Money Housing affordability: NSW Treasury documents offer no relief to Sydney home hunters

13:40  19 june  2017
13:40  19 june  2017 Source:   msn.com

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Despite years of rising house prices in Sydney , confidential documents reveal the market may be headed for a soft-landing rather than the crash many first- home buyers have been hoping for.

In its Perceptions of Housing Affordability Report 2017, financial analysis and advisory firm CoreLogic says it now takes 1.5 years of Currently, the NSW and Victorian governments offer first- home buyers stamp duty relief for homes worth up to 0,000 in NSW and 0,000 in Victoria.

  Housing affordability: NSW Treasury documents offer no relief to Sydney home hunters © Provided by ABC Business Are you a first home-buyer still holding out hope that astronomical house prices might fall in Sydney?

Confidential NSW Treasury reports, obtained by the ABC through a Government Information (Public Access) request, say that despite years of rising prices, the local market may be headed for a "soft landing", and not the crash some frustrated home hunters might be secretly hoping for.

A 2016-17 half-yearly revenue forecast paints a picture of a once-in-a-generation boom saying that while Sydney's raging market cooled at the end of 2016, price growth remains "above expectations".

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Pressure is building on the Premier and Treasurer to deal with Sydney 's housing affordability crisis. The NSW government will be expected to deliver on measures to assist first home buyers. A spokesman for NSW Treasury said the half-yearly review forecast was based on October 2016 data.

Standing Offer Notices. Houses Trust of New South Wales Holroyd City Council [Suspended] Housing NSW Hunter Development Corporation Hunter International DFSI NSW The Treasury NSW Trains NSW Treasury NSW Treasury - Commercial Management NSW Treasury - Human

The reports also spell out something obvious to most millennials — record low interest rates and low wage growth are not helping young buyers get into home ownership.

The authors note Sydney's high prices are remaining "stronger than expected" despite weaker turnover of properties in the last quarter of 2016, and falling demand in other parts of the country.

Treasury calculations show that in 2016 average mortgage payments in Sydney were almost $51,000 a year — double that of Brisbane on $29,000.

The reports suggest we live in an unusual economic cycle and the current period of high prices is "significantly longer" than previous booms.

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Housing affordability in NSW . By Justine Davies June 9, 2015. High demand for the housing stock available, has seen Treasury use the “bubble” word recently in relation to Sydney house prices. Home loan affordability – historical comparison.

You can also see current and closed offers , as well as details of awarded contracts over 0,000 in Houses Trust of New South Wales Holroyd City Council [Suspended] Housing NSW Hunter DFSI NSW The Treasury NSW Trains NSW Treasury NSW Treasury - Commercial Management NSW

Demand is driven up by the trifecta of strong population growth, high investor activity and construction undersupply.

Despite a planning push to fast-track development, there is still a housing shortage with supply hovering at around 100,000 dwellings per year.

The report contradicts Premier Gladys Berejiklian, who said her policy of increasing supply would alone help affordability and slow Sydney's runaway prices.

So have tougher new lending rules stopped cashed-up investors out-bidding Sydney's first-home buyers?

A February 2017 Treasury Forecast said while APRA's attempt to clamp-down on investment lending was initially effective — lowering investor borrowing by more than 10 per cent in mid-2015 — the impact did not last long.

The authors noted that "affordability is not expected to improve" this year, pointing to the investors dominating 2016 residential finance approvals (56 per cent) at the expense of owner occupiers (44 per cent).

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“The NSW Government is doing great things to tackle housing affordability already. Key workers, such as teachers, will be offered discounted homes in Sydney under a new initiative being discussed by state and federal governments.Source:News Corp Australia.

Ms Berejiklian rebuffed calls to give home buyers tax relief , even though stamp duty rates have not In yesterday’s budget papers, NSW Treasury said housing demand had risen even as supply This month Reserve Bank governor Glenn Stevens said some aspects of Sydney ’s property market were

Recent Commonwealth Treasury figures revealed foreigners snapped up $72 billion in Aussie real estate last financial year, up from $60 billion in 2014-2015.

This might be a reason why the State Government has recently raised surcharges and taxes on overseas investors.

It may also have local buyers hoping for further reforms, such as reducing or even eliminating transfer duties, in Tuesday's state budget.

But the documents suggest further reforms wold be difficult.

The Treasury analysis makes clear that high numbers of investors are underpinning Sydney's construction industry, and in turn creating jobs in the NSW economy.

The revenue flows from cashed-up investors paying transfer duties are also helping fill the state's coffers.

The documents predict high levels of transfer duty receipts in 2017 as population growth, lack of supply and investor demand continue.

They also forecast $8.8 billion in stamp duty, boosted by revenues from large transactions like the lease of Ausgrid.

Transfer duty is far and away the biggest contributor to the NSW tax-take and its reform is complex and difficult.

While the documents suggest revenue growth is healthy, there are niggling warnings about some dark clouds on the horizon.

The authors warn that if house prices start to fall, yield-chasing investors are likely to hot-foot it out of the market.

Higher interest rates or increasing unemployment figures are cited as triggers of instability, prompting a collapse in residential property investment — and much state revenue with it.

More than 20% of Sydneysiders have mortgage stress .
Sydney is Australia's largest city with its population swelling by 9.8% to 4.8 million in the five years to 2016, according to the 2016 census. Sydney is Australia's largest city with its population swelling by 9.8% to 4.8 million in the five years to 2016, according to the 2016 census.

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