Category Archives: Housing

Bad luck, next generation

So, this is what a decade or so of driving up house prices in a vicious little feedback loop (Howard slashes CGT and chucks in a homebuyers’ grant and prices jump, then more of those with now increased equity in their home think hey, I should invest in rental properties, pushing up prices, so more try to get in with their further increased equity, rinse, repeat), combined with half a century of signing off on housing developments further and further away from the Melbourne city centre without either building necessary transport infrastructure or even leaving space for it to be built lateronly a tiny fraction of young people in Melbourne can now afford to buy a home anywhere within reasonable commuting distance to the CBD. (And of course it’s even worse in Sydney.)

MOST Melbourne homes are too expensive for households on a median income, and only a handful of suburbs – mostly on the city’s fringe – pass the affordability test, a government report reveals.

The report shows households earning the city’s median annual income of $70,300 have few suburbs to choose from. Even the cheapest suburbs require an annual household income of between $67,000 and $90,000 to pay the mortgage and other bills.

In many inner Melbourne suburbs – which have better access to public transport and services – a household requires an income of between $120,000-$200,000 a year.

The Tandberg sums up part of it:

It’s difficult to overstate just how much long-term damage this stuff does to our society.

Could we please (a) stop encouraging the burying of investment capital in rental property, and (b) stop just giving state governments a free pass when they permit developments to be built without leaving space for necessary infrastructure? Just because the harm won’t be felt till after they’ve left office is no reason we shouldn’t be calling them on it now. Unless you’re planning not to be here in twenty years, it’s going to affect you, too.

Reasons to be happy you’re not stuck renting, like your kids will be

A glorious morning, where everything has turned out for the best. A couple of unions have been crushed – this time for daring to demand Australian jobs in a company that trades on the record its Australian workers have built up for safety. Glamorous and wealthy people will be visiting Melbourne for a horse race. And people questioning the status quo are being moved on wherever they gather.

So I thought I’d get in the spirit by sharing with you some happy thoughts to make you feel better about your lot in life, so long as you’re not a renter, locked out of owning your own home by the non-portability of your job and the ludicrous prices in Australian capital cities.

  • You own an asset that’s priced by real estate agents at a ludicrous figure! If you can find a buyer wealthy enough to pay it. And if you don’t mind the inflated house prices making your rates higher for pretty much no realisable gain for you.
  • Your housing costs remain roughly stable over the term of your mortgage. You can’t have your rent raised every year at the whim of a landlord. (And if a bank threatens raising interest rates on your mortgage, every politician in the land will fight to prevent it.)
  • You can save money by planting your own vegetables and trees and other things in your own back garden, not limited to pots but in the ground, where they can flourish – if you were a renter, you’d probably be prevented from doing this. And if you weren’t, and spent money nurturing such a garden, the landlord could, with a few months’ notice, just take it from you.
  • You can put up pictures without asking permission.
  • You can install air conditioning without the landlord raising the rent because the house now has air conditioning.
  • You can install solar panels and water tanks and otherwise reduce your living costs.
  • You can have pets without asking someone for permission as if you were a child.
  • You can relax, because you can’t be kicked out at a few months’ notice on the whim of a landlord.

See? Things are pretty good, after all. For you.

Keep this in mind whenever you read a newspaper story about housing

Just caught up with last week’s Media Watch, and one story shone up to the light something that anyone reading a story in a newspaper about the property market should keep in mind: the papers are desperate for real estate agents’ money, and are terrified of pissing them off. TJust how terrified they are, and just how willing they are to throw your interests aside as a reader if the agents are unhappy, was demonstrated by an embarrassing incident involving a Murdoch paper in WA.

The Sunday Times dared to publish a glowing story about ordinary people who’d had excellent results not using agents. The real estate agents were outraged at this outrageous outbreak of editorial independence by one of their print monkeys, and quickly swung into action:

It was kicked off by investment property specialist Mark Hay, with an email addressed to pretty much every real estate agent west of the Nullarbor…

“Can I encourage you to boycott the paper in light of this, or better still this is a perfect reason why we as agents should build our own web site to challenge and the others who keep putting the squeeze on us. Anyone interested?”

The terrified Sunday Times managing director quickly, desperately wrote a grovelling apology:

Last Sunday we published an article in our real estate section that failed Journalism 101 … As the Managing Director of The Sunday Times I unreservedly apologise for the article.

