Let's Talk Housing Affordability

Let's Talk Housing Affordability

This week I am picking on Scott Morrison. If you are signed up to my Rate Club notice it will be hitting your inbox this Saturday, stay tuned. Take a look at the below chart for the Median Housing Prices for States across Australia. Mr Morrison wants to confine what is put on the table to the supply side. Attacking demand would crash the market, he said.

Housing Affordability

Malcolm Turnbull is said to be very anxious the Government search for solutions to the affordability challenge. Expert opinion and common sense indicate this search should be as broad as possible, looking at the demand as well as the supply side.

Wages VS Housing Deposits

See the difference in the chart over the years in home buyers wages vs housing deposits. It's massive.

This is a nice dilemma for Mr Morrison. Sydney Liberal John Alexander is widely on the record arguing the demand side is important and, what is more, that investors are making it hard for young first home buyers.

The evidence indicated "investors were trampling on the opportunity for people wanting to buy a first home", he said.

The reality is, when the Club started we had high rents to the values. 7 per cent rent return was common. Tenants paid these higher rents. Then as more and more investors bought properties and put them on the rental market, rents in relation to values, came down.

Now according to ABS rent return is sitting at about 3.85 per cent - Half! So it’s the old law of supply and demand. The more supply coming into the market, then the less will be the price. The more property investors, the less property capital growth – the less rental price increases.

Regards,

Kevin Young Club Founder of Property Club

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