Australia becoming a 2 tier real estate market as Melbourne's one million dollar median home price suburbs double to seventeen

Melbourne now has seventeen one million-dollar suburbs, more than double the number at the start of the year.
The booming housing market means the likes of Balwyn and Surrey Hills are joining the property elite of Toorak and Brighton as having median price tags of more than $1 million.
Real Estate Institute of Victoria figures show that sales in the three months to the end of June produced nine more million-dollar suburbs, compared with eight in the first quarter of this year.
REIV chief Enzo Raimondo said the middle and the top end of the Melbourne homes market were going strong.
"I don't remember the $500,000-and-up market being this strong," Mr Raimondo said.
While housing affordability continues to worsen, especially for those trying to enter the market, it seems there is plenty of money to spend on property in eastern and beach suburbs of Melbourne.
The median value of Hampton homes jumped 23.8 per cent to put it in the $1 million bracket in the June quarter.
A renovated, four-bedroom clinker brick home in Littlewood St sold on Saturday for $1.855 million, stunning agent Stephen Wigley, of Hodges in Sandringham.
With a starting price of $1.35 million, Mr Wigley expected to secure a sale close to the reserve of $1.5 million.
"But a gentleman... started the bidding at $1.5 million," he said.
The Hampton area had been undervalued for some time and the quality of homes and its location would ensure more high prices would continue, Mr Wigley said.
Kay and Burton managing director Gerald Delaney said it had been the busiest winter for sales.
In the past year, the estate agent had sold properties worth at least $1 million in 23 suburbs, Mr Delaney said.
On Saturday, Kay and Burton sold a four-bedroom townhouse in Glen Eira Rd, Elsternwick, for $1.195 million.Source: Herald Sun

Housing affordability, scarcity and mortgage interest rates to get worse

Housing affordability will get worse before it gets any better, with mortgage interest rates more likely to rise over the next year or so, the federal opposition's housing summit was told today.
Financial markets are already betting the Reserve Bank of Australia will need to raise interest rates next month to kerb renewed signs of price pressures.
Any rise will compound already stretched household budgets after last year's three interest rate rises.
More than 100 experts in finance, economy and politics have joined federal and state Labor politicians at Parliament House in Canberra to find solutions to the housing affordability crisis.
ANZ Bank chief economist Saul Eslake told the conference that high interest rates were the cause of the last housing crisis in the late 1980s, which was later countered by low interest rates.

But this time the problem was also rising house prices, which would be “a problem for sometime to come,'' Mr Eslake said.
Lower mortgage rates would help, and authorities should aim to put downward pressure on interest rates, and “saving more from the resources boom than the present government,'' he said.
Young are the victims
The conference was told that the main victims in the current housing crisis are under the age of 35 that typically borrowed too much during the 2000-2004 housing boom.
This group is now suffering from rising interest rates, and in some cases are having to take on a second job to meet repayments.
NSW Planning Minister Frank Sartor said the cost of building houses was accelerating, and needed to be countered with a quicker turnaround in housing permits.
But he disagreed with the federal government's solution to the housing problem that it was just a question of releasing more land for housing and cutting state housing related taxes.
Mr Sartor said cutting taxes would just lift house prices by the amount of the tax cut. This is a similar argument the government uses for not raising the $7,000 First Time Home Owners Grant.
But in any case, the conference was told that the value of the grant has been hugely diminished due to the rise in house prices.
The Government is undertaking a national land audit to find suitable areas to build new housing, and continues to press states and territories to cut land taxes as part of the GST agreement.
Infrastructure is key
Australian Local Government Association president Paul Bell says it is not just a question of building new houses, but building them where people wanted to live, with proper services and infrastructure.
”Housing supply has to be where the housing demand is,'' he said.
Housing Industry Association managing director Ron Silberberg says states will suffer a $50 billion shortfall over the next 10 years as they try and keep up with new infrastructure needs.
He said there should be a residential infrastructure fund, similar to Auslink and the government's new roads initiative, to allow for a synchronised roll-out of infrastructure with new home building.
Another problem for new home buyers is they are competing with investors who can gain tax benefits from investing in property, and are driving up house prices.
But Mr Eslake said saving initiatives to help fund the deposit for a new home, such as a superannuation-type scheme, should be aimed at buying a new property rather than inflating the price of an existing home.

