Wednesday, August 31, 2011

Never Believe a Thing A Realtor Tells you!!

Never Believe a Thing A Realtor Tells you!! ...

{ Thanks to Tasmanian Real Estate Trouble for Highlighting the subject}
http://tasmanianrealestatetrouble.blogspot.com/2011/03/heard-it-before.html 

Remember a Realtor has a vested interest in convincing you that everything is OK & now is the perfect time to buy. Because if they don't they Starve!! Just think about this or keep it in the back of your mind when you read stories from Banks / REIWA / RP DATA etc they all form part of what I call "PROPERTY INC" ......

The biggest players in "PROPERTY INC" are Newspapers & property Websites .....  

Property advertising revenue sways what they report & how they report it !!!
  
 In 2006 Sales in the American Real Estate Markets had slowed down & were STAGNATING.

The National Association of Realtors (They are the same as our REIWA or REIA) decided it was time for action. The Mainline Press were no longer reporting the Property Myth as the would like it to be reported. Facts were drowning out the RHETORIC put out by the NAR so they decided to pay millions to put out the MYTH that now was the perfect time to buy property? Really?

In 2006 USA  property was falling & 5 years later in 2011...  80% of commentators were expecting US property prices to fall a further 10-15% .... but this is the PAID ADVERTISING by the NAR  placed in all the major US Papers. ... Why pay? ... Because Newspapers could no longer credibly report the RHETORIC the NAR wanted them to report so the had to resort to PAID ADVERTS??




     



NAR Campaign Negates Bubble Hype, Encourages Buyers And Sellers
by Blanche Evans  Published: November 3, 2006

{ http://realtytimes.com/rtpages/20061103_campaignneg.htm}

"If you don't tell your story, someone else will," Joe Williams, co-founder of Keller Williams said recently about the media's disinclination to quote real estate brokers as sources for the myriad stories written recently about the so-called housing bubble. Imagine the frustration, ignored by journalists and unable to peddle nonsense to the gullible.

Instead they turn to anyone but people who buy and sell homes for a living -- stock analysts, economists, media pundits, authors, and so on. The effect on buyers has been paralyzing. Many brokers say buyers are concerned with more than rising home prices and interest rates -- they're scared of being the next greater fool. The media turns away from the vested interests to cover the story, balance emerges and the buyers, given a taste of actual analysis and break from relentless spruiking, begin to baulk.

With enormously improved conditions -- interest rates comparable to 40-year-lows and rising inventories that provide greater selection, pending sales are already beginning to rise. Even the former Federal Reserve chairman, Alan Greenspan said he thought the "worst of this may well be over." This could cause many buyers to miss a golden opportunity -- home prices and sales expected to rise again in the spring. Of course things can only get better in real estate land and falling knives don't cause cuts.

Conditions are also improving for sellers. With the number of households expected to increase 15 percent nationwide in the next 10 years, demand will continue. In addition, 2006 has hardly been a failure for housing -- so far, it stands as the third-best year on record. Don't forget the ever-present demand.

Now the NAR is doing something about the negative hype -- running full-page newspaper advertisements in six of the nation's leading newspapers beginning yesterday. The ads are designed to urge home buyers who have been waiting to buy the home of their dreams to act now before the market changes. Not coincidentally, the newspapers chosen -- Wall Street Journal, USA Today, New York Times, Washington Post, Los Angeles Times and Chicago Tribune, are among those most guilty of hyping the housing bubble to the point of scaring buyers to death. The rent-a-quotes became so unreliable, so on the nose, they had to buy their own advertising to con the suckers. 

NAR's first-ever newspaper blitz features the headline, "It's a great time to buy or sell a home." The advertisement points out that interest rates have fallen seven months in a row and are near 40 year lows, inventories of existing homes are higher than they have been in decades and prices have stabilized. But the perfect conditions for buyers are likely to change as sales pick up, prices gain traction and conditions improve for sellers next year. Yep, sales are always likely to pick up, these conditions won't last because buyers will come to their senses (or we'll get our manipulative hooks into them) get used to hearing that one.

