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Rwanda

Essay by   •  December 23, 2010  •  872 Words (4 Pages)  •  1,238 Views

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Interest rates are the festering pimple on the face of the Australian economy. Housing Affordability has hit an all time low in 12 years and unless drastic action is taken, Australians will never be able to reap the benefits of owning their own home.

Economists all over the world have been predicting the current Housing Affordability crisis for years. In the developed world, Australia has the second highest interest rates. Recent statistics state that over 1 million home owners/renters are paying more than 30% of their pre-tax income on their rent/mortgage. I am 22 and have been paying off my unit for 2 years now and have had to pay more than half of my income each week to my repayments.

Not only have the interest rates raised, the cost of living has soared also. In the last quarter to December 2007, fuel had increased 14.3%. How are first home owners or young people meant to break into the housing market if these kinds of necessary expenses keep on rising? People have to go to extraordinary lengths to be able to stay afloat and manage in this market.

For the past decade housing affordability has slowly been deteriorating. The average price of a home has increased by 28%; meanwhile wages have only increased by only 10%. How are these two valuable statistics comparable? How can owning/maintaining the great Australian dream become a reality for a lot of Australians? It can’t, that is the answer to these questions. And if it can, sacrifices are made, extensive work is done, and duties beyond owning a home are sought.

The power is with the Government to be able to help and maintain inflation which is one of the key factors to the constant increasing interest rates. The Government announced that as part of their election campaign there will be changes to help out with the Housing Affordability dilemma.

How is this so, introducing a National Rental Affordability Scheme to financially help out middle income earners by giving the investors incentives to build houses and give cheap rent? What about the people who don’t want to rent and want to buy homes, where are their incentives to buy? How about reducing the price of stamp duty? Stamp Duty on an established dwelling has soared in the past 7 years. Not to mention also the Stamp Duty on building your own home. To try and combat this expense from the 1 January 2007 first home owners were exempt from stamp duty of dwellings up to $320,000 and a concession on stamp duty of houses ranging from $320,001-$459,999. With the price of houses going up, most people won’t fall under this category.

Bankruptcy has tripled since 2002. Isn’t this an alarming rate on its own? Funding tax incentives to investors is also only making the rich get richer and the poor get poorer. The rental market is still depicted from the interest rates and will fluctuate as the interest rates do. Therefore,

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