Housing crisis the top social issue keeping bosses up at night

The nation’s housing crisis has emerged as the biggest social issue keeping Australian business leaders up at night.

KPMG’s annual survey of more than 300 C-suite executives and board members, released on Monday, revealed almost half believed the lack of meaningful progress on housing affordability was not just a challenge facing the country, but also a danger to businesses.

A lack of meaningful reform on addressing housing affordability keeps the nation’s business leaders up at night. Credit: Marija Ercegovac

“[There’s] this recognition within businesses that their workforce is finding housing affordability even more of a problem, which then starts to limit individuals choosing places to work,” said Brendan Rynne, KPMG’s chief economist.

“It makes it harder for people to work out where to live, how to travel to work. Working from home has been helpful in resolving some of those issues, but not everyone can do that.

“And therefore, what businesses are now recognising … it’s not only getting people with the right skills to come and work for them, but also getting those people with the skills being prepared to work for them where their accommodation is so far away, or their accommodation is challenging for them to be part of the workforce.”

Housing affordability shot to first place in KPMG’s Keeping us up at night social challenges list, up from fifth last year. Geopolitical tensions, which was identified as the No.1 issue in 2024, fell to third spot this year.

Australian housing is among the most expensive in the world. The International Monetary Fund said before Christmas that state stamp duties should be abolished, more workers should be deployed to the housing sector, and the easing of zoning rules should be placed on the agenda to tackle “Australia’s housing affordability crisis”.

Alongside the social issue of housing affordability, the survey revealed the biggest challenge facing businesses directly is digital transformation, with 53 per cent of business leaders identifying it as their top issue. This was followed by cybersecurity (43 per cent), controlling costs in an inflationary environment (39 per cent), new technologies such as artificial intelligence (39 per cent), and regulation (38 per cent).

KPMG chief executive Andrew Yates said businesses were grappling with questions around how they could harness technology to transform their organisations, and what it meant for the future of their workforce.

“We’re all trying to understand and make sure that people that work in our organisations feel comfortable with the changes that we’re making,” Yates said.

“Then there’s the return on investment. We’re all making reasonably significant investments in AI – what sort of return are we going to get from that? Our approach and our attitude [at KMPG] is you’ve got to be in the traffic, you’ve got to be having a go … making sure we bring our people along with us, but not getting too hung up on ‘are we getting the return that we would traditionally want from the investment in this?’ because it could quite seriously revolutionise the way we all work.”

KPMG chief executive Andrew Yates says new technology is a big issue facing businesses. Credit: The Sydney Morning Herald

But not a single business leader identified the need to address inflation while keeping high levels of employment – a dual mandate for the Reserve Bank of Australia – as a critical issue. Rynne said this could be a sign businesses were sceptical of the course the RBA had taken.

The unemployment rate is at historical lows, falling a further 20 basis points to 3.9 per cent in November, with the vast bulk of the hiring in the public sector.

“The private side of the economy is incredibly weak … so that is driving and exposing that questionability over whether that experiment the Reserve Bank has been running with keeping rates constant, not continuing to increase them [instead of] causing higher unemployment but getting the economic shock over and done with,” Rynne said.

RBA governor Michele Bullock has consistently said she wanted to limit the damage to the jobs market, telling a press conference in November she didn’t want too many people “tossed out of work”.

“We won’t do well on our employment mandate if inflation gets out of control,” Bullock added at the time. “So we do need to make sure that we bring inflation down. Having said that, it is really important … that people have jobs and that people have an opportunity to earn an income.”

KPMG is expecting core inflation to fall rapidly over the next 12 months, and the RBA to begin cutting the cash rate around May. But there still remains great uncertainty over geopolitical issues, according to Rynne, especially United States President-elect Donald Trump’s inflationary policies.

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