"Homeownership is a safe, secure way to build long term wealth. The national median price of homes bought ten years ago, has increased 88 percent," points out the NAR. With prices having risen 50 percent over the last five years, including a longer timeline circumvents criticism that the housing market traditionally only barely beats inflation by a point or two. It's done that and more in the last five years, but keep in mind, that previous to the boom the nation was recovering from a housing slump. Actually, home-ownership proved to be an assured wealth destruction tool with prices down over 50% in some markets since this campaign.

In addition to the newspaper ads, the NAR is blitzing network television and radio with ads directed at buyers and sellers. These begin airing in the second week of January -- the start of the spring selling season in the warmer parts of the country. Pity the fool who fell for this con job.

"The market is much better than you might hear or read," says Tom Stevens, NAR's president. "Consumers should take advantage of this perfect alignment of low rates and extraordinary inventory before market conditions change," Over 4 years later and time is still on the side of the buyer.

And NAR's 1.3 million members and state and local Realtor associations are being encouraged to adopt the message in their own advertising and communications to consumers, beginning with this news:


  • Total housing inventory levels fell 2.4 percent at the end of September to 3.75 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace, according to NAR's existing home sales report.
  • The national median existing-home price for all housing types was $220,000 in September, which is 2.2 percent below September 2005, when the median was $225,000.
  • According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.40 percent in September, down from 6.52 percent in August.

The time to buy or sell is now. I bet those sellers were damn happy.

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Monday, August 15, 2011

The Great Australian Dream - Just a Dream?

The Great Australian Dream -  Just a Dream?

The great Australian dream for many individuals and families is to purchase their very own piece of Australia.

As our nation grew and prospered through the second half of the 20th century, this dream became a reality for many young families.

Land was cheap, housing was cheap and most of us could afford to buy our very own home.

Home ownership has been supported more recently by ongoing government initiatives such as the First Home Owner Grant and tax concessions available to home owners.


However, in the last decade, buying your own little piece of Australia has become a lot more expensive.

Just 10 years ago, more than 50 per cent of all suburbs in our five major capital cities were affordable but today only four percent are. 

Not a single inner city suburb is affordable today.

Something changed last decade. House prices, not only in Australia, but globally, soared and put the great Australian dream in doubt. Rising prices are seen as a boon for those who already have their own home, but a nightmare for those attempting to get into the market.

The Australian property market truly is a tale of the housing haves and the housing have-nots.

Typically, the “haves” purchased their home many years ago when prices were more favourable. They have since experienced windfall gains through the growth in the price of their properties.The “have-nots” are typically renters, the young (often First Home Buyers), lone persons and single parents.

A decent shelter is a basic necessity for us all and owning our own home the life goal for many. While some prefer the flexibility that renting can offer, the stability of tenure offered by home ownership and the sense of place obtained through owning your own home can be hard to beat.

With house prices outstripping income growth over the past decade, owning a home has become less attainable.

Figure 1 shows that over the past two decades, growth in median house prices across Australia exceeded growth in median household income. During this period, house prices increased by 263 per cent, while after-tax income grew by only 95 per cent.

The difference is entirely due to the last 10 years, where house prices grew by 147 per cent and household income just 57 per cent. In actual dollar terms, the median house price in Australia more than doubled over the last decade - increasing from $169,000 in 2001 to $417,500 in 2011. Conversely, the annual median after-tax incomes for households increased by only half - from $36,000 in 2001 to $57,000 in 2011  (see Figure 1).


So, what’s affordable and what’s not?

A standard rule of thumb for housing affordability is that a ratio of housing costs to income beyond 30 per cent is unaffordable.


Housing stress in Australia

The previous section dealt with housing affordability, in particular, the financial ability of the typical household to purchase a median priced home in Australia. It also demonstrated a serious decline in affordability in Australia over the past two decades. In this section, we take a closer look at housing stress in Australia - the proportion of income that a household spends on housing costs, including mortgage repayments, rent and rates. Housing stress, especially for mortgages, responds slowly to changes in affordability since most households purchased a home many years ago or indeed own their own house outright. Notable exceptions to this group are First Home Buyers.

