Amid the widespread media gushing over ‘tiny homes’, it is nice to finally read an honest appraisal on why they are a retrograde solution for chronic housing policy failures:
Finally, an ingenious solution to a housing crisis that is sapping the quality of life of an entire generation: the humble van.
More than 21,000 Britonsapplied to the DVLA in the past year – a rise of almost two-thirds in two years – to convert their van into a home…
With your cosy cubby-hole on wheels, you can escape the tyranny of a private rental sector defined by rip-off rents and a lack of security and roam the British landscape, unshackled, free!…
Stop this – stop this immediately. This is yet another attempt to glamorise a national scandal, to dress up desperation at the inability of a wealthy society to provide one of the most basic needs of its citizens as kooky and fun.
Will historians look back at this as a wacky, innovative trend, or will they write: “In 2019, citizens of the country with the sixth-biggest economy were forced to transform vehicles into places to live because of the lack of affordable housing”?…
Here is a shockingly radical suggestion. Instead of cramming people into depressing, confined spaces, why don’t we provide quality housing people can afford?
Bravo. Finally somebody else ‘gets it’. Tiny homes are no genuine solution. They are merely caravans rebranded to make them sound romantic.
For generations caravan parks have been where Australia has housed its poorest and most vulnerable residents. They are effectively emergency accommodation that is one level above being homeless.
‘There has beenan increase in part time workers, no wage growth above CPI, squeezing of available credit facilities, collapse in Australian equities, falling AUD compounded by falling demand in Australian commodities.
The lack of any serious economic reform by this turgid coalition, refusal to release funds to stimulate economy, refusal by this elected joke called Government to fairly spread the tax burden will mean the good punters in Sydney and Melbourne are going to find themselves out of pocket and mortgaged locked in indebted, negatively priced housing.
But the answer is simple…..add another 300,000 migrants a year. As before 98.8% will move to one of two cities, prop up the real estate and further ghetto-ise once pleasant places.
But taking a leaf out of the Morrison/Hockey playbook …. Jesus provides, just get a better paying job all you leaners and you can maybe compete against the wash of international arrivals. Best of luck.’
Sydney and Melbourne house prices will soon be growing at double-digit rates
Sydney and Melbourne house prices will be growing at more than 12 per cent per annum by the middle of next year, one of the nation’s largest banks has forecast as the Reserve Bank talks up the chances of the economy recovering in 2020.
Economists with the ANZ believe a change in sentiment along with cuts in interest rates and the federal government’s income tax reductions will super-charge Sydney and Melbourne to a point they will effectively wipe out the price falls recorded between 2017 and early this year.
Sydney dwelling prices rose by 75 per cent between 2012 and 2017 while over the same period they increased by 58 per cent in Melbourne. They then fell 15 per cent and 11 per cent respectively until June.
ANZ believes that by the end of this year, Sydney and Melbourne prices will be up by 3 per cent.
By the middle of next year, they will be growing at an annual rate of 12 per cent and 13 per cent respectively.
By year’s end, a combination of tighter credit and improved supply will mean price growth will come back a little but will still be 7 per cent in Sydney and 9 per cent in Melbourne.
ANZ senior economist Felicity Emmett said the property markets of the two cities were re-bounding much quicker than expected.
“Auction clearance rates bottomed out in December and have been rising since. But the improvement became much more marked from May onwards,” she said.
“The change in sentiment was driven by the combination of lower rates, easier access to credit, and increased certainty around housing taxation. Together, these factors have helped to shift sentiment from one of pervasive negativity to broad optimism.”
The Reserve Bank restarted interest rate cuts on June 5. Since then, dwelling values as measured by CoreLogic have increased by 7.2 per cent in Sydney and 7 per cent in Melbourne.
The lift in prices, however, will come at a longer term cost with household debt levels likely to increase while affordability will fall.
Does this article challenge the concept of paying rent to foreign owners of Australian domestic housing?