Government urged to take heat out of housing market

The Northern Territory Chamber of Commerce says rising house prices are contributing to Darwin's high inflation rate.
The latest consumer price index (CPI) shows Darwin's inflation rate this year is 3.7 per cent, 2 per cent more than Sydney and Adelaide.
Chamber of Commerce spokesman Chris Young says a shortage of available land for development is not helping.
"We're asking the Government to accelerate the release," he said.
"They've got a number of planned releases over the next couple of years.
"Our concerns are that they maybe need to accelerate those a little bit to try and take a little bit of heat out of the market."
Source: ABC

Adelaide mortgage business hits the skids with debts of AU $10 million

A South Australian mortgage business has been placed in voluntary administration.
John West and Associates, based at Campbelltown in Adelaide, has debts of more than $9.5 million.
More than 50 investors are affected.
Administrator Austin Taylor, from Meertens Chartered Accountants, says the collapse is the latest in a series of high-profile property-related mortgage scheme failures, which have included Westpoint and Fincorp.
"This company was borrowing money from investors on the basis of promissory notes and it was then using that money and lending it out to people at a higher interest rate usually secured with mortgages," he said.
Hope of some return for mortgage investors.
Mr Taylor says, at this stage, it appears there will be some return for mortgage investors.
"But it's far too early to say exactly what that might be," he said.
"It's going to really depend upon the state of the mortgage loans, the underlying security that they're secured against and the capacity of borrowers to repay.
"That's going to be a process that will take a little while to get through."
Company director John West says he is confident that, given time, all the money will be recovered for investors.
"There are a number of mums and dads who are currently hurting from this particular freezing of funds, where they depend on those funds," he said.
"The majority of funds would be with larger, more sophisticated investors but I think it's irrelevant whether a person is a small investor or a large investor. The reality is they've trusted somebody."
John West and Associates is also being prosecuted by the Australian Securities and Investments Commission for alleged breaches of the Corporations Act.
Source: ABC

Hot property areas as housing market heats up with mortgage business surge ahead of the election.

Melbourne and Canberra were the hot property standout performers in a mixed bag of capital city housing price increase results for the June quarter while home unit and apartment prices are improving nationwide.
Melbourne house prices jumped 6.5 per cent to a median of $398,217, the strongest growth in six years, according to researcher Australian Property Monitors.
But it was a different story in other capitals.
Prices in Hobart falling 1.6 per cent and Perth's housing bubble deflating at a rate of 0.2 per cent.
Sydney inched along with growth of 1.1 per cent, though apartments turned in a better result with prices rising 2.2 per cent.
"Melbourne, Canberra and Brisbane property markets are booming," APM general manager Michael McNamara said.
Prime property is hot
The growth is being driven by the premium end of the market while many outer suburban areas suffer, particularly in Sydney.
Canberra recorded the best growth of all, with 7.4 per cent for the quarter and a surge of 17.6 per cent over the year, taking the median price to $319,587, according to APM.
In Brisbane, prices jumped four per cent for the quarter, or 12.8per cent for the year.
In Melbourne's inner urban area, which includes suburbs such as Malvern, Port Melbourne and St Kilda, prices grew 10.7 per cent for the quarter.
Prahran recorded a massive 22 per cent jump based on 63 sales, Mr McNamara said.
Inner-city heats up
Melbourne's inner south market was also on the boil, with 11.5 per cent growth in house prices, for the quarter.
"It's difficult to see that this heat will be as sustained as in the first three years of this decade," Mr McNamara said.
"It's more likely a six to 12-months phenomenon," he said.
"Low stock levels mean that more cashed-up buyers are competing fiercely for a smaller pool of available properties on the market.
"First-home buyers are also competing with investors trying to take advantage of increasing gross rental yields."
Clearance rates improving
JP Morgan chief economist Stephen Walters said auction clearance rates - about 80 per cent in the past few weekends - pointed to better fortunes in Melbourne.
Mr Walters said investors were likely to be a major factor in the price growth with Melbourne's median price still about $100,000 lower than Sydney.
Adrian Fini, executive director, development, for Mirvac Group, one of Australia's largest apartment developers, said Melbourne residential prices and turnover had been recovering throughout the first half of this year.
While the Sydney market, apart from the strong top end, had been flat, the beginnings of a turnaround were expected later this year, Mr Fini said.Source: The Australian