How is housing stress measured?
 .
Most frequently, housing stress is based on the ratio of individual housing costs to income. Typically, if a household is paying more than 30 per cent of their income on housing they are considered to be in stress. In this report we consider three basic forms:

1. The basic “30 only” rule where a household who pays more than 30 per cent of their after-tax income on housing costs is deemed to be in stress

2. The “30/40” where we only include low income earners - the bottom 40 per cent of income and then apply the 30 only rule

3. The “50 rule” are those in extreme housing stress who pay more than half their income in housing costs

The 30 only rule is often criticised for including rich households who by choice spend a large fraction of income on housing and the 30/40 rule overcomes this problem by restricting “stress” to only those households in the bottom 40 per cent of the income distribution. Both measures have their place.

The 30 only rule includes all Australian households and so better captures “middle Australia”, while the 30/40 rule is better placed to consider the implications for the less advantaged in society. The 50 rule is a simple measure of households paying a seriously large amount of money on housing and potentially at greater risk of default, especially should their economic circumstances change or interest rates increase.
What does it mean to actually be in housing stress?

Quite simply, households that are in housing stress are devoting a much larger fraction of their after-tax income to housing than those households not in stress. Those in housing stress therefore have less money left over for other essential items such as food, transport, health, utilities and education. These households’ ability to purchase non-essential items, or
luxury items, is very much compromised.

Who is experiencing housing stress?

Naturally, housing stress is most strongly felt by those buying a home (mortgagor) or those renting. Both tenure types have a high level of stress of around 30 per cent using the 30 only rule. However, nearly 1 in 10 buyer households spend at least half their after-tax income on housing. These households are at serious risk of financial difficulties, especially if family or economic circumstances were to change. Renters are the most prominent group (23 per cent) using the 30/40 rule and therefore the group where social costs are likely to be greatest. It is single persons and single parent households at greatest risk of living in housing stress. On the other hand, couples with children and couples without children barely rate a mention in the two more serious categories of stress. Arguably, couple with children households may be more disadvantaged than suggested as the income measure does not always take into account family size.

A breakdown of housing stress in Australia in 2011 is provided in Table 2. It shows that Sydney is the most stressed city on all measures used, with 9.4 per cent of Sydney households paying more than 50 per cent in housing costs, and 11 per cent of lower  income Sydney households paying more than 30 per cent. Tasmania and South Australia are the least housing stressed states. Of non-capital city areas, Queensland has the most housing stressed households. This may be related to the high demand for housing in the sea change areas of the Gold Coast and the Sunshine Coast where incomes of retirees may be quite low and with the mining boom in inner regional areas.





Generationally, it is the young who experience the most housing stress. Stress levels decline with age and we find that those over 65 years of age face very little housing stress. A concerning result is that First Home Buyers (FHBs) have by far the greatest stress of any group. Sixty per cent of FHB households pay more than 30 per cent of their after-tax income on housing. Seventeen per cent spend more than 50 per cent and 11 per cent fall into the 30/40 rule. This is the group that has been hit the hardest by the recent escalation in house prices. They have been forced to buy into a red hot housing market and crystallised the housing gains of the older generation.

The mortgages used by FHBs escalated over the past 10 years.

In 2001, the average loan by an FHB was just $131,000. By 2011 the average loan more than doubled to $280,000 however wages only went up by 38.8%.

Australian Bureau of Statistics (ABS) figures show that 15.7 per cent of housing loans in 2011 were provided to FHBs. This is much lower than the peak in 2009 of 28.5 per cent and last decade’s average of 19 per cent (ABS 2011a).

The typical FHB is also getting older. Larger mortgage requirements and a generation that’s delaying the responsibilities of life drives this ageing of FHB.  The age of FHBs is creeping up, in 2001, 39 per cent of FHBs were under 30 compared with 37 per cent in 2011. The property price boom of the last decade is transferring wealth from the younger generation to the older generation. Whether that wealth is one day returned to younger generations through larger inheritances remains to be seen.

