Affordable Housing

There is a lot of government officials, members of parliament, Lord Mayors and developers who speak about affordable housing only use pious platitudes that are completelly meaningless.

Well, what is affordable housing and to whom is it affordable, are the vital question? We recall a time when it was determined that rent should not consume any more than 20% of a person’s income and so we decided to put some numbers on the affordable housing scale, and to stop talking in vague terms.

We decided to look up the amount of money a single pensioner gets a fortnight and that is $1,060.00 or $530pw. So, if a person applied 20% of their income to accommodation, then the weekly rent should be $106.00pw, which is far below any accomodation of offer in Australia due to the massive increases in housing over the last several decades. So, we could assume that the government is talking about these numbers? Of course not! So let us be more reasonable and do somethong that no recent government/political leader is prepared to do – set a reasonable difficult target of 50%of the single pensioner’s income; that is $265.00pw. Such a target being set will not be realised without assistance from all levels of government that would give real incentives to landlords to reduce their rents to these levels. See some details below.

Affordable housing should be housing that does not need rent assistance, since if rent assistance is needed then by definition the housing is not affordable; it is only made affordable because other money external to the tenant is applied to their money to reach the rent figure. It may be held that a single person does not need a house but just a room in a share house; Have you seen a house where the total rent divided by the bedrooms is going to have each bedroom cost at the $106pw, because we have not in recent times!

The media has given too many free passes to those claiming affordable housing, since all the housing related policies of the state and federal governments have just caused massive increases in the purchase prices of houses and therefore the overall cost of rent. The Reserve Bank does absolutely nothing to assist to make housing more affordable, and we have Labor politicians (and others) who want to remove negative gearing from housing They do understand that if this policy position was ever implemented that rental costs will rise significantly.

Affordable housing must mean the reduction in the cost prices of all housing, or it will never be affordable to the single unemployed person; and that ought to be the benchmark to determine if housing is affordable.

Steps towards affordable housing:

• • The removal of stamp duty charges since the Government sold the Land Titles Office.
    • Reason: stamp duty is originally a charge to cover the cost of making a certified title change and an ever-increasing purchase tax that went into many thousands of dollars.
  • The removal of the right for non-Australian citizens to own Australian real-estate, unless they are a long-term permanent resident.
    • Australia is almost alone in permitting non-citizens to own real estate and this has a direct price increase on housing prices in Australia
  • The removal of the right to use first homeowner’s grant towards the purchase of housing; but the grant is to be a safety net that may be spent during the first 5 years if a negative unusual financial event happens, the remaining funds will be free to be applied to the housing loan at the conclusion of the 5th year.
    • Reason: the first homeowner’s grant should be only used to retain a home as any application of additional funds at purchase will generally cause increase prices.
  • The minimum deposit for housing must be at least 20% of the purchase price of the house.
    • Reason: 1. a higher deposit will reduce repayments to service the loan so as to make the repayments manageable without causing any severe hardships that may bring the loan close to becoming unserviceable. 2.The higher deposits will reduce the competition at the sale and hence assist in a downward pressure on the purchaese price.
  • Loan advisors to become liable of loan failures if the “expert” advice is to create a false sense of security in the loan agreement.
    • Reason: Loan advisors are claiming to be experts in the industry and will need to be fully across all aspects of the set-up of the loan and the capacity to pay the loan by the customer while still living a normal life.
  • More land has to be released for housing across the whole state so that the total housing stock will increase to level where the number of houses in the state will be at least sufficient for every person in NSW can own or rent a home.
    • Reason: Homelessness is a scourge against the success of any western robust economy and every person deserves a home in a modern and progressive society
  • Decentralization of housing and work hubs throughout the state of NSW with higher speed affordable transport to other centers.
    • Reason: Decentralization of both housing and work hubs will cause further downward pressure on housing prices and higher speed affordable transport will assist in making the decentralized community stable as traveling to other communities for family, friends, entertainment and work will remove the isolation that is often the single biggest failure reason for any satellite community.
  • Incentives can be offered even at council levels of reduced rates if certain rental target pricing is met.
    • Reason: an incentive may assist some property owners to reduce their rent charges.