I wish to challenge the notion that all housing must be affordable for the masses.........it is not an entitlement that everyone of us must own their own home. The cries in the media that affordability is going down the tube merely feeds the entitlement mentality of those who miss out, or more accurately choose not to entertain alternatives of a lesser quality and/or location for their first home.
Unlike their parents, and their parents before them, settling for homes and locations more in tune with their current financial situation and striving to upgrade as the depth of their pockets allow, significant numbers have the bar set too high and feed their disappointment with an inability to spend less than they earn.
What a load of pretentious rubbish
Firstly, unlike their parents and grandparents, the AVERAGE home is 8-9 times their annual wage. This has nothing to do with iPods and Plasma TV's, nor their refusal to live in up and coming neighbourhoods. Back in the day, it was 2-3 times annual wage. Only one person had to work. The old timers love to pat themselves on the back and say how they did without, but the reality is that basic day to day goods are much cheaper. Annual wages compared to median prices are almost triple in some cases.
Secondly, housing affordability has little to do with the individual. It has to do with the broader economy. What property investors fail to understand is that housing is not really a productive part of the economy. The more money people spend on houses and rent, the less money they spend at the shops, on holidays, entertainment, etc. They spend less money in areas that keep Australians employed.
Housing affordability has a long term impact on the economy and standard of living. That is why it needs to be affordable. High house prices drag an economy down and in the long run cost jobs.
Now, I could also go on and on about instant gratification and other such notions, however, in order to keep to my contention, I do not believe that housing was ever affordable. People borrowed within their means and servicibility. They didn't graduate from the school of "having it all now".
Further, I contend that we will see more renters becoming the norm. In Australia, home ownership is ostensibly at circa 70 %. This is not so in other parts of the world,as indicated in home ownership ranks below:
Showing latest available data.
# 1 Ireland: 83%
# 2 Italy: 78%
= 3 Australia: 69%
= 3 United Kingdom: 69%
= 5 Canada: 67%
= 5 Finland: 67%
= 7 United States: 65%
= 7 Belgium: 65%
= 9 Japan: 60%
= 9 Sweden: 60%
# 11 France: 54%
# 12 Denmark: 53%
# 13 Netherlands: 49%
# 14 Germany: 43%
Weighted average: 63.0%
DEFINITION: Home ownership as % of all households (Data is for 2000).
SOURCE: Economist, 30 March 2002, and Euromonitor
http://www.nationmaster.com/graph/peo_hom_own-people-home-ownership
70% of Australians do not own their homes
Home ownership is at an all time low in Australia. It has not been this low since the 40's. Only 35% of Aussies own their homes outright. The rest of them have DEBT, and they have used their home to secure that debt. They may not pay a landlord, but they pay a bank every month to avoid eviction. If they dont make those payments, they are out on their ***
To call someone a home owner when they dont own their home yet, and to pass that off as evidence that 70% of the country own their home is a misrepresentation of statistics. It does not paint a realistic picture at all.
As it it, 65% of Australians have a monthly outlay for accommodation. Rising prices and interest rates means increased accommodation costs. Which means less money being spent on the economy as a whole
Again, not good for all of us in the long run.