Australian housing affordability
Editor
The ability of Australian homemakers to buy houses suitable for themselves and their families entails more than can be accommodated under Treasurer Joe Hockey’s simple advice to get a job which pays well. A recent article in The Conversation by Gavin Wood and Rachel Ong [1] discusses the long-term structural problem in Australian housing and how this has been exacerbated by property investment. According to them:
“Fiscal concessions in the form of capital gains and land tax exemptions to home owners, negative gearing and concessionary capital gains tax for “mum and dad” investors, and asset test concessions to home owner retirees, offer powerful incentives to accumulate wealth in housing assets. As a result, the supply side problems are not so much about a shortage of housing, but an inefficient distribution of the stock of housing.”
“In 1982, the ABS Survey of Income and Housing [2] revealed that 10% of home buyers spent more than 30% of their gross household income on housing costs. In 2011 these numbers had soared to 21% of all home buyers.
“The trends in housing cost burdens reflect rising real house prices. The history of house prices over this time- frame is one of booms in which real house prices escalate to higher levels than they peaked in the previous boom. Periods of house price stability punctuate these booms, and give household incomes some breathing space in which to catch up.
“But at each peak in house prices, household incomes have fallen further behind. According to the same ABS data source, households in 1990 on average valued their homes at a multiple that was four times their average household income. By 2011 this multiple had climbed to nearly six times average household income. ”
Sources:
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The Conversation, 12 June 2015 https://theconversation.com/the-facts-on- australian-housing-affordability-42881
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Household Income and Income Distribution, Australia, 2011-12 http://www.abs.gov.au/ausstats/[email protected]/mf/6523.0
