NOW YOU SEE IT – NOW YOU DON’T !

NOW YOU SEE IT – NOW YOU DON’T !

Most interesting to read in The Sydney Morning Herald on July 18, 2007 an article by Tony Abbott “The ‘me too’ chorus says Government’s got it right”. “By most criteria, the Howard Government has been the best since Menzies.

Unemployment, interest rates and inflation are at 30 – year lows. There is virtually no foreign debt. Australian’s real net wealth per head has doubled since 1996 and real wages have increased by 20 per cent. Contrary to mythology, the richest and poorest deciles have increased their disposable income at about the same rate since 1996, with the biggest percentage gains going to middle- income families. Almost 80 per cent of Australian families are buying their own homes, an all-time record.”

Yet this week, a Federal parliamentary economics committee has been set up to investigate declining credit standards and rising mortgage defaults. The Housing Industry Association’s (HIA’s) national outlook for the June quarter is that record low housing affordability is stopping a growing number of Australians from actually owning their own home. Personal bankruptcies are up 17 per cent in 2006-07 and now we have a suggestion that those borrowing should be required to put down a 20 per cent deposit.

You have a blame game that highlights more people moving to Australia than dwellings being constructed. The Department of Immigration advised that in 2005 – 2006 more than 131,000 people arrived on our shores, yet, we only produced 55,000 new dwellings. A recent report by the Melbourne Institute found rising interest rates and the drought have led to an increase from 10.8 per cent to 15.1 per cent in the number falling into debt and drawing on their savings. And that is just in the last year! The number of people dedicating more than half of their salaries has increased from 5.9 per cent to 7.5 per cent. For those on the land, debt ratios increased from 9.9 per cent to 20.8 per cent. The report also revealed that personal savings fell in metropolitan districts from 57.7 per cent to 50.7 per cent. The study confirmed Reserve Bank research which identified that the highest debt ratios are for those with higher incomes. Seems somewhat strange that those markets are currently in boom where house prices are at peak levels and look like going even higher.

In Mosman, the median price for a house for the twelve months to July 2007 is currently at $1,777,500 and an apartment is $508,500. On the other side, in Cabramatta, (which is a market in decline) the median price for a house is $335,000 and an apartment is $170,000. The stark reality is that today many people simply do not wish to reside in these areas for a number of valid reasons. An argument for Governments to release more land to ease housing affordability is nothing more than a furphy. Why? Because we do not have the required infrastructures in place to accommodate the creation of new suburbs and let’s face it, the State government struggles to get a train past Milsons Point station.

Today, in country towns, we see councils offering vacant land for as little as $1.00 per block (subject to restrictions). The Australian way has clearly identified that families prefer to live by the sea which explains why we have seen population explosions from Gosford to Wollongong. In Thirroul on the South Coast the median price of a house is $491,500 and an apartment $380,000. Then if you head to East Gosford the median price for a house is $370,000 and an apartment is $305,000. This reinforces a compelling argument that today many families seek that irresistible ‘sea change’ as the lifestyle is more appealing than areas of South – West Sydney and, with respect, you could hardly blame them for this decision. With anecdotal evidence that areas closer to water always show greater capital appreciation, it makes plenty of sense that coastal suburbs are today more appealing, because these areas continue to record capital appreciation.

It is much easier now for home owners to go online to property portals to see how much ‘bang for their buck’ they can get and also see how suburbs perform. Today, this method of shopping, is now a fact of life.

I will be taking a few week’s break so management is pleased to announce that talented architect Mr. Peter Tout from Castlepeake www.castlepeake.com.au will be taking over the keyboard. Cheers ^__^

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