Housing crisis: Sydney now the third least affordable market in the world

Sydney is now the third-least affordable housing market in the world with the country’s escalating affordability crisis poised to create a two-class society.

Australia will end up a two-class society if home ownership becomes an impossible dream for many, the report of a major inquiry into housing affordability will warn.

The inquiry was commissioned by federal Treasurer Josh Frydenberg in July amid a price boom that is pushing real estate beyond the reach of a growing number of people.

Even before the latest explosion in values, levels of home ownership were declining sharply, particularly among lower and middle-income households, as well as younger people. Sydney is now the third-least affordable housing market in the world, while Melbourne is sixth. Adelaide and Brisbane are also in the top 20.

Treasurer Josh Frydenberg. Picture: NCA NewsWire / Gary Ramage

The inquiry chairman, northern beaches federal Liberal MP Jason Falinski, said ­affordability could be improved over the long-term if the states boosted supply and slashed property charges.

Mr Falinski said the parliamentary committee conducting the inquiry would recommend federal government payments to states be conditional on undertaking these reforms.

Another key recommendation would be for Canberra to play a greater role in delivering roads and rail in new areas, making them viable for development. The inquiry is also ­likely to recommend enhancing the federal government’s first-home loan deposit scheme.

Mr Falinski – who is the head of the parliamentary committee on tax and revenue that is ­conducting the inquiry – described the lack of affordable housing as a huge regulatory failure by state and local governments. “They are the ones massively winning from this situation,” he said.

Liberal MP Jason Falinski. Picture: Supplied.

“It is to their absolute benefit to sell fewer houses at higher prices than the other way round. That’s why we sold fewer houses in 2019 and that we did in 1992, Australia-wide.”

NSW Planning Minister Rob Stokes blasted the probe for failing to consider changes to federal taxation of property.

“Rather than repetitive inquiries, I encourage the commonwealth government to take concrete policy action that will actually do something to address supply and affordability,” Mr Stokes said.

Experts have told the inquiry that if an extra 50,000 homes were built across the nation each year for a decade, prices and rents could be as much as 20 per cent lower.

It is still unclear if the Labor minority on the committee will support the recommendations of the Coalition majority.

Committee deputy, Labor’s Parramatta MP Julie Owens, declined to comment on the specific ideas that were raised by Mr Falinski.

A BIT OF LUCK CAN YIELD A LOT

Suresh and Shasmita at home in Bardia with their 6-month-old twin daughters Adya (left) and Kaya. Picture: Jonathan Ng

When the first blocks of land were released at Rouse Hill Heights in March, 105 potential buyers camped out in their cars for up to three days to try and secure a lot.

This wasn’t an option for Suresh Adhikary and his wife Shasmita Dash, who was seven months pregnant at the time. They waited for the second release, which had an online expression of interest process to capitalise on demand and prevent more camping.

About 30 hopefuls were selected — to go into a hat for the chance of getting a site. Luckily they were one of the six names drawn out of the hat and secured a 525sq m lot to build a home for their twin daughters, Kaya and Adya.

“There’s not enough land, that’s one of the biggest issues,” Mr Adhikary said.

The estate’s developer Legacy Property CEO Matthew Hyder said: “For governments, state and local, I do think it’s quite a confronting situation to consider that people are forced to do that simply to buy land to build on.”