Has the Reserve Bank and the Liberal Government conspired to caused high rents make families homeless?

With the RBA delivering 6 rate increases, it has to take part of the blame for the current housing shortage, especially rental property, which became unattractive with the cost of financing due to these mortgage rate increases on top of GST costs. As a result Australian's that have missed the prosperity boom are facing the prospect of homelessness, says the St Vincent de Paul Society.
A report by the society says that over the past five years there has been a 30 per cent increase in the number of families with children needing assistance from homelessness services across Australia.
It says the pressure on the services "has never been greater'', mainly due to the desperate state of the private rental market.
About half of the families seeking help had rented their homes from private landlords, even though private renters make up only 23 per cent of Australian households.
The report says the focus of housing affordability has too long been on ownership, while the plight of low-income renters has been ignored.
"It's time proper attention was paid to the private rental market and decisive action was taken to improve access to affordable housing for low-income private renters living under sometimes crushing financial pressure,'' the report says.
It also says that half of all low income households in the private rental market are in housing stress, meaning they pay more than 30 per cent of their income in rent, and a third of those are in housing crisis, meaning they pay more than 50 per cent of their income in rent.
St Vinnies is calling for a direct $1.33 billion investment in low-income housing by the federal government to address the current crisis.
"We believe that the answer lies in switching the thrust of government policy to supply-side measures, namely, direct investment to increase the supply of the very best form of housing for low-income families - public and social housing,'' the report says.
St Vinnies also wants the issue to be at the top of the agenda at the next Council of Australian Governments (COAG) meeting.
The report says the rental crisis is having a devastating impact on children.
"Most of the children in homeless assistance services are under 12 years of age - a crucial period of their development - and homelessness has a serious impact on their health, education and well-being, often causing high rates of anxiety, emotional and behavioural problems and mental illness,'' the report says. Source: AAP

Brisbane's investment property shortgage means fewer vacancies, and soaring rents

Brisbane rental market is reaching crisis point, with new figures revealing fewer vacancies and rent rises of more than $100 per week.
Rents across the city have jumped 50 per cent in five years and reports of prospective tenants bidding for their rental properties have increased.
The Residential Tenancy Authority figures revealed inner-city and Fortitude Valley area rents spiked 38 per cent from $275 in June 2002 to $380 in June 2007.
South Brisbane rents rose from $210 to $310 in five years.
Queensland University of Technology president Daniel Doran said a ‘‘massive amount’’ of students had complained of having to bid for rent to secure a dwelling.
‘‘This doesn’t help students with already high levels of HECS debt, and as a result we’ve noticed a rise in emergency food vouchers,’’ he said.
Raine & Horne principal Darren Dollimore said young adults, particularly students living in inner-city areas, were being hit hardest, with rates rising $10-$60 every three months.
Housing Minister Robert Schwarten said escalating rents and a shortage of properties meant rent-bidding was a concern.
A report released today by industry analyst BIS Shrapnel said the demand for 44,000 new houses last year had not been met, with only 39,000 being built.
Get your free copy of mX at public transport hotspots around Brisbane city and Fortitude ValleySource: MX

