Housing affordability in Australia seem to have worsen over the years with further evidence suggesting that home ownership is rapidly moving out of the reach of the average Australian. Data released on the price of houses reveal that more cities have experienced a surge in prices for homes despite measures that have been put in place to rein the market.
Crucially, these figures reflect the median house price, and the trend is particularly stark in Sydney and Melbourne, Australia’s two largest cities where the house prices have risen more than 15% in the past year and where the dreams of homeownership are slipping further away for first home buyers and middle-income earners in particular. The situation is worst in the regional areas where price has grown to unprecedented levels as people from cities demand cheaper products outside the urban centers.
The problem has led to the increased pressure on the federal government, opposition parties and various housing advocates to find the ways of solving the issue or at least to take more decisive steps aimed at the situation’s improvement. Solutions that have been proposed include the construction of more social housing homes, to changing taxation mechanisms that encourage property investors.
The central authority in Australia, the Reserve Bank of Australia, has highlighted that the existing housing crisis has become a danger to Australia’s economic future through flow-on effects such as highly leveraged household balance sheet and higher property prices. The current interest rate has been kept low to support the recovery from the Covid-I9 pandemic but this policy has also resulted into the current housing bubble.
There are several measures that have been put in place by the state governments that seek to help first-time buyers especially through incentives such as reduced stamp duty and shared equity. Nonetheless, opponents state that these steps have been too weak to contain the demand adequately and may lead to an increase in prices.
This housing shortage situation means that young people in Australia allow significant events in their lives to be altered by housing insecurity some of which are family formation or career transitions. The occurrence has also created increasing levels of income equality between the young and the elder generation as older people get to benefit from the buoyant housing market while young people cannot afford houses across the country.
While discussions about the specific measures continue, more and more voices point to the fact that solving the housing affordability problem in Australia will take years if not decades, and will involve all stakeholders, including the government at all levels, private companies, and non-profit organizations.
