Housing affordability under the spotlight
House prices continue to climb with auction clearance rates still at record high levels particularly in the hotspots of Sydney and Melbourne. First home buyers make up a small percentage of housing sales and recent regulatory changes have done little to stem the growth of prices in our two biggest capital cities. People are now getting squeezed out of the market and worry if their children will ever be able to afford to buy their own home.
Real Estate figures
New research from the Bendigo Bank-Real Estate Institute of Australia shows that the city of Darwin has seen the biggest increase in median house prices during the March quarter. Sydney remains the most expensive city to buy in with median house prices tracking towards the $1 million dollar mark whilst Perth and Brisbane both reported falls in the average price of houses during the period. The median house price across Australia has risen 2.4 per cent to $658,608.
Meanwhile minutes from the Reserve Banks June meeting reveal that the RBA is aware of the imbalances of supply and demand for housing, particularly in the Sydney market. The minutes, published on Tuesday say...
‘Although house price inflation remained high in Sydney and, to a lesser extent, in Melbourne over recent months, there had been some divergence in price developments for different segments of these markets; price inflation of detached house had increase, where as price inflation of units had eased in both cities.
… They also observed there was a relatively low stock of dwellings for sale in Sydney and Melbourne and that dwellings only took a short time to sell.
Concerns over housing affordability have ignited debate and controversy and now a new national political party – The Affordable Housing Party – could soon become a reality. Interested citizens are now rallying to have the party registered and they plan to campaign for changes to policy including scaling back negative gearing and other tax incentives, making it harder for self-managed super funds to buy investment properties, looking at foreign ownership of residential properties as well as added incentives for people to invest in new enterprise and infrastructure rather than residential housing.
FNN spoke to Graham Wolfe Head of Industry Policy at the Housing Industry Association about the main issues that are impacting on housing affordability.
“The total tax take on new housing adds up to about 40 per cent or more on the price of a new house and land package nationally and up to 44 per cent in Sydney. The three largest taxes are GST, Stamp Duty and Infrastructure levies which alone add up to $140,000 in Sydney and a similar magnitude in other capital cities. These taxes make houses less affordable. The government rely on property taxes for about 12 per cent of their total revenue and removing a tax requires an alternative source to offset the loss.”
Australian auction results
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 83 per cent clearance rate from 691 properties for auction, Melbourne cleared 81 per cent from 832 properties, Brisbane had a 51 per cent clearance rate from 113 properties listed and Adelaide cleared 52 per cent from 58 listed auctions.
Commercial property sector
Abacus Property Group (ASX:ABP)
has signed a $115 million deal with Goldman Sachs to buy a property in St. Leonards, Sydney with settlement expected in August.
St Leonards is a commercial property hot spot this week with Mirvac Group (ASX:MGR)
wrapping up a $121 million deal for a development site in the northern suburb.
SCA Property Group (ASX:SCP)
has agreed to buy three shopping centres in Tasmania and also purchased Mount Warren Park in Queensland for a combined total of $99.4 million.
And Growthpoint Properties Australia Limited (ASX:GOZ)
advised it will pay a half yearly dividend of 9.9 cents per share and says it expects to see a 4.1 per cent increase in dividends for the 2016 financial year.