Mortgage interest rate saving ideas

Home mortgage interest rates are at a six-year high and could rise even more. Home buyers and homeowners need to consider these steps to reduce home loan interest rate costs.
Step 1: Check other offers.
You can negotiate or renogotiate with bank and non bank lenders and some mortgage brokers and mortgage lenders as the big banks are undercutting each other on interest rates to win your business.
So if you're after a home loan, check all mortgage lenders and ask them for a discounted interest rate.
At the moment, the big banks advertise standard discount of 70 basis points to 7.37 per cent if you borrow larger amounts, usually more than $250,000, but banks are having to offer bigger discounts becuase the non bank mortgage lenders are gaining ground.

Step 2: Increase your mortgage repayments
This won't reduce your mortgage interest rate, but will cut the term and that can mean massive savings in total interest paid.

Step 3: Compare basic loans interest rates
Mortgage lenders have basic home loans at reduced mortgage interest rates.
Check these out but they may have no savings over the heavily discounted standard home loans that are fully featured.

HIgh costs of mortgage debt consolidation

Lumping all your debts into one may not be the best way out of trouble [but it may be the onle way as well].
People are putting their homes at risk over relatively minor debts such as credit card balances because they don't fully appreciate the difference between secured and unsecured debt.
"People are taking small, unsecured debts and refinancing them onto their mortgage, which is secured debt," says the co-ordinator of the NSW Consumer Credit Legal Centre, Karen Cox. "But if they create the situation whereby they can't pay their mortgage, they risk losing their house over a small credit card debt basically." [If they don't pay their credit card debt, they will eventually put their home at risk because the creditor can chase the debtor to bankruptcy. The difference is that the consolidated debt can be thousands of dollars cheaper per month than the debts separately, and this is why people can't manage the debt in the first place. The problem is that many mortgage brokers add fees and the Government takes mortgage duty and sometimes even stamping duty, and these extra fees contribute to debt bloat.]
Cox says not every borrower is aware of the difference between secured and unsecured debt or fully appreciates that their consumer debt becomes secured debt when consolidated into a home loan: "We've had comments from a number of consumers who say, 'I didn't know I'd done that and I wish I hadn't, because I'm now struggling to pay my mortgage and I could lose my house."'
Financial counsellor Jan Pentland, of Melbourne's Eastern Access Community Health, says such refinancing is being actively promoted by finance brokers. "But while it seems like an easy and sensible thing to do, there are implications that may not be considered," she says.
Unsecured loans - such as the money a credit card company lends you - don't require any form of security to back the loan in the event you default. The lender relies solely on its judgment that you'll be able to pay in full.
Secured loans are backed by some form of collateral - in the case of a home loan, by the house or unit. In this case, the bank, after following certain preliminary steps, is entitled to repossess your home, sell it and use the proceeds to fulfil the debt obligation.
Cox says it is possible for creditors to take enforcement action on unsecured debts - seeking a writ for levy against property or making you bankrupt and forcing asset sales - but says it's a longer process with opportunities along the way to negotiate.
The Consumer Credit Legal Centre generally advises people to stick with their smaller debts and try to negotiate a revised payment schedule with their original lenders to resolve the problem.
Cox says people in financial stress can be vulnerable to making bad decisions based on poor advice in this regard.
"You've got people specialising in debt consolidation and - while not all these people are necessarily bad - it's an area in which some form of exploitation is quite rife," she says.
In extreme cases, people are charged large fees and commissions - totalling perhaps $30,000 on a $200,000 loan - that are added onto the new loan.
"At the really sticky end", Cox says, a large slice of the loan might be on, say, 12 per cent while the remainder of the debt goes to another lender at 16 to 18 per cent.
"The worst-case scenario for those people who are already in significant trouble on either their credit cards or their mortgage and who then consolidate or refinance into another loan is that it actually turns out to be a lot more expensive than the one they've got," she says.
