A friend of mine sent me a link to a report through delicious about the housing market which read: you should read it. So I did. It’s about the housing crisis… something to which I recently *cough* shameless self-promotion *cough* wrote about for a journal article here.  Let’s have a look at the numbers and see where we stack up as a city here is a peek at the top ten report on housing affordability from a leading guru.  Firstly however lets look at the overall problem… housing has outstripped median income in most Australian cities.  Please note all of these pictures have been pawned borrowed referenced from the above report, these are not mine:

What this actually means in terms I can understand is this:  Housing has gone up in this country while the income we make has not multiplied by the same amount.  That is, if we are to measure housing affordability and median income over time we are to see that this graph shows that while housing prices have risen, income has not by same factor.  The following is even more staggering:

This report shows a stunning fact that the place I grew up (well since 1985-1995) is now the least affordable region in the entire world! The numbers in the top column that read 9.6 represent the amount of median income you would need to purchase a house in that area.  The another represents a rank score in terms of overall affordability (please see the report for more details).   An example from my own life is someone I know bought a place for around 2.4 times their income in 1990 on the Sunshine Coast and now it would take 6.4 times their income in same location.  They have had pay rises and dual income, yet the gap continues to widen.

That aside (POP goes my dream), here is another astounding fact about this report. The city I presently live in (Brisbane), scores marginally better:

I thought this to be bullshit at first but I looked into it.   I checked my income (as a family) and did the maths.  A house in our area is 6.1 times what I earn when compared to the median price of 430k.   6 times!  This is a major concern for those of us that are this far behind the eight ball.  Yet, if we take the strategic view and say that 68% (as of 2006) are mortgage owners then 32% are in the minority which has me fighting a losing battle.  I would like to say though that if we don’t take steps to correct this situation, as the demographia report suggests (i.e. government control of land ownership, increasing of supply of land and other solutions… read it!) then we are placing plummeting home ownership rates in conjunction with plummeting rental availability which also ties into things like government housing (a 9 year wait at present) and a host of other issues (homelessness for example).

Towards a solution

I think it’s time we discussed this and began addressing the plummeting levels of affordability in Australia and the regions beyond.  We simply cannot allow this situation to become so bad that we see housing affordability slip below the 50% mark.  I think we need to engage stakeholders like government, developers, economists, practitioners, renters and home owners to begin to come up with new ideas to beat this crisis… yes we need a strategic systems view and a systems solution.   Yet, I can’t see one… can you?

Recently I ran a post on renting and how I had been screwed over by real estate agents. This prompted a person called ‘Jamie’ to email me about her story. Welcome to the new Australia… a land of missed opportunity and a place where the rich screw the poor. This isn’t a matter of whether to buy or not… I am talking about people who can’t afford to do anything but rent. What about them? Here’s the story of a person who has it a lot worse that I do:

Here is my story on what has happened to us as far as the rental crisis goes….

We had been living in a 4 bedroom house, myself, my mother and my two children, we had been renting it at $250 a week for 4 years. We had a fantastic rental history to the point that we got a certificate from The Professionals Real Estate. No black mark on any of our names.

In February 2007 we found out that the owner wanted to sell his house, apparently it was all about some sort of superannuation thing that he and others would benefit if they sold their house. Well it benefited owners but not renters.

We had 6 weeks to find somewhere, so we started looking thinking we would have no trouble finding somewhere. We were so wrong! We applied for house after house, not only were there many others applying for them but they were incredibly expensive. We would wait and line up to see houses. We would apply but knowing my mother was on a pension, and myself on a pension, that those that had higher incomes were going to get offered first.

It was really bad at one point when we applied for a house and we had no reply and we had to keep ringing them but they just put us off and put us off, then we noticed it was having another showing for people to look at it, we were disgusted, we were perfectly good tennants yet we were not even being looked at.

Then the 6 weeks were up. We had to get out but no where to go… so we rang the real estate and got one weeks extension. The stress at this time was incredible, about to be out on the streets basically with a mother two kids and two cats.

