Housing affordability in 'destructive cycle'
PEOPLE who cannot afford to buy their own home are unknowingly making the housing affordability problem worse, an industry body said today.
Urban Development Institute of Australia (UDIA) Queensland president Brent Hailey said housing affordability was now so bad, those who could not afford homes were funding their own social and economic problems in the future.
Instead of pouring money into home repayments, he said, people who could not afford to buy their own property were spending more in other areas, putting pressure on interest rates.
And rising interest rates made the housing affordability problem worse, Mr Hailey said.
The Reserve Bank will consider raising interest rates at its monthly meeting, next week, with some observers tipping another rise.
Mr Hailey said this was a "destructive cycle'' that would lead to job losses in construction and other industries, as people who moved to Queensland could not find affordable housing to buy or rent.
He said Queensland could end up with a whole generation of renters, as had happened in London and New York, as couples gave up on the dream of owning their own home.
He said the three tiers of government needed to work together to motivate people to enter the housing market.
More land should be released to bring land prices down, taxes and charges on new dwellings should be reduced, and the First Home Owners Grant should be doubled to $14,000 for existing homes and trebled for new homes to $21,000.
Mr Hailey said Infrastructure should be installed before houses were built to encourage people to buy.
"Our argument has always been that the infrastructure needs to lead development to give people that perception of quality of life being achieved from the day they move in,'' he said.
Mr Hailey joined the chair of the Real Estate Institute of Queensland, Peter McGrath, in calling for a state summit on the issue.
"This is not a short-term problem and there is no short-term solution,'' he said.
"Governments need to act now, on a national level, to ensure reasonable access to affordable housing is available into the future.''
A UDIA affordability index released in July revealed housing affordability either seriously constrained or at crisis point at 18 of 20 centres examined.
An update is due in the next week. Indications are that the situation has worsened.