Does this article challenge the concept that it is fine to have a shrinking proportion of Australians owning their own home while the percentage of foreign owners grows?
Does this article shine a light on ‘money laundering in real estate, on PROXY buyers and VISA manipulation associated with the buying of domestic real estate’?
DON’T THINK SO!
The article did attract some comments about renting in later years but what about these circumstances …
-workers, say 2 adults on average wages are renting .their rent is so high they are paying 40% of their income to a landlord .ability to save is very limited .rent increases regularly .repairs are not always made, complain and there’s a good chance lease renewal will be refused
What happens next when …
-one or both lose employment -moving out is fraught with difficulties as real estate agents .claw back ‘repairs’ from bonds .insisting on professional cleaners – moving out costs can be crippling
Then with less income the renter can’t rent a suitable dwelling in a desired area.
Oh yes I forgot, ‘go and get a better paying job’ and ‘move to the country’
It’s MYTH PEDDLING … what these sort of stories do is they endorse the concept of being a consumer at every level, not only day to day for food and clothing but for shelter too
AS RENTERS …
-What about your credit rating? -What about how much you pay for insurances? -What about how much you pay for utilities in rented places where there are no energy savings to be enjoyed?
-How often are we asked in a conversation about financial circumstances, ‘and you own your own home?’
-As for renting in later years the picture gets worse, there have been some studies done recently showing older single women
-are particularly worse off not owning a home -find rental affordability difficult –reluctant response from agents and owners to even rent a property to them
-are often forced to share with others
-are forced to rent sub standard dwellings
-also have less super available
It always amazes me being told by a wealthy person that we ought think like he has, especially when he has little to fear from sudden termination of his lease as he has the capacity to easily relocate with a minimum of angst
See what it is really like in Struggle Street … see how you are treated as a renter when you’re not wearing a flash suit and don’t have business cards and clients from the Big End of Town then you‘ll know what it’s like.
VIEW CAAN WEBSITE TO FIND ARTICLES ABOUT RENTING AND MORE ..
THEN we hope you will make your objections known to your local MPs … click on the links below to find their contact details including email and phone!
-could it be they are readily intimidated by an expectant avalanche of abuse that will quickly label them as ‘RACISTS’ if they even mention the facts about foreign ownership of Australian domestic housing
-could it be various media outlets are also wary of mentioning the truth because of the possibility of backlash that could hurt their bottom line
-could it be they are worried about the BIG END OF TOWN and their well connected political allies taking them apart
HOW about it’s all about the above and more!
MEANWHILE … a Whole Cohort of AUSTRALIANS are locked out of HOME OWNERSHIP … with little else to look forward to other than Life-Long Tenancy … and insecurity … for a large slice of the pay packet … in THEIR OWN COUNTRY! How good is that?
Location, location, location: why up to two-thirds of property investors may be getting it wrong
This is even the case for superannuation funds, who set aside a sizeable portion of their assets for investment in Australian stocks — far more than the Australian stock market would represent in a global stock portfolio.
It brings with it problems alongside the advantages of convenience and local knowledge.
Most investors hold only one investment property alongside their place of residence, making it one of the few chances they have to diversify away from the risk embodied in that suburb.
Instead, most double down on that investment.
If you are wondering whether this is unwise, or unwise enough to outweigh the advantages of local knowledge, consider this question: How likely is it that the location you happen to live in will always outperform every other location?
Interestingly we find that “sophisticated” investors are more likely to invest outside of the suburb where they live than less sophisticated investors.
Investing non-locally is more likely among investors who own shares, already receive rental income, and work as professionals or in management positions.
And a more fragile financial system
The risks that doubling down on locations impose on unsophisticated investors extend to the financial system itself.
Higher geographical concentration of property investments increase the risk of defaults and foreclosures in a market downturn, amplifying economic cycles.
*Australians have a lot of wealth tied up in property, and the property market in turn is highly connected to the financial system through bank lending.
