The Age finally notices that there might be a massive downside to inflated house prices:
In the case of the Melbourne greenfield market, which accounts for 42 per cent of annual lot sales for all five markets, the percentage of affordable lots has fallen from nine lots in every 10 to three lots in every 10 over the past 30 months.
Based on independent qualitative research, first home buyers in new estates have, in the past, represented from 50 per cent to 80 per cent of total demand. With the purchasing capacity of the average first home buyer being limited to about $400,000 for a house and land, it is critical that land prices are kept at or below the $200,000 price point to remain affordable.
The median lot price in Melbourne has increased by 22 per cent over the past 12 months with the current median being $219,000 for a 448 square metre lot.
Thank you for noticing! And acknowledging that this might be a bad thing!
But the relief is short-lived. As usual, they completely ignore the major factor that’s keeping the prices high: the vicious circle of high prices meaning investors (with equity in at least one other property by definition) have more money to spend, outbidding first home buyers and pushing prices up, leading to investors having more money to spend and so on. No, it’s immigration and planning:
The dramatic reduction in the ability of Melbourne’s new developments to deliver affordable housing has been due to unprecedented demand driven by net overseas migration, delays associated with legislating new supply and the time taken to secure, plan and develop land holdings. In short, the procurement and planning process has been unable to keep up with demand.
Note that they don’t here mean the building of new infrastructure so that the young people forced out to Deer Park can actually get to jobs in the city. They just mean making life easier for developers, and creating an easy scape-goat for young people’s anger.
And at least some readers are buying it:
Here’s how you fix the property market in Australia. Just need a government brave enough to do it.
1. Stop ALL foreign investors from buying ANY residential property in Australia â€“ PERIOD !
2. Have to be a resident in Australia for at least 5 years before you can buy property here
Bottom line, is you cannot outbid cashed up Asian investors (foreign or domestic) at an auction.
Posted by JohnS | Melbourne – March 28, 2011, 11:41AM
Sorry, JohnS – you cannot outbid cashed up investors of any race. Because they’ve got a hell of a lot more equity in their existing properties than you have savings.
I no longer expect commercial media to actually tackle the real causes – negative gearing, inflationary grants like the FHOG, ridiculously low capital gains tax, insufficient protections for young people forced into long-term renting. That’s hardly what advertisers want. But it would be nice if occasionally the independent media had a go.
Until they do, the problem is only going to get uglier.