I've watch a couple of threads where people were documenting subdivision expenses and compares other peoples experiences with ours. At some stage I'll get around to adding up all the expenses , but I haven't done it so far. With all the reports we've had to get done plus council fees I'll be suprised if it's not getting up around 100K, which is what this article suggests.
See Change
http://www.dailytelegraph.news.com.au/story/0,20281,18179329-5001021,00.html
A $1000 a month rip-off on mortgages
By GRENTON GARDNER, Housing Industry Association
February 18, 2006
NSW faces a Government-induced housing affordability crisis that threatens both the economic and social fabric of the state. In Sydney and regional centres young people are confronted with the prospect of never owning their own home and spending the rest of their lives paying dead rent money to a landlord.
Many are quitting, heading for the border and more favourable economic climates elsewhere in Australia or even overseas. Others are giving up on the prospect of raising children and enjoying a normal family life, adding to the already serious problems of an ageing workforce and a greying population.
It is all avoidable. Government policies are to blame.
At the heart of the problem is a radical shift in longstanding attitudes to the provision of infrastructure during the 1990s. For generations since the beginning of federation, if new roads, bridges, schools and hospitals were needed, they were provided out of government revenue.
It made good sense: These were public facilities, available to everyone and therefore to be paid for by everyone. If the money was not immediately on hand, governments borrowed against their future revenues.
Those facilities would also be used by people down the years, so it was quite reasonable that they should also foot some of the burden. It was part of nation building, making Sydney and NSW one of the great places in the world in which to live.
This began to change less than two decades ago when a new set of economic principles captured the ears of government ministers. Suddenly balanced budgets and user-pays became the fashionable catch-cries.
So who pays and whose budget? The answer has increasingly been new homeowners through massive mortgages they have to take out
to realise the Australian dream of home ownership.
Suddenly the cost of providing the services for new homes -- local roads, sewerage connections, the installation of lights and public open spaces -- was shifted from the community at large to the new homebuyer.
A homebuyer now pays $350,000 for a block of land in Sydney and then needs to consider what money is left to build a home. The price of land now includes the cost of a range of public services. These charges are largely hidden from purchasers. Land is not advertised as $200,000 plus taxes but it should be. Purchasers have a right to know what they are being asked to pay for.
Chief among the hidden taxes are local council Section 94 contributions (up to $50,000 per lot) and the State Government-imposed infrastructure levies (currently $15,000 but set to rise to an average contribution of $50,000). Homebuyers, of course, have been caught unaware. Few would realise their home purchase is indeed funding so much public infrastructure including main roads, rail, childcare centres, indoor sports centres, and libraries ... the list goes on.
It is estimated that the average new homebuyer is paying an additional $1000-a-month on their loan to cover these taxes.
To add insult to injury, $600 million raised out of the taxes and charges is sitting unused in council trust accounts, leaving communities without the services they paid for up front.
This radical change in the way the NSW Government raises revenue has been achieved by stealth. Its success is based on the fact it is aimed at a small and vulnerable section of the community -- new and first homebuyers.
Only a tiny part of the population is buying a home at any one time. Buyers are isolated; their protests safely ignored. Established homeowners, whose equity improves as house prices go up are hardly going to protest.
Yet this method of raising revenue, apart from being totally unfair, is recklessly building up to trouble for the future. If fewer homes are
bought, fewer will be built and the housing industry, one of the major economic drivers of the NSW economy, will suffer.
A generation denied homeownership and forced into long-term renting is bad enough, but the grim news does not end here.
With more competition for accommodation, rents are certain to rise, taking a bigger slice of take-home pay and reducing even further the prospects of saving enough money for a mortgage deposit. As lifetime renters reach retirement with no tangible assets to help support them, more money will be needed for pensions.
The Housing Industry Association Commonwealth Bank Affordability Report did record a 5.4 per cent rise in housing affordability at the end of last year, but let's not kid ourselves -- we are not on the way back to the halcyon days of the early 1990s when the cost of repaying a mortgage was less than 20 per cent of household income. Sydneysiders now pay on average 37 per cent of their disposable incomes on buying a home, the highest of all Australian cities.
The most significant factors in the improving affordability rates were rising incomes and stable interest rates.
Despite this minor and probably temporary improvement in affordability, the cost of an average Sydney home is still almost nine times the average annual household income and Sydney remains one of the least affordable cities in the world, ahead of both New York and London. These figures present a clear message: Strong and decisive action by the Government is the only way to have a significant effect on home affordability. Sitting on our hands is simply not an option.
The NSW Government must recognise the years of neglect of previous administrations. To his credit, Premier Morris Iemma has identified housing affordability as a priority area but the Government, unfortunately, is still wedded to the idea of development levies paying for services.
Consumers borrow money to buy homes and businesses borrow to expand, so why should governments not borrow to provide the facilities so necessary to our modern lifestyles?
There are other innovative solutions that should be canvassed. One is the use of personal superannuation funds to either provide a deposit for new homeowners or to pay down a mortgage to ease repayments.
Another possibility is for the Government to end the pegging of council rates, allowing them to rise in tandem with inflation and giving local authorities more funds to carry out maintenance and improvements with money from their own communities, not just new homebuyers.
The problems that Premier Iemma faces are not of his making. They are the result of the collective inaction and bad policy making of successive governments over almost two decades. Mr Iemma has inherited a state economy that is stuttering along the no-growth path. It falls to him to clear up the mess.
NSW business will never flourish if both its practitioners and customers are priced out of the market. The time has come for the Government to follow the lead of other states, such as South Australia and Western Australia, and reject unfair levies on new housing as a significant form of revenue-raising.
