Decreasing housing affordability - will the new government act?

There are two things that I love about the buying and selling of residential real estate.  One is the feeling of personal achievement as a real estate agent when a house is sold and a good price has been achieved for your client - it is quite satisfying to know that you have done a good job. 

The second thing that I enjoy is watching the excitement that many people experience when they buy a property (be it their first or their tenth).  For a large number of Australians, the purchase of a property represents life-change – be it that they are making the move out of the family home, upsizing to accommodate a growing family or even just taking steps to move out of the rental market. 

It is therefore increasingly worrying to hear that home ownership is becoming more and more difficult for many Australians.  We have seen this trend occurring for a little while now, and the recently released HIA-Commonwealth Bank Housing Affordability Report found that housing affordability levels around Australia have reached record lows. 

The report’s Housing Affordability Index is formed based on a combination of interest rates, household incomes and home prices to determine affordability conditions.  The latest report showed worsening affordability in most regional areas and capital cities across Australia in the three months to June. 

From my perspective in real estate, a key contributing factor to this situation is the critical supply situation that is occurring nationwide.  This large undersupply of residential real estate, which many have estimated to be over 200,000 dwellings and growing, may largely be due to the lack of strategic urban planning by governments at levels.  

The Federal Election, as the most recent example, saw little attention paid by either party to the state of housing in our nation.  It is understandable that there were other issues also of great importance which needed to be covered.  But from where I sit it appears that the residential property market is an issue that is causing Australians much concern, and it is thus important that the situation is addressed by government bodies.  

They say that it often takes a crisis to occur before anybody takes action to rectify an issue.  Well, with Australia’s growing population and housing shortage, we could be in a situation where it won’t be long before affordability levels mean that the great Aussie dream of home ownership will for many remain simply a dream.  This, in my humble opinion, would be a tragedy. 

How can we avoid such a situation? Perhaps the answer is for local, state and federal governments to direct their focus to co-operative and competent strategic urban planning to ensure that land is released and housing construction levels increase.   Whatever action is taken, it is certain that it needs to occur. It will be interesting to see what actions the new government (which hopefully will be decided upon today!) will take to improve the housing situation in Australia.

Posted by Charles Tarbey on 07/09/2010 at 2:13 PM | Categories: State of the Market -

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