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Zed weeps for the first home buyers

johnboy 29 March 2012 74

Liberal Leader Zed Seselja is expressing his sadness that there are no Canberra suburbs with a media house price under $300,000 which makes the ACT uniquely unaffordable.

Zed remains silent as to whether lower real estate values are Liberal policy (which would be a balls-out move). But he does have this to say:

“The Canberra Liberals believe the solutions to the ACT’s housing affordability problems should include a genuine land bank, which would have a pool of land ready to release, infrastructure improvements, taxation reform, streamlining the planning system and improving competition in the market.

“Through our Infrastructure Canberra policy, the Canberra Liberals would also establish an independent infrastructure commissioner backed by an industry board to ensure that infrastructure which supports housing is delivered in a more timely and targeted manner.

“The affordable housing crisis created by this government is of great concern the Canberra Liberals, and we will take all reasonable steps to improve the situation,” Mr Seselja concluded.

Should we, however, be too concerned about first home buyers who have, by definition, tens of thousands in savings, versus those at the bottom end of the rental market?

Also bear in mind the Government will try and claim housing in Canberra is affordable compared to average wages in the ACT, ignoring the roughly half of the distribution curve earning below average wages.


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c_c c_c 2:51 pm 17 Apr 12

Zed: ““The Canberra Liberals believe the solutions to the ACT’s housing affordability problems should include a genuine land bank, which would have a pool of land ready to release…”

And a quote from the same speech I quote previously:

“Land prices are artificially high in Australia… a [redacted] government will make grants to the states to acquire substantial areas of residential land on just terms and to sub-divide, service and sell it at cost.”

Again, when, who and to who. A wonderful irony.

c_c c_c 2:47 pm 17 Apr 12

“The price of every house which is built in Australia is artificially and needlessly inflated by the extra costs which [redacted] Governments have imposed or failed to halt in land prices, interest rates and construction costs.”

Does anyone want to have a crack at guessing when this quote is from, who said it and who they were referring to?

VYBerlinaV8_is_back VYBerlinaV8_is_back 10:48 am 02 Apr 12

drfelonious said :

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.

You’re not seriously trying to tell us that sites like Macrobusiness are ‘impartial data’ surely! 🙂

Data from past events is useful, but ultimately you have to make educated guesses about the future. Clearly, property that only a small proportion of people desire or can afford will be more impacted by negative economic events. Property in higher demand, though, has more money chasing it.

At the end of the day, we are probably not going to agree, and that’s OK. I’ll continue holding my cashflow positive portfolio (and letting my tenants pay off my loans), and you can do whatever you like.

c_c c_c 12:50 pm 31 Mar 12

dungfungus said :

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.

My information is the only properties outside the campus that ANU still holds are apartments, and then only for shorter term lease until staff and visiting academics find their own place.
They certainly had stand alone homes in the past: http://www.flickr.com/photos/archivesact/sets/72157627512625116/

Interestingly, ANU supplements this with an agreement with DHA (Defence Housing Australia).
http://accom.anu.edu.au/UAS/978/2732.html

chewy14 chewy14 12:14 pm 31 Mar 12

Alderney said :

Rather than look at which words I’ve used, you should instead try to look at how I’ve used them. The English language is a wonderful thing, what with the nuances and all.

Perhaps you should realise that the way something sounds in your head is not the way it may look written on the internet?
I mean fancy reading words and assuming they mean what they mean.

milkman milkman 10:57 am 31 Mar 12

drfelonious said :

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.

I’m a property investor, and I’m quite impressed you have hard data from impartial sources regarding the future. Where do you get this data? Crystalball.com.au?

Alderney Alderney 9:56 am 31 Mar 12

chewy14 said :

Alderney said :

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.

Not really.
You suggested that Zed was developing a social conscience because he was suggesting interference in the market. To me that sounded like you thought the government wasn’t already heavily involved. I apologise if that’s not the case.
But there can be no doubt that their interference in recent years has increased which has only served to increase prices. As you’re a property owner I’m unsurprised that you’re happy with this.

Rather than look at which words I’ve used, you should instead try to look at how I’ve used them. The English language is a wonderful thing, what with the nuances and all.

Bramina Bramina 9:29 am 31 Mar 12

Gungahlin Al said :

But there remains a substantial undersupply, and it remains a seller’s market

As an economist, I really struggle with the concept of a sellers market. The market price and quantity are determined equally by supply and demand. A boyant ‘seller’s market’ can only be held up by boyant demand.

And even though there is an undersupply now, it doesn’t mean the mood of buyers can not rapidly shift from its current exuberant state to a pessimistic state.

Gungahlin Al said :

Perhaps people have forgotten the front page splashes of hundreds and hundreds of angry “working families” leaving LDA ballots empty handed? Don’t believe that the underlying problem has gone away – they’ve just got better at concealing it. There have for a few years now been pre-ballots, so only a subset of those on the waiting lists got invited to the actual ballot. This way there was only every a handful of disappointed people afterwards collected in one media-friendly location. It worked a treat. The bad media disappeared completely.

