Australian housing patterns not sustainable

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Australian housing patterns not sustainable

Postby HBS Guy » 06 Mar 2010, 07:09

Houses getting bigger while families get smaller: Albanese

Traffic congestion could cost the national economy $20 billion by 2020.

The Federal Government says Australian housing patterns are not sustainable.

Infrastructure Minister Anthony Albanese has released a report on the state of Australian cities.

He says traffic congestion could cost the national economy $20 billion by 2020.

Mr Albanese has told the Queensland Media Club that while the average Australian family is getting smaller, homes are getting bigger.

"This is a mismatch between demographic trends and housing stock," he said.

"It is unsustainable and we need to have a debate about these issues - not telling people what to do but actually analyse what's going on and have that debate."

The report says congestion, housing affordability, energy use and water consumption are some of the biggest challenges facing 17 cities of 100,000 residents or more.


http://www.abc.net.au/news/stories/2010 ... ion=justin

Clearly, congestion charges are going to have to be levied, but alternative public transport will need to be available otherwise the levy is just a tax. Even Adelaide is getting to the stage that even in the middle of the workday traffic is pretty heavy while Sydney traffic is just stupid.
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Re: Australian housing patterns are not sustainable

Postby HBS Guy » 09 Mar 2010, 22:25

Single-person homes may replace Aussie dream

A new report says the Australian dream of owning a three-bedroom house on a quarter-acre block is a thing of the past and that smaller homes for singletons must be built.

A housing supply report to be released officially next month predicts the number of single-person homes will account for one third of Australia's housing supply within 20 years.

A few key findings were revealed today at an urban developers' conference in Sydney.

The report says not enough homes are being built in Australia to cope with population and lifestyle changes.

According to the National Housing Council (NHC), there will be a dramatic rise in the number of homes from 8.5 million to just under 12 million by 2029.

More people will choose to live in the city, with Sydney, Perth, Melbourne and Brisbane the preferred capitals.

NHC chairman Dr Owen Donald says the number of single-person households will almost equal the number of family homes.

"These days the younger people are partnering later and those partnerships are not lasting as long, so there are more single people in the population," he said.

Dr Donald says the types of homes being built now will not be viable in the future and developers will need to innovate, otherwise there will be a housing price blow-out.


http://www.abc.net.au/news/stories/2010 ... ion=justin

d'uh, single-person households live in units, which are infill type dwellings mostly.
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Re: Australian housing patterns are not sustainable

Postby Lefty » 11 Mar 2010, 17:18

http://petermartin.blogspot.com/2010/03/that-housing-boom-it-stopped-in-january.html

It remains to be seen whether this backslide is temporary or the beginning of the bursting of a bubble.
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Re: Australian housing patterns are not sustainable

Postby HBS Guy » 11 Mar 2010, 17:22

Could have fed into unemployment figures too.
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Re: Australian housing patterns are not sustainable

Postby HBS Guy » 12 Mar 2010, 06:42

Record number of homes for sale takes gloss off auction prices

Sold at a loss . . . Boomerang Street, Turramurra.

SYDNEY'S auction market has lost some sheen.

It seems the enthusiastic early-bird vendors got the buyers, but as the market moves into its pre-Easter rush it is becoming more difficult.

The slight decline in the market comes under the weight of a record 2860 houses and units listed for March auction.

The early March results still hover at a respectable 70 per cent clearance, but it is down on the 75 per cent February success rate, and the 85 per cent achieved during January.

The northern beaches has recorded the most sudden reversal with its clearance rate halving from 60 per cent in February to 30 per cent so far this month, according to Australian Property Monitors.

The lower north shore has dipped from 83 per cent in February to 67 per cent.

The drop is also evident in the south-west, where the sale rate slipped from 59 to 38 per cent.

''The decline in clearance rates in the south-west region is consistent with the expected slowdown in the first-home buyer segment after the removal of the government boost and the four rate rises since October,'' the Australian Property Monitors economist Matthew Bell said.

''A lot of purchasing was brought forward, and this seems to be having an effect on 2010 clearance rates.''


http://www.smh.com.au/nsw/record-number ... -q1lc.html

Hopefully, as more people enter the market for a home loan and start approvals take off again--govt musn't lose nerve, lot of buying brought forward so industry has some fat to live off for a bit. But you see how dependent still on stimulus the economy is!
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Re: Australian housing patterns are not sustainable

Postby Lefty » 12 Mar 2010, 07:05

Talking to one of our trivia team last night, she's looking for a house. Average house price in the Calliope area is supposed to be $375 000 but do you think she could find one nearly that low?

The house next door to us is priced to sell, the owners having dropped the price a number of times over the past 2 years (people across the road gave up and took theirs off the market) - at 6 times our combined annual household income. It's a nice house but such prices are just ludicrous. But - and this is an important factor in keeping prices elevated I think - they cannot just keep lowering the price because unless they sell for significantly more than they bought it for, they will not be able to find another house they can afford.

