Post by Flash on Mar 18, 2008 18:38:56 GMT -5
Are interest rates solely reponsible for housing crisis?
There has been much talk for the past few months about the increasing unaffordability of housing in Australia. As we've heard before somewhere..."the rich are getting richer and the poor, poorer". It seems the land of milk and honey and middle classes is eroding, with a widening gap between the haves and have nots.
Most focus has been on interest rates as a cause for the affordability crisis, but now that they are steady(ish) what else can be blamed?
HIA's Executive Director, Industry Policy and Services, Chris Lamont has said that "the worst affordability situation in at least a quarter of a century, coupled with low vacancy rates and soaring rents, has the potential to create social upheaval, the like of which has not been seen since the Great Depression. If people can not afford to buy a home, and there is nowhere left for them to rent, then what is left? It is a desperate situation." (HIA Media Release 15/01/07)
Interest rates are definitely a factor for existing mortgagees who took on large loans 3-4 years ago, however they play a smaller part in affecting those trying to get into the market. Mr Lamont suggests the availability (or lack thereof) of ready-to-develop land, coupled with enormous planning red-tape and the fact that state and local governments see housing as their cash cow are more responsible for the crisis.
The actual cost of labour and materials for a new home has remained competitive and roughly in line with inflation, but there are many issues affecting the industry outside of its control. The suggestion to rectify the situation is a much more collaborative approach between government and the housing industry's consumer reps to reduce the red-tape and artifical supply constraints. Maybe if this happens, there can be a clearer pathway to supplying more affordable housing to the average Australian now and into the future.
It's a scary thought that many Gen X's and Y's won't be able to afford their own home in the way their parents have. Already it is easy to see that most new entrants into the home-buying market are spending far greater percentages of their earnings on the mortgage than ever before. How sustainable is it? What happens when people can't afford a roof over their head? What ever happened to "she'll be right mate?"
Have your say here.
There has been much talk for the past few months about the increasing unaffordability of housing in Australia. As we've heard before somewhere..."the rich are getting richer and the poor, poorer". It seems the land of milk and honey and middle classes is eroding, with a widening gap between the haves and have nots.
Most focus has been on interest rates as a cause for the affordability crisis, but now that they are steady(ish) what else can be blamed?
HIA's Executive Director, Industry Policy and Services, Chris Lamont has said that "the worst affordability situation in at least a quarter of a century, coupled with low vacancy rates and soaring rents, has the potential to create social upheaval, the like of which has not been seen since the Great Depression. If people can not afford to buy a home, and there is nowhere left for them to rent, then what is left? It is a desperate situation." (HIA Media Release 15/01/07)
Interest rates are definitely a factor for existing mortgagees who took on large loans 3-4 years ago, however they play a smaller part in affecting those trying to get into the market. Mr Lamont suggests the availability (or lack thereof) of ready-to-develop land, coupled with enormous planning red-tape and the fact that state and local governments see housing as their cash cow are more responsible for the crisis.
The actual cost of labour and materials for a new home has remained competitive and roughly in line with inflation, but there are many issues affecting the industry outside of its control. The suggestion to rectify the situation is a much more collaborative approach between government and the housing industry's consumer reps to reduce the red-tape and artifical supply constraints. Maybe if this happens, there can be a clearer pathway to supplying more affordable housing to the average Australian now and into the future.
It's a scary thought that many Gen X's and Y's won't be able to afford their own home in the way their parents have. Already it is easy to see that most new entrants into the home-buying market are spending far greater percentages of their earnings on the mortgage than ever before. How sustainable is it? What happens when people can't afford a roof over their head? What ever happened to "she'll be right mate?"
Have your say here.