One week later, still no luck so we moved into a friends house, myself, my mother and my two kids as well as the two cats were sharing a 3 bedroom house occupied by two other people and a dog. It was very cramped but we were grateful for a bed to sleep in even if we did have to share with each other.

We lived at the friends house for a month and if it wasn’t for someone we knew breaking their lease on a private rental, we would still be living with a friend I believe.

We finally moved into a new place. A 3 bedroom house with a sunroom for $320 a week (ouch!) During our stay in this house pretty much straight away after moving in my mother fell sick and I do hold the rental crisis responsible, the stress took its toll and she ended up with cancer. She died in November 2007.

I am now paying $320 by myself and may end up out on my ear at some point as the rents are far to harsh for one income let alone for a low income. The only way I can actually stay in Brisbane altogether is by working part time, raising my children, and I study to try and get ahead. A full time income wouldn’t even benefit unless it was a high wage.

I believe there is a solution. I believe that there could be an answer to this even with the Housing Comission having a 9 year waiting list.

The answer is for starters. Just like Premier Beattie said… we should put a toll on entering QLD since so many southerners are moving here and pushing prices up. This also pushes low income earners out of Brisbane, and many would be happy for that but what that means is people who have lived here all their lives have to leave friends and family. This is very say. Myself and my family had to change schools and everything. Which of course, is not good.

The other is instead of buying up houses for housing commission. Housing could actually subsidize rental properties through real estates or private rental, therefore reducing the cost of rent for many. Thanks to Howard there is a long waiting list because he made sure many houses were sold up.

So this is my story.

So where to from here for Brisbane? Where to for Australia? Remember what happened to the French when they screwed over their people? So… what happens next?

Over breakfast yesterday morning I was watching Sunrise, a local morning show. They had a man from Melbourne talking about property ownership from a perspective that I wasn’t familiar with. His core argument was that leasing (and he conceded) and renting were better than owning. He cited some examples which you can read here of the going rise in costs that I think show the overall trend in this country. What interested me was that he was a lessor and said, ‘this side of the grave I will not own a house even though I have owned five of them!’.

I was gobsmacked! This was an interesting point of view because it’s a common, if not unmovable, dream in Australia to own your home. It’ called the ‘great Australian dream‘ here at to be honest it’s now out of reach of more people than it has ever been in the history of this country. The point that got my attention the most was that putting your money into a managed fund or stocks may actually get you better financial returns. Several factors like: maintenance, rates and the like were cited as on-going expenses. I have to admit as I have before… the place I am living in now is fairly dodgy! As a renter I wonder about the future of something that may or may not be sustainable.

There is a lot of rhetoric about it being a sound investment but in closing this short post I would like to point out that homeownership is a dream for a lot of us. It’s the intangible desire to have a place we can call ‘home’ that is somehow built into our psyche. That goes beyond sound economics and is something else entirely.

Technorati Tags: property, house, home, Australian dream

At the moment in the Australian media there is a huge outcry about the housing affordability crisis. Some stats I heard on the radio yesterday say that only 39% of houses are affordable now in comparision with 96% in 2001. Where I live in the north of Brisbane there is a group of houses where a high rate of crime was reported. I went for a walk there the other day and began to think to myself what’s happened that the present state of affairs has come to this. Looking at the big cities of the world like London, New York or Paris it would seem that this is not a new problem for them. Housing affordability may have been a luxury in Australia for years but now it’s a luxury that I know I can’t afford.

How does one cope with these realities? A bit further north from me there were groups of families using the exhibition grounds as a temporary accommodation because they couldn’t find homes to rent. In the Philippines there are entire shanty towns built out of rubbish and left over bits of metal. A positive for me is that I can say, “at least I can afford it.” However, I cannot see anytime soon that I won’t be renting. I have never owned my own home and if things keep increasing then I probably never will. Thank God I can afford to rent but that is not really much of a comfort when you are kicked out after the house is sold. I mean we have lived in eight houses in the past eleven years. In this last five years we have moved five times.

It’s not all bad though. When I can eventually afford a house at least I can say that I know what I like. Although I still dream of owning a home it will be many, many years before I can afford it (given present trends). Are you in the same boat?

Technorati Tags: housing affordability, London, New York, Paris, Philippines