Thus, property price rises appear to be a self-reinforcing process, but with the median price passing $600 000 and property spruikers tipping prices to double again in the next 10 years, that would put the average price in excess of a million dollars. That is not simply not affordable and probably not sustainable. Mortgage repayments could be as high as $10 000 dollars a month in that scenario.

Of course, I suppose that even that might not bring the price down. Is it possible that instead of collapse we could just come full circle back to the time when the average family could not afford to buy a house and most working people's homes were owned by landlords?

Just a thought.
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Re: Australian housing patterns are not sustainable

Postby HBS Guy » 12 Mar 2010, 07:38

Well, ATM demand for housing is falling and that means prices are falling too.

What about buying land and building a modest kind of home? Usually cheaper to build than to buy.
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Re: Australian housing patterns are not sustainable

Postby Lefty » 13 Mar 2010, 15:43

As an aside, here is what $170 000 buys you in Melbourne today....http://www.domain.com.au/Property/For-Sale/Apartment/VIC/Kingsville/?adid=2008253591

That is more that we payed for a 3 bedroom house on an acre and a quater of land. And while we aren't in town, we aren't exactly at the far end of black stump road either, we have all the basic services.

What about buying land and building a modest kind of home? Usually cheaper to build than to buy


Yeah, that's what we did. It was a little cheaper than buying but I don't know what it would be like now. Mum and Dad built about 2 years ago and wanted a smaller house than they ended up building - the covenants wouldn't allow below a certain size.
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Re: Australian housing patterns are not sustainable

Postby Lefty » 13 Mar 2010, 15:50

You gotta be fuckin' joking!! Vacant blocks of land around Gladstone are selling for(or at least priced at) more than we paid to buy our land and build a house on it.

Better scout around to make sure I'm not just looking at the top end of the market.
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Re: Australian housing patterns are not sustainable

Postby Lefty » 13 Mar 2010, 16:03

Did find some cheap land but it is in the Gladstone region rather than near Gladstone itself ie Rosedale and other little bush towns - that is, it is about 100km drive to where the jobs are.
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Re: Australian housing patterns are not sustainable

Postby HBS Guy » 13 Mar 2010, 16:04

Only a little cheaper? OK, have not been involved in home buying/building since '89.

Hmmm the only way some will be able to buy is "sweat equity"--pay a builder to build to the "first fix" and they do the "second fix" (bar stuff like plumbing and wiring up power points and they can do landscaping/gardening. The home buyers can move in too while they do the second fix--no dead rent money!

I think some banks or whatever loan money on a "sweat equity" basis. More people should take these up--one way of reducing the ridiculous size of houses!
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Re: Australian housing patterns are not sustainable

Postby HBS Guy » 13 Mar 2010, 16:08

100Km drive is a 2 hour commute each way! Feasible IF there was a fast rail link, 1 hour commute each way! (once you enter city fringes proper traffic is a killer--trust me, it is! But not sure how big Gladstone is, but OTOH 100Km commute twice a day is $$$ in petrol
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Re: Australian housing patterns are not sustainable

Postby Ethnic » 13 Mar 2010, 18:49

HBS Guy wrote:Clearly, congestion charges are going to have to be levied, but alternative public transport will need to be available otherwise the levy is just a tax. Even Adelaide is getting to the stage that even in the middle of the workday traffic is pretty heavy while Sydney traffic is just stupid.


I know. Ever tried driving down West Lakes Boulevard in the evening? It's like a mad house. Can only imagine what the CBD is like. Public transport around my area is pretty good, have the option of the 115, 118, 113, 115, 117, even the 300s and the J if I'm willing to walk to the mall. The only problem is the load I have to carry with text books, laptop and students' books. A bit hard to carry all that on a bus, even with a bag.
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Re: Australian housing patterns are not sustainable

Postby HBS Guy » 13 Mar 2010, 19:09

I once took 30 minutes to travel from East tce to (nearly) West Tce at peak hour along Pirie/Waymouth Sts--about a kilometre!


If you got laptop why carry books? digitise!
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Re: Australian housing patterns are not sustainable

Postby Ethnic » 13 Mar 2010, 19:20

HBS Guy wrote:If you got laptop why carry books? digitise!


We don't have the resources at the school to do all that. Plus the students use hard copy text books and alot of their work is based on them.
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Re: Australian housing patterns are not sustainable

Postby HBS Guy » 13 Mar 2010, 19:27

that's a shame!
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Re: Australian housing patterns are not sustainable

Postby Lefty » 14 Mar 2010, 00:59

HBS Guy wrote:100Km drive is a 2 hour commute each way! Feasible IF there was a fast rail link, 1 hour commute each way! (once you enter city fringes proper traffic is a killer--trust me, it is! But not sure how big Gladstone is, but OTOH 100Km commute twice a day is $$$ in petrol

Sadly, no fast rail link :sad

Just got back from dinner at the pub with friends. They have bought the house they were renting, a short walk from Gladstone CBD (and pubs :purple ). They paid over half-a-mil but they were not first home buyers so already had leverage.

