First Home Buyer Strike - Outraged at housing affordability?

[minimumtrade]

Is anyone outraged at price of houses and land?

My old man paid under a years wage for a fringe suburban block, 25 years ago. I'd have to fork out four years wages for an urban fringe block of a smaller size and another 15kms out !!

This can be fixed with good taxation reform.

Prosper Australia have organised a buyer strike.

Let your voice be heard - Vote here on GetUp Australia

http://www.prosper.org.au/2011/03/15/pr ... rs-strike/

Tax reform group Prosper Australia today called on first home buyers to delay buying real estate ahead of the flip into a falling market, which it described as imminent.

RP Data reports there are over 900 Melbourne auctions scheduled for the weekend and 2700 over the next three weeks. Prosper believes this enough to decisively tip the market into oversupply.

When the Great Australian Land Bubble bursts just as land bubbles all around the world have the freshest buyers are totally exposed. They face financial ruin as house prices fall below their debt. The crippling mortgage repayments become pointless, Prosper campaigner David Collyer said today.

The bursting of the land bubble is signalled by simultaneous downturns in auction clearance rates, building approvals and housing finance. ABS data already shows the latter two elements in place (ABS 8731.0 Building Approvals; ABS 5609.0 Housing Finance).

We cannot help those who have recently bought, but we can warn prospective buyers particularly first-timers whose innocence and heavy borrowing leaves them uniquely exposed.

Australia's housing market is widely regarded as being in a price bubble and most severely unaffordable. Warnings have been issued by a long list of agencies and experts, including the IMF, the OECD, The Economist newspaper, Jeremy Grantham and Steve Keen.

"Residential properties are trading at between six and nine times earnings depending on assumptions. Historically, they have fluctuated between two and a half and three times earnings," Collyer said.

The largest element buyers are paying for is the land, not the building.

A buyers strike is the only rational response to current land prices. Frankly, prices are ridiculous. How anyone can pretend Australia has a land shortage beggars belief!

Some argue prices have arrived at a new and permanently high plateau, but the historical record shows reversion to the long term average in every case without exception.

The experience in the USA, Europe and the UK is for sudden, jagged falls in property prices. Sales volumes also shrink dramatically.

I remind you there are 1.3 million Australians with negatively geared rental properties. They are diverting all rents and some personal income to meeting interest payment in the hope of capital gains. When only capital losses are expected, investors will flood the market and overwhelm demand. Buyers will step back, making it virtually impossible to sell at any price.

"Do not underestimate the scale and significance of the transformation that is about to unfold. Price falls are imminent protect yourself. Don't Buy Now!" Collyer concluded.

Let your voice be heard - Vote here on GetUp Australia

[ianmartin]

Its goverments, developers and big business that is causing us to pay so much more.

I think if the goverment would start building more houses and sell them at say interest rates of about 4%, then imagine the revenue they would be making.

They did it years ago and most families could afford to buy their own house. And lets face it when something is your own, you tend to spend money on it to upgrade or look after it. Hence forht more money being spent in the local economy.

It sounds easy in theory but how is it in prac. Well lets see Australia is about the dearest place in the world to buy a house. It is encouraged in the UK and America. And many other western countries.

So lets stop trying to be a world leader and get back to the era when only one adult had to work, but they could still buy their own piece of Australia.

[Gleno]

Well said Ian I know for a fact that the percentage of a mans/womans wage that go towards a home loan is far greater than it was say 20-30 years ago. The problem In my opinion is there are still people out there that are prepared to pay the price thus the reason why house prices are expensive.

[bunnishiwa]

One main issue here - not enough houses. Lack of supply of anything drives prices up. We've just got to the end of an amazing surge in wealth over the late 90's up to 2008, allowing more people to buy into the market at a younger age. Combine that with a healthy 150,000 people emirgrating here each year (read that figure somewhere - feel free to correct me as cannot be bothered to google search it) and supply is short. A 'buyer strike' would have no impact - someone always wants a house.

This is not really a government issue, although lowering stamp duty would help for a short while, but the first home owers grant generally will cover 80% of this for a reasonable, small first home ($250,000'ish) so it really shouldn't be an issue for those not on the ladder.

No you probably can't live exactly where you want to. That's life (would love to be living in St Andrews on a large block next to the beach personally). You also won't get the house I guess a fair few of you want - we didn't. Misses n I saved like crazy for 2 years no holidays, buying nice stuff for my car n house etc. Went from renting beach front in Mordiallioc (had a fair cheap deal on it) to back of Frankston (not the Pines, for those who know the area), to a small, old place with a bit of a backgarden - again worked hard, payed a lot of extra money into the Mortgage every week (had a holiday ), to the point that when we sold 3 years later we'd paid a fair chunk off. Finally we're in our close-to dream house, in an area we love. Prices are cheaper down here, as we're 1.5hrs from the city but the place is beautiful.

We worked hard for this, because we really wanted it. I drove an Excel for 7 years for this to give you an idea of the sacrifice

This is what your folks, or grandfolks did - saved, worked hard, focused on what they wanted and achieved it. 4 years wages for the block, could be yours in 2015 - sell yer Lancer (:shock: ) buy something v cheap to run, like a Getz, be boring, save hard n you get there.

This is boring, but years of hard work n dedication mean that we now both have nice cars, a lovely house and can afford 3.5 weeks holidaying in the states last year (not as expensive as you'd think, even New York), nice toys and money isn't a huge worry - we've earnt it

Regarding the article, I don't care if house prices fall - I like my house, and most importantly I can afford the mortgage payment, even if they rose by 5% (although that'd hurt). Don't overextend financially as it'll bite you in the ass.

My 5 cents

[ianmartin]

True Marc,

They do give loans to younger people who wish to buy houses. But the young ones need to be sure that when they decide to have kids that they can afford the ridiculous repayments.

I have tried to get loans before, however i paid off all my debts and credit cards just after i finished uni. And low and behold i was knocked back because i had no credit history to check.

The problem is that it is too hard for governments to set up the process of housing. Why should banks that under the legislation supposed to be non profit entities, be making mass profits. I would rather be giving it back to the government.

This system worked years ago for Australia, and will work again if implemented properly. The main issue with doing this now is that the banking industry is too big now and can hold governments to ransom.

I am now 48 I own nice things and have no debt. I had a major work accident and cannot get a job due to age and injury. I am not incapasitated, but do have some minor limitations. My wife works in a bank, and we have been told that we cannot get a loan now as we are a one income family.

Forget the housing shortage. Governments can build houses and help improve the econony in that way. But they are trying to be international trade big time players. Australia thrived before and can do again.

Imagine if the economy recieved 30 billion dollars a year from mortgage payments from its people. Not to mention all the other taxes which they already collect. The country would be in a much healthier state.

This is not to say that i disagree with you. Yes people need to stop keeping up with the jonses and strive to succeed. And having nice things in your starting years is not important { however nice it is to have them }.

But a 560sq block of land up here is now around 300k. The house is the cheap bit. An average 25sq 4 bed home can be built for about 170k. With stamp duty and extras, there isnt much change out of 500k.

These are the issues that adopting a former policy or building Australia campain could solve or at least make it more affordable.

We can only hope