Home ownership dreams fading for the young? Or is this the beginning ?

Found a spare ten minutes today to have a sticky in the In The News forum on Whirlpool (and I don’t normally hang out there at all), but I saw this rather appealing topic, the topic of the young not able to afford something so important as Home Ownership.

Anyway, as I normally do with long, In The News threads that I do read, I skim through as much off topic or repeat, or useless arguments as possible, and get to see as many posts containing fact based opinion. I came across one post, which caught my eye, he didn’t say much, but the link he posted said millions (litterally).

An article by David Van Der Klauw on what can be only seen as the closest to the truth on the Housing Crisis in the Sydney area.

I don’t take anyone for an idiot, so I’m not going to dumb the article down, you can go read it. What I will do is, when that article loaded, it was huge. I thought, it’s gonna take me a fair bit to tear this apart, I was ready to hit the close button, but I started reading to see if it was worth more than face value.

What I found was both eye opening and certainly gives a great point of view on the housing issues.

Of the most interest was the Orange scenario, titled Reality Bites Oranges.

It basically tells a story of how several boys had to get oranges with money given to them to buy from the school canteen, all were told to buy one orange a day.

However, the canteen owners enjoyed toying with the supply, and therefore raising demand, which meant prices would rise due to lack of supply, and same demand.

So, what the result was, was a lot missed out, except for the richer kids who continued to get oranges, despite being priced at where bananas were a few months back!

The mothers of the boys stormed the school and found the source of the greed and.. well, fixed it. All oranges were back to sane prices after supply was increased again.

Essentially, when you put this view over the Sydney housing issues, you clearly see a greater part of the problem isn’t to do with not having money to afford houses, or houses all of a sudden being worth a bit.

That’s right all you Sydney Homeowners, you own a house, but its not really worth as much as you think it is, because you have to obviously sell the house to get the value out of it, and you have to also sell it quickly before everyone else does, otherwise demand might slow, or supply might increase, and all of a sudden, you lose value.

Of course, you could quit work (assuming you own in Sydney because you live in Sydney), but what do you do to pay the mortgage on a new house, further out, where industry might not be at its highest?

Essentially one thing really does need to happen to satisfy not just the housing issue, but also, the critical infrastructure issues, such as housing, telecoms, etc.

Supply doesn’t really need to speed up with demand.
Demand shouldn’t have to drop to support supply.

Industry should expand out into the not so densely populated areas of the country.

What this will do is a few things.

Industry moving out into more areas creates more jobs, moves the housing demand to areas with more supply, and will essentially force infrastructure changes such as that to housing and telecom to support the new growth and demand.

It creates jobs for those capable, but just not in the right area.
It creates housing demand for the areas where housing is just in high supply.
It expands industry to areas where there is only a low industry level.

It basically solves several issues!

On the other hand, our government could indeed help out. They don’t even have to spend a dollar.

Remove the First Home Owners Grant, or at least, apply it in a manner that doesn’t mean prices rise as a result of it.
Zone more area. That’s right, create more supply to satisfy demand.

From my talks with David by email, he indicated the root of the problem is entirely the fact that there is just not enough houses to cope with the families in demand for them, and as a result the Greedy Pigs (I should say home owner, right?), are milking it for all they can. Which is OK I suppose, considering its a free market.

The other solution is obviously, instead of zoning out land, and using up another resource, and as well, changing industry, the new developments, should all start looking at being apartment buildings, except, use the air space, so one house each level, that way land is not just given out like its going out of fashion, demand is satisfied due to increased supply out of the one spot, and the dream of young home (apartment style) is indeed fulfilled for many.

Sure it doesnt’ have a big backyard, but that’s not the real issue, the real issue is densely populated areas are simply choked with not enough houses to cope with demand, and no where to build more of them.

Read the article, it doesn’t say all I have said here, and I didn’t find time to read all of it.

I read the best bit I found, Reality Bites Housing, and immediately felt this article is something incredible. If you are also a Sydney Greedy Pig, or home owner, certainly have a read of it also, and just realise how low valued your house really is.

When I look at this issue, I realise something is going to give soon. Either the government will zone more land, or a lot of people will become bankrupt, and something else will break, essentially, SOMETHING IS GOING TO BREAK.

Just as is the case with the Telstra, G9, FTTN debate. Sooner or later, something will break, and the path will become clearer. The government stuffed it up, by selling Telstra with infrastructure, the fix is certainly something they can help work out, whether its stronger regulations, or they go the other way, and just pay for FTTH and let Telstra squirm as it struggles to maintain market share.


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