Interest rates are rising: Is the RBA at fault for allowing Australians to take on too much debt? By business reporter Nassim Khadem Posted Wed 6 Jul 2022 Many Australians borrowed heavily on the expectation that interest rates would not rise until 2024.(Reuters: David Gray) Can we blame Australians for being a little confused about the Reserve Bank's messaging on interest rates? Towards the end of 2020 and for nearly all of last year, Reserve Bank Governor Philip Lowe said interest rates would not likely rise until 2024. During the pandemic, as average house prices in Sydney and Melbourne crept over $1 million, the couple took out a $1.5 million loan with a 10 per cent deposit on the expectation that interest rates would not rise for about four years. In November and December 2020, Dr Lowe said in the bank's monetary policy decision statement that the "Board is not expecting to increase the cash rate for at least three years". Continues.... https://www.abc.net.au/news/2022-07...-australians-are-hurting-is-the-rba/101209428
‘Extremely challenging’: Sydney house rents jump 19 per cent since pandemic began By Tawar Razaghi July 14, 2022 https://www.smh.com.au/property/new...ic-began-to-reach-record-20220712-p5b0ym.html Key points The median weekly asking rent for houses jumped 3.3 per cent to $620 in the June quarter. Units saw an even sharper increase of 5 per cent in the same period, jumping to $525 a week. The rises are putting pressure on tenants already facing an increasing cost of living. Sydney tenants are facing the highest house rents on record and unit rents are set to reach fresh highs by the spring, new figures show, as experts warn of more housing stress. The median weekly asking rent for houses jumped $20 a week, or 3.3 per cent to $620 in the June quarter – a record, the latest Domain Rent Report, released on Thursday, showed. Units had an even sharper increase of $25 a week or 5 per cent in the same period, jumping to $525 a week. House and unit rents have jumped by more than 11 per cent each in the year to June, outpacing annual wage growth almost five times, in one of the biggest cost of living pressures to households already facing the high cost of petrol prices and other essentials. Sydney’s rental market has reached this new extreme due to a combination of the limited supply of homes to choose from as the city’s vacancy rate remains at a record low of 1 per cent and some investors sell, plus demand from priced-out buyers, interest from international students and returning migrants filtering back into the market, as well as new households forming that prefer single living rather than share housing during the pandemic. Domain chief of research and economics Dr Nicola Powell said it was a stark contrast to the start of the pandemic. “If you compare March 2020 to June 2022, house rents are up 19.2 per cent,” Powell said. But units were only up 1 per cent in the same period, she said, with unit rents accelerating since the start of this year as more people were choosing the smaller property type for its relative affordability. “House rents have reached a record high for each quarter in the past year and a half. What’s become more apparent, particularly over 2022, we’re certainly seeing demand steered towards units rather than houses because of affordability constraints,” Powell said. “It’s the first time in 14 years units have risen at the current annual pace. If we continue to see units continue at their current rate of growth they will reach a record high in the next quarter.” Sydney house rents have reached new records and tough conditions lie ahead.Credit: Powell said households would find rental increases “extremely challenging” as the cost of other essential goods and services was up too. “It’s likely we’ll see more households shift into rental stress. This is a broad-based lift we’re seeing in Sydney. There are some areas that have remained below their rental peaks but with escalating costs of living for essential items, it does put households under pressure,” she said. Westpac senior economist Matthew Hassan said the return of international students and other migrants was starting to have some impact, with numbers in Sydney now tracking between 30 and 40 per cent of pre-COVID levels. He said demand could reduce somewhat once renters who are waiting for new homes to be built are able to move out of their rental. “That could siphon off some demand in the rental market,” he said. Inner west renters Jess Brooker (left) and Rhiannon Earl said it took them two months to find a liveable rental, but only