by TMB
Australia, it has recently been widely speculated, is facing a housing affordability crisis.
So much so that whereas from the post war period to as recently as the early 2000’s the cost of housing was around four times the median household income in recent times this has risen to as high as seven or eight times median incomes (RDC, 2007).
To be in housing stress is broadly considered as being when a household both spends more than 30% of income on rent or on mortgage repayments and their income is ranked in the bottom 40% of the income distribution (NHS, 1991). Therefore due to the scope of people this definition includes, affordable housing is not confined to households eligible for social and emergency housing but also the working poor.
According to the OECD Australia’s capital cities are now among the least affordable places to live in the world, with the most overvalued houses in the western world. They said that the price of housing relative to incomes is 50 per cent higher in Australia compared to other countries studied (in Spoehr, 2006).
Australia, it has recently been widely speculated, is facing a housing affordability crisis.
So much so that whereas from the post war period to as recently as the early 2000’s the cost of housing was around four times the median household income in recent times this has risen to as high as seven or eight times median incomes (RDC, 2007).
To be in housing stress is broadly considered as being when a household both spends more than 30% of income on rent or on mortgage repayments and their income is ranked in the bottom 40% of the income distribution (NHS, 1991). Therefore due to the scope of people this definition includes, affordable housing is not confined to households eligible for social and emergency housing but also the working poor.
According to the OECD Australia’s capital cities are now among the least affordable places to live in the world, with the most overvalued houses in the western world. They said that the price of housing relative to incomes is 50 per cent higher in Australia compared to other countries studied (in Spoehr, 2006).
Slow land release or low interest rates?
Sustainable planning calls for consolidated and integrated cities with medium density and a curb to the sprawl that has made Australian cities so car dependent. Many aspects of Melbourne 2030 respond to this, such as with the implementation of the Urban Growth Boundary (UGB) and the increase of densities in the inner city and around activity centres.
The Federal Government however, citing studies from the international research institute Demographia, blame the State Government’s for the increased housing affordability crisis for holding back on land release as an attempt to curb urban sprawl. Many leading economists including from the ANZ and Macquarie Bank dispute this view, identifying a decade of low interest rates, increased migration and cuts to capital gains tax - making negative gearing more attractive, as the cause (Schneiders & Millar, 2007). From this perspective poor housing affordability has thus been due to heightened demand not lack of supply.
The Federal Government however, citing studies from the international research institute Demographia, blame the State Government’s for the increased housing affordability crisis for holding back on land release as an attempt to curb urban sprawl. Many leading economists including from the ANZ and Macquarie Bank dispute this view, identifying a decade of low interest rates, increased migration and cuts to capital gains tax - making negative gearing more attractive, as the cause (Schneiders & Millar, 2007). From this perspective poor housing affordability has thus been due to heightened demand not lack of supply.
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| An example of the expensive houses of southern Australia, photo by yewenyi |
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| An example of the expensive houses of southern Australia, photo by yewenyi |
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