Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

Homes not costly but deposits are

By Graham Young - posted Thursday, 22 September 2016


Our research suggests the deposit is the problem.

In 1991 the median dwelling in Brisbane was $120,000 and could be purchased for 4.72 times average annual earnings. In 2015 it was $475,000 and that ratio was 6.09, 29% more expensive in real terms.

That’s a solid real return, but interestingly, repayments on that dwelling in 1991 were $309 a week, or .63 time average weekly earnings, and today, 25 years later, repayments on the median dwelling would be $614 a week, or .41 times AWE. That’s an increase in affordability of 35%.

Advertisement

So why aren’t purchasers rushing into the market as they were in the 90s?

The answer seems to be the time it takes to save a deposit.

At 10% of AWE before tax, it takes 12.2 years to put aside a 20% deposit today versus 8.9 25 years ago. That’s a significant increase, and many purchasers just don’t have that much patience.

What can, or should, governments do?

Historically state governments have provided first home owners grants which are a taxpayer-funded gift to first home purchasers to bridge the deposit gap.

These grants do work, although they also have an inflationary effect on house prices as well, so reducing the benefit.

Advertisement

It is also difficult to justify gifting $20,000 of taxpayer’s money for a private benefit.

A much more sensible approach, and one for the Commonwealth, would be to regard the house as part of retirement planning.

If you don’t own a house by retirement, the financially smartest thing is to take your super and buy one.

  1. Pages:
  2. 1
  3. Page 2
  4. 3
  5. All

An edited version of this article was published in the Courier Mail.



Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

11 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Graham Young is chief editor and the publisher of On Line Opinion. He is executive director of the Australian Institute for Progress, an Australian think tank based in Brisbane, and the publisher of On Line Opinion.

Other articles by this Author

All articles by Graham Young

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of Graham Young
Article Tools
Comment 11 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy