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Housing affordability crisis worsens.



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Media Statement

MARK LATHAM MP

SHADOW TREASURER

MANAGER OF OPPOSITION BUSINESS MEMBER FOR WERRIWA

10 November 2003

Housing affordability crisis worsens

New figures released today show that the housing affordability crisis in Australia has worsened.

The Reserve Bank has reported that Australia now has its highest-ever debt-servicing ratio for home loans (6½ per cent of household disposable income is absorbed by the repayment of mortgage interest). It is tougher for people to service a loan and buy a home than at any time in Australia’s history (see attached graph).

Today’s ABS housing finance figures reveal that during September the proportion of first homebuyers hit 13.3 per cent of all dwellings financed. This is the lowest figure ever recorded (see attached graph).

Historically in Australia the proportion of first homebuyers has been around 23 per cent. Decade after decade this is what has sustained the Great Australian Dream of home ownership - market entry. The dream is now fading for the next generation of young Australians.

John Howard and Peter Costello are living in the past by banging on about nominal interest rates 13 years ago. The debt-servicing ratio for home loans is much worse today, as is the participation of first homebuyers in the housing market.

The more Howard and Costello talk about the past, the more they demonstrate to the Australian people that they have no answers to the housing affordability crisis. Mr Costello hasn’t turned 50 yet but he sounds like an old fella, always talking about the past and never the future.

I again call on the Government to address the Reserve Bank’s concerns about the housing bubble and excessive household debt. It needs to smooth out the housing cycle and introduce new savings schemes to stabilise the household balance sheet. It can no longer afford to ignore the warning bells from the RBA, Treasury, the IMF and APRA.

Contact: Phillippe Allen (mob 0409 374 900)

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