They related their experience of applying for their first mortgage - the loans officer sat them down and more or less gave them a lecture on financial responsability and what they could really afford. This mirrors our own experience around 10 years ago(we have never borrowed again). But when they went for this latest loan, the loans officer was almost throwing money at them!

This is the other half of the house price bubble. Yes, too many Australians just wanted ever more and ever grander but obtaining that is not possible without the finance. The banks must bear a great deal of responability here for ignoring all the old, sensible lending rules of thumb in the pursuit of ever greater profit.
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Re: Australian housing patterns are not sustainable

Postby HBS Guy » 14 Mar 2010, 07:42

It is part of the neolib crap! A complete focus on the short term to increase bonuses! It is a wonder the GFC was so fucking mild!
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Re: Australian housing patterns are not sustainable

Postby Lefty » 14 Mar 2010, 09:37

The first rule of bubbleology is, you don’t know when they will pop, and in fact, they can expand a lot longer than you think. Or as Mr. Keynes said, markets can stay irrational a lot longer than you can stay solvent. The second rule of bubbleology is — bubbles always pop
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Re: Australian housing patterns are not sustainable

Postby Lefty » 14 Mar 2010, 09:55

Exactly that - you don't know when they will pop. Doomsayers can lose all credibility predicting the bursting of what looks very suspiciously like a bubble because they can drag on for so long - for years and years.
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Re: Australian housing patterns are not sustainable

Postby HBS Guy » 14 Mar 2010, 10:03

I will look for the Galbraith books, he describes the South Sea bubble very well.

Bubbles never change, really. whether bucket shop, Ponzi scheme, the craze for breeding the first black tulip or other bubble, it depends on an unending supply of money from an unending supply of those wanting to get in on it. When there is the slightest check, long-buried caution sticks its head out the ground and the bubble pops.
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Re: Australian housing patterns are not sustainable

Postby Ethnic » 14 Mar 2010, 18:08

All this bubble talk has got me in the mood for champagne. Whatever happens, one thing is for sure. If the bubble ever pops, I doubt it will be like the USA pop. Even when the USA was in their boom, house prices were cheaper than here. When I went there a couple of years ago, you could buy a nice house with a decent backyard for $400, 000 - only 15 minutes from Manhattan! Try finding something like that 15 minutes from Sydney CBD for same price.
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Re: Australian housing patterns are not sustainable

Postby Lefty » 14 Mar 2010, 20:43

You can buy them a lot cheaper than that in a lot of places in the US now. Going for $500 in some parts of Detroit.

Problem is, it's hard to get a clear picture of all the facts here in Oz. The property bulls relentlessly push the "chronic shortage" barrow but it's hard to determine whether there is or isn't. You would think if that were the case that it would be extremely difficult to find houses for sale as they would tend to be snapped up almost immediately they went on the market (NOT what I am seeing in my area) and that there should be next to no vacant property. But according to the ABS, 1 in every 10 houses in Australia is vacant.

And that building 1 new house for every 1.5 new human beings we add (presumably of all ages) simply isn't nearly enough. Do we need 1 house for every 1 new person or something?

Every new person that we add by way of birth isn't going to be looking for a house of their own for quite a while! So that leaves immigration. But what portion of new immigrants are singles and what portion are either couples or couples with children? Unless nearly all of them are single, that's going to shrink the need for the number of houses needed to house them all by a rather large margin.

I think it is more likely that we have a shortage of housing relative to the number of Australians who desire to own second or multiple properties and also the desire for not basic housing but McMansions have helped push up the price. There are likely other factors as well, including the willingness of banks to finance a level of debt by ordinary borrowers that they would have previously been unwilling to allow.

IMO, this means that we are developing our very own sub-prime mortgage market - first home buyers. When an ever-increasing number of new entrants into the housing market are being granted loans totalling 5 or 6 or 7 times their total combined income or more, then we must surely be setting up a very significant problem down the track - to put it mildly.
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Re: Australian housing patterns are not sustainable

Postby HBS Guy » 14 Mar 2010, 21:07

Yeah, another downturn and the bad debt position of the banks might be more serious than it was this time (more of the newer, over-financed loans, less of the more sensible loans.)
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Re: Australian housing patterns are not sustainable

Postby Ethnic » 14 Mar 2010, 21:29

This whole "chronic housing shortage" mantra has been doing the rounds since the real estate industry began. Even in the last housing bust in the 80s and 90s, real estate agents were still touting the "desperately need houses, many people waiting to buy" bullshit even though many homeowners were foreclosing and no one had money to buy. It's their livelihood and they will do anything to get customers. Scare tactics are very good at keeping business booming. Australians aren't very bright when it comes to real estate tactics. In Adelaide, there is no shortage. Houses are on the market for a long time before any interested buyers make an offer. However that hasn't reduced prices. People may find their houses on the market for months but they still demand outrageous prices. My house is a 3 bedroom, one bathroom, nutcase of a house with a run down shed. I'm 5 minutes from the beach and West Lakes Mall. I'm happy. I don't need 5 bedrooms, a dining room, guest room, rumpus room, 2 kitchens yadda yadda. Why? Who am I going to impress?
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