International comparisons

Australia has one of the least affordable housing markets in the world. The 2011 International Housing Affordability Survey conducted in Australia, Canada, Ireland, Hong Kong, New Zealand, the United Kingdom and the United States showed that Australia was the second most expensive of these countries.

While not directly comparable with the results in this report, the survey showed that only Hong Kong was more unaffordable (Kotkin, 2011). That said, there are considerable difficulties in interpreting international house prices. The sort of housing available in each country differs tremendously. Some countries, like Australia and Hong Kong, are highly urbanised. Typically, urban areas are more expensive owing to greater job opportunities and a general preference for city life. Housing quality also varies greatly between countries, for example, in Australia, most housing has a large floor area and is detached while many other countries have much smaller housing that is either semi-detached (terraces/townhouses) or units. Regardless of the difficulties of international comparisons, housing in Australia is expensive compared with most other countries.




Conclusion

The previous decade witnessed a dramatic drop in Australian housing affordability.

Median house prices more than doubled to $417,000 while median after-tax incomes only increased by 50 per cent to $57,000. 

Australia now has amongst the most expensive property in the developed world. This report shows that this decline in affordability is all pervasive through Australia’s states and territories and major cities and towns.

Just 10 years ago, Australian housing was considered affordable. Australian housing is now severely
unaffordable.

If incomes continue to grow at the same rate as the past 10 years, it would take nearly 10 years of flat house prices for Australia to return to an affordable housing market.

In 2001, more than half the suburbs in our five major capital cities were rated as affordable. Today, only four per cent are affordable. Not a single inner city suburb is affordable. The impact of affordability is most strongly felt by those attempting to get into the housing market via the purchase of a home.

In summary, Australian house prices are simply so high that for many Australians the great Australian dream is just that - a dream. For those who do manage to purchase a house, high house prices mean taking on very high levels of debt that will constrain their lifestyle for many years into the future. Significant, widespread house price drops appear unlikely in Australia, meaning that housing will remain unaffordable for many years to come.

Source: AMP Housing Report

Thursday, August 11, 2011

Will Investors Cut & Run

What happens from here remains to be seen. But property investors represent a clear risk to the ‘slow melt’ of Australian housing if they became widespread sellers of their loss-making investments.


Two recent articles in Fairfax contained some interesting discussion about the implications of negatively gearing and the Baby Boomers’ impending retirement on the Australian housing market.
The first article by Gittins! summarises the motivations behind, and implications of, the Baby Boomers’ mass accumulation of investment properties since the 1990s:
Back in the early Noughties, when the property market was booming, a lot of baby boomers began contemplating their future and realised they hadn’t saved nearly enough to allow them to continue in retirement the privileged lives they’d always enjoyed. They decided they’d have to start saving big time.
So what did they do? Went out and bought a negatively geared investment property, of course. Their notion of saving was to borrow to the hilt, then sit back and wait for the lightly taxed capital gains to roll in…
For most of the decade in question [the decade to 2005], we fought each other for the best house in the block, forcing house prices up and up…
Everywhere we turned we could see ourselves getting wealthier, year after year. The value of our homes rising inexorably, the value of our super swelling nicely. With all that going for us, who needed to save the old-fashioned way? No wonder negative gearing – of share portfolios as well as residential property – was so popular…
As for house prices, the boom is long gone and prices are, in market parlance, ”flat to down”. There’s no reason to believe they’ll be taking off again any time soon.
Gittins!’ article was followed-up a week later by Fairfax’s Ian Verrender, who touched on the risk of falling property prices causing forced sales from negatively geared investors:
Australian real estate enjoyed a prolonged boom through the 1990s until 2008 fuelled by cheap and easy credit.
That credit boom has come to an abrupt halt. During the past 12 months, credit growth for housing has been the weakest in 40 years, ever since the Reserve Bank began compiling the data. Not surprisingly, housing prices have begun to weaken.
A market analyst, Greg Canavan, author of the Sound Money, Sound Investments newsletter, reckons the number of negatively geared investment properties purchased during the boom, many of them on 100 per cent loan-to-value ratios, will soon begin to slip into negative equity.
Negative gearing only works when capital values are rising. Right now they are not. That has the potential to produce forced sales of investment properties and a rise in bad debts among the banks.
Whether Australia’s army of loss-making property investors will sell-up en masse in the face of a prolonged period of flat to falling home prices is one of the big unknowns facing the Australian housing market.
Certainly, the idea of holding an investment currently earning a net yield of around 3% when interest costs are tracking around 7% during a period of stagnant capital growth is unappealing, and logic would dictate that many negatively geared investors would grow tired of the constant cash drain and sell-up to avoid incurring more losses.
But whether this logical scenario plays-out in practice remains to be seen. As the great Isaac Newton once proclaimed after losing his fortune on the South Sea Bubble: “I can calculate the motions of heavenly bodies but not the madness of men”.
Still, the statistics on negatively geared property investment in Australia are staggering.
First, there’s the rapid growth of property investment over the past 30 years (chart from Morgan Stanley).