Our study suggests there is an opportunity to strengthen Australia’s financial system by educating potential investors about risk.
It could make them, and the Australian economy, better able to withstand downturns.
Maria Yanotti is a lecturer of economics and finance at the University of Tasmania’s School of Business and Economics. She receives funding from the Australian Housing and Urban Research Institute. Danika Wright is a lecturer in finance at the University of Sydney. This article originally appeared on The Conversation.
*Withthis week’s release of dwelling commencements and completions data for the June quarter, it’s once again time to examine how Australia’s dwelling supply is tracking against population growth.*
The below charts track the following, which are based on the latest available quarterly data:
Dwelling approvals to June 2019;
Dwelling commencements to June 2019;
Dwelling completions to June 2019; and
Population change to March 2019.
*First, the national picture shows that both dwelling approvals and commencements have completions have collapsed.
*Completions have also just peaked, whereas population growth was strong at 388,800 in the year to March 2019:
*Overall, dwelling construction is facing an epic bust at the same time as population growth continues to run rampant.
*Next is NSW, where after lifting to unprecedented levels, both approvals and commencements have collapsed. However, completions have just peaked, whereas population growth remains strong:
In VIC, both dwelling approvals and commencements are crashing, whereas completions look to have peaked in the June quarter. Population growth is still turbo-charged, albeit has moderated slightly:
In QLD, dwelling approvals and commencements are also crashing, with completions following closely behind. By contrast, population growth into QLD has risen strongly over recent quarters:
The construction cycle in WA continues to unwind abruptly with approvals, commencements and completions all plummeting. Meanwhile, population growth has rebounded after crashing recently; albeit remains at very low levels:
SA’s housing market was headed into oversupply. However, the situation is changing with population growth accelerating just as dwelling approvals and commencements are falling:
To summarise, while the housing market hit oversupply recently as the plethora of homes were completed, the collapse in dwelling approvals and commencements suggests that construction will bust from now into 2021.
Other things equal, this points to higher rents in the future; although this will also depend on what happens to wage growth and unemployment, which will be hit hard as construction jobs retrench:
The latest figures on new homes reinforce other data showing Australia currently making close to the worst economic progress in the Western world.
It doesn’t help that the Coalition has virtually abandoned public housing, reports Alan Austin.
Permits for new dwellings in the financial year ended in June came to a total of 188,250. That sounds quite a lot. But it was 44,726 fewer than the year before, and a thumping 50,406 fewer than three years ago. It was also fewer than in 1988-89 during Paul Keating’s reconstruction of Australia’s economy.
The percentage decline in the last year over the year before was 19.2%, the worst annual decline since 2000-01 at the depths of the early 2000s global recession.
Construction data deconstructed
New housing data has been released monthly since 1983 by the Australian Bureau of Statistics (ABS) in file 8731.0, Building Approvals, Australia. The ABS separates private sector construction from government, and houses from other dwellings such as blocks of flatsand high rise apartments.
*Private sector houses declined 9.7% in the year ended in June from the previous year. The number – just 110,015 – was the lowest since 2012-13, towards the end of the global financial crisis (GFC).
*Private sector dwellings other than housesdropped a staggering 29.9% last year from the year before. That is the worst decline in 23 years.
*Public sector dwellings, including both types, declined 17.9% year on year.
*The number – a puny 2,416 – was the lowest on record by far. The second lowest was 2,722 in 2011-13, and the third lowest 2,779 in 2016-17, when Scott Morrison was Treasurer.
*This confirms the Coalition has virtually abandoned public housing, a high priority – and a strategic economic stimulus measure – of most previous governments.
*The average number of public housing dwellingsbuilt annually by the Keating Government was 8,514. Through the Howard years, this dropped to 4,346.
*The Rudd and Gillard period, most of which was impacted by the GFC, averaged 6,402.
*In stark contrast to these, the average under the Coalition – during an unprecedented global building boom – is just 3,060.
