Will the Great Australian Dream of owning a house remain a dream? According to new research from think tank Per Capita, home ownership is declining rapidly, especially among the younger generation and low income groups.

Housing affordability is the primary challenge among prospective homebuyers with housing costs reaching a crisis point for many Australians. Per Capita’s report for the V&F Housing Trust reveals that house prices have increased dramatically thanks to tax rules and tax breaks that mostly benefit the wealthiest of investors and households.

House prices during the pandemic and after have escalated dramatically, with average new mortgages increasing by 14% in just six months in 2021. Investor activity increased by 30% over the last two years, with investors significantly outspending first-time buyers.

While many countries around the world are facing housing affordability challenges with a dramatic rise in the cost of rent and home ownership, they have consciously made policy decisions to reduce the social and economic problems caused by spiralling housing costs. However, in Australia, the costs and benefits of current housing policies are unevenly distributed across the Australian population, with the benefits of property tax concessions flowing disproportionately to the wealthiest households, and rental and mortgage stress concentrated among lower and lower-middle income households, says the report.

So that all Australians have access to an affordable home, Australia too will need to choose its own deliberate policy path, which would require significant political engagement.

Grim facts about Australia’s housing market:

Sharp fall in home ownership rates
Increasing housing stress for both mortgagees and tenants
Key workers on middle incomes increasingly locked out of secure housing within a reasonable commute of their jobs
Low and fixed income households not having access to secure, subsidised shelter
Increase in rents across Australia by almost 10% over the 12 months to March 2022
Cost of renting a house up by an average of 14% and unit rent prices up by 8.5%
Social housing construction, maintenance and availability unable to meet demand
Mortgage stress has doubled in five years from 20% to 40% while 54% of low-income renters are in rental stress

Lack of housing security affects all segments of the population

While the housing debate discusses declining affordability for first home buyers, the fact is that this crisis affects all segments of the Australian population. According to the Per Capita report, one in four older Australians lives in permanent income poverty, primarily due to the fact that they do not own their own home and must pay private rental costs on fixed retirement incomes.

The proportion of Australians who will never own a home is increasing; younger generations are entering the home-ownership market later than ever, if at all. One can already see the impact of this trend with homeowners aged 55 to 64 years still owing money on mortgages tripling from 14% to 47% over the last 25 years.

Results of a recent poll indicated that respondents believed home ownership was now out of reach for young people. Policy decisions that favoured existing property owners through lower taxes and concessions over the last 25 years have fuelled a dramatic increase in property prices. The same policy makers, the report reveals, have failed to implement alternative housing models to private ownership that could provide security for tenants. Housing security can also be provided through secure rental housing, both in the private market and through public and community housing.

Download the report.

Image: https://lendstreet.com.au/mortgage-advanced/what-is-housing-affordability-and-its-economic-impact/

Architecture News & Editorial Desk

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