Second, the percentage of property investors claiming a rental loss has increased significantly, driven by house prices increasing at a faster rate than rents (chart from Morgan Stanley):

While the charts are a little old, and exclude data from the most recent ATO Taxation Statistics (see here for more recent analysis), the explosion of property investors – from around 4% of taxpayers in 1979 to 13% as at 2008 – is stunning, as is the increase in the percentage of investors claiming a loss. Moreover, the acceleration in property investment from 1990, coincident with the Baby Boomers reaching peak earnings age (45 to 55 years old), is clearly evident.
Alarmingly, around half of property investment loans are interest-only, which both reduces the amount of equity accumulation and increases potential losses from adverse price movements, raising the likelihood of forced sales (chart from Westpac):

After the small rebound following the stimulus-fuelled surge of first home buyers in 2009, appetite for investment property once again appears to be waning. Whereas investor credit grew at annual rates of between 15% and 30% in the 15 years to 2005, it is growing at only 6% currently:



Monday, August 8, 2011

The Big Squeeze - 60 Minutes Australia Story

Sunday 7th Aug 2011
 
Extract from 60 minutes Story on Channel Nine Sunday 7-8-2011

Link To Video Story:   60 Minutes Aust Housing Story The-big-squeeze 

Reporter: Allison Langdon Producers: Jo Townsend, Steve Burling, Hannah Boocock


We dodged a bullet this week.
The Reserve Bank decided to keep interest rates on hold yet again. And with good reason.
Record numbers of Australians are struggling to keep up with their mortgage repayments.
Home ownership has never been tougher or more thankless.
A generation ago, buying a house was the done thing - the one investment that was considered as good as money in the bank.
If you didn't own the roof over your head, you'd failed in some way.
Not anymore.
Now, renting might just put you ahead of the game.

Full transcript:


ALLISON LANGDON: To the world, Tracy and David Dodd are the very model of Australia’s relaxed and comfortable middle-class. They’re living the dream – three kids, a mortgage and a suburban family home on an acre block. But Tracey and David have been keeping a secret from their family and friends – they’re drowning in debt. No-one to look at you would think that you are struggling.

TRACY: It might look like we have got everything but you don’t see the mortgage, you don’t see the loans. You don’t see everything and nobody wants to talk about it you know, because it is embarrassing.

ALLISON LANGDON: Has it taken a toll on you both?

TRACY: Mmm…sorry.

DAVID: Oh it has – it has taken its toll but you’ve just got to do it.

ALLISON LANGDON: Like most young couples, the Dodds invested their heart and soul and every spare cent they had into the ideal of home ownership – the biggest mortgage their double income would allow. But last June, Tracy lost her job in the construction industry and David was made redundant. Just to keep money coming in, he’s taken a lower-paying job. Ever since, the Dodds, like tens of thousands of middle class families have been going secretly broke in the suburbs.

TRACY: We went from having a really great income including a company car, fuel card, phone – things like that – to basically losing all of that.

