07/12/2004 - 21:00

Buoyant market has a cost

07/12/2004 - 21:00

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WHILE increasing median house and land values are widely seen as positive, particularly by those already in the market, home affordability is rapidly becoming a sensitive issue in Western Australia.

Buoyant market has a cost

WHILE increasing median house and land values are widely seen as positive, particularly by those already in the market, home affordability is rapidly becoming a sensitive issue in Western Australia.

The affordability gap is not as pronounced in Perth as it is in the eastern States but a continuing upward trend in property prices, coupled with relatively stable wage levels, threatens to alienate increasing numbers of people from the property market.

The State Government and property industry have recognised affordability as a significant issue and both have made steps to ensure affordability, although, as yet, a consistent, overarching policy has not been achieved.

Builder Dale Alcock said a range of things contributed towards lack of affordability, but nominated several major problems that the Government could assist with.

“The stake that the Government gets from GST is massive, and I have heard developers saying that it is like having another party in the equation,” Mr Alcock said.

“The State has reaped a huge windfall from the GST and taxation generally, and they need to reinvest that.

“The Government has been mooting implementing an infras-tructure levy for greenfields develop-ment, but this cost will be passed straight onto the consumer, and levies can be $15,000 to $25,000 per lot.

“The question for government is whether they want to continue to be the landlord, or if they want to get people into their own homes.

“If we can’t continue to deliver affordable housing, we build for less and less people, and more homes will need to be built by departments and welfare agencies.

“For us to remain a vibrant private industry we have to retain affordability.”

Mr Alcock said a lack of trade training and the shortage of labour in the building industry were significant issues.

“There is also a need for the consumer to accept that they can’t continue to build bigger for less,” he said.

“Maybe the concept the market needs to accept is that they should build for what they require, and live within their means.

“This will ensure there is always a market for homes when they resell.”

Mr Alcock said shared equity was a possible answer to the affordability issue and suggested both govern-ment and the private market could get involved.

“The Department of Housing and Works has tried it, but the concept needs to see commercial providers come in,” he said.

“It will require some consider-ation, thought and innovation to get the private market involved, and it needs to be in a credible way that gives them the return they need, but I think it is saleable.

“The Government does need to assist wherever they can by being flexible and innovative, and looking at options and alternatives, otherwise they will just have to invest more money in welfare housing.”

In a direct attempt to address the affordability issue, developer Nigel Satterley, in a joint venture with Landstart, will shortly release a product in Brighton exclusively to the first-home buyer market at between $185,000 and $200,000, well below Perth’s median house price of $240,400.

“Affordability is important as a part of the Australian heritage – it helps people into home ownership which is the Australian dream,” Mr Satterley told WA Business News.

“We are currently working out the rules with government for the genuine application of delivering affordability.

“We are working closely with the builders, and the housing will be integrated, and very hard to pick.”

Developer and former Town Planner Luke Saraceni said affordability was important because of the housing market’s role as a major driver of the economy.

“It is important to retain supply more than anything else – deliver affordable land to meet market demand,” he said.

“Once the supply is cut off, demand drives it up, and such is the case in places like Sydney.

“I believe government can have a role to play by investing in housing stock, but supply is the most important factor.”

Real Estate Institute of Western Australia CEO Anne Arnold said the affordability question had two elements.

“The first is the capacity to get started by raising a deposit, and the second is to service the debt,” Ms Arnold said.

“Once people own property it is relatively easy to take the next steps, but there are some major impediments for a lot of people.

“HECS debts often constrain young people’s capacity to start in a housing market, and things like mortgage insurance are also impediments.

“The West Australian Government has been quite good in helping to deliver affordability, but we all as a community could look at useful ways of assisting affordability.”

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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