IT’S the great Australian dream ... to own your own home.
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However, this dream is quickly turning into a nightmare, with even the Victorian Treasurer admitting too many people were finding it hard to break into the housing market.
At the moment it is not viable for those hoping to enter the property market - the first home buyer - to even contemplate looking for their dream home ... that little fixer-upper, a DIY dream project.
After handing down his first budget on Tuesday, Treasurer Tim Pallas said housing affordability would be something he wanted to address in the future.
“We do need to recognise that housing affordability is getting away from many average Victorians,” Mr Pallas said, adding people deserved the chance to get into the housing market.
“If we want to make sure the Australian dream remains alive, if we’re serious about helping our kids get into accommodation, we want them to live closer to us, it means a root and branch analysis of the money that we’re spending, the planning systems and approval processes that we’ve got in place,” he said.
“And it means being prepared to make some hard decisions along the way.”
The Reserve Bank’s decision earlier this week to lower interest rates to two per cent – a record low – may help some people into the housing market, but they also need to be aware of their capacity to pay back their mortgage when (not if) the interest rates rise again.
The need to further stimulate the nation’s economy was behind the RBA decision to further cut the rate by a quarter of a percentage.
However, it also means that while house prices will be soaring, it will also be easier for people to borrow money.
It is clear the role of the Reserve Bank is to help manage Australia’s economy, but this latest rate cut is likely to drive house prices even more and, in turn, increase household debt.
And let’s not forget the other side of the coin, lower interest rates also hit those retirees with interest-paying investments, greatly affecting those with self-managed super funds.
So, what looks good on paper may actually be a double-edged sword.