ALLISON LANGDON: So do you have more money going out each week than what you’ve got coming in?

TRACY: Absolutely.

ALLISON LANGDON: How much difference are we talking about?

TRACY: Probably – it’s getting very embarrassing – probably about 400 bucks…$400.

ALLISON LANGDON: This is the outskirts of the Gold Coast. When you look around and see the big, shiny new houses, the nice lawns and two cars in the driveway, you can’t help but think, ‘life must be pretty good here.’ But this version of the Great Australian Dream is just a facade – nowhere is mortgage stress being felt more keenly than right here. And the figures are staggering – one in 50 families are at risk of losing everything. The number of Australians behind on their mortgage repayments by more than a month is at an all-time high. Areas of mortgage stress can be pinpointed right around the country. Mostly in areas, that just five years ago, were booming. Families who borrowed to the limit in the real estate gold rush are the ones who are now struggling to pay their bills.

SANDRA: We’ve never over-spent, never gone outside of what we can afford. We’re just not spontaneous spenders like that who’d just go and blow it.

SANDRA: Phil and Sandra Box live in Capel, two hours south of Perth with their teenage boys Aiden and Keegan. Sandra’s a school teacher, while Phil runs his own business as a mechanic. Despite 40 years of hard work, their spiraling debt has forced them to come up with a drastic solution.

ALLISON LANGDON: From a nice family home to the takeaway store.

SANDRA: Mmmm.

PHIL: We’ll be comfortable enough here to get us through. The telly will go over here with the power point and probably the lounge around that side.

ALLISON LANGDON: This will be their new home – an empty takeaway shop in an industrial block.

PHIL: Out here we have got enough room for our bedroom to be set up. That’ll be storage and wardrobe – that sort of thing in the cool room.

ALLISON LANGDON: Where is the bathroom?

PHIL: Ah, bathroom is out the back, you’ve got to go through the rain unfortunately.

ALLISON LANGDON: The shop is one of six properties Phil bought in this industrial estate. He runs his business here, but the investment was intended to see them through retirement. So no-one could accuse you of waking up one morning and going, ‘oh wow, we want to retire in a couple of years – what are you going to do?’

PHIL: Oh no – we had a plan, we did…we had a plan. We just bought our own property and intended to live off the income from that property.

ALLISON LANGDON: Ironically for Phil, things started to go badly when his mechanics left to join WA’s mining boom. The Global Financial Crisis, interest rate hikes and the spiraling cost of living have combined to create a crippling mortgage squeeze.

PHIL: It’s just the disappointment I suppose, from coming down from being in a very comfortable position to a point we’re not accustomed to, that’s all.

SANDRA: Food’s gone up, rent’s gone up, mortgages have gone up, petrol has gone up – nothing has come down but house prices. It’s really working against us isn’t it?

ALLISON LANGDON: What did those people do wrong?

CHRIS: I don’t think it’s necessarily a case of doing anything wrong. Sometimes it’s bad luck and everything goes wrong at the same time, once one thing falls down, quite often the whole pack of cards comes down with it.

ALLISON LANGDON: Property Analyst Chris Gray believes what is wrong is Australia’s obsession with home ownership. Instead of chasing the dream and pouring everything into one asset, he believes there is another way. Chris never considered buying his multi-million dollar home on Sydney Harbour…it’s a rental.
ALLISON LANGDON: So if you were to buy the family home you wouldn’t be able to get this?

CHRIS: There is no way we could afford it. So no matter what your budget is, you can never afford the house that you really want, so I’d much rather have the view and rent it instead.

ALLISON LANGDON: So you are living the dream.

TANYA: Absolutely.

ALLISON LANGDON: He says owning your own home is overrated. And it’s time Australia followed the lead of Europe and Asia where renting is a way of life.

CHRIS: A lot of expats go to Hong Kong and Singapore and they get in the lifestyle of renting and it’s actually nice and flexible. And they come back to Australia and think, ‘why would we buy the family home?’

ALLISON LANGDON: You don’t meet many Australians like The Semmens family. They have no interest getting into the property market. And why would they? So what’s this property worth, where you’re living?

