to make housing more affordable by deliberately reducing prices is totally full of s***.

I think you’ll find about a third of people live in homes owned outright, a third are living in a home being paid off and a third rent.

Of the third of people paying off a home, I’d expect there to be a range of situation, from almost paid off through to just making first payment.

Alderney said :

As the owner of more than 1 home, I don’t want housing to be more affordable.

If I can’t make a profit on my investments there’ll be hell to pay for the pollie who strips my assests.

IIRC, about 2/3rds of households “own” their home, many of which bought with tiny deposits and would be totally up s*** creek with negative equity if prices were to fall to affordable levels, which is why any political party promising to make housing more affordable by deliberately reducing prices is totally full of s***.

dpm said :

It’s interesting as people already whinge and claim it as a ‘slum’ if a new block of flats (remember the famed development at Jammo, built by the same wizards that brought us Space?) gets built in an established suburb. Can you imagine what people would then say if they built an entire suburb with a $300k median house price?

Besides, considering the majority of 1 bed units on Allhomes are $300+, what will these cheaper places look like??

The answer is to stop putting illegal immigrants on the dole and in free houses, and instead to give them jobs in the construction industry, just as we did with migrants prior to the 1970s. And release some swathes of land at reasonable prices.

It’s interesting as people already whinge and claim it as a ‘slum’ if a new block of flats (remember the famed development at Jammo, built by the same wizards that brought us Space?) gets built in an established suburb. Can you imagine what people would then say if they built an entire suburb with a $300k median house price?

Besides, considering the majority of 1 bed units on Allhomes are $300+, what will these cheaper places look like??

As the owner of more than 1 home, I don’t want housing to be more affordable.

If I can’t make a profit on my investments there’ll be hell to pay for the pollie who strips my assests.

Shouldn’t Zed be spouting some mantra about letting the market be or something? Anyone would think he has developed a social policy conscience.

For Zed’s sake, I hope Tony Abbott doesn’t find out there might be social policy advocates in the Liberal Party.

Improving competition in the market, will Zed abolish the LDA stranglehold?

Also curious is Zed again making reference to improved infrastructure. How does improved infrastructure make homes cheaper, if anything one would think it bumps up the costs to developers and government which are then passed on in rates and land costs? Then again this is the same infrastructure policy that he promises to be see all and be all.

It amuses me that Zed is so concerned with this issue that his response is to rinse and repeat the same media release:

http://the-riotact.com/zed-vows-to-make-housing-more-affordable/55129
http://the-riotact.com/average-first-home-hits-400000-half-of-it-in-tax/56560

This is incredible, it seems like every couple of months when Zed has nothing better to bitch about, he puts out some generic release lambasting the government on housing affordability. The last two paragraphs from today’s release are almost a direct copy and paste from a similar media release of his from September last year.

As I’ve pointed out the last two times he’s done this, the only way a land bank, infrastructure improvements etc. etc. are going to improve affordability is if they increase supply enough to cause prices to fall, and that is politically unthinkable.

Housing affordability is a real problem in Canberra, but this moron continues to use it as an excuse to bash the current government whilst providing no credible solutions of his own.

Problem is no ACT Govt will give up Stamp Duty or even like to reduce it (for low income earners or anyone else for that matter). Like it or not Stamp or transfer duties are the main source of income for a small Territory like the ACT (no royalties here). Of more concern is the lack of incentive for the ACT Government to do anything other than raise Stamp Duty. As there is no freehold land in the ACT the Stamp Duty refers to leases which is tax deductable for investment properties. Basicially if you rent your dwelling you in effect get a Stamp Duty concession. So the ACT Government is pretty much cost shifting to the Commonwealth by having high amounts of Stamp Duty to which ACT residents can rent their home for a year and negative gear, claiming back the Stamp Duty. I was advsied that when buying a house in the ACT it would be best to rent it for a year rather than live in it. So there isn’t much incentive there for the ACT to lower Stamp Duty and if you rent your property there isnt much care. The only people that do are probably familes who want to move into the place straight away.

Stamp Duty is the killer, yet I don’t see any government giving up this over priced cash cow.

I would consider most of my friends to be fiscally responsible (good at budgeting and saving, not prone to unnecessary expenditure), but the only first home buyers amongst them that have been able to buy a home in the past 4 years are on individual or combined salaries of $150,000 a year, or more. I would estimate those salaries to be well above the national average. They didn’t get fancy homes in leafy, inner city suburbs, either. They got 30-40 year old ex-govy homes in outer areas.

Of course, the usual people will come in here and claim that home ownership is affordable for everyone, without divulging the facts that they bought more than a decade ago, when prices were much less than now (even in comparison to average wages at the time), but it seems to me that Canberra is not very affordable when it comes to home ownership.

I always find the idea that Canberra renting is affordable odd, especially as I pay half my income in rent, and I am on the cheaper side of rent in the suburb I live in. I don’t have a public service salary, perhaps that means I don’t count in their statistics?

I have had a bit of a look around, and for the houses just like the one I am renting ALL the prices are more expensive for rent. From my experience renting a house in the ACT on only my oncome is only just affordable. So the affordability to me isn’t true.

Oh and don’t tell me to buy, I am fortunate to have, very recently, saved some money, but even with my savings my income (alone) will not allow me to purchase an appropriate house. So I do not find the ACT a highly affordable for renting or buying.

As a first homebuyer Ive just had my savings completely stripped by paying a deposit and then stamp duty. I’m broke again and I havent even moved in yet.

So yes whilst we have to scrimp and save 10s of thousands to get into the market. Having lower prices would be great. A FHB stamp duty exemption like NSW would go a LONG way to reducing pressure though. 3% of value is almost a home deposit in itself. I could have put 10% down instead of 5% and avoided paying more in mortgage insurance.