A UK housing expert has made a claim that 70% of Sydney-siders under the age of 35 will be excluded from the housing market.
The figure makes up part of a new report, Homes for All, which found that Australia’s housing market is in crisis, with only half of the supply needed to meet demand.
The authors of this report claim that tax incentives in place in Australia make it easier for existing property owners to continue to purchase investment properties than it is for young people to purchase their first home.
When it comes to applying for home loans, it is easier to qualify for a home loan if it is for investment purposes than if the property is for owner occupation.
At the same time we find 22 per cent of Australians own 55 per cent of residential development.
Of course one thing this report fails to mention is that First Time property buyers do not need to buy a home to live in, they could try to purchase an investment property while in their 20′s and then move into it or purchase their own home later. Then they will have the same tax incentives as are currently available to property investors.
There is a strategy that investors who own several properties follow. They buy their first one in the inner suburbs, a small apartment which is easily rented, close to all facilities. They hold this property for several years while tax deducting all property expenses off their income including interest costs of their loans. They then revalue this property and apply for a home loan using the accumulated equity in their investment property as a deposit.
Mr Williams said Australians were building 14,000 to 15,000 homes a year when the figure should be more like 40,000.
“We’re way off, tens of thousands behind. No wonder there’s a pressure on prices,” he said.
He said that about 30 years ago it took three times the median salary to buy a house in Sydney, whereas it now took nine times.
This is a more significant ratio than those in most of the world largest capital cities.
He said compared to other cities such as Melbourne and Perth, Sydney was producing less than half the number of homes per 10,000 people.
“Sydney produces 43 homes per 10,000 people, while Melbourne produces 103,” he said.
Lack of new homes in Sydney is driving up rents.
“Rents in Sydney are rising four times faster than inflation,” Dr Williams said in the report.
NSW Opposition Leader John Robertson issued a statement in agreeing that NSW is indeed in the grip of a housing affordability crisis.
