Posts Tagged ‘housing’


Home truths: It’s back to reality

Few issues hit home as literally as housing affordability.

The question is has it worsened as a result of the current economic downturn? Are more people experiencing housing stress?

Interest rates have come down markedly, to the point that someone on an average mortgage could be up to $500 a month better off. But has that made housing more affordable?

Housing affordability is a relationship between what you pay for housing, be it a rental property or a mortgage, and associated costs such as insurance and water rates, and your gross wage.

If you are paying more than 30 percent of your gross wage for housing, you are deemed to be in housing stress.

There is a debate about whether this is an accurate enough indicator, particularly given the increasing propensity of Australians to borrow huge amounts on credit cards.

Personal debt is now a big contributor to household stress and interest rate cuts are not being passed on in this area.

What role should banks be playing at such a time? My concern with banks is that their cycle is about 12 months out. If banks have a social responsibility, which I believe they do, they should be lending now and they should have been reigning in lending a year ago. The reverse is true.

So people are feeling a lot of pain, particularly at the lower end of the market, where the biggest correction in housing prices has occurred.

While it was understandable during the massive resources boom we experienced in Western Australia, with lots of cash being thrown around, that people would be in the market for flash houses in desirable locations, it never made much sense to see prices skyrocketing in the so called “mortgage belt”.

Now the bubble has well and truly burst. But while there are more houses for sale, in all but the most desperate of cases, the prices being asked are not significantly cheaper. People are still not quite desperate enough to sell at a realistic level. There is more pain to come.

In some ways, what this economic downturn is doing is merely bringing the market back to where it should be. It was unsustainable.


On the outer: The real cost of fringe dwelling

It’s time to challenge the notion of what constitutes affordable housing.

We need to look beyond the quick fix, short term solution of releasing more land further out on the urban fringe, to the long term implications of such a myopic development strategy.

It may seem cheaper to build on greenfield sites on the outskirts of the city than in the inner suburbs, but it is simply a false economy.

When you consider, for example, that 75 percent of people who live in Perth’s sprawling North-West corridor have to commute to work outside of the corridor – their weekly fuel bill soon casts a greater shadow than their mortgage. How is this affordable?

There are also big social ramifications. With longer commutes, there is less time for family or for building a sense of community; with rising transport costs, there is little disposable income to go around. People in outer suburbs become increasingly marginalised.

In a recent address to councils, planners and transport experts in Melbourne, Curtin University’s Professor Peter Newman argued that governments needed to look at the real costs of building on the fringes, including the burden of commuting and associated emissions of greenhouse gases.

“The old economy based around cars and extending further out has been a proven failure,” he said, maintaining that governments could save up to $85,000 per new housing lot over 50 years if they instead built in existing suburbs close to public transport.

We need a paradigm shift in our attitude to housing. Governments need to start articulating the benefits of higher density living – lower transport costs, access to better amenities, proximity to knowledge generating employment, greater sense of community – at the same time as generating the means by which all socio-economic groups can access it.

Some people choose to live further out because they want a certain kind of lifestyle, but many are simply forced out into the boondocks because they see it as the only way they can enter the housing market.

We need to give people options and this means making high density attractive and affordable. It means creating good public space that meets the demands of all members of society. In a sense, we need to give them the same sense of security that comes with a backyard – a safe, clean space to walk their dog, go for a run or take the kids to the park.

The redevelopment in Stirling is a great example of forward thinking in urban regeneration. It’s based around urban density and a train station and Stirling itself is becoming a fairly major employment zone.

However, given the way the area has evolved, with industrial and higher density concentrations, it has significant advantages over other inner ring centres. It will take a fair amount of political willpower to enable similar developments in the western suburbs where ratepayers have a vested interest in preventing high density.

High density is not going to please everyone. There will always be a demand for land, for a backyard, for a place to park the boat. It’s part of who we are. But there needs to be a strong understanding by the powers that be that if they continue to release land on the outskirts of town it is only a  part of the overall equation.

Any development must also factor in the other key driving factors of any economy – labour, capital and enterprise. This means transport networks, as well as investment in significant infrastructure that encourages strategic industries and generates knowledge intensive employment.

The onus is on our leaders to drive the market and to provide attractive, affordable options. The majority of the population may still be thinking short term, but we need the political will to make decisions that are sustainable for the long term.