This is what I would consider a poorly researched article, but I always read between the lines, my notes are in Uppercase.
Expensive housing turning Australia into a nation of renters 01 Mar 2013 17:18:00
Expensive housing turning Australia into a nation of renters Housing tenure has changed significantly in the decade with fewer of the young and middle aged owning a home and altogether fewer people owning outright. Photo: Glenn Hunt
Australians are headed to be a nation of renters, living increasingly in apartments, and, for the poor, crammed into more crowded homes. THIS STATEMENT IS VAGUE “NATION OF RENTERS”, I AGREE HOWEVER THAT AS THE DIVIDE BETWEEN RICH AND POOR INCREASES IT WILL AFFECT THE POORER PEOPLE, HENCE MY COMMENT THAT THE PERCENTAGE OF UNDESIRABLE RENTERS WILL INCREASE AS THE DIVIDE PUSHES MORE PEOPLE EITHER TOWARD WEALTH OR POVERTY, PRETTY SIMPLE CONCEPT REALLY.
On Friday the federal government’s independent adviser on housing, the National Housing Supply Council, released a major report warning of the long term consequences of constricted new supply and low affordability. WHAT ARE THE CREDENTIALS OF THIS INDEPENDENT “ADVISOR”, HOW RELIABLE HAVE THEIR PREDICTIONS BEEN?
NHSC chairman Owen Donald said current supply was below the level that would support the traditional style and ownership of Australian housing.
“The shortage is likely to be felt by the more vulnerable in our population, such as would be buyers with low and insecure incomes, those at the lower end of the rental market and those dependent on government income support payments,” he said. THIS AGAIN REINFORCES MY VIEW THAT THE PERCENTAGE OF SOME RENTERS WILL RISE, MY CONTENTION IS THAT IT WILL BE THE POORER COMPONENT.
shortage of supply and affordable options
A key reason is cost. Despite the high hopes of Kevin Rudd’s 2007 election, housing supply has proved an intractable problem, with approvals in 2012 falling to new lows.
Dr Donald said it was “clear to the council that housing demand and housing production have been diminished by inadequate planning and provision of infrastructure, and restrictive regulation, notably in the development approval arena”. YES WE ALL KNOW THAT THERE ARE SUPPLY CONSTRAINTS IN THE PROPERTY MARKET DUE TO NUMEROUS DEMAND FACTORS SUCH AS PROPERTY INVESTMENT MANIA BY LOCALS AND OVERSEAS BUYERS, THIS HAS BEEN COVERED MANY TIMES.
“All are primarily the responsibility of state, territory and local governments.”
The federal Minister for Housing and Homelessness, Mark Butler, said his government had made an unprecedented effort to improve supply and affordability, including the $4.5 billion National Rental Affordability Scheme and the $5.6?billion Social Housing Initiative.
But the executive director of the Residential Development Council, Caryn Kakas, said more needed to be done. JAWBONING
“The industry again urges all levels of government to implement much needed regulatory reforms and remove impediments to the delivery of much needed new affordable housing,” she said. JAWBONING
The chairman of National Shelter, Adrian Pisarski, said Australians were changing housing choice due to the lack of affordable options. PRETTY OBVIOUS CONCLUSION
“This is a reminder that affordable housing needs to be a priority,” he said.
significant change in housing tenure
The report, Housing Supply and Affordability Issues 2012-13, used a decade of census data to analyse the fundamental changes in the way Australians occupy and own their homes. A DECADE OF DATA IS NOT LONG ENOUGH TO DETERMINE SERIOUS LONG TERM TRENDS FOR THE NEXT FEW DECADES.
It rejected the view, promulgated by some commentators after the release of the 2011 Census, that the Australian population was growing slower than forecast, as was the demand for housing.
Dr Donald said the Census showed clear evidence that the population was adapting to low supply and poor affordability. THE WORKING CLASS POPULATION HAS NO CHOICE BUT TO ADAPT, CLEAR EVIDENCE OF AN OVERPRICED HOUSING MARKET RELATIVE TO INCOME.
The long term trend to smaller households has stopped and there is some increase in overcrowding, particularly amongst the disadvantaged, he said. OF COURSE THIS IS THE CASE WHEN PROPERTY BECOMES UNAFFORDABLE FOR THE POORER BRACKET
Dr Donald said a significant change had occurred in housing tenure, with fewer of the young and middle aged owning a home and altogether fewer people owning outright. AGAIN ANOTHER POINT INDICATING HOUSING IS OVERPRICED RELATIVE TO INCOME FORCING PEOPLE TO RENT.... HOWEVER....
harder to get onto the housing ladder
In fact the boast of the high percentage of Australian home ownership – 68.7 per cent in 2011 – is only maintained because of the high (82 per cent) level of ownership amongst those over 65. WHAT HAPPENS WHEN THESE PEOPLE DIE? DO THEIR ASSETS DISAPPEAR INTO THE ETHER? NO, THE MAJORITY WILL BE PASSED ONTO CHILDREN AND FAMILY. 82%, THATS A LOT OF MONEY THAT WILL FLOW DOWN INTO THE YOUNGER AGE GROUPS.