The paper published a glowing piece endorsing agents, how wonderful they are, how happy people are who use them, what fine upstanding glowing unparalleled human beings they are, superior to the rest of us, worth not only the vast sums they’re paid BUT MORE, and would they please not boycott

If anyone’s surprised by the regular sucking up (both obvious, and subtly spruiking for their political interests) all the papers do – including Fairfax over here in the East – keep in mind this graphic illustration of what they’re afraid of. Because nothing’s changed. Nobody’s standing up to them.

So if you’re expecting our national media to hold politicians’ feet to the fire when they enact policy in the interests of real estate agents and contrary to those of the rest of us – don’t hold your breath.

Baillieu’s expensive stamp duty cut makes life harder for first home buyers; plans to more than double it.

Oh, there’s a surprise. The massive hit to Victoria’s budget that was Baillieu’s stamp duty cut has, exactly as we predicted, utterly failed to make life any easier for first home buyers:

Duty cut fails to help first home buyers

…The number of first-time buyers entering the market has fallen to its lowest level in seven years despite the 20 per cent discount becoming available about five months ago.

New figures also show the savings on offer – amounting to $5800 on a house at the median price of $565,000 – have been cancelled out by price rises in the city’s more affordable areas over the past year.

And there were some people who didn’t grasp how a stamp duty cut could result in housing being less affordable?

But don’t let its utter failure to help housing affordability stop Baillieu from throwing more money at it:

Slashing stamp duty for first home buyers is one of the cornerstones of the Baillieu government’s plans to improve housing affordability, with the cut set to increase from 20 per cent to 50 per cent by 2014.

So that’s even more money from schools and hospitals to make property developers and real estate agents rich and push housing even further out of the reach of young Victorians.

Well done, people who voted for a Baillieu government.

A politician, and a real-estate man

People who voted for Baillieu were aware he’s a real estate man, right?

THE Baillieu government will consider expanding development in Melbourne’s ”green wedge” zones as part of a big overhaul of the planning system…

RMIT planning expert Michael Buxton said the process for developing the new strategy was flawed – a technocratic exercise without community input. ”The development industry thinks it’s on clover with this government already – that’s a bad sign,” he said.

In case Baillieu’s very expensive free kick to the real estate lobby with the cut in stamp duty (that will push up prices) wasn’t enough…

FHOG: Parasitic rentseekers demand more from the taxpayer

And then, when the increased grant even further inflates house prices, we can call for it to be raised again, and so on forever:

The residential housing market had changed significantly since 2000 and the $7000 grant was no longer adequate, [mortgage broking company] Loan Market said.

“The economics that drove the original payment are outdated and need to be reviewed as per any government grant,” said the broker’s chief operating officer Dean Rushton on Wednesday.

Fortunately the commenters on the piece have treated the self-interested, sociopathic lobbying by these corrupt parasites with the contempt it deserves.

The FHOG makes housing much less affordable and pushes young Australians further into debt. It should be abolished, not raised.

ELSEWHERE (16/6): Weird, what’s a banker doing questioning negative gearing? I mean, I agree it’s a terrible and destructive policy, but the banks have been profiting handsomely by it. What would make them stand against it? (Since “principle” is hardly a plausible explanation.)

Rich man discovers another of the problems of homelessness

Back almost a decade when I used to work for legal aid, one of the problems we often faced was getting bail for homeless people. You can’t be bailed without an address where the police can come and find you – and if you’re homeless, obviously that’s by definition something you don’t have. People can find themselves in prison – the ultimate punishment available in our justice system – simply because they don’t have anywhere to go.

I don’t think any of my clients ever ended up getting stuck there for that reason – we fought hard until we found them appropriate accommodation, next to impossible though that often seemed to be – but certainly many had been imprisoned in the cells for a few days or longer before I saw them. (Particularly if the police decided to go executing warrants on a Friday afternoon, after the courts had finished for the week.) There are few facilities available for the homeless, they fill their places quickly – and obviously the homeless person can’t go and do any legwork because, of course, they’re in custody.

Anyway, so I thought it was interesting to see an extremely rich man – Dominique Strauss-Kahn, the (now former) IMF head accused of rape in New York – finding himself with the same problem:

Set to be released on Friday New York City requires that home detainees have an actual home to go back to or at least suitable lodgings. With New York City hotels turning him away after his alleged assault on a maid and his rental property lease falling through at the last minute he literally has no where to go.

I don’t know what the situation is in France, but let’s hope that if Mr Strauss-Kahn turns out not to be guilty of the charges and ends up back in some position of authority in Paris, he remembers the plight he faced – and does what he can to make sure homeless people in his home country aren’t also stuck in jail because they don’t have anywhere else to go.

It’s a pity more people making the decisions about prisons and homelessness don’t have some actual personal experience of it.