Housing Affordability Crisis in Australia: A Deepening Inequality

Strategic Insights -

Housing prices have soared in Australia, rendering homeownership a distant dream for many young Australians. Brendan Coates, director of the housing and economic security program at the public-policy think-tank, explains that the price of a typical home has grown from about four times the median income in the early 2000s to more than eight times today, and nearly 10 times in Sydney. This shift has significant implications, making it increasingly difficult for first-home buyers to save a deposit. According to Grattan's analysis, homeownership rates are falling fastest for younger people, with 57% of 30 to 34-year-olds owning their home in 2001, compared to 50% by 2021.

Key Takeaways:

  • The price of a typical home in Australia has grown from about four times the median income in the early 2000s to more than eight times today, and nearly 10 times in Sydney.
  • Homeownership rates are falling fastest for younger people, with 57% of 30 to 34-year-olds owning their home in 2001, compared to 50% by 2021.
  • Just 36% of 25 to 29-year-olds own their home today, down from 43% in 2001.
  • Housing unaffordability is contributing to wealth inequality, which has been climbing for two decades.
  • The growing divide between the housing 'haves' and 'have-nots' is largely generational, with older Australians who bought their homes before prices really took off seeing their share of the country's wealth steadily climb.
  • Australia's land-use planning rules are highly restrictive and complex, making it difficult to build new homes, particularly in areas where most people want to live and work.
  • Over 35,000 apartments and townhouses approved for development are sitting unbuilt in Western Sydney, highlighting the challenges to Labor's target of 1.2 million new homes to be built nationally by mid-2029.
  • Lending criteria are too stringent for many first-home buyers, with major banks imposing a servicing buffer that often disqualifies buyers, even in areas like Western Sydney that used to be considered affordable.

Statistics:

  • The price of a typical home has grown from 4 times the median income in the early 2000s to more than 8 times today, and nearly 10 times in Sydney.
  • 57% of 30 to 34-year-olds owned their home in 2001, compared to 50% by 2021.
  • 36% of 25 to 29-year-olds own their home today, down from 43% in 2001.
  • 1.2 million new homes are to be built nationally by mid-2029.
  • Over 35,000 apartments and townhouses approved for development are sitting unbuilt in Western Sydney.

Sources:

  • Brendan Coates, director of the housing and economic security program at the public-policy think-tank.
  • Grattan's analysis.
  • Andrew Hrsto, founder and owner of residential developer ALAND.
  • ALAND Home Loans.
  • Labor's target of 1.2 million new homes to be built nationally by mid-2029.