When Will There Be Affordable Housing?

Ldatscheap on 13/08/2024 - 12:51
Last edited 13/08/2024 - 14:00

Background - I outright own my own home, and have kids approaching adulthood. Have previously been a landlord but now only own ppor.

Pre Covid there was always a opportunity to buy a cheap family home. Cheap meant a long drive to work/school and the house was tired. And you may not be able to live in a major city.

Doing a realestate search houses up to $500000 over the whole country has 406 listings, even less after removing listing errors and regions that have no industry.
During covid there would have been more then 500 properties for sale under $300k just in Tasmania alone.

I guess the point I'm trying to make is: when/if will low end housing get affordable? And what will make it better?

Is it greedy landlords owning multiple properties causing this? Lack of public housing? No sting of 10%(the 90's) interest rates to trigger a sell off? Too much/too little immigration? Elevated labour costs to build new? Other factors?

As a gen x, it feels like when my boomer parents pass away all the inheritance will go to house deposits for the grandchildren - which will make the situation worse in the long run as people without family money will rent forever. Another options is to buy investment properties now and pass them to the kids later, but again thats just making the overall problem worse.

It seems kinda grim. Any thoughts?

Poll Options

  • 6
    Dollar is being devalued
  • 49
    Greedy landlords owning multiple properties
  • 2
    Lack of public housing
  • 1
    Soft interest rates
  • 72
    Too much immigration
  • 3
    Too little immigration
  • 5
    Elevated labour costs to build new
  • 35
    Not enough houses being built to meet the growing population
  • 2
    There are loads of Cheap/affordable regional areas
Home & Garden

Comments

  • localhost on 13/08/2024 - 15:39
    -4

    I don't see big drama. 2014 when we bought our unit price was $700k. Now is about $1m.
    At the same time my salary jumped from $110k to $160k - so it's the same ratio.

    Problem is with what OP wants - house, and of course for $500k. Try looking for $1.5-2m and will find plenty of them.

    • Fredfloresjr on 13/08/2024 - 16:01

      So better host Ozb xmas party this year then.

      • localhost on 13/08/2024 - 16:06

        With pleasure but will be in Europe.

    • datscheap on 13/08/2024 - 16:16

      As per OP- I outright own my house, I dont need to discuss its worth as unlike you I dont care about dick length contests.

      I don't want a house for $500k, this post is about people starting with their first 'cheap' home - ie my kids in the future.

      • Ghost47 on 13/08/2024 - 16:26
        +2

        Your kids' first home will likely be a shoddily built 1 bedroom apartment with annual strata fees of $5000 in a high rise with two elevators, one of which will often be out of order which means it'll be a 20 minute wait each morning to get to the ground floor to go to work.

        It sucks but that's the future we're heading towards and this will be the reality for many Australians. It could be stopped if we stopped artificially growing our population so much via immigration, but it won't be because the rich people who are in control only care about themselves.

      • localhost on 13/08/2024 - 17:21
        +3

        As other people said - plenty of 1 bedroom units for $300-500k in Sydney for example, which is a good starting point in property market.

        Unfortunately no 4bd,2bath,2car houses for that price. Accept the reality, it's no longer 1990.

  • zanzir on 13/08/2024 - 15:44

    3d printing of houses should make it cheaper to produce. They can do cement printed houses now which look like art deco pieces lol

  • djsweet on 13/08/2024 - 15:49

    Not enough houses to meet the demands of mass immigration.
    Investors buying up properties.
    Something has got to give. But until then…
    If we continue this route, it will likely lead to the abolition of the middle class and lead to a economic chasm between those who have inheritances and can afford property, and those who do not. The rich will get richer by leveraging their existing assets, and those who couldn't get a foot in the door will get more and more screwed.

  • ihbh on 13/08/2024 - 16:01

    2064-2086 - in 40-60 years' time the global population will peak and then decline. There will be more affordable housing around the world.

    Source: https://www.visualcapitalist.com/when-will-the-global-popula…

    As for Australia, it depends on how popular Australia is vs other countries and the level of immigration we let in.