“As time progresses, it now seems certain that the aggregate rate of home ownership will fall and the proportion renting will increase significantly,” the NHSC report said. WELL THIS IS STILL OPEN FOR DEBATE. IT IS OBVIOUS THAT AUSTRALIA IS IN THE MIDST OF THE LARGEST REDISTRIBUTION OF WEALTH IN MANY GENERATIONS. IF THE AGGREGATE RATE OF HOME OWNERSHIP IS DECLINING, THAT CAN BE SEEN AS A BEARISH CONDITION, BUT WE DO NOT KNOW WHAT THE CONCENTRATION OF ASSETS IS IN THE “SHRINKING” AGGREGATE. IN THIS SCENARIO AGAIN, THE RICH WHO NUMBER LESS IN POPULATION MAY OWN MORE ASSETS RELATIVE TO THE POOR, SO PERCENTAGE WISE, NUMBERS OF RENTERS RISE, BUT UNDESIRABLE RENTERS THAT HAVE NO INHERITANCE, POORLY PAID AND CANT GET A MORTGAGE ETC A LARGE PART OF THIS CONCLUSION IS BASED ON CURRENT RECORD LOW INTEREST RATES.
“Many of these change are likely to have been at least partly driven by the increase in house prices over the decade, making it harder for people to get onto the housing ladder, and taking out proportionately larger mortgages when they do.” OBVIOUS CONCLUSION
Over 50 per cent of homes where the head of the household was aged 25-34 in 2011 were renting. In 2001, it was 45 per cent. YES A 5% INCREASE OVER A DECADE, BUT WHERE IS THE INFORMATION ON THE QUALITY OF RENTAL APPLICANT. AND GETTING BACK TO MY EARLIER POINT, HOW MANY OF THESE PEOPLE BETWEEN 25-35 WILL INHERIT MONEY FROM THE AGE GROUP ABOVE 65 WHO HAVE AN 82% LEVEL OF OWNERSHIP??? ANY RENTER THAT GETS AN INHERITANCE OF 200K OR HIGHER WILL PUT THAT INTO PROPERTY, NOT KEEP RENTING. THERE ARE PLENTY OF PEOPLE AROUND WAITING FOR THAT DAY AND COUNTING ON IT, SO THEY ACCEPT THAT THE RENTAL CIRCUMSTANCE WILL BE TEMPORARY UNTIL THE WINDFALL COMES. WHERE ARE THE PERCENTAGES ON THIS????
The NHSC said the rising proportion of young renters pointed to “an emerging change” in?housing demand driven by the?lack of affordability, by lifestyle, and by the increased focus on mobility. THIS CONTRADICTS OTHER ARTICLES I HAVE READ ABOUT YOUNG PEOPLE BEING MORE INTERESTED IN CLIMBING THE PROPERTY LADDER THAN EVER, I AM PRETTY SURE A FEW OF THE PROPERTY BULLS ON THIS THREAD HAVE THROWN IT AROUND AS A BULLISH FACTOR
Short of a dramatic reverse in the next 10 years, the proportion of renters will rise inexorably to European levels, as the high- ownership generations pass on. THERE IS ABSOLUTELY NO EVIDENCE THAT THIS RENTAL HOUSING MARKET WILL MIRROR THE EUROPEAN LEVELS. WHAT EUROPEAN LEVELS?? I THOUGHT THERE WAS A BIG DIFFERENCE BETWEEN GREEKS AND GERMANS WHEN IT COMES TO INVESTMENT ATTITUDE. IN EUROPE IT IS QUITE ACCEPTABLE IN SOME COUNTRIES TO RENT FOR YOUR ENTIRE LIFETIME. IF YOU BELIEVE AND MENTION THAT IN AUSTRALIA YOU ARE CONSIDERED AND IGNORANT FOOL. THE 2 ATTITUDES TO INVESTMENT ARE COMPLETELY DIFFERENT.
Amongst the older baby boomers, in homes where the head of the household was aged 55-64, the most dramatic change has been is the increase in the proportion of those still paying off a mortgage, from 15.9 per cent in 2001 to 31.4?per cent in 2011. MORE EVIDENCE OF INFLATIONARY HOUSE PRICES BEING EXPENSIVE RELATIVE TO INCOME, WHILE PERSONS IN THIS AGE BRACKET ARE STILL TRYING TO PAY OFF A MORTGAGE WHILE HAVING ADULT CHILDREN AT HOME EITHER SPONGING OFF THEM OR TRYING TO SAVE TO BUY AN OVERPRICED PROPERTY BECAUSE THEIR PARENTS TELL THEM THEY ARE IDIOTS IF THEY RENT.
The NHSC said the extension of mortgage debt for older borrowers was “not a matter for alarm” for those who could pay it off. IF YOU ARE HAPPY FOR PEOPLE TO WORK UNTIL THEY ARE 80YO, THEN ITS NOT A MATTER FOR ALARM
“But it is evident that some will need to sell their home, move to lower amenity homes in less costly locations and depend on the age pension to provide for all or most of their living expenses.” YES DOWNSIZING IS NECESSARY FOR MANY BECAUSE THEIR INCOME CANNOT KEEP PACE WITH INFLATIONARY PRESSURES
The Residential Development Council’s Caryn Kakas said the forecast growth in rental signified?the death of the great Australian dream of home ownership. NO S**T.
“A place to call home is at the heart of every family, but the dream of buying a home is quickly fading for many which will have dire consequences for our nation’s economic future,” she said.
Dr Donald welcomed the “signs of an innovative response” to the housing shortage by the industry in providing smaller and better designed homes, and by governments in the reconsideration of planning and development controls and the design of new housing programs. http://www.afr.com/p/national/expensive_housing_turning_australia_WSw4y4QvQDc89p6aAiYKGI
I am not going to waste much more of my time on this, so my final point is this.
The majority of the house price increases have been a result of 2 factors, increasing global money supply from 1971 and declining interest rates from 1980, these 2 conditions cannot be reproduced for the same result over the next 3 decades.
The global interest rate mechanism is broken to the downside.
If you don't understand something as basic as that and its effects on assets, then its time to find a new hobby.
