jimijams
30-05-2007, 01:47 AM
Housing costs and bankruptcy numbers show big increases
Nassim Khadem and Ben Schneiders
May 30, 2007
HOUSING affordability has hit a record 23-year low nationally as mortgage repayments now account for more than 30 per cent of an average first-home buyer's income.
And more people are going bankrupt or entering into debt agreements, a Senate estimates hearing has revealed.
A Housing Industry Association-Commonwealth Bank index shows affordability at its lowest level since 1984 and more than 10 per cent lower than at this time last year.
With median house prices increasing by 1.5 per cent in the March quarter, nationally mortgage repayments account for 30.7 per cent of total first-home buyer income, pushing average mortgage-holders into spending more than 30 per cent of income on housing costs.
While affordability improved in Victoria for the quarter as house prices in the state fell, it is near its lowest levels since 2003, the peak of the previous property boom. Mortgage repayments absorb 28.1 per cent of a Melbourne first-home buyer's gross household income. Other figures show vacancy rates are at 25-year lows in Melbourne.
A Senate estimates hearing last week revealed that record levels of personal debt are becoming a greater burden, increasing bankruptcies and debt agreements.
The chief executive of Insolvency and Trustee Service Australia, Terry Gallagher, told the hearing that bankruptcies grew 12.5 per cent in the nine months to March. About 15 years ago bankruptcy numbers were 13,000 a year; now they were 30,000 a year, he said.
Debt agreements — by so-called debt-solution companies offering people the chance to pay back part of a debt rather than go bankrupt — have jumped 32 per cent in the nine months to March. Across all forms of personal insolvency, total activity has increased by 15.7 per cent.
The director of policy and campaigns with the Consumer Action Law Centre, Nicole Rich, said that for most consumers it would be better to go bankrupt.
"If you are struggling you should be able to wipe the slate clean and start again," she said. "These so-called solutions just add to people's debt problems and in some cases end up costing them thousands of dollars."
Figures from the Supreme courts of Victoria and NSW show an increase in mortgage defaults. In Victoria, the number of land repossession cases going to court is at its highest in six years. NSW has had a 75 per cent increase in repossessions in the past three years.
Australians for Affordable Housing spokesman David Imber said: "The fundamentals are of great concern in Melbourne. We are still seeing rent rises and that low and middle-income renters are unable to afford to purchase a home."
HIA managing director Ron Silberberg said the decline in housing affordability justified a national response. He said the monthly loan repayment on a typical first-home mortgage had increased from $2352 to $2387 in the March quarter.
If nothing were done, housing affordability would not be restored until 2022, he said. .
Labor's treasury spokesman Wayne Swan said: "A total of eight back-to-back interest rate rises on (Prime Minister) Mr Howard's watch have added around $140,000 to mortgage interest repayments on the average median-priced home across our capital cities over the life of a loan."
http://www.theage.com.au/news/national/housing-costs-bankruptcy-numbers-on-the-rise/2007/05/29/1180205250359.html
Nassim Khadem and Ben Schneiders
May 30, 2007
HOUSING affordability has hit a record 23-year low nationally as mortgage repayments now account for more than 30 per cent of an average first-home buyer's income.
And more people are going bankrupt or entering into debt agreements, a Senate estimates hearing has revealed.
A Housing Industry Association-Commonwealth Bank index shows affordability at its lowest level since 1984 and more than 10 per cent lower than at this time last year.
With median house prices increasing by 1.5 per cent in the March quarter, nationally mortgage repayments account for 30.7 per cent of total first-home buyer income, pushing average mortgage-holders into spending more than 30 per cent of income on housing costs.
While affordability improved in Victoria for the quarter as house prices in the state fell, it is near its lowest levels since 2003, the peak of the previous property boom. Mortgage repayments absorb 28.1 per cent of a Melbourne first-home buyer's gross household income. Other figures show vacancy rates are at 25-year lows in Melbourne.
A Senate estimates hearing last week revealed that record levels of personal debt are becoming a greater burden, increasing bankruptcies and debt agreements.
The chief executive of Insolvency and Trustee Service Australia, Terry Gallagher, told the hearing that bankruptcies grew 12.5 per cent in the nine months to March. About 15 years ago bankruptcy numbers were 13,000 a year; now they were 30,000 a year, he said.
Debt agreements — by so-called debt-solution companies offering people the chance to pay back part of a debt rather than go bankrupt — have jumped 32 per cent in the nine months to March. Across all forms of personal insolvency, total activity has increased by 15.7 per cent.
The director of policy and campaigns with the Consumer Action Law Centre, Nicole Rich, said that for most consumers it would be better to go bankrupt.
"If you are struggling you should be able to wipe the slate clean and start again," she said. "These so-called solutions just add to people's debt problems and in some cases end up costing them thousands of dollars."
Figures from the Supreme courts of Victoria and NSW show an increase in mortgage defaults. In Victoria, the number of land repossession cases going to court is at its highest in six years. NSW has had a 75 per cent increase in repossessions in the past three years.
Australians for Affordable Housing spokesman David Imber said: "The fundamentals are of great concern in Melbourne. We are still seeing rent rises and that low and middle-income renters are unable to afford to purchase a home."
HIA managing director Ron Silberberg said the decline in housing affordability justified a national response. He said the monthly loan repayment on a typical first-home mortgage had increased from $2352 to $2387 in the March quarter.
If nothing were done, housing affordability would not be restored until 2022, he said. .
Labor's treasury spokesman Wayne Swan said: "A total of eight back-to-back interest rate rises on (Prime Minister) Mr Howard's watch have added around $140,000 to mortgage interest repayments on the average median-priced home across our capital cities over the life of a loan."
http://www.theage.com.au/news/national/housing-costs-bankruptcy-numbers-on-the-rise/2007/05/29/1180205250359.html