  • ihbh on 13/08/2024 - 16:06
    +1

    The greedy landlords option doesn't reflect reality (the multiple adjective is irrelevant). The % of home ownership has only reduced a small amount over the last few years.

    https://www.aph.gov.au/About_Parliament/Parliamentary_Depart…

    • Drakesy on 13/08/2024 - 16:26
      +2

      I don't really know about that.
      The falloff is pretty significant. For the 25–34-year-old age group 60% owned a house back in 1980, it was 45% in 2016 and it's only declining, i'd imagine it's now well into the 30%'s.

      That's a halving of home ownership levels.

      • ihbh on 13/08/2024 - 16:34

        What do you think will happen when the oldies die?

        • Drakesy on 13/08/2024 - 16:39
          +2

          Their kids who are now past family making age (in their 40's) inherit a 5 bedroom home for them and their partner. And the population decline continues. Only way out it seems (at least to the government) is to import more migrants.

          • Ghost47 on 13/08/2024 - 16:43
            +3

            @Drakesy: Makes sense but wow that's fkn bleak.

        • mitt on 13/08/2024 - 18:53

          Many oldies are liquidating their properties to fund an extended retirement/exploding medical costs.

          The wealth transfer is being altered to go to corporations/developers rather than children & grandchildren.

          • Drakesy on 13/08/2024 - 19:49

            @mitt: Yep and the taxpayer gets to subsidise something like 75% of those costs as its pretty loosely means tested. Have a $1.5 million property but you dont want to liquidate because you'll lose your pension?

            Sounds ok to me!

    • bargaino on 13/08/2024 - 16:51
      +2

      Also, if investors were somehow buying too many investment properties (e.g. due to tax incentives), that would drive up house prices, but also increase supply and drop rents.
      Rents are not low! If anything, we need more landlords, building more houses to rent.

      A shortage of housing is a problem no matter who owns them, public housing, private landlords or owner occupier. Our population is simply growing faster than we can manage.

      • Ghost47 on 13/08/2024 - 17:19
        +1

        If anything, we need more landlords, building more houses to rent.

        Yep, but materials and labour costs are through the roof so it costs too much to build and if something does get built they'll just charge insane rents in line with the market because houses are an investment first and foremost these days, unless somehow millions of new dwellings are built overnight to flood the market with supply.

        We are in deep shit. I don't think most people realise how bad things will get.

      • Drakesy on 13/08/2024 - 17:43
        +1

        we need more landlords, building more houses to rent.

        Only thing is that 75% of all investment properties are bought pre-existing. Only 25% are built.

        Basically they're stifling population supply by taking existing dwellings off the market of people looking to buy PPORs

        • bargaino on 13/08/2024 - 18:16

          Considering how many times a typical house changes hands in its lifetime, 25% does not sound bad.
          It does not matter how you slice it, there is a shortage. A combination of massively rising demand from immigration, and high cost of new land and construction.

          One factor sometimes overlooked is that high-rise apartments cost far more than similar sized houses to build. Especially when perfectly good houses are being demolished for blocks of flats because land is so expensive.

  • mrdean on 13/08/2024 - 16:27

    The WEF's slogan "you'll own nothing & be happy" by 2030, comes to mind.

  • Hvrd on 13/08/2024 - 16:46

    politicians and the powers that be have multiple properties, so never

    • mrdean on 13/08/2024 - 16:47
      +2

      I hear tiny homes are all the rage these days.

      • Ghost47 on 13/08/2024 - 17:01
        +2

        My mind boggles at the fact people have glamourised living in a van.

        • FireRunner on 13/08/2024 - 17:55
          +1

          Gotta make the most out of a bad situation

  • ihfree on 13/08/2024 - 16:52
    +1

    I think the only way out is to vote outside of the two-party system. Either of the two major parties would face some major criticism in the media if they tried to change anything and likely wouldn't be elected again.

    Australians are obsessed with property. Every second person seems to have some story about selling their house at a profit or speculating on property.

    The price of housing also has a number of knock-on effects. For example, there's much less opportunity to take risks with entrepreneurship due to housing security.

    Yet another example of us being "the lucky country".

