The AFR has produced an alarming report today on the rapidly declining levels of housing affordability across Australia, with families in Australia’s three biggest cities struggling to find well-located accommodation for under $750,000:
Prospective purchasers with $750,000 to spend on a three-bedroom house in the first four months of the year had to go an average 36km out of the city [Sydney]…
Even then there were only 238 houses available in that price bracket… Three-bedroom apartments selling for $750,000 and less in the greater Sydney area were an average 29 kilometres from the CBD – the closest being in Parramatta…
In Melbourne, the situation was similar, with just 95 three-bedroom apartments available in the four-month period, at an average distance of 16k kilometres from the city centre. Three-bedroom houses in the $750,000-and-under price bracket, by comparison could be found at an average 17 kilometres…
Brisbane told a similar tale, but three-bed units, on average, were even further out from the city centre at 15.3 kilometres and there were just 69 of them, while the 575 three-bedroom houses were an average 14.9 kilometres.
It’s a crazy country that we live in when $750,000 is considered the threshold for affordability. In reality, this price level is still highly unaffordable.
Seriously, anyone that still claims that housing affordability today is no worse than previous generations (I’m looking at you, again, Malcolm Maiden), needs to have their heads read. The evidence is irrefutable that current housing affordability levels are woeful.
We all know what needs to be done to fix Australia’s housing mess: abandon policies that artificially juice demand (particularly speculative demand) and free-up supply-side barriers.
The Federal Government obviously has control of the demand-side levers (e.g. tax rules, immigration policy, home buyer subsidies, etc), and it has unfortunately ruled-out reforming negative gearing and capital gains tax concessions.
Still, it could also take the lead on supply. Given that the feds control the lion’s share of the nation’s tax take, they have ample opportunity to drive reform by offering incentive payments to the states to free-up land supply, relax planning, and build housing-related infrastructure. It is the federal government, after all, that has decided to run a high immigration program, so the least it could do is provide the states – the ones responsible for service delivery and infrastructure – with the means to cope with this growth.
None of this is rocket science. Time for action.
