Australian Housing Crisis

Issues Facing The Housing Industry (A Brief Summery)

пÑ"? Negative Gearing

Presently there is a big issue for first homebuyers as they compete with property investors for homes.

пÑ"? Inflation

Even in the 21st century there is still a big issue facing every industry in every country in the world, inflation. That is, the constant rising of prices is an unrelenting problem in everyone’s mind.

пÑ"? Inadequate Work Force and Unemployment

In the recent Federal Budget, there was an expectation of unemployment to rise by 4-5% in the next few years. In an addition to unemployment, the meagre workforce of homebuilders and architects greatly reduces the supply of new home need by the population

пÑ"? Population Boom

A higher standard of living along with the influx of new migrants adds a great number of people who need homes.

пÑ"? Inescapable Interest Rate Rises

In the recent years, the Reserve bank of Australia has had to raise interest rate 12 consecutive times. The interest rate now stands at a crippling 9%.

пÑ"? Escalation In Housing Demand

As a result of the population boom, the demand for new homes has significantly increased. This rise in demand has ultimately resulted in the increase of prices.

пÑ"? Infrastructure

Australia has a very spread out pulpous and the current infrastructure is just starting to show signs of not being able to keep up with the shear amount of new cars.

Issues Facing The Housing Industry (A More In Depth View)

Inflation

The steady rise of prices has inevitably put more strain on families. As price of food and other necessities such as fuel rise, the average working class family is finding it harder to survive. The Rudd government has done its best to curb inflation, but it’s still early days and things do take time to take effect. In the mean time, families are force to restrict their expenditure and tighten their budgets as the price of living increases.

Negative Gearing

In the arena of first homebuyers’ verses property investors, investors have all the experience and money along with surplus money from their rental properties. This gives investors greater buying power as opposed to first home buyers who don’t really know much of the �works’ and have a certain price threshold that they cannot exceed. This unfair advantage often pushes the first homebuyer into outer suburbs are less favourable properties, adding to the strain of starting a family.

Population Boom

Recent civil unrest in many counties has caused yet another �boom’ in immigration numbers, this, along with a higher standard of living has escalated population numbers remarkably. These new families have also risen the demand for new housing. This has had adverse affects as the housing industry rose prices, since people were willing to pay a higher price for their new homes, thus producing higher yields for investors whilst deprive poorer families of much need money.

Infrastructure

The infrastructure is starting to fail as more and more people use the roads, the death toll is also rising and fuel is getting more and more expensive. The new East-Link toll way will take a major strain of our over crowed roads but will it be enough? A house is also a lager physical object that takes up a whole property; this means that builders are finding it hard to find places to actually build a house. More and more house are being built further and further for Melbourne, this puts added pressure on infrastructure as people need to travel further to get to the basic necessities such as hospitals, supermarkets, schools, doctors...

Interest Rate Rises

Interest rates have risen in an unprecedented manner in the past year as the Reserve bank of Australia has been forced to rise the interest rate just to keep the economy going. This is the main reason for the recent inflation for housing prices. Families now have to pay a crippling 9% on their morgues’. A family buying a $300,000 new home payed just $1000 in interest a few years ago, nowadays the same family would have to pay $2700 in interest, almost double.

Inadequate Work Force and Unemployment

The new influx of immigrants and school graduates has resulted in a demand swell for new homes. The housing industry just can’t keep up with the new demand meaning that overworked builders are demanding higher wages. This also adds to the price increase of new homes.

A Brief Assessment Of Government Propositions

First Home Saving Accounts

Name: First Home Saving Accounts

Action: The government has initiated a first homebuyers saving account that gives first home buys an extra $5000.

Catch: To be eligible of the $5000 bonus buyers have to prove that they have saved, for a first home, at least 10% of their income for at least a 5 year period.

Thoughts: This is a great idea and how ever thought of it should be commended, but sadly $5000 dollars for a $300,000 new home just ait enough.

Pros:

• $5000 does help if not much

• It’s a good incentive to save up for a new home.

• Its peoples tax money going back into their pockets.

Cons:

• $15,000 might help but certainly not a mere $5000

• People