API Blog :: Have your say!

The mining boom is great on paper, but like the unsinkable Titanic on calm waters, no one seems to see the great iceberg ahead. There’s an old Jewish proverb, which – roughly translated – goes: “People come to poverty in two ways, accumulating debts and paying them off.”

BY CATHERINE CASHMORE

You don’t need the brain of a statistician to work out why political polls are low. It’s not just about lowering hospital waiting lists and reducing rising electricity bills. Neither is it about handouts to appease changes in policy such as the carbon tax.

It’s as simple as providing shelter for those who are unable to commit 50 per cent or more of their wages to accommodate for their own needs, let alone the needs of a growing family.

I’m a bit of an ABC junkie, always tuned into one of the various news stations. I listen to MPs’ voices coming over the airwaves daily, reminding me of Australia’s sunny outlook in light of Europe’s economic woes. I hear our Prime Minister remind me that by 2013 we’ll have a surplus and I read reports about a flood of “economic migrants” flocking to our shores to take advantage of our low unemployment status.

I recently read about an Englishman who was a hard working former paper mill operator by trade but was retrenched and refused to go on welfare. Still needing to provide for his family and frustrated with the lack of opportunity at home, he moved to Queensland. Staying with relatives for the moment, he believes our prospects will provide opportunity here that he’d be unable to find elsewhere – and he’s probably right.

I wonder if he factored in the cost of housing when making his choice. He has 12 children among his dependants so finding a house to comfortably accommodate his needs won’t be easy – or cheap.

But it’s not just about purchasing. The rental market in every capital city is stressed to the max. I had a recent conversation with a young girl about to move out of her current home because the owners want to move in. One two-bedroom unit she looked at was in such high demand that the agent received numerous applications, some $50 a week above the advertised price. She told me how she always offers three months rent in advance, but even that’s not enough to beat the competition.

For those unable to provide such incentives, low wage earners or the unemployed, you’ve got to wonder how they get by.

Perth’s vacancy rate has now dropped below one per cent, Sydney’s is at 1.5 per cent, Adelaide is sitting on 1.3 per cent and Brisbane’s is 1.6 per cent. Tenants who are knocked off the rental ladder face a situation that’s truly dire. In 2010, even after a tightening of the eligibility rules, there were 248,419 people across the country on a waiting list for government-assisted accommodation.

So, what do we do? Planning rules must be relaxed in outer suburban areas. The provision of services in regional locations needs to be planned and implemented. We don’t need housing affordability schemes that help less than 1000 recipients for an outlay of millions of dollars. Nor should we be giving out incentives that place inflationary pressure on existing real estate, like the First Home Owners Grant.

Governments should instead remove stamp duty on new dwellings and consider a change in policy on negative gearing, as well as a few other recommendations cited in the Henry Tax Review. We’re rolling along on a wave of prosperity, but like the Titanic, that iceberg could spell destruction.

Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. She is Channel Ten’s property expert on ‘The Circle’ and a senior consultant for National Property Buyers servicing the needs – Australia wide – for homebuyers and investors.