    • mrdean on 13/08/2024 - 16:55
      +1

      The only sane logical choice when voting is One Nation. I agree, housing should never have been used for speculation.

      • ihfree on 13/08/2024 - 17:02
        +1

        ON is too aligned with the LNP. Looking at their policy, It's pretty vague.

        I strongly doubt One Nation would have the ability to execute should they miraculously get government. They're basically protest vote to influence the LNP. Similar to the teals, but in a different direction.

      • Ghost47 on 13/08/2024 - 17:02

        Never in my life did I ever think voting One Nation would be a sensible choice, but as each day goes by it's really becoming the only logical choice.

      • SBOB on 13/08/2024 - 17:04

        The only sane logical choice when voting is One Nation

        Said no sane logical person ever.

      • Drakesy on 13/08/2024 - 19:49

        *sustainable australia party

  • JDMcarfan on 13/08/2024 - 16:53
    +2

    you forgot an important option OP: "Preferential & Detrimental Tax policies", both which drive up housing prices before considering a bunch of other talked about factors.

    Preferential:
    1. Negative Gearing - People make a big deal of NG, but that makes investing and thus providing "affordable/tax subsidised" rentals possible. Its a reduction on YoY tax income, which does inflate asset values somewhat but doesn't directly impact an investors capital appreciation.
    2. CGT Discounting - I feel this is the bigger kicker of the 2. 50% CGT discounts on property makes property investing a massive kicker to investors (myself included) as it allows me to make capital gains that then get taxed at half my tax rate (effectively increasing my after-tax return by 50%), the fact that you can access a 50% after just one year grossly overestimates the impacts of inflation (what it primarily was introduced to combat) and allows for speculative "short-term horizon" investing which then becomes a cyclical inflator of house prices. I haven't even gotten to the main residence exemption that removed CGT all together. This effectively makes the family home even more of a speculative/investment asset. E.g. If I only need a house worth $1m, but can afford a house worth $2m, I overspend and buy the $2m house simply because 100% gains over 10 years means I get double the "profit".

    Detrimental:
    1. Stamp Duty - The fact that transactions costs in buying and selling a house costs ~5% and is usually a cash outflow from equity (typically not financed) means that people hold onto their assets longer than needed to avoid rightsizing their house - which reduces supply - but also makes acquisition costs more expensive both inflating an overall purchase price by ~5%, but more importantly inflating the required deposit by ~20%. E.g. $1m house with a 80% LVR, costs $1.04m in NSW (before other costs) but the deposit requirement jumps from $200k to $240k. This gets worse the larger the purchase price, so people either struggle upgrading their home when it becomes too small for them, or intentionally buy too large a house initially to avoid double taxation.

  • ECE on 13/08/2024 - 17:09
    +2

    There will never be. 😁

  • snapper17 on 13/08/2024 - 17:28

    the government doesnt want to devalue the property market. There are plenty of run down apartment blockds and houses that are government owned. They have been empty for years. Some if not most will need repairs to make it livable but thats cheaper and easire then building new homes. The government also sold off perfectly functional high rise commission buildings in nice areas to developers to make luxury apartments for the well off.

    The government build covid living places when they thought there would be a worse outcom. These places could be used for cheap housing.

    There are large ieces of land that could be used to build many tiny homes suitable for a single person or a couple. These are much cheaper and quicker to build. Its only recently in the last year or so that victoria approved this type of housing. Theres no reason it took so long. I am not sure if other states have followed trough.

    There is so much red tape and fees/taxes/permits ect causing significant delays

  • digitalbath on 13/08/2024 - 17:55
    +1

    It’s not your fault, or mine that other people can’t afford to buy property. If you can, do it. If your inheritance has to go to your kids, too bad.
    I bought a shitty townhouse 9 years ago. It’s now doubled in price, but that’s pointless as I have no intention of moving. But, at least my mortgage repayments are cheaper than paying rent in the same complex.
    A lot of people could afford a home if they weren’t so entitled and don’t think they are entitled to live in the cbd or some other fancy suburb.
    But will continue to whinge when they can’t afford property.
    In this time, all we can do is look after our loved ones and ourselves.
    Anyone else who says otherwise is a liar. And they definitely aren’t helping poor old Joe and sally down the street with a deposit.

