Some of you may have noticed from some of my previous posts that I am doing some research into an affordable housing concept in Perth WA; I thought I would share some of this research here:
In the last quarter, the median Perth house price was $545K, and the median unit price was $450K. These figures are pricing an ever increasing number of people out of home ownership. However, home ownership is such an intrinsic part of our culture – tied as it is to notions of success and security - that many people acquire large debts in order to enter the property market. This places financial pressure on individuals and families, but also dictates a person’s lifestyle for a significant portion of their adult lives. People must work and live in a certain way to ensure that the costs of home ownership and home maintenance can be maintained. The reality of this is that people end up paying for home ownership not simply in monetary terms, but more precisely, in years of their life.
Consider the following example:
“The average disposable income in Australia after tax is $43,100 a year for a single person. On 250 working days a year and eight hours a day, that's an earning rate of post-tax money of $21.55 an hour or 36¢ a minute.
On the average wage:
• If you have a mortgage paying 7 per cent, every $10,000 repaid over 20 years will cost you 224 days work or 10.8 months to repay.
• A $100,000 mortgage costs you 8.98 years of your life to repay.
• The average mortgage of about $367,000 will cost you 32.9 years of your working life.
• Even on $200,000 a year the average mortgage is still going to cost you 10.7 working years.”
[Source: Marcus Padley via http://www.theage.com.au/money/planning ... z2XNIQOXst ]
Considered in this way, would many people believe their home worth nearly 33 years of their life?
Whilst this example may show that the current property market and that current home ownership options have flaws, the reality is that people still need to have a roof over their head, and that for the large majority, ownership is the preferred means. So are there any alternatives that could make home ownership more affordable?
ABS figures reveal that between 1994-1995 and 2011-2012 there was a decrease in the average household size, but that the average dwelling size increased. So, whilst the trend is for household sizes to decrease, the size of dwellings is increasing, to the extent that more than three quarters (78%) of households occupied dwellings which had more bedrooms than were needed to accommodate the occupants. Given this data, it is possible to imagine a suburban landscape where a significant proportion of dwellings are occupied by households who have more space than needs require, and which could be used more efficiently to increase affordability.
One model to increase efficiency is co–ownership. The model that I have been investigating could allow two to three parties to live independently, and legally share ownership of a single home, which previously may have only been occupied by a single family. Homes specifically designed for co-ownership could have a mix of private and communal spaces; there would be several private suites, or studios, that contain a bedroom, ensuite, kitchenette and work space, as well as shared kitchen, dining and lounge facilities. The home would be owned by co-owners, who each hold a percentage of the title. Please contact me directly if you would like to see a sample home.
In any case, here is the real question this line of investigation raises: Would we be willing to re-imagine our traditional notions of home ownership to include such a model of co-ownership? Would we consider it a help or a hindrance if we could achieve affordability and more lifestyle flexibility by sharing home ownership with other parties?
Your thoughts?
Meriam