HOUSE PRICES RIP-OFF.....now it's official
For the last 15 years, house and land prices throughout Australia (and New Zealand too) have simply sky-rocketed, in many cases, for no real reason.
An independant, international commission recently completed a study in Australia, and YES it's now official, that Australian house prices are 52 % higher than they rightfully *should* be, when compared on a corrected basis, with International criteria.
In Austral-asia, private home ownership runs somewhere around 70 % (ie 70 % of the population live in a home they own outright, or are paying off on mortgage).
Some folks owned a second home, which they rent out as an investment. This can be a good thing, sort of like a retirement nest-egg, or something to later help one's children get a start in their lives.
However the tax rebate called "negative gearing" seems to have been partly responsible at least, for the trend to pay ever increasing prices for houses and apartments. Even if the price the "investor" pays is s-o-o great that he'll never cover the mortgage repayments, no worries, the Tax-man will let him claim the "loss" on his income taxes, as a deduction.
20 years ago in Perth, a 3 bedroom house would rent out annually for 8 % of it's gross value, not surprisingly Real Estate agents started pushing residential house sales to upper-middle income earners as a way of obtaining assets and tax deductions. nowadays the figure is somewhere around 1 or 2 %. ie assuming zero outgoings of maintenance, rates and insurance, it'd take 50 to 100 years to break even with the purchase price of the house. This hasn't stopped Real Estate agents, who are paid by percentage commissions, from continuing to talk-up and beat-up the market as much as possible.
Oftentimes banks have been very generous giving out large loans on small or no deposit to "investors" who've been happy to spend the money like water, further exasperating the situation of pushing up house prices to levels very much higher than the houses could be said to be *really worth*.
The recent independant international commission found that Australia-wide, residential houses were 52 % *more expensive* than they should be.
I know from the personal experience of various e-friends that a reasonable 3 bedroom family home in Houston Texas (4th largest city-metro area in USA) or a healthy size, modernised, 3 bedroom terrace-house in Baltimore Maryland (within commuting distance of Washington DC......effectively the political capital of the Western World)......both places with good-sized yards (land area) in USA these places sell for less than US $ 90,000.
Converted to New Zealand dollars you would not be able to buy even an empty building block of land, anywhere within the greater Christchurch area for that sort of money.In the area of Chch (population approx 400,000) you'd be hard pushed to find an empty building block for NZ $ 150,000 (~US$ 110,000). The cheapest house you'd find to buy would be more than that obviously, for even the "worst", a "handyman's dream", real bulldozer material !
In Australian dollars, forgetting Sydney and Melbourne entirely, you'd just barely get the smallest new building block on Perth's very outer edge cheapest new subdivision new housing areas around Mandurah (one and a half hours drive south of the Perth city centre area)
Unfortunately the newspapers have by and large ignored the situation. Remember that the real estate section of the newspaper amounts to about one third of it, and paid advertising is what drives newspapers (the journalists sometimes relegated to little more than an afterthough I fear)
In Perth's previously cheapest outer edge suburb, "Medina" the house prices went up 26 % one year, then last year, 42 % on top of that.
Awhile back there was one small article in the newspaper, and then another small article more recently, saying that maybe it IS NOT such a good thing that housing, for the poorest people at least, is going up in price by 40 % or more per year, while wages and social security pensions rise by only some 2 % per year.
There's an increasing number of folks living in country areas, sometimes very remote areas, simply because they cannot afford to live anywhere else......and I'm not just talking about myself, this is becoming a real socio-politic-economic issue within Australia (and probably NZ too).
Houses in country areas are much cheaper to buy, and oftentimes old abandoned farmhouses can be lived in rent-free, provided to "tenant" is prepared to do some maintenance in lieu of rent, and pay associated rates and charges. However a disadvantage of country areas is the lack of services. There's much less, often nearly nothing, available in the areas of (Reliable and paid) Employment, education and other retraining (especiallly for the mature aged person).
Both state and Federal governments have so far been laughing all the way to the bank, as various types of "stamp duty" or "property tax" are based on percentage values, and often on a sliding scale......so when a $50,000 family home becomes a $250,000 family home, the Govt gets 5 times (or more !) the money-for-nothing they normally would do. Finally the situation looks like maybe starting to bite them in the backside. There's an increasing pool of available labour......paid and volunteer, who find themselves living in remote country areas where their skills and abilities are wasted un-used.
