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Housing affordability crisis? What housing affordability crisis?
- By Geoff Dart
- Published 24/09/2008
- Unrated
Mr Geoff Dart, a Sociologist and Associate Director with leading accounting and business advisory network, Moore Stephens, has challenged the current economic view that Australia is in the midst of a housing affordability crisis.
Speaking at recent seminars in Melbourne and Sydney, with fellow speakers, Mr Saul Eslake, Chief Economist of the ANZ Bank and Mr Harley Dale, HIA Chief Economist, Mr Dart proposed an alternative hypothesis to that presented by his fellow speakers.
“Most commentators will tell you that all signs point to a crisis in housing affordability,” Mr Dart said. “However, if you look beneath the surface of the issue, it is not as clear-cut,” he added.
“Demand for housing has fallen amidst rising interest rates and increases in living expenses such as health, transport, education, and petrol,” Mr Dart said. “As such, pressure on housing stock has also fallen; people have battened down the hatches and the number of home loans has fallen as a consequence.
“This caution has resulted in a fall in house prices around the country, contrary to the view of many economists and the HIA and demonstrated in the March quarter figures, particularly in Melbourne and Sydney. I expect we will continue to see downward pressure on house prices over the coming year.”
With respect to the availability of existing housing stock, Mr Dart said there are some very interesting and important trends to take into account. “Baby Boomer empty nesters, for example,” he said “are downsizing and vacating large homes for units, apartments, or town houses.
“And don’t forget the increasing popularity of home improvement or nesting,” he added. “This is becoming more prevalent, as the renovation and addition market reached $30 billion, an increase of some 4 per cent over the previous year to the highest level on record. Families and couples are buying older, generally smaller houses and upgrading them for modern living and family expansion.”
Mr Dart went on to say that many commentators don’t take into account that almost 160,000 elderly people left their homes for retirement villages and nursing homes last year, and this is increasing by some 5 per cent every year. This has freed up to 100,000 homes for families and new home buyers, across a range of suburbs around the country, especially the ‘older’ populations of Sydney, Melbourne and Hobart.
And almost every suburb has multiple examples of developers building an increasing number of apartments and town houses on blocks of land that formally housed one house per some 700 or so square metres, creating two or more residences where previously there was only one.
“So I think the housing affordability and availability crisis has been overstated somewhat,” Mr Dart said. “I think the issue is more around human nature and, perhaps, unrealistic expectations of younger people coming into the housing market. There is plenty of housing stock and prices are coming down, thereby improving affordability.” Mr Dart added that he agreed with the economists that interest rates may well fall in 2009/2010, further improving housing affordability.
“I think as a culture we have lost the art of saving and delaying gratification until we can actually afford something. Combined with that is a generation of ambitious young people who want the lifestyle their parents enjoy – now.
This is simply unrealistic, you have to earn it and we have to teach our kids what that means.”
- ends -
About Moore Stephens
Moore Stephens is a leading national network of six independent firms of business advisors and chartered accountants in all mainland capital cities of Australia. All Moore Stephens firms are long-standing members of their local business communities and specialise in providing highly personalised, expert and commercially astute audit, accounting and advisory services to their clients.
All member firms are also independent members of Moore Stephens International Limited, a global network of 358 independent member firms with 621 offices in 95 countries and annual fees revenue of more than US$1.8 billion.
For Further information:
Geoff Dart
Phone: (03) 8635 1908 Mobile: 0419 575 252 gdart@moorestephens.com.au
Speaking at recent seminars in Melbourne and Sydney, with fellow speakers, Mr Saul Eslake, Chief Economist of the ANZ Bank and Mr Harley Dale, HIA Chief Economist, Mr Dart proposed an alternative hypothesis to that presented by his fellow speakers.
“Most commentators will tell you that all signs point to a crisis in housing affordability,” Mr Dart said. “However, if you look beneath the surface of the issue, it is not as clear-cut,” he added.
“Demand for housing has fallen amidst rising interest rates and increases in living expenses such as health, transport, education, and petrol,” Mr Dart said. “As such, pressure on housing stock has also fallen; people have battened down the hatches and the number of home loans has fallen as a consequence.
“This caution has resulted in a fall in house prices around the country, contrary to the view of many economists and the HIA and demonstrated in the March quarter figures, particularly in Melbourne and Sydney. I expect we will continue to see downward pressure on house prices over the coming year.”
With respect to the availability of existing housing stock, Mr Dart said there are some very interesting and important trends to take into account. “Baby Boomer empty nesters, for example,” he said “are downsizing and vacating large homes for units, apartments, or town houses.
“And don’t forget the increasing popularity of home improvement or nesting,” he added. “This is becoming more prevalent, as the renovation and addition market reached $30 billion, an increase of some 4 per cent over the previous year to the highest level on record. Families and couples are buying older, generally smaller houses and upgrading them for modern living and family expansion.”
Mr Dart went on to say that many commentators don’t take into account that almost 160,000 elderly people left their homes for retirement villages and nursing homes last year, and this is increasing by some 5 per cent every year. This has freed up to 100,000 homes for families and new home buyers, across a range of suburbs around the country, especially the ‘older’ populations of Sydney, Melbourne and Hobart.
And almost every suburb has multiple examples of developers building an increasing number of apartments and town houses on blocks of land that formally housed one house per some 700 or so square metres, creating two or more residences where previously there was only one.
“So I think the housing affordability and availability crisis has been overstated somewhat,” Mr Dart said. “I think the issue is more around human nature and, perhaps, unrealistic expectations of younger people coming into the housing market. There is plenty of housing stock and prices are coming down, thereby improving affordability.” Mr Dart added that he agreed with the economists that interest rates may well fall in 2009/2010, further improving housing affordability.
“I think as a culture we have lost the art of saving and delaying gratification until we can actually afford something. Combined with that is a generation of ambitious young people who want the lifestyle their parents enjoy – now.
This is simply unrealistic, you have to earn it and we have to teach our kids what that means.”
- ends -
About Moore Stephens
Moore Stephens is a leading national network of six independent firms of business advisors and chartered accountants in all mainland capital cities of Australia. All Moore Stephens firms are long-standing members of their local business communities and specialise in providing highly personalised, expert and commercially astute audit, accounting and advisory services to their clients.
All member firms are also independent members of Moore Stephens International Limited, a global network of 358 independent member firms with 621 offices in 95 countries and annual fees revenue of more than US$1.8 billion.
For Further information:
Geoff Dart
Phone: (03) 8635 1908 Mobile: 0419 575 252 gdart@moorestephens.com.au
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