"So it hasn't solved their issues at all. It might postpone enforcement proceedings but that's about it. A lot of those people go under in a fairly short time anyway and they've lost a whole lot of their equity [in their home]."
Pentland says finance brokers being paid by commission have a vested interest in promoting such loans. "They're not an independent voice and, ultimately, the outcome can be that people eat away at the equity in their homes."
In the middle are people refinancing what should be short-term debt - such as credit card balances - on long-term loans so that their repayments drop, perhaps easing their immediate burden. But the result is that they pay much more over the term of the loan, Cox says.
"Some people make that decision because they're facing enforcement proceedings on the credit card, but it's something they really need to be aware of. It might well be that, if they get advice, they'll manage to make some sort of arrangement with the original creditor on the credit card."
Also in that middle zone are people whose lenders won't let them consolidate their debts in their existing, standard-rate home loan. Some of those people might move to lenders offering "sub-prime" home loans, which come at higher interest rates based on the perceived higher risk for the lender.
Such borrowers need to take care that the saving from lowering the rate on the credit card portion of their debt isn't wiped out by the higher rate on the - almost certainly much larger - home loan portion of their debt, Cox says.
"People have to be very careful to get advice from an independent source before they do anything - particularly if they're under pressure from existing creditors," she says.
The Australian Securities and Investments Commission provides details of free, independent counselling services at its consumer website, http://www.fido.asic.gov.au/ (search for "financial counselling"). Pentland says the calculators available on many financial websites allow borrowers to do their own sums on possible outcomes.
Cox says some people will have to ask themselves whether, in the end, it would be better to sell their home.
"It's a really hard decision, but when you're being offered finance on really bad terms, once you get to that point, it's better to think, 'I'm going to make a strategic retreat here ... If I sell up now at least I'm going to walk away with some cash.' If you keep refinancing, there are people out there who, literally, are out to strip you of your equity.
"You're only going to end up worse off in the long run, because if you lose your house and your equity too that's just devastating."
Selling up is an extreme solution but a valid one if you've done a thorough assessment of your overall financial position and it just doesn't add up, Pentland says.
"You have to do some serious thinking - if you were to refinance, is that going to resolve the problem, or is it just putting off the day when you're going to have to face this?"
THE SNOWBALL EFFECTConventional wisdom says you should pay off your most expensive, non-deductible debt first. In other words, you should apply any extra money to your credit card debt first, ahead of a personal loan or home loan and definitely before an investment loan on which you can claim the interest expense as a tax deduction.
However, if personal debts have got out of hand another strategy is to pay off your smallest debts first.
The strategy involves paying the minimum required on all of your debts, then finding an extra amount to apply to the smallest of those debts. Once you've paid that first debt off, you apply its minimum repayment and the extra amount to the next smallest debt and so on.
The idea is that the amount you pay on the next debt in line snowballs each time a payment is made.
Plus there's a psychological benefit in actually seeing the debts being knocked off one by one, rather than having one large, consolidated debt hanging over your head for what seems like forever.
Asked what she thinks of the snowball strategy, named by US finance author David Ramsey, financial counsellor Jan Pentland says she thinks it does have psychological value.
"It cuts across the notion of paying the most expensive debt first but there's an effect when people see themselves making some progress," she says. "And that encourages them to do more."Source: The Age

Real estate investors to get tax breaks for providing cheaper rental stock

Australian Labor Party will consider giving tax breaks or even cash to property investors who invest in cheaper rental housing to create more housing stock and thus ease Australia's housing crisis.

Labor's housing spokeswoman Tanya Plibersek said that while Labor will not tamper with negative gearing, its flaw is that it delivers only expensive rental properties as owners seek to maximise tax advantages.

