New research from the Parliamentary Library has discovered the nightmarishly high amounts of money that an individual would have to make to purchase a house and not be in housing stress. The annual income to afford a house is now 1.6 times that of the average Australian wage, which members of Parliament have said just proves "the system is broken".
The analysis, completed by the Parliamentary Library who used data from the Core Logic and Australia Bureau of Statistic found that all across Australia the annual income needed to purchase a house without being under housing stress is $164,400. Big yikes.
The definition of housing stress was determined as being able to live comfortably by spending less than 30% of one's income on housing costs.
According to these figures, in all of Australia is no capital city or city region where it is affordable to save for, buy, and live in a house on just one income, which Greens MP Max Chandler-Mather says is unacceptable.
“When you need to earn $186K a year and have a $173K deposit to buy a house in a capital city in Australia, then you know the system is broken," stated the MP.
Across the capital cities the prices varied, with Sydney unsurprisingly topping the list as the most expensive.
The city with the lowest required income to comfortably afford a home was Darwin, but it still required a yearly salary of $124K -- still 1.3 times the average Australian salary, and 1.5 times the average salary in Darwin itself.
While the situation is dire, with rental affordability also hitting a 17 year low, Chandler-Mather told PEDESTRIAN.TV that he believes changing some key policies will help to fix the housing crisis in the near future, namely abolishing negative gearing and the capital gains tax.
"Negative gearing allows property investors to take any losses they make on their investment property -- including mortgage interest payments -- and deduct it from their tax. Meanwhile the capital gains tax discount means a property investor gets 50% from any profit they make from a property sale tax free," explained the Greens MP.
Chandler-Mather pointed out that this is problematic is because these tax handouts are only available to people who are already on the property market, which gives them an unfair leg-up when buying more property.
"So when you’re at an auction, a property investor can pay way more for a house knowing full well they can get hundreds of thousands of dollars in tax handouts," he said.
The Greens politician said he believes that taking away this "massive advantage" would help level the playing field for first home buyers.
"Over the medium term this will stop the crazy increase in house prices and give wages time to catch up."
But maybe there's a simpler solution to all this?
If the required income to comfortably own a house is 1.6 times the average income, what if in order to live that sweet home owner lifestyle you simply worked 1.6 full time jobs to make the extra bank?
As the billionaires say, pull yourself up by your bootstraps. Cut back on the avocado toast and really hustle for it.
Well, Chandler-Mather seems to think that is neither practical, nor fair.
“Lots of people are already getting a second job to try and make ends meet and it is still not enough to buy a home," he told PEDESTRIAN.TV.
“If you’re a nurse or a teacher you might already be working a 64 hour week, and they certainly are not getting paid anything like the $164,000 you need to earn to comfortably afford a home.
“I reckon a much better solution is to stop giving property investors billions of dollars in tax handouts rather than try and force a hard working nurse to find a second job."
And it's not just politicians like Chandler-Mather who think so.
New data from Redbridge Polling showed that three out of five voters supported the idea of limiting or abolishing negative gearing and capital gains tax discount.
Though the concept of abolishing negative gearing has been avoided by politicians due to it being historically unpopular, as the housing crisis continues to worsen by the day, the voters of Australia have become more willing to do what it takes for change to occur.
Let's just pray the politicians do too, 'cos God help me if I have to make $164K just to be comfortable in Australia I think I might move to Antartica instead.
The post ‘The System Is Broken’: Annual Income Needed To Afford A House Has Been Revealed And Yes It’s Over $150K appeared first on PEDESTRIAN.TV .
