Home ownership dream disappearing, hope is on the horizon

Housing affordability is again in the headlines following last week’s decision by the Reserve Bank to increase interest rates.

However, a study completed by Southern Cross University has shown that increasing interest rates is only one contributing factor to housing affordability.

The study, conducted in the Tweed Shire by SCU’s Centre for Enterprise Development and Research and funded by the community credit union, BCU, found that the rising number of property investors and rising houses prices were making it increasingly difficult for first-home buyers and low-income earners to enter the housing market.

Research Director Dr Stephen Kelly said the report showed that housing affordability was becoming an increasingly significant problem in many parts of Australia. In 1975, almost 70 per cent of those under 35 were home owners; by 1994 this declined to 55 per cent.

“Housing affordability is at almost record lows. The situation in the Tweed is really representative of the whole coastal strip from Port Macquarie up,” Dr Kelly said.

“The number of investors in the market is displacing the home buyers. The investors have the ability to negatively gear and earn money from their properties so they are able to pay more. In December 2004 for example, nearly 1 in 4 new mortgages were for investment purposes across Australia.”

Dr Kelly said prices in the Tweed had risen much more than many other places apart from Sydney, but the average incomes here were much lower.

“The Federal Government’s First Home Ownership Grant scheme, which was designed to support home ownership, has actually caused a significant jump in house prices due to the influx of new purchasers into the market. This largely undermined the benefits of the scheme, ultimately making it harder for first home owners and those on lower incomes to access the market.”

In the Tweed Shire and other parts of the North Coast the influx of “sea-changers” was putting additional pressure on the housing market.

“There’s a constant flow of cashed-up sea changers, many of whom are retired. Eventually they are going to need services in health and hospitality, but the people who do the work, mostly on lower incomes, will have nowhere to live that they can call their own. That will have a whole range of other implications.”

Ray Battle from the community credit union, BCU, said there were a whole range of schemes, some of which were in place in Victoria and the United Kingdom, which could have a long-term positive affect on home ownership rates and affordability.

“There are a number of community based projects which have been very successful and these are run at the local level,” Mr Battle said.

The report produced by Southern Cross University has recommended that roundtable discussion forums be held on the Mid North Coast and Far North Coast involving key government, community and business stakeholders.

“There is currently a lot of talk on housing affordability but the subject is only given cursory consideration and most attempts generally appear ad hoc. The forums would ensure that greater attention is focussed on this growing problem and hopefully come up with alternative programs that can be implemented in the different regions,” Mr Battle said.

BCU would like to invite anyone in the Tweed area who is currently experiencing problems in purchasing their own home to contact Dr Kelly at SCU on 07 5506 9200 before March 18 if they are interested in participating in one-to-one interviews to conclude this research.