Even Rentals Doubtful For Low Earners
The Age
Friday February 22, 2008
HOME ownership is moving out of the reach of lower-income Australians, and on current trends, even renting will become increasingly difficult for many to afford, a new study warns.
The study, headed by leading housing analyst Judith Yates, of Sydney University, projects that over the next 40 years, the number of households will increase by 50%, but as housing becomes more unaffordable for people in the bottom half, those renting their homes will almost double.It comes as housing industry monitor Residex urged the Government to find other ways to tackle inflation, warning that relying on higher interest rates to crush inflation puts the burden on "newly and heavily mortgaged families already struggling with high petrol and food prices".And the Housing Industry Association forecast that in 2007-08 hardly any growth in housing starts is likely, despite the severe housing shortage. It says in 2008-09 there will be only a minor rebound, with housing starts projected to rise 4% nationally and 6% in Victoria.In a government-funded study published by the Australian Housing and Urban Research Institute, Professor Yates and her co-authors - Hal Kendig, Ben Phillips, Vivienne Milligan and Rob Tanton - project that on current trends, the gap between growth in house prices and growth in incomes is likely to widen over the next 40 years."In the future, as in the past, the majority of Australians will have affordable, secure housing over their lives," they said. "(But) it will be increasingly difficult for low and moderate-income households who have deferred home purchase to become home owners."The number of lower-income households in housing stress in the private rental market is expected to increase by 120%."The study points out that home ownership rates are already falling among younger households. Between 1981 and 2006, the proportion of householders aged 35 to 44 who do not own their home has risen from 25% to 32%. The proportion aged 25 to 34 who are renting has swollen from 39% to 49%.During the same period there has been a big increase in ownership of rental property, driven by tax breaks, which allow landlords to write off interest bills against tax, and pay tax on capital gains at only half the rates paid on income from work.The study says the most far-reaching reforms to improve housing affordability require reform of taxes and charges applying to housing "to provide for more equitable outcomes for future generations, and to promote greater equity within generations, especially between owners and renters".Housing Industry Association director Chris Lamont said housing starts had stalled at a level providing about 20,000 fewer homes a year than Australia needed. New rate rises would further restrict supply, putting more pressure on house prices and rents.
© 2008 The Age