You can still buy a house in Germany for the same price, in real terms, as you could in the 1970s. If I look at the example of my parents – they were in no rush to buy because they could live very well in rented accommodation. They put their money in a bank account and bought their first home when they were in their early 50s and it took them six or seven years to pay off a small mortgage. They were extremely relaxed about it.”
I’m pretty passionate about housing (un)affordability in Australia. I don’t particular like that young Australians face a life of debt just to afford basic shelter.
It came as a big suprise to see Kevin Rudd (increasingly known as KRudd) basically slap me in the face this week when he announced the doubling/tripling of the first home buyers grant, effectively enabling sellers to ask seven to fourteen grand more for their overpriced properties.
It’s taken a few days for my rage to subside, especially since hearing many, many intelligent people state that this will actually make housing less affordable, just like the introduction of the first home buyers grant initially did.
The most refreshing response I read was ‘Built for shelter, not prosperity‘ by Terry Sweetman:
The purpose of housing, surely, is to provide shelter for people, not to become a commodity; the purpose of government investment should be to put people into accommodation not into mortgages.
But, instead of people rejoicing in the mere fact of home ownership or affordable rental accommodation, spirits soar or crash on the basis of projected market prices.
How extraordinary that we celebrate the rising costs of shelter, one of the most basic of human needs. Would we be so delighted if food and clothing were similarly placed beyond the reach of so many citizens?
I needn’t say more.
So I was on t.v. tonight which was weird considering I don’t really watch t.v. It’s International Tenants’ Day today too, how fitting.
Why I choose to rent and why rent money isn’t dead money.
The whole corporate bailout thing happening in the US and now Australia really pisses me off. So I was glad they published my letter to the editor of the Courier Mail today.
The whole bail out situation smells fishy to me:
“It’s not based on any particular data point, we just wanted to choose a really large number.”
- A Treasury spokeswoman tells Forbes.com on how they came up with US 700 billion dollars as the bail out figure.
I guess that’s how Wayne Swan came up with his four billion dollar figure to “boost competition in the mortgage market”.
Mark Stacey of Sorrento in WA put it really well in today’s Australian newspaper when he said:
It is sad to see the major political parties squabbling to claim ownership over a bad idea, namely the use of taxpayers’ money to increase lending for mortgages. If lending money for house purchases was the route to a propserous and secure future, we’d already be in financial nirvana.
Malcolm Turnbull doesn’t get it. Wayne Swan doesn’t get it either. It’s all rather worrying.
Where else will the Washington Mutual equivalents in Australia get their money?
Update: Banks in Britain are having the same sort of financial problems and other banks there have “… refused to buy mortgage loans that customers are struggling to repay” (link), unlike the Australian Government who is proposing to do just that, with taxpayers’ funds nonetheless.
Update (2 Oct 2008): I sent PM Kevin Rudd a letter and got a standard response saying that they’ll take my opinions on board and send me an official response.
It was interesting frightening to watch Bursting the Bubble on Insight tonight. I still can’t get over how much debt Australians have taken on; Insight mentioned that we as individuals have seven times greater debt than during the recession in the early nineties: scary!
I read a lot about housing unaffordability in Australia and I have read lots of stories about Australian families who have bought overpriced housing (what housing isn’t overpriced) because of the alleged security that a house provides.
The one thing that Insight successfully showed tonight is that an expensive house with a large mortgage doesn’t actually provide security at all, it just quite the opposite. How can any person with a large mortgage requiring multiple incomes and uninterrupted employment just to service the debt at current interest rate levels feel any bit secure? Isn’t that what security is about, feeling secure?
I would feel insecure with a mortgage large enough to pay for the apartment we rent. I would feel insecure buying any apartment in Brisbane at the moment knowing that we would need two full times jobs for 30 years just to service the debt. I feel secure renting a place knowing that we have a few years rent in savings in case something goes wrong. I feel secure knowing that I could quit my job tomorrow and we could still easily afford rent and living expenses from just one salary. Now that’s security.
Another fellow bubblepedian got a letter to the editor published in the Courier Mail today. She got quoted on the headline too. Well done Shery!