Ms Plibersek said she wanted to push for Labor to adopt the policy where investors received tax incentives or tax credits for providing housing at cheaper than market rent rates.

"Anything we do should actually increase housing stock, we have to build more houses if we want to do something about housing affordability so I'm particularly interested in measures that increase the supply of houses," Ms Plibersek said.

Two weeks ago, Labor leader Kevin Rudd released a paper in Brisbane entitled New Directions for Affordable Housing, which canvasses various proposals to end the crisis and also proposes a July 26 housing summit.

Ms Plibersek said that of the various options, she favoured a rental incentive scheme.

That would provide a subsidy to developers or community housing providers to build affordable accommodation.

The subsidy would apply for as long as owners rented properties out at affordable rental levels.

"They will be able, some time down the track, to rent them out at market rates," she said. "But while they get the subsidy, they will be renting it at below market rental.

"It might not be cash, it might be reduced taxation, but it's a fixed amount of benefit - in many instances, the way you'd do it is reduced tax or tax credits so they can use it in other areas of their business or they might pay less capital gain over time".

Ms Plibersek said many people were investing in housing but were most likely to invest in high cost properties.

"The tax treatment in many ways privileges that type of investment," she said.

"If there are other ways of privileging investment at the more affordable end of the rental market ... that is something that I'm enthusiastic about."

Her comments came as Peter Costello revealed he had written to state governments, the housing industry and land developers to begin an audit to identify land able to be released for housing.

The Treasurer, who blames high housing costs on land shortages that could be eased if states released more public land, said it was essential to identify land that is available for housing so that demand from a growing population does not put extra pressure on house prices.

"The Federal Government recognises that housing affordability is a complex issue, and there are many aspects that govern it on both the demand and the supply side," he said.
Source: The Australian

Labor promises housing relief for home buyers in its election platform

Australia's Labor Party has promised to work with state and local government to cut red tape for home buyers, reducing delays in the real estate development application process, if it wins the upcoming federal election.
Australia's hopeful "Government in waiting" says industry bodies like the NSW Urban Taskforce has found that delays cost up to $4 billion a year alone in the state, and in some local council areas development applications are taking at least 12 months.
Holding costs and delays can add up to 15 per cent to a project's overall cost, it says.
“These delays add unnecessary cost burdens to the home buyers and this is significant to first time home buyers on limited budgets,” Labor leader Kevin Rudd said in a joint statement with treasury spokesman Wayne Swan and housing spokeswoman Tanya Plibersek.
Labor's national housing affordability summit on July 26 will consider how to roll out a national online real estate land development application tracking website that would be uniform across all states, territories and local government planning departments.
“This would allow all home buyers, including first time home buyers to check the status of their approval at any time of the day,” Mr Rudd said.
“It would also save local councils time and money. A similar scheme known as the Application Tracking Online Service is already operating in northern Sydney at Pittwater Council.”
Labor says the process of complying minor housing projects – such as extensions – also needs streamlining in local government councils.
Source: AAP

