About this time last year, I bumped into my old mate Jon Stanhope, former Labor Chief Minister, at the shops. He was lamenting the fact his house value had gone up $50,000 p.a. Jon has a real social conscience and was concerned about how on earth young people could ever afford to buy into the great Australian dream of owning their own home. Since then, house prices have risen by about $200,000 minimum for a basic three-bedroom ex-govie in the outer suburbs. 

Last week, I went to an auction of a mate’s place in Tuggeranong, a heavily renovated ex-govie that would have sold for about $650,000 two years ago. It sold for about $300,000 more than that. Admittedly, it was very well presented with a great garden. A nice young couple in their mid-20s bought it. They told me they used the bank of mum and dad for part of it and borrowed the rest. 

They had a loan limit of $800,000, which seems standard these days, and had factored in a rate rise. The young man had a good, well-paid job and his wife a most satisfying job which was not, however, particularly well paid. There are many first home buyers in worse positions than them. 

What on earth happens if rates rise from about two per cent to four or five? What can and should the ACT government do?

Part of the problem is the time it takes to get new developments up and running. Industry people tell me four to six different officials must have their say and often buck pass or blame others for not making a decision. Someone needs to take charge and say “the buck stops here”. This would speed up the process and save costs. Significant delays and cost increases have occurred in several new developments as a result of too many officials all having a say with none taking responsibility. 

Also, the ACT still has a fair amount of land it can release for greenfield sites for standalone dwellings. Kowen Forest and the land west of the Murrumbidgee spring to mind. Going across the border with joint ventures with NSW will also help. 

Controlled land releases have a great effect on prices. Restricting land release sends the price skyrocketing, while releasing too much depresses prices. The Cabinet needs to find the balance and basically get it right (give or take 200 to 300 blocks) with each year’s land release program.

First home buyers should also buy what they can afford. They should buy a basic two-bedroom unit, townhouse, or rundown house and then, when they can afford it, upgrade to a bigger property. I know many older Canberrans on average wages successfully did this. They spent within their means. These few suggestions might help address what is also an Australia-wide issue.

Editor’s note: The opinions expressed in this column are those of the author and do not necessarily reflect those of Canberra Daily.

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