*There is a credible case that global conditions for new home construction in 2019 are the best in seventy years.
Interest rates are extremely low, loan capital is available, building technology is advancing, unions are weaker than they used to be and international trade is freer than ever – Donald Trump notwithstanding – which moderates costs.
Most well-managed economies are taking full advantage of these strong global tailwinds and enjoying a new housing boom. Poland has seen building approvals increase for seven consecutive months, Greece for the last five months, and the Bahamas for the last four.
Current data on new housing approvals is available at tradingeconomics.com for 41 free enterprise economies.
The USA, Chile, the Czech Republic and Taiwan enjoyed increased new home approvals in July over June, and increases in four or five of the last six months.
The Netherlands, Germany, New Zealand, Belgium, Luxembourg, Croatia, Latvia, Estonia, Jordan, Macedonia, Kenya, Qatar and South Africa have all had rises in the latest month over the month before.
Canada, Honduras and Slovenia have seen strong rises for the last two months straight.
Sweden, Lithuania, Montenegro, Austria and Bulgaria, which report quarterly, have all reported higher building permits in the second quarter of this year over the first.
Albania has seen strong quarterly rises in five out of the last six quarters.
So these are global boom times for house construction. Except for three dismal laggards.
*Australia is the only country among these 41 in which housing starts have declined in five out of the last six months.
Also lagging are Portugal and Israel, with four of the last six months in reverse. But neither has housing outcomes as poor as Australia’s.
Forward to 2019-20
Here comes the scary part. We now have ABS housing permit numbers for July and August, which indicate how things are travelling in the new financial year.
*Total dwellings approved in those two months are just 25,782, a dramatic drop of 25.1% on the number for the same two months last year. That’s the lowest for July and August in seven years. It is the lowest relative to population on record. So there is no sign of any turnaround, despite the benign conditions.
Whole economy in decline
*The last financial year was one of the worst for Australia’s economy, with deteriorating outcomes on jobs overall, youth unemployment, productivity, wages, interest rates, retail sales, GDP growth, federal debt, interest paid on the debt, net worth, the value of the Aussie dollar and the welfare safety net.
*Theloss of wealth due to record exports being shunted out of the country with little or no return to the budget – or the people of Australia – is now at an all-time high.
These outcomes are particularly shameful given the global conditions still prevailing with continuing growth in investment, trade, jobs, corporate profits and government revenue.
*In fact, it is these powerful global tailwinds which have masked the disastrous mismanagement of Australia’s economy.
*As an example, Australia’s ranking on jobs has slipped from 16th in the OECD two years ago down to 20th today. Appalling! But the jobless rate has actually improved from 5.5% to 5.3%. Thanks to the global boom.
Role of the media
Again, these dreadful outcomes will seldom, if ever, be mentioned by the mainstream media.
The compact – or is the quid pro quo? – is secure.
The big media corporations will not disturb the management of the economy and the Government will not disturb their freedom from the obligation to declare profits fully and pay the required taxes.
Of course, if the corporations did pay appropriate tax on actual profits, along with fair wages, there would be plenty of revenue for new housing.
Extinction Rebellion, also known as XR, began in April 2018 when a small group of British activists met in Bristol to discuss how to achieve what one early member called “radical social change”.
It started as part of the Rising Up network, which describes itself as being born out of the Occupy movement and includes among its aims “a rapid change in wealth distribution and power structures”.
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XR’s first major action, on October 17, 2018, was to occupy Greenpeace’s offices in London, with the aim of gaining media attention and distinguishing itself from earlier movements.
“The point of this was to say, ‘Greenpeace, we love you, but we need to talk. There is an emergency and you have a role to play in this’,” wrote Ronan McNern, Extinction Rebellion’s media and messaging coordinator.
Later that month, academics, including the former archbishop of Canterbury Rowan Williams, attached their name to an open letter which stated we’re, “in the midst of the sixth mass extinction” and that the British Government had failed to take adequate action.