Rising home costs means changes to Australian dream in an election year

home prices and location and convenience are forcing Australians to redefine the dream.
One of the hardiest perennials in the political garden is the "home affordability crisis". As is often the case in an election year, a lot of fertiliser is being spread about at the moment on the issue. While some of the policy ideas have merit, our politicians are too often focusing on the wrong parts of the problem and thus coming up with wrong, or at least inadequate, "solutions".
A big crop of new housing proposals has sprung up recently.
Australia's housing ministers are talking about a national shared-equity scheme where government becomes an equity partner in purchasing a home aimed at low and moderate-income households, as well as a revamped first home owners grant.
Federal Labor leader Kevin Rudd is proposing low-tax home deposit savings accounts, an overhaul of local government funding to rein in rising infrastructure charges on developers and home buyers, a shared-equity scheme and tax credits that can be offset against tax liability for investors who agree to charge below-market rents as a way of encouraging the supply of low-income rental housing. All will be considered at a national housing summit in Canberra later this month.
Federal Treasurer Peter Costello wants an audit of government land that could be released for development, while resisting Coalition backbench calls for that most hardy of all perennials in this debate - a doubling of the first home owners grant from $7000 to $14,000.
And Prime Minister John Howard has taken the opportunity to get stuck into the states for what he says is the key source of the problem - their failure to release enough land for residential development on the periphery of our cities.
Some of these approaches attack the problem of falling home affordability from the demand side and some from the supply side.
Demand-side solutions tend to be self-defeating. For example, government first-home buyer grants intended to make buying a house more affordable can, perversely, push up prices as sellers simply absorb the handout into their asking price especially in an overheated market. With no increase in supply, bumping the grant from $7000 to $14,000 would simply mean the going price would rise, more or less, by $7000. Likewise for the suggestion to scrap stamp duty.
And while Rudd's idea for tax-preferred savings vehicles would make it easier for people to gather a deposit (albeit with a cost to the budget), it would do nothing to restrain house prices and may actually add to them for similar reasons.
More broadly, what is happening here is simply a case of constrained supply meeting increasing demand, as incomes rise and housing finance has become relatively cheaper and more accessible .
If there is more money available (higher incomes providing the capacity to service bigger loans on offer) at a relatively low price (low interest rates) chasing a limited amount of housing (because there are only so many places people can, or want, to live), prices can only go one way - up.
Prices have also been pushed higher by cashed-up property investors chasing a limited stock of existing housing, assisted by easier finance and the tax system through negative gearing, depreciation allowances and the halving of the capital gains tax in 1999.
A supply-side policy approach is more likely to succeed, although many of the solutions offered have tended to be simplistic and inadequate.
As both the Productivity Commission and Macquarie Bank analyst Rory Robertson have pointed out (and the federal Treasury seems to agree), it is simply not enough to say that homes are now unaffordable for many first-time buyers because state governments have not released enough new land on the edges of the big cities.
The heart of the problem is that prices are being pushed up by competition for housing in the places in which people actually want to live - big homes close to the centre of cities and to the coast, with short commuting times to work and access to the entertainment, educational and cultural amenities that these places offer.
"The issue of location, location, location dominates the housing-affordability problem," Robertson notes. "Would-be home buyers on average incomes (or less) have been pushed towards the periphery of our cities and beyond, 'priced out' of the market for well-located family homes. Indeed, the extremely high price of land 'close to the action' leaves most of us struggling with that never-satisfying compromise between proximity maximising work, educational and leisure opportunities, while minimising travel time and the size of our houses and yards.
"In Australia . . . average home prices generally are much lower inland, or near the coast but well away from 'the action'.
"Unfortunately, all six of Australia's state capitals where most of us tend to live are high-demand coastal centres, and so are prone to be relatively expensive."
This demands a different sort of supply-side policy solution effectively shrinking distances in our cities through better transport and decentralisation and increasing housing supply closer to the city centres through more medium and high-density development.
The most promising approaches involve improving transport infrastructure, to reduce commuting times and effectively increase the quantity of "well located homes". It also involves creating jobs closer to plentiful lower-cost housing land by promoting suburban and regional economic development and encouraging decentralisation of major employers in both the public and private sectors.
And there needs to be new approaches to planning regulation and a change in expectations among some home buyers themselves especially accepting the new reality of apartment living instead of a house on a quarter-acre block.
As Robertson concludes: "The harsh reality for most of our younger generation (and others left behind) is that the housing-affordability horse has bolted and it ain't coming back.
"For those would-be home buyers priced out of the market for well-located family homes, the best practical advice remains to look further afield or to start thinking about apartments. These days, that never-satisfying trade-off between proximity and house and yard sizes simply is a fact of life.
"The Great Australian Dream has been downsized."
Source: The Age

Australian homeowners don't understand their mortgage home loans

Almost three quarters of Australians say they are unhappy with their home loan and don't fully understand the paperwork, an online survey says.