    • Ghost47 on 13/08/2024 - 18:09

      A lot of people could afford a home if they weren’t so entitled and don’t think they are entitled to live in the cbd or some other fancy suburb.

      I see this saying a lot but honestly I think it's somewhat of a falsity. I think people are actually happy to live in the suburbs but it's ridiculous to pay so much for a house if they have to travel far for work.

      Houses can cost $1m 40-60 mins from the Melbourne or Sydney CBDs. This house in Liverpool sold for $964k for example. I would hardly call Livo a nice suburb. If someone is on $100k a year (which is above the median salary although a bit low for Sydney standards) that's 9.64x pre-tax income to pay off the house. After 30 years the total cost for the house will be something like $1.65m at a 6% interest rate (and that's factoring in a $200k deposit), and that's not even including all the other costs you need to pay over 30 years such as insurance, taxes, utilities etc.

      $1.65 million for a house 40-60 mins from the CBD in an average suburb in a country where wage growth is non-existent (unless you change jobs every two years), that's definitely something that's worth complaining about.

    • mitt on 13/08/2024 - 18:49
      +1

      I bought at the start of 2022. I got a good deal. My valuation has more than doubled since.

      I could not afford the place I live in now if I bought it now. Two years went from good deal to at least 50k beyond my absolute maximum budget.

      If your valuation has only doubled in 9 years you are either in an awful suburb, an awful complex or your valuation is a year or 2 old. The most recent spike has been INSANE.

      • digitalbath on 13/08/2024 - 19:21

        My evaluation is old, but I also bought within my means. Awful suburb? No. Awful complex, no. Either way. I’m still ahead.
        If your place has doubled, and the new evaluation is only 50k out of your budget if you were to buy now, then good for you.

  • ssfps on 13/08/2024 - 18:11
    +1

    Not enough houses being built to meet the growing population

    Too much immigration

    Lets not beat around the bush. We have a below-replacement fertility rate, we require immigration just to have a stable population. "Growing population" is nothing more than a euphemism for too much immigration.

    Dollar is being devalued

    Soft interest rates

    Elevated labour costs to build new

    These 3 are all essentially the same point. Our money is worth less both locally and internationally, and soft interest rates are a big contributor to devaluing our currency.

    There are loads of Cheap/affordable regional areas

    Objectively false (most regional areas with any industry have seen greater rises during 2023-2024 than most metro areas).

    So really there are only 2 real reasons to vote on in this poll (and in reality) - devaluing of our currency, and importing more people than we can house.

  • mitt on 13/08/2024 - 18:46
    +2

    The most recent spike is mostly the dollar devaluing. This is how we are paying for the covid money printing. We are also paying for it via mass migration to keep us out of a "technical" recession while all these corrections happen.

    You will never see pre covid prices again. You will probably never see 2022 prices again. If it does collapse, it will only adjust down to correct from the mass migration pressure. The dollar devaluation is permanent. Reset your baseline.

  • brendanm on 13/08/2024 - 18:55

    When they stop handing out free money, and importing infinite people while we have a lack of housing.

  • drprox on 13/08/2024 - 18:59

    I know plenty of two income households that do not accept living in cheaper suburbs that are a short metro ride or drive to the CBD. There are problems certainly but some do actually choose to rent when they could buy (just not where they are renting).

  • noideaa on 13/08/2024 - 19:12

    If homes were affordable, the selfish will hoard them all then lease or sell it or higher price.

  • plmko on 13/08/2024 - 19:29
    +2

    Melbourne is the only capital city in the Australia to see a stalling price average:

    • Over supply
    • Incoming land tax
    • Exodus of people

    They just proved what everyone has been saying about housing.