Extinction Rebellion was officially launched in the UK on October 31, 2018, with a protest at London’s Parliament Square to declare rebellion against the UK Government.
*In large part, the protest is about minimising climate change and the problems associated with it, from rising seas to food insecurity.
Specifically, in the UK, the movement wants the Government to “tell the truth” and declare a climate and ecological emergency; reduce greenhouse gas emissions to net zero by 2025 and stop biodiversity loss; and create a “Citizens’ Assembly” to guide decisions on these issues.
*For some key figures in the movement, it’s not just about climate change.
Sam Knights, who has been part of the movement from its inception and co-edited This Is Not A Drill: An Extinction Rebellion Handbook, wrote in his introduction to that book:
*“The challenge we now face is extremely daunting. Because the problem, unfortunately, is not just the climate. The problem is ecology. The problem is the environment. The problem is biodiversity. The problem is capitalism. The problem is colonialism. The problem is power. The problem is inequality. The problem is greed, and corruption, and money, and this tired, broken system.”
“XR isn’t about the climate. You see, the climate’s breakdown is a symptom of a toxic system that has infected the ways we relate to each other as humans and to all life. This was exacerbated when European ‘civilisation’ was spread around the globe through cruelty and violence [especially] over the last 600 years of colonialism, although the roots of the infections go much further back.”
The movement was founded on a rejection of traditional protests, according to Roger Hallam, one of its organisers.
*”Sending emails, giving money to NGOs, going on A-to-B marches. Many wonderful people have dedicated years of their lives to all this, but it’s time to be honest. Conventional campaigning has failed to bring about the necessary change,” he wrote in This Is Not A Drill.
*Instead, the movement preaches economic disruption — most significantly, the blocking of roads — arguing that, “Without economic cost the guys running this world really don’t care“.
However, XR says actions taken in its name must be non-violent, drawing inspiration from the American civil rights and Indian independence movements.
“As soon as you allow violence into the mix, you destroy the diversity and community basis upon which all successful mass mobilisations are based,” Mr Hallam wrote.
While the movement says it is decentralised, and open to anyone who agrees with its aims and methods, Mr Hallam says it has nevertheless been carefully planned, “unlike many of the spontaneous social-media-fuelled rebellions and uprisings in recent years”.
For instance, the focus on city centres is intentional:
“The truth is, they don’t mind you doing stuff in the provinces. They do mind when you set up camp on their lawn, because they are forced to sit up and pay attention,” Mr Hallam wrote.
Mr McNern wrote in This Is Not A Drill about XR’s media strategy, which included protesting at the BBC’s London headquarters, offering exclusive stories to target media, and creating a WhatsApp group for sharing information with journalists.
“The families arm is a way for people to get involved in the Extinction Rebellion who might be feeling a little bit nervous about the idea of mass civil disobedience,” she said.
But while many of the XR activists risking arrest are young people, not all of them are.
In April, Farhana Yamin, a lawyer who had been a lead author for Intergovernmental Panel on Climate Change reports, was arrested when she superglued her hands to the ground outside Shell’s headquarters in London.
*“I wanted to show how ridiculous it is that a law-abiding — indeed, law-making — mother of four should be handcuffed while the world’s major polluters remain unaccountable for ecocide,”she wrote in Nature.
Yesterday, journalist Chloe Adams, a mother of two small children, described why she chose to join the movement despite having lived a law-abiding life.
“I am haunted by one image: the moment my children are old enough to understand the gravity of the climate crisis, and they look me in the eye and ask, ‘but what did you do Mummy?'” she wrote.
Investor confidence has bounced back after almost two years of fear, as prices rise in Sydney and Melbourne.Source:Supplied
Prime Minister Scott Morrison’s intention to support the housing market was signaled loud and clear a week prior to the May 2019 Election when he announced a surprise First Home Buyer (FHB) deposit subsidy scheme.
