Daily Bulletin


Real Estate

  • Written by Joseph Walton, REIV President



Unsurprisingly housing affordability has been a key focus of both the state and federal Governments in the lead up to this year’s Budget announcements, particularly given the strength of the Melbourne and Sydney markets. However, strong house price growth is not the only factor affecting millennials trying to get a foothold on the property ladder. And many of these complex factors have very little to do with property – stagnant wage growth and the increasingly high cost of tertiary education.

Melbourne’s property market is performing strongly at present with house prices heading in an upward trajectory since 2013. In the past decade, the metropolitan Melbourne median house price has risen from $386,000 in March 2007 to $826,000 in March this year – a $440,000 increase or 114 per cent. While this seems extraordinary – Melbourne’s median house price has fallen short of doubling in the past seven years, which is the typical cyclical growth rate for property.

In Melbourne, the main driver of house price increases has been high population growth. Interstate migration is at its highest level in more than four decades. Around 107,000 new residents call Melbourne home every year. Melbourne is Australia’s fastest growing city and demand for housing continues to outstrip supply, which is resulting in increased competition for homes within the city limits.

The Government’s response has been to increase taxes on those who can afford property. At present stamp duty on property transactions in Victoria is the single biggest source of revenue in this state, forecast to contribute $6.2 billion in 2017-18. Land tax will generate a further $2.4 billion to the Government’s coffers. Other property taxes introduced under the current state Government – including absentee owner tax, vacant residential property tax, and additional stamp duty for foreign purchasers - will also contribute to the state’s revenue.

These taxes – and the Federal Government’s Capital Gains Tax - have not reduced the cost of housing. In fact, they have achieved the opposite by making it unattractive for property owners to buy and sell without significant expense. Given the level of revenue both levels of Government pocket from the property industry, it can afford to do more for first homebuyers. The First Home Owners Grant should be available on both new and established houses and the recent doubling of the FHOG in regional Victoria should also be provided to buyers in Melbourne.

Wage growth has also failed to keep pace with the increased cost of living and is currently at its lowest level in 10 years – at 1.9 per cent in Victoria. While that rate fell to 2.6 per cent in 2015, annual wage growth is generally around 3-3.5 per cent.

Millennials are also one of the first generations of buyers to be saddled with high levels of student debt. And today’s Federal Budget confirms that the cost of a tertiary education is only going to get more expensive with student fees rising 7.5 per cent by 2021. The repayment threshold is also decreasing $13,000, making it even harder for our nation’s young people to save for a deposit.

Given the nation’s property market is the largest store of personal wealth, it’s imperative that new generations of buyers have access to the market. There’s no silver bullet to improving housing affordability but further taxing the property industry and punishing investors is not the solution.

Writers Wanted

Heading back to the playground? 10 tips to keep your family and others COVID-safe

arrow_forward

Qatar expresses 'regrets' for 'any distress' to women invasively searched in baby incident

arrow_forward

Education & More – Family Tips on How to Settle in Bangkok

arrow_forward

The Conversation
INTERWEBS DIGITAL AGENCY

Politics

Prime Minister Interview with Kieran Gilbert, Sky News

KIERAN GILBERT: Kieran Gilbert here with you and the Prime Minister joins me. Prime Minister, thanks so much for your time.  PRIME MINISTER: G'day Kieran.  GILBERT: An assumption a vaccine is ...

Daily Bulletin - avatar Daily Bulletin

Did BLM Really Change the US Police Work?

The Black Lives Matter (BLM) movement has proven that the power of the state rests in the hands of the people it governs. Following the death of 46-year-old black American George Floyd in a case of ...

a Guest Writer - avatar a Guest Writer

Scott Morrison: the right man at the right time

Australia is not at war with another nation or ideology in August 2020 but the nation is in conflict. There are serious threats from China and there are many challenges flowing from the pandemic tha...

Greg Rogers - avatar Greg Rogers

Business News

AppDynamics Solves Visibility Gap Between Traditional Infrastructure and Cloud Environments

New Full Stack Observability Platform, Integration With Cisco Intersight Workload Optimizer and Cloud Native Visualisation Features Provide Cross Domain Insights and Analytics of Business Perfor...

Hotwire Global - avatar Hotwire Global

Why Your Small Business Should Bulk Buy Hand Sanitiser

As a small business owner, employee and customer safety is at the very top of your priority list. From risk assessments to health and safety officers, appropriate signage and proper briefing...

News Co - avatar News Co

How Phone Number Search In Sydney Can Help Your Business

To run a successful business, keeping track of your company and competitors are the major factors. With a lot of tools, available businesses have options to stay current. One way in which busine...

News Co - avatar News Co



News Co Media Group

Content & Technology Connecting Global Audiences

More Information - Less Opinion