HOME AFFORDABILITY 'DRAMATICALLY BETTER THAN FIVE YEARS AGO                 

By Jessica Irvine May 20, 2009 smh.com.au

A TYPICAL home is worth a little over four times the average household's annual after-tax income, down from almost six times five years ago, Reserve Bank figures show. Strong growth in incomes and a period of more sluggish median house price growth are working in the interests of would-be home buyers. "This is a dramatically better picture on Australia's housing affordability," the chief economist at UBS, Scott Haslem, said.But housing still remains expensive by historic standards. In the 1980s, it took just three times the average annual disposable income to afford a median priced home. Australia remains one of the least affordable countries in the world. In Canada the multiple is less than four. In the United States it has remained at about three times annual disposable income for the past two decades and precipitous house price falls in some areas of the US has reduced this even further. The governor of the Reserve Bank, Glenn Stevens, said yesterday that the gradual improvement in affordability suggested Australian house prices were not heading for the same large price falls witnessed in other countries. "In Australia's case, the ratio of the median dwelling price to average household income has declined quite noticeably since 2003, without a very large absolute decline in housing prices. "This is evidence for at least the possibility that these adjustments can take place over reasonably lengthy periods and without being terribly disruptive to the economy." Also working in favour of prospective home buyers has been the drop in mortgage interest rates to their lowest since the 1960s. Mr Stevens said this had already delivered a significant boost to household spending power. "I don't have much doubt that certainly for the household sector, this is an expansionary setting of policy." While economists have begun to speculate that this could be the low point for rates, Mr Stevens held open the possibility of further small interest rate cuts if needed to boost consumer confidence. "That is obviously a factor to keep in mind in the month-to-month tactical decisions."

GROWTH TOWNS HAIL CASH FLOW...
By Darrell Giles January 20, 2007 couriermail.com.au

QUEENSLAND'S booming economy has brought unprecedented growth to centres long considered Brisbane's poor relations.In Mackay, riding the coal boom, the council's budget this year leaped to $105 milllion, up from $55 million a decade ago. Brisbane City Council rules over a budget of $1.4 billion, but many of the state's smaller councils are enjoying unprecedented growth and riches. Coal-fired Mackay and Rockhampton have seen their expenditure of $55 million each in 1995-06 leap to $105 million and $87 million respectively in 2005-06. And the bottom line will only get bigger and better. The effect has been even more dramatic in small centres such as Warwick and Chinchilla. Warwick's expenditure has jumped from $17 million to almost $50 million in the past decade, while Chinchilla's has more than tripled. Chinchilla Shire Council's acting chief executive Ken French said his town had experienced dramatic growth thanks to the energy sector. Road works associated with the Kogan Creek Power Station and other energy projects had contributed to the boom. "Hundreds of new homes have been built in the past year. We have had a huge amount of development," Mr French said. Mackay is so cashed up it has allocated $153 million for capital expenditure next financial year, including funds for a water reuse project. "There has been unprecedented growth in the industrial sector due to the resources boom," said Mackay City Council's acting chief executive Dan McKinlay. "We have 2500 people moving to the area every year, making Mackay the fourth fastest-growing district in Australia." Mr McKinlay said the 150 per cent increase in the city's operating and capital budget had a downside. "It's an enormous challenge to balance that growth and deliver vital infrastructure for a rapidly expanding population." The resources boom has made for record low unemployment of 4.1 per cent. Queensland created almost 100,000 jobs in 2006 – about 35 percent of all jobs in Australia.. Acting Premier and Treasurer Anna Bligh said: "It is remarkable that our unemployment rate continued to fall despite an ongoing drought and interest rate rises " Ms Bligh said it was encouraging that demand for university places in the key sectors of engineering, health and architecture had increased. Local Government and Planning Minister Andrew Fraser said growth put a lot of responsibility on government and councils as Queensland welcomed up to 1500 newcomers a week.