The Price of Shelter

[IQS.RLOW]

As far as governments are concerned, land supply should be their only concern.

[mantra]

The invasion of negative gearers has been followed by an invasion of foreign buyers, who push aside would-be owner-occupiers in exactly the same way. Rather than living in the homes they've bought, they treat them as investments and either leave them empty or rent them out to tenants who would have once had a chance of owning them.

I think this is the main cause. For some of us - our kids will never be able to afford their own home until we die and even then it might be a struggle. There was talk on the radio the other night about death duties being reintroduced. That will kill off any chance they might have.

[Rorschach]

Yes I can see that as the next obstacle, parents are being seen as the new loan bank for their children affording housing.

[Neferti]

Young people in Sydney and Melbourne might have a problem saving up a deposit for a Mortgage, but it is a lot easier than it used to be and Interest Rates are way down.

My daughter has a Mortgage, as do all her friends. She attained that by working her butt off and going without some stuff, like overseas travel.

She won't need my house to boost her Bank Account when I die, she will undoubtedly use it for an "investment" or travel.

I do have friends and family in Sydney, Melbourne and the Gold Coast with million dollar homes. None of them waited until their parents died to get a Mortgage.

Oh and "home owner" means somebody who actually has paid off their Mortgage and OWNS the home. OUTRIGHT. Mortgagors (those who borrow money from the Mortgagee) are the ones with the "problem" .... those of us who have paid the Bank are sitting pretty.

[Rorschach]

Oh I don't know that it is easier, house prices are so much more than they used to be and you still need to save a lot until banks will give you a mortgage and then there's mortgage insurance on top of that....

A house may have been $400,000 in the past and now they are $800,000... 10% as a saving to get bank money in the past would have been $40,000.... today its 20% and a higher price which means $160,000.

Roughly speaking.

[Rorschach]

The economic downside to the bank of mum and dad
Matt Wade

The bank of mum and dad is in hot demand right now. As house prices soar, especially in Melbourne and Sydney, a growing band of first-time buyers are turning to their parents for help to get in the property market.

Research published by advisory firm Digital Finance Analytics last month found over half of all first-time buyers are getting assistance from parents to purchase property, up from about one in 20 six years ago.

Overall, the national median house price increased by 1.7 per cent over the quarter.

Even the government's top economic official - Treasury secretary John Fraser - is talking about it. He told a Senate committee this month that the "bank of mum and dad … is becoming more and more prevalent". And he warned it has distorted savings behaviour.

"It has impacts on superannuation - where superannuation is going to," he said. "It has impacts on why people are saving in their older years to fund their children's housing needs, and not just purchases but often rents."

But there's another troubling side-effect from the growing popularity of the bank of mum and dad - it is widening the gap between the haves and the have-nots.

A team of economists from Sydney University and RMIT University recently used a detailed, household-level survey to investigate how "intergenerational transfers" affected housing and wealth between 2001 and 2010.

They discovered those who received $5000 or more from mum and dad were much more likely to own a home than others. A parental transfer of that magnitude lifted the home ownership rates of beneficiaries aged between 25-65 years by 14 percentage points compared to the rate that would be achieved with no transfer. The effect of parental gifts on ownership rates among those aged less than 45 was even more pronounced.

The researchers also found first-home buyers who received parental transfers typically bought a more expensive house than first-timers who did not get funds from the bank of mum and dad.

But the economic modelling revealed the net effect of transfers from parents to children to buy housing had served to increase wealth inequality in Australia between 2001 and 2010. That's because people who got help from their parents were more likely to have accumulated housing wealth.

"The analysis ... does flag the potential for wealth to become increasingly concentrated over time and the important role that housing and housing tenure may play in such an outcome," the study by Garry Barrett, Melek Cigdem, Stephen Whelan and Gavin Wood for the Australian Housing and Urban Research Institute read.

There is a growing risk that people without access to a cashed-up bank of mum and dad will be left behind.

Can anything be done?

The economists say policies to boost home ownership should specifically target groups that are unlikely to receive parental gifts and bequests. Another option is to allow more people access to the bank of mum and dad by making it easier for older generations to "unlock" some of their property wealth to help their children buy a home.

[Neferti]

Oh I don't know that it is easier, house prices are so much more than they used to be and you still need to save a lot until banks will give you a mortgage and then there's mortgage insurance on top of that....

A house may have been $400,000 in the past and now they are $800,000... 10% as a saving to get bank money in the past would have been $40,000.... today its 20% and a higher price which means $160,000.

Roughly speaking.

Not everybody lives in Sydney. Not everybody wants to. Like I have said elsewhere, back in December 1980 when I left Sydney, a house on the North Shore suburb of St Ives (where I lived at the time) was $60,000.

I moved into a rental house in Weetangera in the ACT and a friend I made (who came up from Melbourne) bought a house in the same street for $60,000 at the end of 1981.

I have no idea why Sydney house prices went up so much and Canberran ones remained almost "normal". Demand, perhaps?

I have friends in Sydney who have retired and downsized and I haven't been so rude as to ask .... but my sister "downsized" in Melbourne and bought a brand new place (only 3 bedrooms and 2 bathrooms) in a different suburb, closer to the City and paid $3.5 million for it. I did ask whether that was actually "down sizing". She always buys brand new furniture and so forth as well. I live in almost "poverty" here in Canberra, since my house is not worth 1 million.

[Outlaw Yogi]

Who's to blame for rising house prices?

Fucken migrants, that's who.

I should turn my place into a caravan park, become a slum lord and over run the neighbourhood with junky vermin and sleazy wogs. And when their welfare is cut off send 'em back to town to look for Vinnies.

[freediver]

As one of Morrison's colleagues, Liberal backbencher John Alexander, puts it: "It's not much good increasing supply if it's consumed by opportunistic investors."

Sure it is. If there is an oversupply of rental properties, rents will go down, which will make more people disinclined to buy and also feed back into the investment market to discourage investors.

[Neferti]

As one of Morrison's colleagues, Liberal backbencher John Alexander, puts it: "It's not much good increasing supply if it's consumed by opportunistic investors."

Sure it is. If there is an oversupply of rental properties, rents will go down, which will make more people disinclined to buy and also feed back into the investment market to discourage investors.

How many rental properties do you have?

Aussie kids are more inclined to go to Uni and get a large debt then travel for 5-10 years before coming back and starting to pay off their Uni debt, IF they get $50K a year or whatever.

Meanwhile they are nearing 30 and are BROKE and have no money saved, but expect to get employment because of their "degree" back in Australia.

Travelling might broaden your arse but it will NEVER get you into the property market. These kids went through the Howard era ... when parents got paid to bring them up. Stupid idea.