Overcoming the impediments – what will it take to shake up housing affordability? Federal Budget initiatives go some way towards helping first-homebuyers, but a coordinated approach is key to making a real impact

Prospective home-buyers will have been all-ears listening to Scott Morrison hand down the 2017 Federal Budget, eager to see how the government is responding to the housing affordability crisis that has kept young people’s plans on the back burner for so long.

But if CoreLogic research is any indication, they may be left feeling underwhelmed – at least in the short term. Even though the introduction of a ‘First Home Super Savers Scheme’ will allow Australians to direct a proportion of their pre-tax income into saving for a deposit, the Core Logic Perceptions of Housing Affordability report indicates this may not be enough to alleviate the strain for first-home buyers.

Housing affordability has been a contentious issue for some time. Despite banks tightening their approach toward investor lending and stricter rules around foreign ownership, prices have continued to rise. In the Federal Budget, the Treasurer has just introduced additional measures to counteract negative impact from investors, yet ironically investor activity appears to be the least of first-homebuyers’ worries. Only 27% of buyers highlight it as a major impediment to getting on the ladder, and only 30% are concerned about negative gearing.

So what do first-homebuyers think would really make a difference?

Concessions and grants

Stamp duty is a lucrative tax for state governments, but a bane for homebuyers struggling to come up with the initial costs required to buy a property.
According to CoreLogic research, buyers now have to save 1.5 years of gross household income for a 20% deposit (up from 0.8 years 15 years ago), and that’s before they factor in stamp duty costs. Consequently, 44% of homebuyers say stamp duty and deposit costs are their biggest impediment to getting on the housing ladder, with three-quarters saying they would welcome an exemption or reduction in stamp duty.

Government grants are also an appealing proposition for first time buyers, with almost three quarters (71%) believing a grant would help them enter the property market. Although they’ve been introduced in some states, and have no doubt gone some way to alleviating buyers’ financial pressure, in reality their impact on affordability is questionable. In fact, grants may have the opposite effect on housing affordability, by fuelling demand and pushing up prices in the lower echelons of the market.

The right dwellings in the right areas

With houses out of reach financially, apartment living is becoming a more realistic option for many families these days. But there’s a catch: the majority of the 150,000+ apartments currently under construction are one or two bedroom units, more suited to investors and renters than growing families.

Around 60% of prospective buyers believe increasing the availability of land would improve affordability. But with parcels of land earmarked for development often situated on urban fringes, it’s equally important for state government to invest in solid infrastructure, providing homeowners with the amenities, jobs and transport they rely on.

A dedicated housing minister

And with all the different factors impacting housing affordability, there needs to be someone to coordinate the responses. At $7 trillion, residential real estate is by far Australia’s largest asset class, yet there is a currently no one at the helm steering the ship.  CoreLogic research indicates clear support for a dedicated Federal Housing Minister, with almost two-thirds of respondents (63%) in favour.

At the moment, housing affordability is by far one of Australia’s greatest challenges and there is an overwhelming need for someone to champion housing policy across government sectors.

As it stands, there’s no quick fix available. Rather it’s a convoluted test of resourcefulness, requiring the cohesive commitments of private, public and government sectors working towards a common goal.  It’s a monumental task yet all those involved can take heart in knowing their efforts could positively impact a whole generation of Australians for whom owning a home is currently nothing but a pipe dream.

Read more about how to fix housing affordability:

Housing price growth peaked earlier this year and will slow to 1.9 per cent by next year, ANZ says in a new research report.

While some potential home buyers might be praying for a sudden crash in prices to improve affordability, Saul Eslake says that wouldn’t be desirable. “You wouldn’t want to solve Australia’s housing affordability problem the way the Americans did,” he says. “The best way to solve it would probably be to have an extended period where house prices were flat and incomes grew rapidly. It would be a good thing if we had a gradual deflation of house prices.”

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Removing the Hassle from Sales and Rentals across South East Queensland. Aim to Empower other like minded Property Investors. L J Gilland Real Estate is a prestigious boutique agency specializing in Property Investment Management Services and the Sales of Investment Properties with tenants in place. Comprised of a top performing group of handpicked specialists, our Agents proudly serve Property Investors in Queensland. Since 1996 our Agency has demonstrated a genuine enjoyment of working with people, developing long-term relationships and delivering on the promise of great service. Carlos and Linda Debello offer property investor's the confidence to sell and lease in any market. We provide comprehensive market appraisals, exclusive multimedia marketing campaigns, and knowledgeable, highly personalized counsel on all aspects of real estate. Our Property Management Team is equally considerate, offering investors with in-depth advise, well-researched rental valuations, and highly professional rental management services. http://goanimate.com/movie/0M4bvcZzgIbI?utm_source=linkshare&uid=0u6RGtWsmlVc Carlos’ direct mobiles are 0400 833 800 & 0413560808. Linda’s mobiles are 0409995578 & 0414978700 (prefer email contact for Linda). Office 07 3263 6085. http://www.ljgrealestate.com.au http://www.yellowpages.com.au/qld/aspley/lj-gilland-real-estate-pty-ltd-14091356-listing.html http://au.linkedin.com/in/lindajanedebello http://twitter.com/GillandDebello http://www.facebook.com/pages/ljgrealestate
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