What is the one thing, your major priority, you would do to help ease housing affordability in Australia?
We need to get over this idea of home ownership as the Australian dream. Put in place a system where long term renting of the one house is possible (I'm talking 20-30 years plus) then more and more people will be comfortable with the idea of renting.
I'm seeing many of my younger clients happy to rent where they want to live at that point in time and then invest elsewhere. With it being so common for people to change jobs every few years, work in different states & overseas - buying a house to live in often stops them from taking up amazing opportunities.
Renting isn't a bad financial decision. It only becomes a problem if you spend all the rest of the money you earn.
If you set yourself up so that some investing is done automatically and at regular (say monthly) intervals for a long period of time (20 years plus) then there is no reason why renting long term can't be a viable and much more flexible option.
Let market forces take their course. If the next generation can't afford a house, then who will buy them? It's impossible for house prices to continue to grow faster than wages. You can't get to a point in 100 years where an average house is (in today's dollars) $5,000,000 when the average wage is $70,000.
Sometimes house prices stretch one way or the other (cheap relative to wages or expensive relative to wages) but it must eventually return to the mean.
This idea that YOU MUST GET IN NOW BECAUSE THEY'LL ONLY GET MORE UNAFFORDABLE is ludicrous. It might take 5 years, it might take 10 or it might take 20 to revert to the mean. In the meantime, do what James has suggested above.
the places that have a housing affordability problem are very small in comparison to the whole country. There are no end of places where the cost of housing is extremely low
and whilst many people wont be super keen on a tree change to Broken Hill, the point is that there are lots of options for people to invest in direct property whilst renting and living perhaps nowhere near their investments.
If there was a single thing that could act as a silver bullet, it could be to actively work on incentives that allow businesses to decentralise without crucifying themselves by distance. because the people will go where the businesses are.......
And that involves long term infrastructure planning: roads, rail, air transport. Electronic data management is crucial to any plan like this: and I mean something OTHER than the hokey NBN we have here!!!
I doubt there is a politician alive with the cajones to plan and FUND this, so we are probably stuck with the shitty situation with a teeny tiny portion of the country worth gazillions and the rest of the place you cant give away......except to foreign investors....and THAT boys and girls is a discussion best left for another day:)
The private sector(private investors,Non for Profit housing groups even institutions) are willing to build affordable housing if government plays ball with them in changing policy for real incentives.E.g broader land tax exceptions,release land below market cost to build on and even tax concessions like the NRAS scheme was.Otherwise private sector will not deliver affordable housing, never.You cannot make housing more affordable but you can supply affordable housing.
Gotta be a wage breakout - hats got to be where it comes from...
I appreciate your going to say how do we facilitate that - then we need to pass it back to businesses and get their solution on how this could be facilitated.
This is a very hot topic, particularly if you live (or want to live) in Sydney and to a lesser extent Melbourne.
All of the contributors so far have provided a number of solutions/ideas which can help address the affordability issue.
In my opinion (particularly in the case of Sydney) the planning system needs to be addressed to increase supply. My memory of Economics 101 was if we increase supply, demand will decrease and with decreased demand we will achieve lower prices. If only it was that simple…..
James is correct. Renting as a means of living closer to employment has to become the new normal. Essential and service workers cannot be expected to own their own home if they work in or near the Sydney CBD. But as John suggested rental assistance in many instances is needed – how many of those same workers struggle to cover their rent by choosing to live closer to their employment. How much disposable income does the barber cutting your hair for $25 have? How far do they have to travel every day to get to their employment?
This is a major social issue with people travelling further and further to get to work. Spending more time commuting and less time with family.
The idea of home ownership should not be governed by owning the title to the land. Affordability outcomes around leasehold title are one obvious answer with those large tracts of residential leasehold land possibly being a very desirable long term annuity-based investment to large institutional investors.
I also agree with Brendan that there are a number of places outside of Sydney that are affordable and have employment opportunities. I know a number of families who have relocated to regional cities and love the quality of life that they now enjoy. However, there is not the supply of jobs, or housing, in those other areas to totally alleviate the affordability crisis in Sydney – at least not in a hurry.
Whilst my immediate solution would be around planning considerations I accept it is not the answer – there is no single answer. There are a number of moving parts and this discussion needs to continue in order to find a solution.