The value of Australian houses rose by $450 million in the March quarter, the highest rise on record, bringing renewed calls for action to address the growing housing affordability crisis.
The government defines housing stress as a household that is earning in the bottom 40 percent of the national income and is spending more than 30 percent of its income on housing.
Around 20 percent of key workers such as nurses, emergency officers, and teachers were experiencing housing stress in Sydney and 17 percent in Melbourne.
“Moderate-income households who previously would have become homeowners are now being locked out of the housing market, putting strain on the rental sector,” the report said. “To cope with the lack of affordably priced housing close to jobs, some workers are commuting long distances, and there are suggestions that some young people are leaving Sydney and Melbourne altogether to settle in more affordable cities and regions.”
Commonwealth Bank chief economist Stephen Halmarick told the Committee for Economic Development of Australia online conference on Tuesday that the lack of attention on housing supply is causing this crisis.
“If you increase demand and you don’t increase the supply, then there’s only one result that we all learn in economics 101—which is the price goes up.
Report lead author Professor Duncan Maclennan said the report affirms that the current housing system is failing an increasing number of young people, so an immediate overhaul was needed.
“Australia’s approach to housing policy has fuelled income and wealth inequality and created significant economic instability,” Maclennan said. “This is becoming a huge drag on productivity and warping Australia’s capital investment patterns.”
Liberal MP for Bennelong John Alexander said his own government’s policies were causing a dysfunctional housing market. He said every level of government needed to implement policies to squash prices down to around three times annual household income.
