Aussie home ownership worse than Eastern Europe

AUSTRALIA is one of the worst countries in the developed world for owning your own home - according to a damning report. MORE people in Eastern European countries like Hungary and the Czech Republic own their own home than Australians. And, if you’re young - it’s going to be even harder to get a foot on the property ladder - a major report from the Australian Institute of Health and Welfare has revealed. It shows home ownership for young people has fallen by more than one-third in the past 25 years. The alarming statistics released today also show, despite relatively low interest rates, the proportion of Australians who own their properties has fallen from 71 to 67 per cent over 20 years. This ranks Australia 29th among the 35 countries in the Organisation for Economic Co-operation and Development for home ownership - behind Hungary, the Czech Republic, Iceland and Ireland.

This is despite welfare spending increasing by $40 billion in the past decade, growing to 9.5 per cent of gross domestic product - according to the report. The most dramatic drop in ownership was experienced by young people. Fewer than 40 per cent of people aged 25 to 34 owned a home in 2013-14, compared with 60 per cent in 1988-89. Assistant Social Services Minister Zed Seselja says the high cost of land is the major factor, as well as the lack of land release in some of the major cities.

“The high price of land is the only thing which has really changed over the past two decades and we’ve supported individual states in addressing this,” he told news.com.au. “The cost of building a house hasn’t really changed in 20 years, but the cost of land has been going up faster than wage growth and inflation.” He also said Australia’s OECD home ownership ranking was “misleading”. “Most people in Australia have a secure future once they have a mortgage, and that may not be the case in some of the other countries on the list,” he said. Mr Seselja defended the government’s efforts on trying to promote home ownership. He pointed to National Affordable Housing Agreement - which he said improves the supply of new housing and the first home super saver scheme.

The Turnbull government is working with the states on a new national affordable housing agreement and announced in the budget measures to help young people save for their first home through their superannuation. “I think it’s fair to say most Australians would say that you know we want to do more,” Mr Seselja said. Affordability has also dropped for households who rent, the report found - with renters seeing a 62 per cent (or $144) increase in average weekly housing costs over the past two decades.

Mr Seselja said the government is giving renters a helping hand through an income supplement called Commonwealth Rent Assistance and negative gearing. “If you take away negative gearing, you would see rents shoot up because landlords would still need a return on their investments,” he said. However, Brendan Coates, a housing policy expert at the Grattan Institute said negative gearing has added “fuel to the fire”. “Reforming negative gearing and capital gains tax, which have added fuel to the fire, would be a good start but it would only lower prices by about two per cent,” he said. “It’s not about how many homes we build this year or next year. We would need to see at least a decade of sustained home building to make a big difference.”

news.com.au /October 19, 2017

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