Morrison admitted that this FHB scheme, which is due to come into effect on 1 January, had been devised by Australia’s property lobby for the express purpose of lifting house prices: *
Remember Scomo before entering politics wrote the policy for the developer lobby, The Property Council of Australia … it looks like they are holding the reins! And this is the consequence …
Peter Koulizos… said there had been a surge in buyer sentiment in recent months, with corresponding price increases in Sydney and Melbourne.
The organisation has just released the results of a survey of its full membership, which found that 82 per cent of investors view now as a good time to buy residential property.
About 48 per cent of respondents plan to purchase in the next six to 12 months, the survey found.
That return of optimism, combined with spikes in activity from other buyers — particularly first-timers — indicates that a market recovery is in full swing…
“It’s clear that many investors, regardless of their political leanings, were fed up with being told they were ‘greedy’ when the vast majority only own one property and are just trying to improve their financial futures,” Mr Koulizos said…
PIPA would see the approach of a killer asteroid as bullish. Investor demand has rebounded modestly:
The current price increase is being driven more by owner-occupiers, which have rebounded more strongly:
That said, the conditions are ripe for investorsto pile back in and they do tend to follow owner-occupiers rather than lead at price turns.
Reforms to negative gearing and capital gains taxes are dead and buried.
*Australia’s entire fasco-housing complex has colluded to drive house prices higher by trashing mortgage standards and sucking in first home buyers. And mortgage rates have cratered, crunching cash returns and opened positive gearing opportunities.
Last week, SQM Research released data showing that rental yields have failed to materially rise, despite the heavy falls in dwelling values:
However, due to the sharp fall in mortgage rates, SQM Research reports that “some cities are effectively offering cash-flow positive investments after interest expenses”:
With lending rates on the long term decline in Australia and (up until recently) property prices stagnating in recent years, what has become particularly interesting is the effect of the widening gap between lending rates and property rental yields. As average lending rates for home-buyers continue to decrease following on from multiple rate cuts, the gap between these lending rates and rental yields has continued to grow, literally to the point where some cities are effectively offering cash-flow positive investments after interest expenses. But as mentioned in previous weeks, while tempting, cash-flow property investments maybe offering such good yields for a very good reason.
Let’s first look at Hobart:
The chart above presents the gap between the average property yield in Hobart and average variable basic rate across Australia. This shows that there has been an overall uptrend in the gap from the beginning of 2015, and this gap is still rising. It currently stands at 1.75%. Meaning a typical fully geared property in Hobart is still offering a gross 1.75% yield after deducting interest expense.
Now in recent years, Hobart has had a boom on its housing market. Both prices and rents have risen in dramatic fashion. However, rents more so. Hence why acquisition yields have actually gone up. Arguably, one would want to see yields rising to reflect the fact that there is increasing risk (in our opinion) that the Hobart housing market is now in its very late stages of its three year upturn.
There has been a similar trend in Canberra, as shown in the charts below.
Like Hobart, Canberra is also experience a positive gap between yields and interest rates, lending itself to the opportunity of purchasing a cashflow positive property. Mind you, the yield gap is not as large as it is in Hobart,
In this instance, rental yields itself in Canberra have been fairly stable, running at about 5.5% for units and about 4% for houses for a number of years now. So the positive yield gap has simply occurred due to the reduction in lending rates.
Brisbane is also now offering a positive yield after interest rates which is quite significant for a larger capital city. It has occurred due to a rise in rents in the last two years while housing prices have been rather benign, therefore increasing yields. Yields for units are running at about 5.3% gross. While for houses they are running at about 4.1%. As with all other cities, it is the reduction in lending rates that have created this reality. But in this instance the rise in rents In recent times has also been a contributing factor.
So overall, the charts reveal this is not a normal occurrence. While the data we have run only goes back to 2010, in my memory, I cannot recall a situation where a number of our capital cities are offering cash-flow positive residential properties.
As the housing recovery gathers steam, these opportunities will obviously close.