Scan the homepage of the Herald on any typical day, or pick up our newspaper and you will most likely find two types of articles: the first will be a news story warning of the latest impact of the cost of living crisis, often with an angle linked back to housing. The second will be from our property arm, Domain, recording another exorbitant multimillion-dollar sale of what is essentially an ordinary family home.
The juxtaposition of these two parallel worlds – a generation of young people struggling financially and locked out of the housing market and a generation of older people sitting on property goldmines – is uncomfortable and highlights the need for urgent action to prevent the sort of entrenched economic disadvantage that Australia has proudly avoided for decades.
NSW Treasurer Daniel Mookhey will deliver the state budget on Tuesday.Credit: Wolter Peeters
In the former category of stories is today’s article by senior writer Matt Wade that shows a generational gap in credit stress as the risk of loan default among those aged under-30 grows at a much higher rate than for older people.
The default risk for those aged under 25 jumped 2.5 per cent in the March quarter and by 2 per cent for those in the 26-30 year age group, analysis by credit bureau illion shows.
By comparison, default risk for those aged 41-50 fell by nearly 1 per cent and remained unchanged for over-50s.
Hasseldine said higher rents was a key driver of growing credit stress among younger age groups; illion data shows that rents are around are now about 12 per cent higher than they were a year ago.
As the cost of living crisis drags on, these latest figures reinforce for us the fact that it is the most economically vulnerable that pay the highest price of the straitened times in which we live. The young, the unemployed or those who are working in casual and/or low-paying jobs. It is this group who are locked out of the housing market. These are the cohorts that are hardest hit in an economic downturn, and for whom structural inequities in the housing market will hit hardest.
These warnings should not be lost on NSW Treasurer Daniel Mookhey, who will on Tuesday deliver his second NSW budget.
While of course, the biggest economic levers are held by the Reserve Bank, in the form of interest rates, and the federal government, the state government has some control over a key factor in the housing crisis – supply.
The Minns government has singled out housing as its most pressing challenge, kicking off the largest planning changes in a generation to reach ambitious targets under the National Housing Target of 75,000 homes a year for the next five years.
As Mookhey told Wade and state political editor Alexandra Smith on Saturday: “I think it’s fair to say that resolving the housing crisis is a key mission of the government, and we are determined to make a difference.
“I think the question that we need to ask ourselves as a society is why should the next generation miss out on the opportunities that their parents and grandparents had?” Moohkey asked rhetorically.
Well, let’s hope for our city’s sake that Mookhey will have some solid answers to this question that will be revealed tomorrow.
The housing crisis is complex and has multiple parts. As Christopher Harris also reports, hundreds of homes sitting empty in some of Sydney’s most expensive suburbs have been classified as inactive dwellings while thousands more are being used as secondary residences, sparking calls for a vacancy tax as a solution to the state’s housing supply and affordability crisis.
NSW crossbench MPs say a tax on unused homes, as has been rolled out in Victoria, could fund further housing for essential workers in addition to putting more properties onto the private rental market.
As Harris writes, this is no small issue. A third of all people rent in NSW and Sydney’s median rent for a house reached a 15-year-high of $1063 a week last month, while units cost $706 a week, according to SQM Research.
The Herald calls on government at all levels to implement urgent measures across a range of policy settings to help sort out this housing crisis and alleviate cost of living pressures on the most vulnerable.
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