Disclaimer: These comments are the writer’s own and do not necessarily reflect the current opinions and policies of the Real Estate Institute of Western Australia.
Flicking through some of my earlier contributions to the Voice, I found this one about Affordability written in 2010; this issue remains a hot button topic.
Much finger-pointing surrounds this topic: the government an obvious target for not tackling the problem “head-on” and opting for “working committees”, real estate agents for hiding behind their fiduciary responsibility of achieving the highest possible selling price and developer landowners by holding back vacant blocks until demand clearly outstrips supply.
These groups certainly feature in the discussion but behind it all is perhaps our humanness; our modern desire to have more and to have more now.
Many first-time property buyers are no longer content to buy and live in an outer, established suburban two-bedroom flat, quoting “lifestyle reasons”.
Instead many build in newly created urban sprawls where a theatre room and outdoor kitchenette are a “must have”. This perceived need for desirable “all-done-and-finished” housing has inevitably made building a home more expensive and the fresh sods they are constructed on include “in-built” infrastructure costs forced on developers by government policy and passed on through to the consumer.
Credit has been easy to obtain (granted not as easy as it has been in the USA of late and local lenders have tightened their lending criteria somewhat) and aided by generous government grants, many home buyers find themselves sacrificing lifestyle for the humdrum of mortgage repayments.
It is well known that nowadays we sacrifice more of our weekly earnings on mortgages or rent in percentage terms than ever before.
And whilst the issue of affordability is subjective (some can afford more than others) and inherent in modern liberal capitalism, it is an issue that is getting worse as out median house price moves beyond $480,000. (Source, REIWA) A $450,000 mortgage means paying $772 per week at current interest rate levels for a 25 year loan. With average weekly earnings across Australia at $1,250 per adult per week, in terms of averages and medians the problem is obvious. (Source, St George Bank Mortgage Calculator and ABS August 2009)
The lead probably needs to come from government who ought to make a serious attempt at restructuring grass roots planning and infrastructure policy in order to combat development constraints and create genuine community housing.
Seven years later, the heart of the issue remains the same; it’s a planning and supply issue and negative gearing is not to blame.
by Hayden Groves
REIA Deputy President