after a $100 increase to their budget.Credit:James Alcock For inner west renters Jess Brooker and her partner, it took two months to find a suitable home to live in, and only after a rental budget increase from $600 to $700 a week, which costs them between 30 and 40 per cent of their incomes. “For our initial price range, we couldn’t find anything liveable,” Brooker said. “We were looking for a two-bedroom place because I work from home and my girlfriend works in the office full-time.” She said they inspected numerous rentals that needed repairs to security screen doors and maintenance of mould, but agents told the couple the rentals would be leased as is. The city’s rental market is so competitive that in many instances the couple were asked to put down a deposit before an inspection in order to secure the property. “You have to apply before you actually see it, and then they will want the deposit that day; otherwise you get knocked back, and the deposits were non-refundable,” Brooker said. “For example, I saw a property [online] in the afternoon – it was posted eight hours before and the deposit was already taken when I queried about it.” The inner west had the highest quarterly increase to weekly rents, jumping 6.7 per cent to $800 in the three months to June. Tenants’ Union of NSW chief executive Leo Patterson Ross said Sydney still had a fundamentally undersupplied rental market that had never improved in real terms during the pandemic. With housing costs one of the largest expenses for households, rent rises are the latest cost of living pressure to hit pay packets.Credit:Ken Irwin “The falling rents [during the pandemic] were largely because people were falling into economic crisis. It wasn’t because of an abundance of genuine affordable housing coming online. It was because of people losing their jobs,” Patterson Ross said. The ongoing lack of official rental relief measures at a time Sydney was facing its fourth COVID wave, wage stagnation and economic uncertainty would cause renters hardship in coming months, Patterson Ross said. LJ Hooker Group head of property management Nick Georges said that, while there were multiple factors for rising rents, the biggest was the city’s unprecedented housing boom that has locked out potential buyers. “A lot of young families are saying, ‘I’m going to rent something for 12 months or 18 months and ride this wave out and see what interest rates do,’ ” Georges said. “I don’t think we can put it on people coming back to the country … A lot of the houses are being filled up by people who are in the market to buy.” He said the supply of rentals had also reduced since the pandemic hit because of investors selling their investment properties or moving back into them. Georges said with the sheer number of applicants on each rental property, it has become almost commonplace for prospective renters to offer up to six to 12 months of rent in advance in places like the north shore. With Melissa Heagney
Australian homes are so cold that some are falling below the WHO's recommended 'safe' temperature Max Chalmers Posted 16h ago https://www.abc.net.au/news/2022-07-15/why-are-australian-homes-so-cold/101227308 Amity and Micky love their rented Sydney home, except for the chilly temperatures during winter. (ABC RN: Sophie Kesteven) In Amity and Mickie's rental home in Sydney, there's a room connected to the main living space by a doorway that has no door. A note stuck to the wall reveals the family's pet name for this room: "Antarctica". "It's got a ceiling that's just plastic sheeting and no insulation," Mickie tells ABC RN Breakfast. "It's absolutely freezing." Mickie has wedged a rod above the doorway and draped a heavy curtain to try to halt the cold air wafting in, but it's not having much of an impact. It's just one of the small modifications the family has made as they shiver through a second winter in a house they otherwise love. And the conditions are taking a toll. "I feel like the cold really impacts my mental health, probably more than my physical health," Amity says. "I find it just really affects my mood, being cold." Despite this, the family hasn't asked for any changes to the property to fix the problem because they don't want to put their landlord offside and risk eviction. Amity looks out into the room she often refers to as "Antarctica".