And even though they could save as much as $60,000 on an average-size mortgage by shopping around for a better deal, most don't - either through apathy or a lack of understanding.

Mortgage lender Myrate.com.au found 77 per cent of the 1100 people it questioned last month felt unhappy or confused with their home loan.

"The survey found an overwhelming majority of Australians were not happy with their home loan and admit to feeling miserable, confused and downtrodden as a result," the company said.

However, only 38 per cent were prepared to shop around for a cheaper deal.

The survey also found that 71 per cent of respondents would rather drive out of their way to get cheaper petrol than investigate ways to obtain a less expensive home loan.

"For many Australians, the idea of saving money on petrol is an easy equation - it's laid out in front of you in black and white, whereas the perception of refinancing your home loan in order to get a better deal seems far too daunting," said Myrate.com.au general manager Kevin Sherman.

"We try to encourage people to pull out their home loan paperwork and look at their personal circumstances to make sure their home loan is still appropriate for them."

Mr Sherman said a person could save as much as $60,000 on a $300,000 home loan if they shopped around.

"To get your initial home loan, it feels like a lot of work. Most people think a home loan is the same across the board, but the deals are very different."

Mr Sherman said the failure of people to check whether they had the best home loan situation was a combination of apathy and a lack of understanding.

"People put it in the too hard basket," he said.

"A home loan can be the biggest financial investment many people will make in their lifetime, so it's important they check their home loan on an annual basis to ensure they're getting the best deal."

SOURCE: AAP

Wealthy become mortgage lenders darlings as they borrow to buy investment property

Australia's richest federal electorates, in Sydney and Brisbane, have been leading the mortgage binge, dousing fears that the majority of households are facing a debt crunch.

Wealthy families are borrowing against their bricks and mortar to buy investment properties, and to fund holidays or their children's education. This group, not the battlers, explains much of the drop in home ownership over the past five years, data obtained by The Australian shows.

The best example is Mitchell, in Sydney's northwest suburbs wealth-belt. It boasts the second-richest electorate by income and the largest concentration of houses with four or more bedrooms, and is the second-safest Liberal seat on the electoral pendulum. Yet the proportion of households paying off their homes has jumped from 35.4 per cent in 2001 to 46 per cent last year.

This week's release of the national census showed the share of Australian households owning their home outright crashed from 39.8 per cent in 2001 to just 32.6 per cent last year. And the proportion who were paying off their home jumped from 26.5 per cent to 32.2 per cent over the same period.

The housing boom since 1997, which has typically seen prices double as nominal interest rates have halved, has created fears about the locking-out of young families.

But new entrants to the market over the past five years facing larger debts do not account for the fall in the share of houses owned outright. It is existing owners using their bricks and mortar as a line of discretionary credit who are driving the trend to lower rates of freehold title.

"That third that have paid off their home may well be borrowing against it," federal Treasurer Peter Costello said. "My suspicion is that there are a lot of people unlocking equity in their homes, particularly amongst those older people who would traditionally have paid off their mortgage in its entirety."

Stephen Walters, chief economist at investment bank JP Morgan, said people might have expected an ageing population would mean a greater proportion of people fully paying off their homes, but more people were now prepared to be investors.

"Certainly the big change between 2001 and 2006 is deteriorating affordability. As prices boomed through 2002-03, more people had to borrow to gain a foothold in the market," Mr Walters said.

"But added to that is the changes in banking products that are allowing people to redip into their mortgages to fund things like their kids' education and go on overseas holidays. It puts off paying the final debt, and pushes up the proportion of households that aren't paid off."

NSW, which has experienced a property slump in recent years, had the lowest proportion of home mortgages (30.2 per cent) of any of the main states, the main census said. The boom state of Western Australia had the highest proportion of mortgaged homes at 35.2 per cent.
Source: The Australian