DAVID: I think it’s worth three million, I’ve been told.

ALLISON LANGDON: They rent 10 acres here in the Tweed hinterland, with breathtaking views from the Queensland border down to Byron Bay. There’s plenty of room for David and Kristen and their five gorgeous kids.

KRISTEN: Like, we don’t have to worry about you know, ‘have we have got enough petrol in the car for the week’ and all those kinds of things – we just put some more in.

ALLISON LANGDON: You’ve got that little bit of money if you want to spoil the kids, you can.

DAVID: Yep – that’s right.

KRISTEN: Yes definitely, and with five that’s a lot of spoiling. That’s not cheap!

ALLISON LANGDON: Instead of being slaves to a mortgage they’re investing their time and money in a new business – a kid’s hair salon right in the heart of the mortgage stress belt.

KRISTEN: I’ve got a mum here who owns a real estate – she was telling me they’ve just had their biggest boom at the beginning of this year because of all the foreclosures.

ALLISON LANGDON: Does it make you glad that you rent?

KRISTEN: We haven’t basically mortgaged our future based on our house.

ALLISON LANGDON: So life’s good for you?

KRISTEN: It’s very good for us, we’re very free. I guess we’re very secure even though you used to have to have a house to be secure.

ALLISON LANGDON: With the money left over at the end of each week, David and Kristen can afford to treat their kids to a day out. The decision to rent also means fewer arguments about money, one of the major causes of marriage breakup.

KRISTEN: We have peace between David and I.

DAVID: Yeah, yeah.

KRISTEN: Look – honestly there is so much stress that happens between husbands and wives over money and I think money just amplifies things.

ALLISON LANGDON: Does it put a strain on the relationship?

TRACY: Sometimes…

DAVID: Sometimes it does for sure – we won’t talk to each other for a couple of days.

ALLISON LANGDON: The strain is showing. Tracy and David even dipped into their superannuation fund to meet their mortgage repayments. But it wasn’t enough. The Dodds have just made the heartbreaking decision to abandon the dream and sell up.

DAVID: We were going backwards and backwards, we were going to lose everything and ahh… ‘cause of the market now it has gone worse. Not even one person has come out here to have a look at this house.

TRACY: It was our big dream. It’s a bit of a shock to think that you’ve worked so hard – to now be walking away with nearly nothing.

ALLISON LANGDON: They’ve tried their best to shield the kids from the stress of their financial worries, but at eight, their eldest son Caleb is aware that things have changed.

TRACY: His dream was always to join the army, since he was five. And he did say the other day that ‘it would be better Mummy, if I went to college’ and I said, ‘why is that darling?’ and he said, ‘well I could get a better paid job and I could help you and Daddy out’ and when…

ALLISON LANGDON: That’s hard…

TRACY: …So he does, he understands and he is such a good kid, we’ve got great kids.

ALLISON LANGDON: It’s this sort of pressure that’s forcing more and more Australians to rethink how they can secure their family’s financial future.

CHRIS: There’s a massive social stigma against renters. It’s always thought that poor people rent. If you look at purely the numbers, it actually makes more financial sense to rent your own home, than it does to buy it. The golden rule was that ‘rent money is dead money’ – whereas the rule now is ‘rent money is only dead money if you don’t reinvest the equivalent somewhere else’.

KRISTEN: You know we’re better off renting, keeping our overheads low and having the cash to do what we want to do. It’s a simple equation.

ALLISON LANGDON: So you’ve got no regrets about the decisions you have made?

KRISTEN: We’ve got all the things that happen to every family you know and don’t tell me running a business and five kids isn’t stressful, but we haven’t added to it.

DAVID: Yeah.

KRISTEN: You know, we’ve taken off what was one of the biggest pressures and it’s made it easier – we can enjoy it.

TRACY: We loving going to the park, meeting friends, you know riding bikes, that’s our fun. We’ve refocused our lives and realised that our children and our happiness is much more important, so no more stressing and it doesn’t matter what we live in so long as we are all together.