Housing affordability plummets to 75-year low

Homes are harder to buy for young Aussies than any time since just after World War II. But with the issue set to be a federal election flashpoint, hope is growing for real change.

There is no one solution to make housing more affordable, concluded Jason Falinski, the MP who chaired the latest federal parliament inquiry into housing supply and affordability.

He rightly noted there have been many inquiries into housing over the last two decades yet prices and availability are still problems.

Falinski suggested pursuing longer term outcomes, especially structural, amid 17 recommendations presented to parliament. Some recommend no change, i.e. to retain negative gearing, while other recommendations are more dramatic, such as an overhaul to replace stamp duty with land tax.

“This change would increase housing turnover, remove an unnecessary obstacle to home ownership and stabilise government revenues,” the report concluded.

The committee also recommends developer contributions be reformed “as they have ballooned, adding nearly half the housing cost and have failed to provide increased infrastructure.”

Noting significant benefits of higher density living, Falinski says state and local governments should be incentivised by federal government to increase urban density in appropriate locations using an empowered community framework as currently being trialled in Europe.

Falinski suggests their replacement with a value capture model or ensuring that developer contributions can only be expended on their intended localised purpose.

He noted these levies on developers are passed onto the purchaser despite not being used to improve the local area, “creating communities that feel disempowerment.”

It was of concern that communities across capital cities were having higher densities imposed on them with minimal input or consultation.

Anthony Lorusso has struggled to buy his first home. Picture Rebecca Michael.

Significant planning approvals should come with “protections and preservation of surrounding areas guaranteed in law, not just spoken of to be broken within a few years.”

The report also recommends the government allow first home buyers to use superannuation assets as security for home loans, without using the funds themselves as a deposit.

Meanwhile Australia’s rate of home ownership has been in decline since Baby Boomers bought their homes.

“At the moment, home ownership rates among Australians under the age of 40 are at levels not seen since 1947.

“No one believes that when this figure is updated it will not fall further, perhaps to the lowest level on record.

Housing affordability has hit its lowest level for young Aussies in 75 years. Picture: NCA NewsWire / David Swift

“Being able to afford a home is becoming harder and harder for younger Australians. Falinski notes “Australia has more usable land than any other continent, outside the penguins of the South Pole.

“We have one of the least densely populated countries in the world with some of the highest average weekly earnings, and the highest minimum wage in the world.

“Housing should be easily accessible and affordable. Yet, by some measures our five largest cities are all in the 25 least affordable markets in the world.”

Increasing supply is easy to say but appears hard to do, the report noted. And it needs to be noted the Labor Party provided a dissenting report.

Accordingly expect housing affordability to be an election issue.