Government intervention is needed to solve affordability crisis

As economists tell the Australian government to ready for another round of economic stimulus, Australians for Affordable Housing is calling on state and federal governments to make creating more affordable housing a national priority. 

This follows the release of the annual Demographia International Housing Affordability survey of 325 global housing markets, which classified Australia as having no affordable markets in 2011, with the majority of those markets classified as “severely unaffordable”.

Housing is the biggest cost-of-living issue in Australia, and this report is further evidence of the need for proactive government action on this issue. 

Australia has the worst housing affordability of any national market outside of Hong Kong, which is a terrible indictment and shows just how serious this problem is. 

The survey classified Melbourne and Sydney as “severely unaffordable”, with the cities’ median house price 8.4 times and 9.2 times the median income respectively. 

Although Australia’s national unaffordability ratio reduced from 6.1 times in 2011 to 5.6 times this year reflecting a slight fall in house prices, we must not ignore the fact that this still leaves Australia’s housing as “severely unaffordable”. 

This makes it the right time for governments to prioritise spending on affordable housing and prepare a stimulus plan focused on social housing, in anticipation of further economic problems in Europe. 

Social housing spending was the unheralded success story of the last stimulus package.  It didn’t just keep builders employed but delivered massive social benefits to some of our most vulnerable and disadvantaged people. 

By contrast the boost to the first-home owner’s grant simply supported house prices at record levels delivering a boost to those vendors who sold rather than providing benefits to renters seeking to get into the market.

Sarah Toohey is campaign manager of Australians for Affordable Housing.