The Perceptions of Housing Abordability report of 2019 goes beyond the numbers. It explores in depth what Australians think and feel about property, exploring their hopes and dreams.
What we do know is that affordability has deteriorated in recent times. But the will and passion to own this piece of Australia remains. The Australian dream has not been tarnished. We have found that over 81% of Australians – four in five – believe it is still important to own a home.
However, we cannot be complacent. The housing market in Australia remains unaffordable and we may be entering another period of rising prices. With interest rates at record levels, prices are starting to go up, but we are still facing a critical situation. Let's look at some statistics.
The ratio of household income to housing value today is 6.5 times. Thus, the typical Australian household spends on average 6.5 times its gross annual income to buy housing at a median price for $ 524,000. Less than 20 years ago, it was 4.5 times.
The market is difficult to penetrate. It takes an average of 8.7 years to save for a 20% deposit. It's a long time – an eighth to a tenth of life.
Once you have overcome this obstacle and set foot in the door, you are spending 35% of your gross annual income on your mortgage. This is a large amount of disposable income that you need to be able to repay your loan.
Meanwhile, wage growth remains bland. Australians simply did not get the wage increases they needed to help them save and pay more for housing.
It is therefore not surprising that, while half of Australians believe that affordability has improved in the past two years, more than 80% are still concerned that to be able to afford their first or next home.
The cubby house syndrome, in which young people decide to stay at home with mom and dad, is alive and well. Some 63% of Australians who still live with their parents say they cannot afford to leave home, compared with 62% in 2017.
Unfortunately, to date, we have applied certain cosmetic levers – such as stamp duty concessions and grants to first-time home buyers – to alleviate the problem of affordability. They offer temporary relief, but we need to tackle more basic levers. We cannot count on falling house prices to solve the accessibility crisis.
As a priority, we must move from a property tax system based on stamp duties to a general property tax. We accept that all governments must raise property taxes, but stamp duty is ineffective. This drops a lot at the point of purchase, so new customers carry the burden.
A broad-based property tax is a more democratic way to share the burden. I am happy to see that ACT has embarked on a 20-year journey in this direction. It would be fantastic to see other states and territories imitate it.
Lisa Claes
is the CEO of CoreLogic International,
the world's largest real estate data and analysis company
Top suburbs:
newcastle
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Penrith
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west wodonga
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