Housing affordability improves for seventh consecutive quarter
The welcome news in the March 2013 Quarter edition of the Adelaide Bank/REIA Housing Affordability Report is that nationwide, the proportion of family income required to meet home loan repayments has dropped below 30% for the first time in almost five years. The proportion of family income required to meet average home loan repayments now stands at 29.9% and the proportion of family income required to meet rental payments now stands at 24.4%.
“The figure for home loan repayments is significant because traditionally, it’s the point that has been used to describe what is generally accepted as housing stress”, said Damian Percy, General Manager, Adelaide Bank
“Adelaide Bank believes that high levels of home ownership underpin strong and resilient communities, which is why we do our best to lower the cost of lending as much as we can - while still providing the great service and fast approval turnaround times that people have come to expect from us.
“The figures for this quarter show that first home buyers are still ‘on strike’ everywhere except my home State of South Australia. But it’s not just affordability that’s dominating property conversations around the barbeque. ‘Right-sizing’ our housing choices is becoming equally important as our cities expand. Expect to hear this expression more often in property circles.
“In my view, it is now an opportune time to broaden out the debate surrounding housing affordability to include other impediments to people ‘right-sizing’ their housing. This includes supply-side policies such as land releases and development costs at a State Government level.
“The overall tax-mix and ‘take’ between the Commonwealth, States and Territories needs to be periodically reviewed and impediments to right-sizing must be part of this mix. We all know of cases of elderly, single Australians rattling around in big houses with large gardens while younger couples try and raise two or three children in apartments with little room to play.
“Many people have to put themselves through the stress of renovating and expanding older, smaller, less energy efficient houses - rather than simply moving, because of excessive taxes and charges that act as impediments to right-sizing their dwelling for a particular stage in life. Wouldn’t the world be a better place if it was easier for a single, elderly person to more easily trade their dwelling with a younger apartment-dwelling family for something smaller and easier to look after?
“Stamp duty has long gone from being a tax supposedly collected and justified for shuffling the paper title to property from one drawer to another at the Land Titles office into a revenue source worth tens of thousands of dollars per transaction to State Government coffers.
“Stamp duty should have been abolished or at least significantly reduced in scale to ‘cost-recovery’ for managing land titles at the time of the introduction of the GST. The ability to more easily move into a suitably sized dwelling could be so much more affordable.
“Surely it is time to revisit this area of public policy and at least start the conversation”, Mr Percy concluded.