Australia’s housing shortfall remains an “intractable problem” particularly for the more vulnerable in the population such as first home buyers and low income earners, research suggests.
A report from the federal government’s independent advisor on housing, the National Housing Supply Council (NHSC), has warned of the long-term consequences of constricted new supply and low affordability.
Despite some improvement in market conditions recently, it revealed that housing supply was below the level that would support the traditional style and ownership of Australian housing.
NHSC chairman Owen Donald said: “The shortage is likely to be felt by the more vulnerable in our population, such as would-be buyers with low and insecure incomes, those at the lower end of the rental market and those dependent on government income support payments.”
Poor planning to blame
The report suggests that housing demand and housing production had been diminished by “inadequate planning and provision of infrastructure, and restrictive regulation”, notably in the development approval arena.
“All are primarily the responsibility of state, territory and local governments,” said Donald.
The Housing Industry Association (HIA) has called on the government to intervene to ensure housing remains accessible for all Australians.
“Without government policy intervention, unaffordability will continue to grow and there will be further threats to home ownership and upward pressure on rents,” said HIA chief executive of Industry Policy and Media, Graham Wolfe.
Increased reliance on rentals
The NHSC report also revealed that more Australians are turning to rentals to fill the housing gap, living increasingly in apartments and cramming into crowed homes.
It’s particularly true among younger Australians with more than 50 percent of households, where the head of the house was aged 25 to 34, were renting in 2011, up from 45 percent a decade ago.
“As time progresses, it now seems certain that the aggregate rates of home ownership will fall and the proportion renting will increase significantly,” the report said.
Tips to help first home buyers
Despite the grim picture of Australia’s housing market, buying a home is still a reality for many Australians. The Australian Bureau of Statistics shows that more than 8000 first home buyer loans were settled on average each month in 2012.
To help make the dream of owning a home reality, here are expert tips specifically for first time buyers:
- Prepare a budget – outline your everyday expenses and see what you have left over to contribute to home loan repayments. Consider using a home loans calculator such as the free online version at RateCity as a guide to what you will be able to afford.
- Consider using a first home saver account – launched in 2008 these accounts have largely gone unused by Australians saving to buy their first home. While they do have a number of rules and conditions, the benefits include a government contribution of 17 percent interest on the first $6000 you deposit each year (on top of the interest paid by the institutions). The tax benefits associated with these accounts are also worth mentioning.
- Shop around – there are hundreds of home loan options to choose from and lots of lenders competing in the mortgage space. Comparing home loans using a free site such as RateCity can help simplify the process but can also help borrowers to save thousands of dollars over the life of the loan.
- Do your research – before you buy, arrange for a building and pest inspections and have the contract checked by a conveyance or solicitor before signing on the dotted line. Also do your homework on the additional costs such as moving, stamp duty, lender’s mortgage insurance and utility bills, to name a few – these can all add up so factor them into to your budget!