There is something really wrong with governments selling things by ballots. Ballots do not change the market price, even though the selling price is lower.

That makes lotteries a welfare payment from the taxpayer to the winners, with the winners effectively pocketing the difference between the selling price and market price.

So this doesn’t solve the problem of speculation driving up market prices, it just creates another form of speculation by lottery.

Gungahlin Al said :

Until such time as there is a substantial selection of vacant land for sale and “on the shelf” in multiple areas (not a single suburb or two), it remains a seller’s market open to manipulation (whether deliberate or otherwise).

It’s not just land, it is allowing density to increase.

An efficient city has peaks of high density around centres, with density smoothly reducing to the outer suburbs. But in Canberra, we have this perverse situation where we have highish density centres, and then low density suburbs, and then higher density outer suburbs.

chewy14 chewy14 11:00 pm 30 Mar 12

Alderney said :

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.

Not really.
You suggested that Zed was developing a social conscience because he was suggesting interference in the market. To me that sounded like you thought the government wasn’t already heavily involved. I apologise if that’s not the case.
But there can be no doubt that their interference in recent years has increased which has only served to increase prices. As you’re a property owner I’m unsurprised that you’re happy with this.

Gungahlin Al Gungahlin Al 10:33 pm 30 Mar 12

Zed: …”broken planning system” – says whom? Catherine Carter? The planning system has gone through a mountain of work with countless hundreds of hours of inputs from industry experts and community volunteers alike. It is most of the way there, notwithstanding the DV306 shemozzle

There are no specifics in this piece by Zed, except some vague remarks about things the Government is already doing, and the reference to “taxation reform”. Is this code for the first home stamp duty reduction they’ve talked about previously?

The problem with this sort of proposal is that it reads OK in the media, and the target people think they are in front, but every time it has been done ‘the market’ just absorbs it, and prices go up by at least that much for everyone. So the target buyers are actually no better off, and everyone else is actually worse off. And it makes it very hard for existing owners to sell existing homes. Happened under John Howard’s First Home Buyers Grant.

I have said for some years that the biggest issue in the ACT is that we have a sole supplier of new land (even if they then sell it on to a 3rd party), and their price setting method actually drives up the market artificially.

As I understand it (and I’ve raised this multiple times with LDA, ACTPLA and EDD and never been contradicted), the LDA gets a valuer in to advise on prices for new releases. Adviser says the market is rising and therefore recommends an increase of x for the next release. Substantial undersupply (still) means people in the market have to cop the prices on offer if they want to get out of their rentals. Adviser gets to say next time – the market is rising so increase the next lots by x%. And so it keeps going. But it is a monopolist supply market that is distorting the price, then cashing in on it.

Now after considerable pressure from groups like GCC and many others, the Government cranked up their land release program – late to get going but going nonetheless.

But there remains a substantial undersupply, and it remains a seller’s market, with the seller (in the first instance) always being the ACT Government. Perhaps people have forgotten the front page splashes of hundreds and hundreds of angry “working families” leaving LDA ballots empty handed? Don’t believe that the underlying problem has gone away – they’ve just got better at concealing it. There have for a few years now been pre-ballots, so only a subset of those on the waiting lists got invited to the actual ballot. This way there was only every a handful of disappointed people afterwards collected in one media-friendly location. It worked a treat. The bad media disappeared completely.

Until such time as there is a substantial selection of vacant land for sale and “on the shelf” in multiple areas (not a single suburb or two), it remains a seller’s market open to manipulation (whether deliberate or otherwise).

And it doesn’t matter what the Government has attempted to do through the housing affordability initiatives, it has all been countered and then some by this artificial driving up of prices to levels that put our increases ridiculously on par with increases in Sydney and Melbourne. It is absurd for a town where the only real land supply constrain is the artificial one called the NSW border.

My personal thought for some time (note not Greens policy) has been that the way to ease back the overheated market without causing a price crash that would harm existing homeowners, would be to self-impose a moratorium on increases in new land prices until such time as the Government has sufficiently got back on top of the land supply shortfall that there is stock on the shelf – for immediate purchase and construction commencement – not this can’t start for two years nonsense we have now.

Alderney Alderney 9:31 pm 30 Mar 12

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.

Alderney Alderney 9:27 pm 30 Mar 12

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.

dungfungus dungfungus 9:07 pm 30 Mar 12

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.

drfelonious drfelonious 6:57 pm 30 Mar 12

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.

Bluey Bluey 10:16 am 30 Mar 12

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.

Quokka Quokka 8:38 am 30 Mar 12

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.

c_c c_c 2:34 am 30 Mar 12

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.

arescarti42 arescarti42 10:52 pm 29 Mar 12

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.

dungfungus dungfungus 10:41 pm 29 Mar 12

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.

VYBerlinaV8_is_back VYBerlinaV8_is_back 10:39 pm 29 Mar 12

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.

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