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The Wrong Direction for Affordable Housing

The recent positive signs of directions towards more affordable housing are being reversed as the property market is now heading in the wrong direction for affordable housing with the new signs of available Chinese money ready and willing to invest into the property market.

There has been signs of a slowing in the increase of housing prices right across Australia over the past few months and such slowing had the potential to make housing slightly more affordable and yet we now see a change afoot that will reverse this trend as we now have standing in the wings investment funds that will see the Chinese investors launch a new assault on the housing market that will housing prices escalate to new heights making housing so much more unaffordable to most Australians.

 

https://www.theaustralian.com.au/business/opinion/robert-gottliebsen/property-the-chinese-are-back/news-story/579f3935a7f1c96005394b3c677393c5

“A year ago the Chinese were having incredible trouble finding the money to settle apartments bought off the plan two or three years earlier. In Sydney Harry Triguboff’s Meriton advanced them money to settle and in Melbourne non-bank financing helped while sometimes the Chinese were given extended credit by developers.
But now Meriton reports that the vast majority of Chinese are settling their off-the-plan apartment purchases in full without the need for Meriton loans. Moreover these apartments, as “used” apartments, have fallen about 20 per cent in price and even though the Chinese know there is a big paper loss involved they are still settling.
Clearly there have been changes in China that make is a little easier to get the money out or borrow in Hong Kong”

The slow down of foreign investment in housing was producing reduced housing prices – while this is not welcomed by those selling housing it has made some housing more affordable for Australians needing housing. As the foreign investors have reduced their involvement in Australian housing market there has been more housing on the market for sale and with the investors with more modest amounts to invest; as a direct result there becomes more affordable housing on the market as the prices being achieved in the sales are declining.

https://thewest.com.au/business/housing-market/perth-houses-most-affordable-on-record-ng-b88901143z

The West Australian property market has shown the effects of removal of excess moneys into the property market. It is important to point out that the reports of a booming economy have often been related to an overheated property market where the housing prices are rising very rapidly and yet this distortion of the value of property is precisely what has made has made housing so unaffordable in the first place. The way the government crows about the health of the economy as house prices increase and yet crows so much less on the subject of affordable housing and find it necessary to find mostly lame excuses to blame on the problem without dealing with the real issues on hand causing the rises in housing prices. Note the excesses of the mining boom cause huge housing price rises and as the mining has slowed down there has been massive housing price reductions.

https://thewest.com.au/business/housing-market/survey-shows-extent-of-wa-property-market-price-drop-after-mining-boom-ng-b88900994z

The problems of this housing price plummet is directly related to the unbalanced approach to the economy by the Federal Governments over the past several decades. This means that the short term economic plans of the various governments lead by the Labor Party and the Liberal/National Parties have set up the nation for a huge roller-coaster ride in so many areas of the economic equation. A new approach is needed and as we go forward with a new approach there will be pain but the result will be a more stable economy with real affordable housing for all Australians. To embark on this new direction we will need a new political direction and that can only be undertaken by the Christian Democratic Party. It will not be easy but for a strong and balanced economy that will withstand all economic storms we must change what we are currently doing. The current economy is only advantageous to the wealthy and high income earners but of no advantage to the vast majority of most Australians on average or below average wages. These people are the forgotten people the current political processes who are only thrown a few crumbs from the tables of the wealthy. We can and must do better!!

https://www.smh.com.au/business/the-economy/is-the-bottom-about-to-fall-out-of-our-6-9-trillion-property-market-20180720-p4zslb.html

Below is quoted from the article in the link above:

“And the Reserve Bank board’s consideration of debt at this month’s meeting noted that while there is a “material share” of debt owned by low income earners: “Survey data indicate that much of Australian household debt is owed by higher-income and middle-aged people, who tend to have more stable employment and often larger savings buffers.”

Measures of financial stress watched by the bank have shown no noticeable increase.

 

Jobs figures released this week show continued growth in jobs and unemployment near a 5 and a half year low.

After a half decade of rapid gains, some pull back in home values is not unusual. According to CoreLogic, nationwide home prices are still 32.5 per cent higher than five years ago.

In its consideration this month, the members of the Reserve Bank’s board “agreed that household balance sheets continued to warrant close and careful monitoring”.

Most Australians would agree.”

There are some concerns raised in this that need addressing before we find a true part to stability in the housing market. The number of unemployed needs a close examination as the stats may not tell the truth as the stats are collected and while their figures are not in dispute the use of the numbers can be of concern from time to time. and so the unemployed numbers can often be understated. The numbers of people who give up on the requirements to be considered “unemployed” fluctuate from time to time but they are still unemployed, but not necessarily in the numbers. 
The low income earners are mostly the ones finding housing affordable – often because of high rents or just unable to get in to the market for purchasing of housing in reasonable proximity of work or other commitments .

Many of the fixes are often recomended by those in the business – for advise is sort from the “key stakeholders”. The key stake holders are most often the banking industry, the real estate industry, the property investors, developers, but never the people who are looking for housing but finding it as being far too difficult to find housing. Some times agencies looking for accommodation for disadvantaged people may be consulted but their information is overwhelmed by the other “more” key stakeholders much more wider experience in the housing market. 

Note well: Most of the stake holders have a lot at stake if the prices of housing is reduced to more affordable levels and hence there are many thousands of dollars of reasons why their advice might be distorted from the best long term solutions. It seems to me the the weak suggestions by the Labor Party is only about getting elected and not resolving the problem at all. They want to “grandfather” current tax deductible items on investment properties after spending a lot of time on demonising negative gearing of rental properties. Many members of the Labor caucus own rental properties and are wanting to protect their investments. This is a huge conflict of interest by these members. The friendships with the Asian nations by so many members of the Federal Parliament means that the closing of the door completely on the foreign ownership of housing in Australia is not possible for them to consider – BUT THIS IS A STRONG KEY TO REDUCE THE PRESSURE ON THE PRICE OF HOUSING. It is unfortunate that personal interest has played such a strong role in the increased unaffordability of housing to so many Australians.

The relationship between the huge assault on reducing the number of people entitled to receive the pension and the need to supply ones own retirement income via superannuation funds or by other personal arrangements have changed man of the decisions that are made by those capable of self managing their income into retirement to either choose the stock market or the property market.

“According to the Tax Office, about 11 per cent of the adult population owns one or more investment property, up from 7 per cent in the 1990s.” This indicates that the returns on property has assisted those capable of it to choose the more stable property market than the volatile stock market to hedge proof their retirement income. This brings more into the market as investors and as a result also puts pressure on increases in housing prices. Many of the superannuation funds also use the property market to stabilise their earnings. (the superannuation funds often use a mixture of housing and other investment properties).   

The solution to the unaffordability of housing must include the reduction of government charges, the stopping of foreign ownership of housing, better banking and financial regulations, and strong transport connection between communities and work places.   

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