Australian housing is still wildly unaffordable, and no, we can’t actually solve that by simply asking young people to stop talking about it.
Despite a fall in house prices during 2018 and 2019, Australia’s house prices are still among the highest in the world compared to incomes. The release of the 16th annual Demographia International Housing Affordability Survey confirms what we know – houses cost a gosh-damn fortune.
But it also highlights something we continually overlook. It doesn’t have to be this way.
As Australians, we are surrounded by high prices. I’m resigned to seeing six-figure prices on houses in Melbourne, including in some far-flung suburbs. But the figures for the rest of the world remind us this is the exception not the rule. As the next graph shows, New Zealand is doing worse than we are, but major countries such as the US, UK and Canada have much more reasonably priced homes compared to incomes.
Sydney has house prices at 11 times incomes. Major cities such as Chicago manage house prices of four times incomes. Even New York house prices are five times incomes. The way it is in Australia is not the way it has to be.
Australia has got itself stuck, for now. House prices have run so far ahead of incomes that we can’t let them fall, because that will make lots of borrowers unhappy, and crush confidence in the economy. The best answer would be to help incomes catch up to house prices, but we don’t seem to know how to do that either. It’s a paradox.
SOLVING THE PARADOX?
One answer to housing affordability complaints comes to people’s lips faster than any other: MOVE!
“Perhaps people should stop whingeing and simply move,” reads a representative online comment I found.
This is a popular trope, when homeowners, encountering the lamentations of younger generations about affordability, get cross. Indeed, when you look outside Sydney and Melbourne, you find greener pastures. Even the Demographia report acknowledges that.
“There is only one affordable market, Gladstone, Queensland,” it says. The Queensland city of Gladstone, about 500km north of Brisbane, has some very attractive looking real estate.
SOURCE:CHRONICLE
