Aussies still at risk in housing drought

Aussies still at risk in housing drought

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!


Did you find this helpful? Why not share this article?



Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy


Learn more about home loans

What is appreciation or depreciation of property?

The increase or decrease in the value of a property due to factors including inflation, demand and political stability.

What does going guarantor' mean?

Going guarantor means a person offers up the equity in their home as security for your loan. This is a serious commitment which can have major repercussions if the person is not able to make their repayments and defaults on their loan. In this scenario, the bank will legally be able to the guarantor until the debt is settled.

Not everyone can be a guarantor. Lenders will generally only allow immediate family members to act as a guarantor but this can sometimes be stretched to include extended family depending on the circumstances.

How is the flexibility score calculated?

Points are awarded for different features. More important features get more points. The points are then added up and indexed into a score from 0 to 5.

How much are repayments on a $250K mortgage?

The exact repayment amount for a $250,000 mortgage will be determined by several factors including your deposit size, interest rate and the type of loan. It is best to use a mortgage calculator to determine your actual repayment size.

For example, the monthly repayments on a $250,000 loan with a 5 per cent interest rate over 30 years will be $1342. For a loan of $300,000 on the same rate and loan term, the monthly repayments will be $1610 and for a $500,000 loan, the monthly repayments will be $2684.

What is a construction loan?

A construction loan is loan taken out for the purpose of building or substantially renovating a residential property. Under this type of loan, the funds are released in stages when certain milestones in the construction process are reached. Once the building is complete, the loan will revert to a standard principal and interest mortgage.

What is the flexibility score?

Today’s home loans often try to lure borrowers with a range of flexible features, including offset accounts, redraw facilities, repayment frequency options, repayment holidays, split loan options and portability. Real Time Ratings™ weights each of these features based on popularity and gives loans a ‘flexibility score’ based on how much they cater to borrowers’ needs over time. The aim is to give a higher score to loans which give borrowers more features and options.

Mortgage Calculator, Property Value

An estimate of how much your desired property is worth. 

What is a building in course of erection loan?

Also known as a construction home loan, a building in course of erection (BICOE) loan loan allows you to draw down funds as a building project advances in order to pay the builders. This option is available on selected variable rate loans.

What is breach of contract?

A failure to follow all or part of a contract or breaking the conditions of a contract without any legal excuse. A breach of contract can be material, minor, actual or anticipatory, depending on the severity of the breaches and their material impact.

How personalised is my rating?

Real Time Ratings produces instant scores for loan products and updates them based what you tell us about what you’re looking for in a loan. In that sense, we believe the ratings are as close as you get to personalised; the more you tell us, the more we customise to ratings to your needs. Some borrowers value flexibility, while others want the lowest cost loan. Your preferences will be reflected in the rating. 

We also take a shorter term, more realistic view of how long borrowers hold onto their loan, which gives you a better idea about the true borrowing costs. We take your loan details and calculate how much each of the relevent loans would cost you on average each month over the next five years. We assess the overall flexibility of each loan and give you an easy indication of which ones are likely to adjust to your needs over time. 

Mortgage Calculator, Repayments

The money you pay back to your lender at regular intervals. 

Mortgage Calculator, Repayment Frequency

How often you wish to pay back your lender. 

Mortgage Balance

The amount you currently owe your mortgage lender. If you are not sure, enter your best estimate.

What is an ombudsman?

An complaints officer – previously referred to as an ombudsman -looks at formal complaints from customers about their credit providers, and helps to find a fair and independent solution to these problems.

These services are handled by the Australian Financial Complaints Authority, a non-profit government organisation that addresses and resolves financial disputes between customers and financial service providers.