*Brenton Gardner is HIA executive director of residential development
See Change
http://www.dailytelegraph.news.com.au/story/0,20281,18179329-5001021,00.html
A $1000 a month rip-off on mortgages
By GRENTON GARDNER, Housing Industry Association
February 18, 2006
NSW faces a Government-induced housing affordability crisis that threatens both the economic and social fabric of the state. In Sydney and regional centres young people are confronted with the prospect of never owning their own home and spending the rest of their lives paying dead rent money to a landlord.
Many are quitting, heading for the border and more favourable economic climates elsewhere in Australia or even overseas. Others are giving up on the prospect of raising children and enjoying a normal family life, adding to the already serious problems of an ageing workforce and a greying population.
It is all avoidable. Government policies are to blame.
At the heart of the problem is a radical shift in longstanding attitudes to the provision of infrastructure during the 1990s. For generations since the beginning of federation, if new roads, bridges, schools and hospitals were needed, they were provided out of government revenue.
It made good sense: These were public facilities, available to everyone and therefore to be paid for by everyone. If the money was not immediately on hand, governments borrowed against their future revenues.
Those facilities would also be used by people down the years, so it was quite reasonable that they should also foot some of the burden. It was part of nation building, making Sydney and NSW one of the great places in the world in which to live.
This began to change less than two decades ago when a new set of economic principles captured the ears of government ministers. Suddenly balanced budgets and user-pays became the fashionable catch-cries.
So who pays and whose budget? The answer has increasingly been new homeowners through massive mortgages they have to take out
to realise the Australian dream of home ownership.
Suddenly the cost of providing the services for new homes -- local roads, sewerage connections, the installation of lights and public open spaces -- was shifted from the community at large to the new homebuyer.
A homebuyer now pays $350,000 for a block of land in Sydney and then needs to consider what money is left to build a home. The price of land now includes the cost of a range of public services. These charges are largely hidden from purchasers. Land is not advertised as $200,000 plus taxes but it should be. Purchasers have a right to know what they are being asked to pay for.
Chief among the hidden taxes are local council Section 94 contributions (up to $50,000 per lot) and the State Government-imposed infrastructure levies (currently $15,000 but set to rise to an average contribution of $50,000). Homebuyers, of course, have been caught unaware. Few would realise their home purchase is indeed funding so much public infrastructure including main roads, rail, childcare centres, indoor sports centres, and libraries ... the list goes on.
It is estimated that the average new homebuyer is paying an additional $1000-a-month on their loan to cover these taxes.
To add insult to injury, $600 million raised out of the taxes and charges is sitting unused in council trust accounts, leaving communities without the services they paid for up front.
This radical change in the way the NSW Government raises revenue has been achieved by stealth. Its success is based on the fact it is aimed at a small and vulnerable section of the community -- new and first homebuyers.
Only a tiny part of the population is buying a home at any one time. Buyers are isolated; their protests safely ignored. Established homeowners, whose equity improves as house prices go up are hardly going to protest.
Yet this method of raising revenue, apart from being totally unfair, is recklessly building up to trouble for the future. If fewer homes are
bought, fewer will be built and the housing industry, one of the major economic drivers of the NSW economy, will suffer.
A generation denied homeownership and forced into long-term renting is bad enough, but the grim news does not end here.
With more competition for accommodation, rents are certain to rise, taking a bigger slice of take-home pay and reducing even further the prospects of saving enough money for a mortgage deposit. As lifetime renters reach retirement with no tangible assets to help support them, more money will be needed for pensions.
The Housing Industry Association Commonwealth Bank Affordability Report did record a 5.4 per cent rise in housing affordability at the end of last year, but let's not kid ourselves -- we are not on the way back to the halcyon days of the early 1990s when the cost of repaying a mortgage was less than 20 per cent of household income. Sydneysiders now pay on average 37 per cent of their disposable incomes on buying a home, the highest of all Australian cities.
The most significant factors in the improving affordability rates were rising incomes and stable interest rates.
Despite this minor and probably temporary improvement in affordability, the cost of an average Sydney home is still almost nine times the average annual household income and Sydney remains one of the least affordable cities in the world, ahead of both New York and London. These figures present a clear message: Strong and decisive action by the Government is the only way to have a significant effect on home affordability. Sitting on our hands is simply not an option.
The NSW Government must recognise the years of neglect of previous administrations. To his credit, Premier Morris Iemma has identified housing affordability as a priority area but the Government, unfortunately, is still wedded to the idea of development levies paying for services.
Consumers borrow money to buy homes and businesses borrow to expand, so why should governments not borrow to provide the facilities so necessary to our modern lifestyles?
There are other innovative solutions that should be canvassed. One is the use of personal superannuation funds to either provide a deposit for new homeowners or to pay down a mortgage to ease repayments.
Another possibility is for the Government to end the pegging of council rates, allowing them to rise in tandem with inflation and giving local authorities more funds to carry out maintenance and improvements with money from their own communities, not just new homebuyers.
The problems that Premier Iemma faces are not of his making. They are the result of the collective inaction and bad policy making of successive governments over almost two decades. Mr Iemma has inherited a state economy that is stuttering along the no-growth path. It falls to him to clear up the mess.
NSW business will never flourish if both its practitioners and customers are priced out of the market. The time has come for the Government to follow the lead of other states, such as South Australia and Western Australia, and reject unfair levies on new housing as a significant form of revenue-raising.
*Brenton Gardner is HIA executive director of residential development
