This article from October last year but really, nothing has...

This article from October last year but really, nothing has changed. It has even gotten worse.

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By Gemma Daley
Oct. 25 (Bloomberg) -- In what Prime Minister John Howard
calls Australia's greatest period of prosperity, Melbourne
social worker Jane Lazzari can't afford her dream.
``I want to be a homeowner, and it's not an unreasonable
thing to want in this economy,'' said the 39-year-old single
mother of two, who earns A$65,000 ($58,700) a year, well above
the average Australian income of A$56,600.
The ability of Australian families to buy a house or repay
a home loan is at a historic low. That's bad news for Howard,
68, who has called for a general election on Nov. 24. A Newspoll
survey published in the Australian newspaper Oct. 23 showed his
Liberal-National coalition 16 points behind Kevin Rudd's Labor
Party.
``Housing affordability is a vote-winner,'' said Rick Kuhn,
an economics and politics professor at the Australian National
University in Canberra. ``At the moment, Howard loses.''
The prime minister is partly a victim of his own success in
boosting the economy, which has grown an average of 3.5 percent a
year since he came to power in 1996.
When he first took office, Howard vowed to stand up for
``battlers'' -- average working Australians. In 2000, his
government introduced a A$7,000 tax-free grant for first-home
buyers in any income bracket. The government has spent A$7.6
billion on the program and given grants to more than 1 million
homebuyers.

Bandwagon

Millions of Australians jumped onto the real-estate
bandwagon, spurred also by new sources of financing from nonbank
lenders such as Wizard Home Loans and Aussie Home Loans Ltd.,
both based in Sydney.
The median price for a house in Australia is now A$423,900,
roughly 70 percent more than in the U.S. and almost triple the
median of A$141,600 when Howard was first elected.
During the same period, wages have risen only 19 percent,
which means mortgage payments now account for 30.7 percent of
family income, compared with 17.9 percent.
The rate of home ownership has also slipped. In 1996, 37
percent of people lived in a place they owned and 29 percent
were in the process of buying. In 2006, 36 percent owned and
27.5 percent were buying.
Howard hasn't introduced any new housing policies since
2000. His government has discussed doubling the first-home grant
and allowing people to draw on their retirement, or so-called
superannuation savings, for a deposit. Officials of his ruling
coalition have said they will announce a plan before the election.

`National Approach'

Rudd argues that there ``must be a national approach'' to
make housing more affordable. If his party wins the election, he
has promised to spend A$500 million in the next five years to
subsidize 50,000 first-home owners, and A$603 million in tax
incentives during the same period to encourage investment in
50,000 new rental homes.
``A good housing policy will change my vote,'' Lazarri
said.
The average monthly loan repayment for a first home rose to
A$2,506 in the second quarter of this year, pushing affordability
to its lowest level since records began in 1984, the Housing
Industry Association said in an Aug. 13 report.

`Half a Million'

``We have to get a mortgage of more than half a million
dollars for a unit,'' said Ben Ommundson, who rents a two-bedroom
apartment with his partner and her six-year-old daughter in a
suburb of Sydney, where prices have gained 37 percent in five
years.
``It's almost impossible to get into the market,'' he said,
even with an annual household income of A$130,000.
Lawmakers lay part of the blame for shrinking affordability
on local taxes imposed by state governments, all of which are
controlled by the Labor Party.
New South Wales local and state taxes and charges add
A$68,233 to the cost of a home in Sydney, according to Property
Council of Australia figures.
There is also a ``chronic'' lack of land on which to build
homes, the council said in a report entitled ``Boulevard of
Broken Dreams.''
Howard has said the market is still healthy, telling
Parliament on Sept. 20 that ``a true housing crisis is where
there is a sustained fall in the value of our homes.''

Still Healthy

He has urged state and local governments to reduce land
taxes. He also asked the Treasury Department for an audit of
available land, but the results haven't been announced yet.
``The longer we go without tangible policy action, the
worse the situation will become,'' the Housing Industry
Association's Managing Director Ron Silverberg said.
Even people who managed to buy when prices were lower are
struggling with interest rates that have increased five times
since Howard's 2004 election campaign, when he promised to keep
a lid on them. The latest came on Aug. 8, when the Reserve Bank
of Australia raised its target rate to an 11-year high of 6.5
percent.
The central bank may raise rates again before the election,
after a report yesterday showed underlying inflation rose at the
fastest pace in 16 years. The bank will increase its benchmark
rate a quarter-point to 6.75 percent on Nov. 7, according to 26
of 27 economists surveyed by Bloomberg News yesterday.
As of June, more than 80 percent of home loans had flexible
or a combination of flexible and fixed rates, according to the
Australian Bureau of Statistics.
``When I heard interest rates went up, I thought, `Oh my God,
not again,''' said Lisa Jackson, a full-time mom who owns a house
in Sydney's Glenmore Park neighborhood and owes A$260,000. ``We
have to tighten our belts, we won't get takeout food and I'm
looking for specials in the supermarket.''