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Wednesday, December 2, 2020

‘No end in sight’ for Sydney and Melbourne’s housing affordability crisis

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‘No end in sight’ for Sydney and Melbourne’s housing affordability crisis

IT’S the news none of us want to hear. According to an explosive and slightly depressing new report, there’s “no end in sight” for Australia’s trillion-dollar mortgage meltdown.

Documenting the seriousness of the affordability crunch, the report out today warns Australia’s mortgage debt level has reached “dangerous territory” hitting $1.45 trillion and growing by $100 billion a year.

Sydney and Melbourne property seekers are the nation’s worst off, with record high housing prices in the capital cities causing a “social catastrophe”.

The report, published by the Australian Population Research Institute, pins the blame on federal government policies on negative gearing, capital gains tax and migration, as well as shortsighted planning by state governments.

The report’s authors accuse Prime Minister Malcolm Turnbull of “monumental insensitivity” towards the next generation of home seekers in Sydney and Melbourne, suffering from record high housing prices.

“The average level of debt per Australian’s household (most of which is mortgage debt) is equivalent to 160 per cent of the mean annual income of each household. This is higher than almost all other developed countries,” they write.

“It is unlikely to be sustainable. A recession or a rise in interest rates would undermine the capacity of mortgagees to service their debt, with profound wider economic implications.”

A sharp increase in the development of high-rise apartments in both cities, and a preference from investors for small apartments, has led to a shortage of “family-friendly” dwellings in the capitals, the report claims.

“There are increasing numbers of high-rise apartments available in both cities. But these are totally unsuitable for those looking for family-friendly housing,” the report states.

“It is the investors who are bearing the risk. They prefer small apartments because most don’t want to pay more than $500,000. A family friendly apartment of 80sq m will cost at least $700,000 to $800,000. As a result, few are being constructed.”

An increase in high rise apartments, like this complex in Malvern, have seen a shortage of “family friendly homes”.Source:Supplied

Providing some global context, the report cites data from the International Demographia International Housing Affordability Survey.

“Sydney and Melbourne are right at the top of the most unaffordable locations in the world,” the report states.

“By the third quarter of 2015 … the median price for a house in Sydney was 12.2 times the median household income. This gave Sydney the dubious distinction of being the second least affordable location of all the 86 major markets surveyed.”

Melbourne was ranked the fourth least affordable location.

We don’t really have a solution, but we’re coping by continuing to rent. Picture: The Australian Population Research Institute.Source:Supplied

The solution? Unfortunately, it doesn’t look like there’s one on the way, with the report conceding there’s “no end in sight” for the housing affordability crisis.

The plight of “generation rent” is a reality in Sydney and is moving to Melbourne, with “profound” implications. In 2011, a huge 42 per cent of Sydney couples aged 30—34 years and 31 per cent of those aged 35—39 years were renting. In 2001 those figures were just 34 per cent and 24 per cent.

The report’s authors argue negative gearing should be abolished and migration levels reduced.

“The Coalition government has its head in the sand,” the report says.

“As matters stand, the affordability crisis will get worse. There is a stubborn insistence that we can have it both ways: huge population increases in Sydney and Melbourne, and affordable infill housing.”

Online Source

The Indian Telegraph Sydney Australia

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