Note this to have further added later, if I get around to it.
An independant, international commission recently completed a study in Australia, and YES it's now official, that Australian house prices are 52 % higher than they rightfully *should* be, when compared on a corrected basis, with International criteria.
In Austral-asia, private home ownership runs somewhere around 70 % (ie 70 % of the population live in a home they own outright, or are paying off on mortgage).
Some folks owned a second home, which they rent out as an investment. This can be a good thing, sort of like a retirement nest-egg, or something to later help one's children get a start in their lives.
However the tax rebate called "negative gearing" seems to have been partly responsible at least, for the trend to pay ever increasing prices for houses and apartments. Even if the price the "investor" pays is s-o-o great that he'll never cover the mortgage repayments, no worries, the Tax-man will let him claim the "loss" on his income taxes, as a deduction.
20 years ago in Perth, a 3 bedroom house would rent out annually for 8 % of it's gross value, not surprisingly Real Estate agents started pushing residential house sales to upper-middle income earners as a way of obtaining assets and tax deductions. nowadays the figure is somewhere around 1 or 2 %. ie assuming zero outgoings of maintenance, rates and insurance, it'd take 50 to 100 years to break even with the purchase price of the house. This hasn't stopped Real Estate agents, who are paid by percentage commissions, from continuing to talk-up and beat-up the market as much as possible.
Oftentimes banks have been very generous giving out large loans on small or no deposit to "investors" who've been happy to spend the money like water, further exasperating the situation of pushing up house prices to levels very much higher than the houses could be said to be *really worth*.
The recent independant international commission found that Australia-wide, residential houses were 52 % *more expensive* than they should be.
I know from the personal experience of various e-friends that a reasonable 3 bedroom family home in Houston Texas (4th largest city-metro area in USA) or a healthy size, modernised, 3 bedroom terrace-house in Baltimore Maryland (within commuting distance of Washington DC......effectively the political capital of the Western World)......both places with good-sized yards (land area) in USA these places sell for less than US $ 90,000.
Converted to New Zealand dollars you would not be able to buy even an empty building block of land, anywhere within the greater Christchurch area for that sort of money.In the area of Chch (population approx 400,000) you'd be hard pushed to find an empty building block for NZ $ 150,000 (~US$ 110,000). The cheapest house you'd find to buy would be more than that obviously, for even the "worst", a "handyman's dream", real bulldozer material !
In Australian dollars, forgetting Sydney and Melbourne entirely, you'd just barely get the smallest new building block on Perth's very outer edge cheapest new subdivision new housing areas around Mandurah (one and a half hours drive south of the Perth city centre area)
Unfortunately the newspapers have by and large ignored the situation. Remember that the real estate section of the newspaper amounts to about one third of it, and paid advertising is what drives newspapers (the journalists sometimes relegated to little more than an afterthough I fear)
In Perth's previously cheapest outer edge suburb, "Medina" the house prices went up 26 % one year, then last year, 42 % on top of that.
Awhile back there was one small article in the newspaper, and then another small article more recently, saying that maybe it IS NOT such a good thing that housing, for the poorest people at least, is going up in price by 40 % or more per year, while wages and social security pensions rise by only some 2 % per year.
There's an increasing number of folks living in country areas, sometimes very remote areas, simply because they cannot afford to live anywhere else......and I'm not just talking about myself, this is becoming a real socio-politic-economic issue within Australia (and probably NZ too).
Houses in country areas are much cheaper to buy, and oftentimes old abandoned farmhouses can be lived in rent-free, provided to "tenant" is prepared to do some maintenance in lieu of rent, and pay associated rates and charges. However a disadvantage of country areas is the lack of services. There's much less, often nearly nothing, available in the areas of (Reliable and paid) Employment, education and other retraining (especiallly for the mature aged person).
Both state and Federal governments have so far been laughing all the way to the bank, as various types of "stamp duty" or "property tax" are based on percentage values, and often on a sliding scale......so when a $50,000 family home becomes a $250,000 family home, the Govt gets 5 times (or more !) the money-for-nothing they normally would do. Finally the situation looks like maybe starting to bite them in the backside. There's an increasing pool of available labour......paid and volunteer, who find themselves living in remote country areas where their skills and abilities are wasted un-used.
Note this to have further added later, if I get around to it.
posted by Catherine Jemma at 11:44 am
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