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The Australian housing crisis: A Roundtable

  • 18 November 2022
  David Halliday: In 1979, my parents bought a three-bedroom home on a 792sqm block in Box Hill South, Melbourne. It cost $34,000. They were both young, and beyond the deposit saved, they had no money (but an impressive record collection). To buy that same property today, you’d need almost two million dollars, well out of reach of most young couples with two dependents.

In this roundtable, we’re going to discuss the national hobby: the Australian property market. Despite rising interest rates and the recent dip in property values, Australia has one of the least affordable property markets in the world.

In the 1960s, buying a home in Australia would set you back three to four times the average salary. Now in Melbourne and Sydney, a mortgage is roughly 13 times the average salary. Compare that to famously unaffordable cities like London, where an average mortgage is more like nine times the average salary.

We have somehow engineered a situation where young people, people on low income, and families on single incomes are priced out of the market. With a lack of affordable housing, more Australians are giving up on the dream of owning a home, experiencing rental stress, and homelessness is rising.  

So how did we get here? We could point to numerous factors but most responsible perhaps is the shift we’ve seen from seeing housing as a human need to housing as an investment product.

Australian property is seen as a safe investment for local and international investors, encouraging speculative property investment in a residential housing market worth over $10 trillion. We offer generous tax incentives to borrow to purchase multiple properties — in this system, we’d prefer people to become second and third homeowners rather than encouraging those on low incomes to purchase their first.

Add to that record low interest rates in the last 25 years and restrictions in land and housing supply, and you have the makings of a housing affordability crisis. Given Australia’s economy hangs on a robust, functioning housing market and nearly 60 per cent of Federal MPs own an investment property, it’s not exactly in the interest of many to drive prices down.

'According to the Australian Human Rights Commission, everyone has a fundamental human right to adequate housing that is secure and safe and enables them to live with dignity. Yet our laws don’t reflect this.'

One in five Australian households own more than one property. About one-third of those