(ABC RN: Sophie Kesteven) But they are taking part in a national project, run by community organisation Better Renting, which is investigating just how cold Australian homes get. Their rental is one of 70 sites that has been monitored through winter for about seven weeks. The project organisers gave the renters temperature monitoring devices to test how often their homes were below 18 degrees Celsius. This is the recommendation set by the World Health Organization for a "safe and well-balanced" indoor temperature for a home during winter. Results so far are concerning. For example, one night Amity put on three heaters at once, in one part of the house, to see how much she could warm it up. She only got the temperature to 17C. Not built for winter Other tenants taking part in the temperature monitoring project are also struggling to heat their homes to the recommended level, according to Joel Dignam, the founder and executive director of Better Renting. "Even in some relatively warmer parts of Australia, the average temperatures are still really low. So in New South Wales and Victoria, the average temperature in the rental properties we're tracking is still below 18C," Mr Dignam says. Temperature trackers give Better Renting round-the-clock data from the 70 sites as parts of the county endure an unusually cold winter. In the first fortnight, the data showed the homes were below 18C for 70 per cent of the time. The coldest temperature recorded so far was 1C, logged by a participant living in their car in Hobart. Those with a roof over their head have logged temperatures as low as 6C. Emma Baker, who heads up the Housing and Healthy Cities Research Group at the University of Adelaide, says the data collected by Better Renting is concerning but not surprising. It matches a 2019 study she was part of that looked at 35 homes in South Australia. None of them reached 18C in winter. "Power used to be really cheap so Australian houses were basically designed as winter tents that you could pump a whole lot of energy into during winter and warm them up," Professor Baker says. But that's no longer an option for many renters as power bills soar. Researchers are also showing greater interest in the links between cold homes and health. The temperature in one of the bedrooms was a chilly 14C at 9am on a Sydney winter's morning. (ABC RN: Sophie Kesteven) "We know that cold housing affects people's blood pressure and their risk of cardiovascular disease, and obviously respiratory disease," Professor Baker says. "But the really interesting thing that's been coming up lately is mental health. "Mental health seems to be the canary in the mine, the thing that is affected first by having cold housing." Participants in the Better Renting project have been asked about the impact their homes' temperature is having on their health and wellbeing. Ten of the 56 who responded mentioned mental health issues related to their home temperature. "Our mental health is affected by the cold house," one renter responded. "I had to stay in bed, under the blanket, to study and do my homework or read a book at night as it is too cold." Professor Baker says work by the Australian Centre for Housing Research shows cold housing can "tip" otherwise healthy people into having mental health issues. "It might be via worry about not being able to afford to heat your home, or the drudgery of living in an uncomfortable living environment, or the sadness of not being able to provide your kids warmth," she says. Calls for better housing standards Joel Dignam says the project shows the need to set minimum standards for the heating and insulation of rentals across the country. He points to a new Victorian minimum standard mandating energy-efficient fixed heaters be installed in rental properties by next year, and an ACT proposal for minimum standards on ceiling insulation. Rental advocacy groups are calling for mandated minimum temperature standards in properties. (ABC RN: Sophie Kesteven) The Real Estate Institute of Australia (REIA) opposes mandating standards. REIA president Hayden Groves warns it would force some owners out of the market and ultimately push up rental prices. "It can be very difficult to retrofit a building to make it more energy efficient, if it's at a certain age. And it can be prohibitively expensive," he says. "If you mandate these sorts of things, you run into the problem where property owners consider, 'Look, it's just another expense that I have to spend on the property, I'll sell it'." Instead, Groves encourages tenants to ask their landlords to make modifications and potentially offer to help install or pay for them. But if you need help sooner, there are tricks out there you can try to keep warmer this winter, like DIY window insulation, sealing up leaks and indoor rugs and door snakes.
