New report on high property prices: More housing, home loan accessibility

A new government report offers a blueprint to tackle the worsening housing affordability crisis in Australia.

It comes as no surprise that Australia is going through housing affordability issues. In the last 12 months, the value of national dwellings increased by 21.6% making it the highest annual growth rate since 1989, says CoreLogic.

The report, titled ‘The Australian Dream,’ was a result of an inquiry into housing affordability and supply by the House of Representatives Standing Committee on Tax and Revenue. 

Addressing all levels of government, it offers 16 recommendations to improve affordability.

The major focus of the recommendations is on increasing the supply of housing and creating policies that lower monetary barriers for first-time buyers.

Some of the key recommendations the committee suggest include:

• Replace stamp duty with land tax.
  
• Allow first home buyers to use their superannuation assets as security for home loans.
  
• Conduct a review of build-to-rent housing market and how it is affected by current regulation and tax policies.
  
• Create a grant scheme that pays states and localities for delivering more housing supply and affordable housing.

Mozo personal finance expert Peter Marshall is a bit weary about the idea of increasing monetary ways to help buyers won’t help make houses more affordable. 

“Making more money available to people no matter what the source has been shown to simply boost house prices and compound the affordability issue,” he said.

Issues of the current housing market

Right now, the Australian housing market is valued at more than $9 trillion, with the mean price of residential dwellings at $920,000. NSW is currently considered the priciest state, with the average property costing $1.2 million.

In the government report, a Domain spokesperson said: “in Sydney, it now takes a couple, with both partners working full-time, seven years and one month to save an entry-priced housing deposit.”

According to Australia’s Survey of Income and Housing, home ownership has gone down from 70% to 66% in the last 20 years and is predicted to decline to 64% in 2022. 

This decline in affordability has been most keenly felt by low to middle-income earners and individuals between the ages 25 to 44.

CoreLogic’s head of research Eliza Owen said of the situation, “the long-term decline in rates of home ownership have been most exacerbated in low-income cohorts, so that would suggest that you have widening wealth inequality perpetuated through Australia’s housing system.”

The Grattan Institute noted that prices for homes have grown much faster than incomes and that “real home prices across Australia have climbed 150% since 2000, while real wages have climbed by less than a third.”

Call for a solution to the lack of affordability

To tackle the affordability issue, many property industry bodies have called for an increase in supply along with improvements in the Australian planning system. 

As of now, the list of recommendations is just a blueprint that could help improve affordability across Australia. Only time will tell if the federal government will work to implement the committee’s ideas to make home ownership more accessible to low to middle-income families and younger generations.

For more information on property and lending trends, browse our home loan statistics page. And for an idea of where rates currently sit, visit our home loan comparison page.