  • Doveman87 on 13/08/2024 - 19:43

    Government introduces stimulus -> uptake of stimulus greater than expected -> people building rent other properties to live in whilst building- > not enough labour to meet demand -> Immigration needed -> we need to build more houses now that immigrates meed housing -> we need to immigrate more labour to meet the demand of the immigration -> viscious cycle commences -> dont known when housing affordability changes unless australians change the view on housing

  • ribze1 on 13/08/2024 - 20:19
    +1

    Missing from poll - advantageous tax treatment of investment properties

    • hasher22 on 13/08/2024 - 20:39
      -1

      This, people don't understand Australia is one of the best countries to invest in real estate. The benefits is way too good not to invest in if you have the money.

  • GuitarXXX on 13/08/2024 - 20:20

    It's not about the supply of house, we have large area of lands and very good construction companies / workers.

    It's about the supply of good suburbs, with good school, shops and life styles. There is absolutely NO increase of good suburbs which makes the hourse around existing mature communities are rare-er and more expensive.

    This is not to blame landlords or immigrants, this is mostly blamed on short-sighted governments and councils. They have so much more tax and stamp duty income with the increased house / land price, but they invested little to development new and good suburbs.

  • hasher22 on 13/08/2024 - 20:38

    Australia is one if not THE most profitable country in the real estate market due to our laws and policies favouring investors.

    "Why Living In Australia Is Impossible" https://www.youtube.com/watch?v=_TUVXfM1nqo&t=2s

  • hasher22 on 13/08/2024 - 20:47
    -1

    Housing will be affordable when

    1 - More homes are built
    2 - When vacant homes are to be rented out or purchased to live in, currently from the census, there are approx 150k homes in Sydney alone are vacant. Example, a Chinese company purchased a block of units and they are ALL vacant because they are waiting on the right business to buy that land out.
    3 - Cease all foreign purchases
    4 - Limit how many homes a person and business can buy for investment
    5 - Remove or cap negative gearing

    And that's just the start, but this will never happen because boomers benefit too much from these laws and how is governing? Boomers……

    • hasher22 on 13/08/2024 - 22:44

      Investors downvoting me BAHAHAHHA

  • xavster on 13/08/2024 - 20:47

    There is a simple solution to bring down house prices, tighten the availability of debt to the real estate market, China did it in 2020 with their 3 red lines policy.
    link here: https://en.wikipedia.org/wiki/Three_red_lines

    Based on the principle that "property is to be lived in, not to be speculated on."

    Set aside the politics and remove "China" from this policy and you will see the true driver of asset prices, it is the availability of debt to finance the purchase of an asset.

    Once you remove a large portion of the debt available to purchase an asset, the pricing of that asset will return to sustainable growth. If we want Australia to have sustainable house prices, we need to enact policies that reduces people's ability to finance existing properties with debt.

    I am OK with creating debt for NEW CONSTRUCTION because the creation of that debt is balanced out by the creation of a new property. i.e. no asset bubble.

    The creation of debt to buy EXISTING properties will cause an asset bubble because there is no NEW property created but new debt is created.

    The debt I'm referring to here is specifically debt issued by banks. This is because bank issued debt is 'created' against an asset, and does not actually come from people's deposits. (The reason banks want customer deposits is to meet Common Equity Tier ratio that banks must comply with, this to cover losses incase they screw up)

    The debt issued by RMBS (mortgage backed securities) or credit unions are fine because they are backed by actual savings and not created.

    Until the financing is fixed, the market will always be distorted by debt.

    Anyway this is getting a little deep so I'll just leave it at that.

  • fullmetal on 13/08/2024 - 20:56

    inheritance tax

  • JIMB0 on 13/08/2024 - 21:29
    -1

    Don't we have enough of these threads? People need to stop crying and get to work if they want a house.

  • rogerwilko on 13/08/2024 - 22:07

    I reckon in about 20 years when the world is suffering from famine, drought, floods, over population and war. Don't worry op you just focus on how much money your grandchildren will inherit.

    Let me guess, you have a ev and solar and thus are contributing to saving the planet.

    Boomers are easy to blame, at some point Gen X need to step up and take some responsibility whilst they are predominately the generation taking positions of power now.

  • tessel on 13/08/2024 - 22:52

    After WW3. Honest. Why can't people understand this? No, I'm not trolling. We clearly do not want prices to go down and they can't go down because that is the economy.

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