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Wednesday, 15 October 2003
Page: 21555


Mr RIPOLL (7:48 PM) —Recently many Australian home owners and investors have been excited, and rightly so, to learn their homes have considerably increased in value. Prima facie, this is good news for Australians, who seemingly are all that little bit richer. Below the surface, however, serious problems linger and could erupt if interest rates rise as is expected later this year. There are dangers for home owners, charmed by the higher and higher valuations that do not represent the core value of real estate. A blanket rise in the price of housing does not equate to the real value across all regions. Many Australians keen to sell their homes to make a considerable profit soon realise that it will cost them just as much, if not more, to find a new home in the same area—without taking into account the added cost of legal charges and taxes.

At the end of the day we all need a roof over our head. Thus far it seems that only investors are likely to benefit from the housing surge in terms of capital growth. At the opposite end of the scale are ordinary Australian families, now faced with a huge increase in the cost of housing. For some, this has created desperate circumstances. Areas such as Ipswich, west of Brisbane, have been traditionally characterised by inexpensive housing, ideal for young families or those at the lower end of the housing market spectrum. Not too long ago a house at the bottom of the market in Ipswich could have been purchased for around $80,000. This figure has now shot up to well over the $100,000 mark—more commonly as high as $120,000 to $150,000. This has crushed the dream of young families—that great Australian dream of owning your own home.

For home buyers, this has been exacerbated by the proportion of tax that accumulates on the price of buying a new home. On average, a family wishing to build a home will pay at least 20 per cent tax on top of the price of their home. The first home owners grant does absolutely nothing to counter this either. In fact, it simply means that sellers are aware that there will be buyers with an extra $7,000—and sellers soon adjust their asking price accordingly. The grant does nothing but make houses more expensive. According to the latest figures on the use of the first home owners grant, infants and young children have been able to buy their first home before they can even walk. This is another failure of this scheme, which was ill conceived by a desperate and panicked government. The scheme has not been effective. It has helped many people into million dollar homes. There have been scams where family members sold homes to each other to benefit from the grant—while leaving out in the cold many other families that were in need but did not qualify because of bureaucratic detail.

Queensland is in desperate need of more public housing and it needs a federal government prepared to make housing an issue for this to be funded properly. There has been a huge reduction in federal government funding under the Commonwealth-State Housing Agreement, which is in part responsible for the diminishing stock of public housing. A significant cause of the housing shortage in Queensland is interstate investors making the pilgrimage to the sunshine state. Southerners, who are not concerned with a 40-minute drive or longer to the CBD, are keen to buy properties in areas such as Ipswich and other outer city localities, and they are willing to pay a premium to do so. This pushes up the average price of previously low-cost housing. For locals who wish to purchase cheap housing, this prices them out of the market and further pushes them to outer regional areas in order to find affordable housing. For many, even this is not an option as moving away from convenient locations and transport means moving away from employment. The only alternative remaining is to rent. Even working couples on average incomes are finding it difficult to break into the home ownership market unless they have significant savings, which in these days of record credit card debt and with national savings at an all-time low are hard to achieve.

There is a lot of pressure on Australian families trying to get ahead, especially in such an unstable and unpredictable market. For young people, new to the workplace and on basic wages of, say, $30,000, home ownership is now only a fantasy. Since the election of the Howard government in 1996, life has become just that little bit more difficult for the average Australian family. Whether it is the rising cost of health care, the swelling costs of education and HECS related debt, the credit card debts at all-time highs or the shifting goalposts for family payments, life has got just that little bit more difficult for ordinary people in this country. It is important to put the current housing market into perspective and to acknowledge that it is not necessarily a positive position for all Australians. For many Australian families, now is a difficult time. Those who have not benefited from increased property values need the government to work hard to help them.