Mortgages in retirement triple, outright ownership halves for most age groups By Rachel Clun July 17, 2022 https://www.smh.com.au/politics/fed...lves-for-most-age-groups-20220714-p5b1la.html The proportion of Australians who own their home outright has halved over two decades for most age groups while the proportion of people with mortgages in retirement years has tripled. Data from the Australian Bureau of Statistics shows that outright home ownership has more than halved for 25 to 54-year-olds between 2001 and 2021. At the same time, the number of mortgage holders and renters across all age groups has ballooned. The number of Australians who own their homes outright has plummeted over the last 20 years.Credit:Jason South Housing and Homelessness Minister Julie Collins said more people have come to her with stories of housing stress in the last 12 months than ever before in her time in parliament. Collins, who first held the portfolio in the Gillard government in 2013, said Australia’s housing challenges have worsened over the intervening years. “What’s changed significantly is that far too many Australians don’t have a place to call home,” she said. “Australians have found it more difficult to rent a home or more difficult to purchase a home. “Clearly, housing affordability in Australia has become a really significant issue, which is why we all need to be working together to try and solve it.” The data, extracted from the 2021 and 2001 censuses by the ABS and analysed by The Sydney Morning Herald and The Age showed that 20 years ago, more than one in five 35 to 44-year-olds owned their home outright. By last year, fewer than one in 10 in that age group could say the same. In 2001, 41.4 per cent of people aged between 45 and 54 owned their home outright, but in 2021 just 18.5 per cent of people in that age bracket did. In both those age groups, more than half now have mortgages while the number of renters has also swelled. Domain chief economist and researcher Nicola Powell said a simple reason more people had mortgages now than 20 years ago was that they have grown as house prices have skyrocketed. “We’re extending ourselves more, we’re taking on bigger mortgages, and taking a longer period of time to pay off,” she said. “What that means is people are going into their retirement years with part of their mortgage still hanging over them as an expense.” Among 55 to 64-year-olds the proportion of mortgage holders in that age group has more than doubled, rising from 15.5 per cent to 35.9 per cent, and the number of people with a mortgage at retirement age or older has risen from 3.2 per cent to 9.6 per cent. Chris Martin, a senior research fellow at the City Futures Research Centre at UNSW, said some people are using their housing as security and keeping their mortgages open for other purposes, including buying investment properties. But a large part of the growth in mortgage holders was because house prices have risen, and Martin said successive government policies have helped drive that boom. Martin co-authored a recent report that found state and federal governments have spent more than $20 billion in the last decade on housing assistance through first home buyers grants and similar policies. “The general trend is that it goes into higher house prices,” he said. RateCity research director Sally Tindall said the shift away from outright ownership has not emerged overnight, but it will continue unless property prices fall. Higher interest rates are bringing the housing market down, which might help some first home buyers, she said. “If we see the property prices drop as their forecast to do, you will see that that that hurdle will be lowered. But it’s not going to be smooth sailing for first-time buyers,” she said. Martin said having a national housing plan with state and federal co-ordination will be vital. “Having a housing policy with the objective that everyone whether they own or rent, should have affordable, secure housing of a decent standard, that should be the objective,” he said.
If the good lord wanted Ausies to have homes, he'd have given @studentofthemarkets a hammer and a HD gift card. ~Mark 6:30:44
Japanese hotel-inspired pods set to help tackle homelessness crisis in Brisbane By Jessica Hinchliffe and Ellen-Maree Elliot Posted 1 hour ago https://www.abc.net.au/news/2022-07...ds-to-help-homeless-goodna-brisbane/101220334 The pods sit on a deck at the back of Goodna Street Life.(Supplied: Goodna Street Life) A grassroots charity is taking a Japanese hotel concept and turning it into a short-term haven for the homeless. Key points: Pod-style accommodation will give people access to private shelter and bed Goodna Street Life has six pods and has plans for another eight The service is receiving 15 calls a day from people seeking help For the past three years Goodna Street Life, south-west of Brisbane, has been developing and building accommodation pods in the hope of aiding people needing emergency shelter. The group provides crisis accommodation at Helen's Haven but aims to match people with long-term housing. Founder and president Helen Youngberry said the severe lack of affordable housing had forced the charity to look at innovative alternatives to cope with unprecedented demand. The service is hoping to fast-track pod accommodation for homeless people.(Supplied: Goodna Street Life) "At the back of our haven we built decking for the pods to sit on," she told ABC Radio Brisbane. "Each pod has its own USB charger, lights, windows, mattress and bed, all powered by solar. "It's like a little Japanese hotel." She said the pods allowed clients to have a closed door and privacy. Each pod has its own USB charger, bed, and light.(Facebook: Goodna Street Life) "It gives them the chance to get in out of the weather and give them a little comfort," Ms Youngberry said. "For many, they can't just venture back into society, so this is like a carrot to help them trust us." The group has six pods finished and eight nearly completed as part of stage one and aims to find other locations to put the pods. 'The worst I have seen it' Since the COVID-19 pandemic, the need for crisis accommodation has increased five-fold for the organisation. "It's dire, absolutely dire," Ms Youngberry said. A recent report by the Queensland Audit Office on the Queensland Housing Department found that 31,000 households are on the social housing register, an increase of 78 per cent since 2018. "We're getting 15 calls a day ranging from what we call normal homeless up to families living in cars and elderly who can't afford their rentals anymore," Ms Youngberry said. "It's the worst I have seen it and it hasn't just crept up. In the last 18 months it has just whammed us and caught us all off guard." Goodna Street Life president Helen Youngberry hopes to have more pods built soon.(ABC News: Rachel Riga) The group has been searching in all areas for additional accommodation. "The problem we're finding is that there's nowhere to move them to now," Ms Youngberry said. "We're usually the middle person but now we are the start and the end, and we have nowhere to put people." Support needed for more pods It is hoped local businesses will come on board to sponsor additional pods as the need for crisis housing grows. "It gives us a way to show people what life is like for those sleeping on the streets, but also a way for us to create awareness too," Ms Youngberry said. Each pod has been built by hand.(Facebook: Goodna Street Life) The group recently took over Laurel's Place, a former missionary property, and will use it to take in families. "We're now housing families there that have been displaced by flooding, rental crisis, the whole kit and caboodle," Ms Youngberry said. "Who with a conscience can leave a mum, dad, and three children in a car?"
