The high cost of housing

HOUSE prices in the Hunter may have come down from their peak of a few years ago, but they haven’t fallen far enough to put an end to the region’s ‘‘housing affordability crisis’’.

Reasons for that aren’t hard to find.

For a start, typical wages in the Hunter are relatively low and a relatively large proportion of the population relies on welfare payments.

As this newspaper recently reported, public housing availability falls far short of demand, creating strong pressure on the lower end of the private rental market.

Indeed, Newcastle has one of the tightest rental markets of any major Australian city, a fact that has pushed rents higher, even as average home prices appear to have slipped or stagnated.

Higher rents have encouraged investors, who see the prospect of better yields in housing than in bank deposits or other assets. Assisted by negative gearing and other tax breaks, investors compete fiercely with would-be home buyers at the cheaper end of the price scale.

To make things worse, the supply of new housing appears to have been choked. Developers are caught between the reluctance of banks to finance new residential projects and an almost equal reluctance on the part of many consumers to commit themselves to big new debts.

For all these reasons, ‘‘housing stress’’ is rising. This condition occurs when a household is obliged to spend more than 30 per cent of its pre-tax income on either rent or home loan repayments.

In the Hunter more than 43,000 households – about one in five – are in this predicament. That is considerably higher than the state average.

At last report, mortgage repossessions were also on the rise in the region, another clear indicator of stress.

Small wonder that many extended families are choosing to pool their resources to find solutions, with more young families moving in with parents and in-laws.

Several suggestions have been put forward to deal with the problem. Some advocate abolishing negative gearing to drive investors out of the marketplace. That might help some renters become home owners, but last time it was tried the supply of rental accommodation dried up almost overnight.

Governments are trying to make life easier for developers, cutting red tape and streamlining approvals. But while banks won’t lend on projects and buyers are shy of taking on debt then development will remain a risky proposition.

THIS year’s Hunter TAFE awards have again turned the spotlight on some inspiring student achievements. Like most forms of education, a TAFE course tends to provide the greatest benefits to those who approach it with the greatest sense of purpose.

Among the 40 graduates honoured at this year’s awards it is that sense of purpose and direction that sets their efforts apart. Having a vision, then harnessing educational facilities to help achieve it, is surely a major ingredient in many a formula for success.

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