Affordable-housing lobby out to nobble investments by:...

Affordable-housing lobby out to nobble investments

by: HOTSPOTTING: Terry Ryder
From:The Australian
October 22, 201112:00AM

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SOME activists see property investors as the great enemies of first-home buyers.

Their core belief, unsupported by evidence or logic, is that homes are unaffordable because investors drive up prices.

Australians for Affordable Housing appears to think that nobbling investors will strike a telling blow for first-time buyers: remove negative gearing and increase capital gains tax, and homes will be affordable.

This group may think investors are the problem, but it seems first-home buyers do not.

A survey by RAMS Home Loans has found that first-home buyers rate other people like themselves as the main competition (43 per cent of those surveyed).

Next on the list of key rivals for homes are home buyers other than first-home buyers (25 per cent).

Australian investors (12 per cent) and overseas investors (14 per cent), two parties often accused of wantonly paying over the odds for real estate, rate very lowly on the radar screen of first-home buyers eyeing up the competition.

The people surveyed are pretty close to getting it right.

The biggest force in the market is home buyers other than first-timers, people who already own their home and decide to upgrade, downgrade or relocate for other reasons.

These people comprise the bulk of buyers in the market. Compared with them, first-home buyers and investors are relatively few in number.

Given that Australians typically move house every eight or nine years (it used to be every seven years on average, but the trend as changed recently, according to researcher RP Data), people buying their second, third or subsequent home are the most active and numerous buyers.

They also have the motivation, financial capacity and confidence to pay a higher price for a home. Often emotion takes over and, in competition with other interested buyers, the price is pushed higher.

This is a quite different scenario to investors who buy on the numbers.

If you can't get the target property at the price you want to pay, you move on to the next option.

The RAMS survey had other interesting findings.

Two-thirds of first-home buyers, it revealed, take less than a year to find a home. And 56 per cent of home seekers believe ownership is realistic while only 7 per cent believe it's "completely unrealistic".

Those who attack Australians who buy rental properties forget the strong national interest in having people invest in this way.

There's heavy pressure on people to plan for a self-funded retirement, given the stress our ageing population is placing on the taxation and welfare systems.

There are limited options. Buy shares or buy real estate. Superannuation alone won't cut it.

Research shows that, overwhelmingly, the assets of Australian households -- the means by which they will fund their retirement without burdening the state -- are tied up in real estate.

Rismark research indicates $3.6 trillion of the assets of Australian families are based in real estate, well ahead of any other investment avenue. Savings in the bank come second ($1.5 trillion), then superannuation and, last, shares.

The anti-property voices in the community not only wish for a big devaluation of our homes but are lobbying government to make it happen.

It's an extraordinarily irresponsible stance: undermine the financial base of 70 per cent of Australians to the detriment of the national interest, to theoretically benefit the small numbers who are potential first-home buyers.