A million homes sit empty, so where are they and can they help ease the housing crisis? By national regional social affairs reporter Erin Parke Posted 9h ago https://www.abc.net.au/news/2022-07-20/homeless-crisis-million-homes-vacant-in-australia/101234424 Coastal beach homes in the Shire of Eurobodalla lay vacant at a time of unprecedented demand for rentals.(ABC South East NSW: Holly Tregenza) Census data has revealed a million houses are sitting empty in towns where, just metres away, working families are being forced to live in tents. Key points: Census data reveals hotspots for unoccupied housing are coastal tourist towns and seasonal farming areas The data highlights the disconnect between housing stock and unprecedented rates of homelessness Local governments say they have exhausted all options to address the housing crisis Analysis of 2021 vacant property data has shown ghost towns are emerging at both ends of the housing market spectrum — in wealthy coastal areas and declining inland farming towns — at a time of unprecedented demand for rentals and soaring homelessness rates. Libby Stapleton, mayor of Victoria's Surf Coast Shire where the majority of houses in towns like Lorne and Apollo Bay are vacant investment properties, said it had become a "massive issue". Libby Stapleton says people have the right to holiday homes, but the situation in some towns is unsustainable.(Supplied: Surf Coast Shire) "You have a situation where 60 to 70 per cent of houses are unoccupied for a large amount of the year, at a time when rental availability is close to zero," she said. "It's frustrating because our communities will not thrive unless they can sustain a permanent population, accommodate key workers, and also retain some fabric of community life." Local governments are taking novel approaches to try to squeeze properties onto the rental market, including writing to non-resident ratepayers pleading with them to rent out their holiday homes and slugging absent owners with financial penalties. But like many community leaders, Ms Stapleton said the onus was on state and federal governments to find both short and long-term solutions to normalise the housing market. Apollo Bay is a popular tourist destination in the summer months.(Commons: Alex Proimos) "Councils are doing what they can, but to be honest we will only ever be able to tweak around the edges," she said. "There's no doubt that the need for change is urgent and it's immediate. I think it's really crucial that people understand the enormity of the impacts that are being felt. "Every day, every week, every month there are people being forced out of their homes and small businesses unable to keep their doors open. "I think as long as we've got policies and a taxation system that treats housing as an investment as opposed to a basic need, it will continue to be an issue." Where are the ghost towns? A breakdown of the census data on unoccupied homes showed a patchwork of under-utilised housing stock in both coastal and inland areas. Professor Amanda Davies says demographic shifts will increase pressure on the vexed issue of taxation reform in the property market.(ABC News: Herlyn Kaur) Some hotspots were trendy, wealthy, seaside towns where out-of-town owners chose to keep them empty or rent them out for brief periods via short-stay accommodation apps. At the other end of the spectrum was empty housing stock in seasonal or shrinking farming communities. "There are two key stories that are standing out in the data," said demography academic Professor Amanda Davies. "There is second-home ownership, with our baby boomer population having second homes and holiday homes, and these are mainly vacant because census night is in August in winter. "And then you have the remote or regional areas where there is seasonal labour, [where houses] are empty when there's no harvesting. "You only need to look at the difference in house prices and rental prices and you can start to see we're looking at two very different stories around that vacancy rate." Some of the most extreme examples of unused homes were recorded on Victoria's Mornington Peninsula and Phillip Island, where in suburbs like Portsea three-quarters of properties were empty. Unusually high vacancy rates were also recorded along Great Ocean Road townships, on the Queensland coast, and in the surfing towns of southern Western Australia. The figures are not considered precise due to the myriad reasons people are absent on census night, but the findings correlate with anecdotal evidence and other data relating to investment properties. Holiday home owners answer plea The data comes as regional residents take increasingly desperate measures to find shelter amid the unprecedented mismatch between the supply of and demand for housing. Out-of-town owners in seaside towns like Kiama choose to keep holiday homes empty.(ABC Illawarra: Justin Huntsdale ) Some towns are reporting a surge in people buying tents to live in, while community services in areas like the WA Wheatbelt are having to return people to the streets with swags and tents. And there are discussions around repurposing unused government properties for crisis accommodation in places like Newcastle and Eden along the NSW coast. Several shires have resorted to asking holiday home owners to rent their second properties out to homeless locals, despite that option being less lucrative than renting them on short-stay accommodation apps like Airbnb. The Eurobodalla Shire wrote to non-resident ratepayers asking them to consider renting holiday homes.(ABC News: Erin Parke) In southern NSW, Eurobodalla Shire mayor Mathew Hatcher wrote to more than 8,000 out-of-town property owners, mainly from Sydney and Canberra, pleading with them to put their spare homes on the local rental market. "We've got so many working homeless in the area who have jobs, might have kids in school, but are currently sleeping in their car because there's nowhere to rent," Mr Hatcher said. "We shouldn't really have to be in this space. A lot of it's about the state and federal governments not stepping up. But we did it out of desperation." Mayor Mat Hatcher wrote to out-of-town property owners pleading with them to put homes on the rental market.(ABC South East: Keira Proust) The letter stated that the shire was "in the midst of a housing crisis", and asked holiday home owners to rent out their properties for one to two years to help the community. Mr Hatcher said while there had been a handful of critics, the response had been overwhelmingly positive. "It's been amazing. We've had over 50 emails, more than 50 phone calls, and people specifically wanting to rent their homes out to a social housing agency," he said. "We know of ratepayers from Canberra who have said they are putting their house on the market to help. They're doing it genuinely out of the kindness of their heart to benefit the community. "It's heartwarming to see that sometimes all it takes is asking, and that people will put their hand up and take the hit in the wallet to help one another." He said there had been a spike in the number of rentals advertised, with just four available rental homes in Bateman's Bay one week, to 50 the next. But Mr Hatcher said the shire was aware it was a short-term fix while it waited for state and federal governments to find sustainable solutions. Financial penalty for empty homes Meanwhile, in Queensland some local governments are charging higher rates to owners of investment properties who are listing them on short-stay accommodation apps to try to get more properties onto the regular rental market. But the Australian Local Government Association said that was not an option available to councils in all parts of Australia. "These levers are only allowable by state and territory governments, so some local governments have very limited control over what they can do to drive more affordable rental properties for the future," said the association's president Linda Scott. "For example rates in New South Wales and Victoria are capped, so there's no control for councils to adjust their rating structure to reflect the needs of the local community." It is not just coastal tourist towns dealing with a large number of empty homes. A breakdown of local government areas painted a more nuanced picture of the patchiness of the housing supply. The 20 local government areas with the highest percentage of vacant houses.(Supplied: Australian government) Many of the geographical areas with under-utilised housing stock were located inland, where towns are dealing with boom-and-bust mining cycles and the seasonal influx of agricultural workers. One example was the Shire of Dundas which sits at the western end of the Nullarbor, close to the WA-SA border. The 2021 Census recorded half of the homes there as being unoccupied, reflected in the local housing market via an online search showing family homes for sale for under $100,000. Laurene Bonza is hoping empty houses will start to fill as mining projects resume.(ABC News: Hugh Sando) Shire president Laurene Bonza laughed dryly when asked if she was surprised by the finding. "No. When you lose 2,500 people out of your population you're going to have a few empty homes," she said. Ms Bonza said the shire's main town, Norseman, had been in decline for more than a decade due to mines being closed or going into care and maintenance. "When the main mine went into care and maintenance most of those families left, which has a flow-on impact on the schools and shops," she said. "You can definitely see empty houses here. A lot are older-style family houses. "They're pretty humble and could do with a spruce-up but, if you're of a handyman bent, they are affordable." The decline in population in the town of Norseman contributed to the high rate of empty homes.(ABC Goldfields: Jarrod Lucas) The cheap homes might soon be in short supply though. The town's main mine is due to reopen soon, meaning the empty houses will start to gradually fill. Will the COVID trend continue? There are subtle changes afoot that suggest the mismatch between housing demand and supply may start to reconcile. Overall, there has been a small decline in empty housing stock since the 2016 census. Southern Victoria recorded a moderate increase in occupancy believed linked to people living in holiday homes during the pandemic.(ABC News: Jarrod Fankhauser) Some coastal towns like Lorne and Portsea have recorded a moderate increase in occupancy, believed to be linked to people with multiple properties leaving the city to live in their holiday homes during the COVID pandemic. Professor Davies said it was too early to say if the trend would continue. "We need to keep in mind that the census count was captured during a period of lockdowns, and we know there were people moving from major cities into their holiday homes during the COVID period," she said. "It will be interesting to see if that holds true over the next five years, and whether people are making a more permanent move to coastal communities." The Shire of Bega Valley is asking holiday home owners to consider renting their properties out.(Facebook: Merimbula Visitor Information Centre) There are also reports in some coastal towns of baby boomers retiring to their holiday homes in increasing numbers. Professor Davies said demographic shifts would increase pressure on the federal government to revisit the vexed issue of taxation reform. "We're in a phase where that baby boomer population is starting to move into retirement, and we've got extreme housing pressure, particularly for the millennial generation," she said. "So there is a need to start to bring together those different threads and have a look at how [we can] stabilise housing, so it is more equitable across the country."
Taxing the family home would fill a $64b gap: OECD Michael Bleby Senior reporter Jul 21, 2022 https://www.afr.com/property/reside...ome-would-fill-a-64b-gap-oecd-20220721-p5b3g3 Australia’s public purse missed out on $64 billion last year in tax revenue foregone due to the capital gains tax exemption on the principal place of residence, a tax break that entrenched intergenerational and geographic inequality, a new OECD report on housing and taxation says. Capital gains tax exemptions, which give more benefit to people who have held them for a long time and to owners of properties in sought-after locations, should be capped or at least balanced in part by “recurrent” taxes such as a broad-based land tax, says the Housing Taxation in OECD Countries report. Own goal? An OECD push to implement capital gains tax on the family home would be political suicide, economist Saul Eslake says. iStock Australia is one of 20 advanced economies in the OECD grouping that allow full and unconditional exemption from capital gains tax on the family home. Even in OECD countries that tax capital gains on primary residences, nine allow full exemptions and another five allow favourable tax treatment. In the face of a popular tax incentive, the notion to drop it is bold. It goes further than the now-dropped policy of the Labor Party when it was in opposition to end the 50 per cent capital gains tax exemption for investors in property and other assets. But while most leaders would not go that far, it could also have far-reaching consequences for housing by raising prices further, warned independent economist Saul Eslake. “It would be a form of political suicide subject to one point,” said Mr Eslake, a critic of Australia’s tax incentives that encourage investment in residential property and drive up the price of housing “You would then need to allow mortgage interest as a deduction, an expense of earning that income.” This would give people even more cash to put into housing purchases, Mr Eslake said. “It’s an incentive to borrow more,” he said. “That’s why people do negative gearing – imagine being able to do it on your own house.” When it comes to residential property, Australia is just above the OECD average of 68 per cent, with 68.5 per cent of household wealth tied up in the owner-occupied and “secondary real estate” investment property, holiday homes and farmland. However, it is second only to Luxembourg for average housing wealth in both types. The OECD argues in favour of removing or capping mortgage interest relief for owner-occupied housing and says capital gains on secondary residential property – or investment properties – should be taxed. But the Paris-based organisation says capping CGT exemptions for primary residences has the potential to reduce distortions and improve equality while also raising revenue, especially at a time of falling home ownership among younger people. “Capital gains tax exemptions for the main residence reinforce intergenerational and geographical inequality, given that gains have been concentrated among older generations and specific geographical areas,” the report says. “Older households are characterised by high homeownership rates and housing wealth and have enjoyed significant growth in property prices.” The unprecedented gains in residential property values – which have outstripped inflation and wage growth – over the past three decades were due to historically low levels of interest rates and unlikely to be repeated, meaning future home owners will not reap the same benefit, it says. “Homeownership rates are falling among younger generations, in part due to property value increases that have made it increasingly difficult to access the housing market,” the report says. “Even if younger households are able to access the housing market, they may not experience the large gains of previous generations. Many countries have also witnessed stark differences in the regional distribution of capital gains, with households in large metropolitan areas benefitting from the most significant property price growth on already highly valued property.” The report argues in favour of broad-based land taxes on real estate and the elimination of transaction-based taxes, such as stamp duty, saying it would increase efficiency in the housing market. Tax incentives for energy-efficient housing renovations could also be better targeted to ensure that they reach low-income households, the report also says. “This could contribute to greater emissions reductions and enhance the equity of tax incentive schemes,” it says.
Homeowners are getting older and wealthier Michael Bleby Senior reporter Jul 21, 2022 https://www.afr.com/property/residential/homeowners-are-getting-older-and-wealthier-20220721-p5b3jp The average Aussie homeowner is getting older and wealthier, the OECD’s latest report into housing and taxation shows. In line with 28 other countries the Paris-based organisation scrutinises in its latest report, home ownership in this country increasingly follows a pattern of concentration among high-wealth households and top income owners. Leaning in: Generational wealth is becoming increasingly important for first home buyers, the OECD says. “High-income households hold a disproportionately large share of housing debt but lower-income households with mortgages generally face higher debt burdens,” the report says. “Home ownership and housing wealth are strongly associated with age. Older households tend to have high levels of housing wealth but low levels of income, raising potential liquidity concerns linked to the taxation of housing. “Evidence also shows that home ownership rates have been declining for younger generations, particularly lower-income and lower-wealth households.” The figures lay bare the challenges that have built up over generations facing housing minister Julie Collins, charged with overseeing the Labor federal government’s new National Housing and Homelessness Plan. Ms Collins met with her state and territory counterparts last week for the first time. The federal government plans a $10 billion Housing Australia Future Fund that aims to build 30,000 social and affordable housing properties withing five years, bring in Help to Buy, a shared equity program to make it cheaper and easier for Australians to own their own home and establish a National Housing Supply and Affordability Council. The OECD figures show that between 1981 and 2016, homeownership rates in Australia for households aged 25-34 dropped by 40 percentage points for households in the first income quintile – the lowest 20 per cent of earners – compared to 7 percentage points for households in the top income quintile. The decrease in home ownership rates was smaller for older age groups, but the size of the drop across generations remains much larger for households in the bottom income quintile compared to households in the top, the figures show. For 55-64-year-old households, home ownership rates dropped by 16 percentage points in the first quintile and by 1 percentage point in the fifth quintile. The Australian pattern, replicated in other advanced economies, pointed to a concerning trend of greater inequality, the OECD said. “These figures illustrate growing concerns about the home ownership prospects of younger generations in OECD countries, as home ownership rates decline and become increasingly reliant on income, wealth, and inheritances,” it said. “While future generations are therefore likely to see continued drops in homeownership rates over time, households with high income, high wealth, and/or access to significant family resources may instead see rising homeownership rates or at least smaller declines.”