The housing affordability issue has long been a matter of debate. However, new findings clearly state why millennial complaint might be justified.
It’s likely you can recall the ideals of the ‘old’ Australia. One where people of all ages were reasonably likely to afford their own home. However, for our younger generation, this dream once enjoyed by many Australians will forever remain that. Before the previous sentence rolls your collective eyes, know that it’s no longer just baseless millennial complaint, as according to the latest Grattan Institute Report, average house prices have increased five times compared to the average full-time earnings since the dawn of the millennium.
The strain – most acute in Sydney and Melbourne – is most aptly revealed by statistics: Since 2012, house prices have risen in the two cities to 70% and 50% respectively. Today’s record level of home construction is actually the bare minimum needed to meet our population’s demand. However, building more homes isn’t the one-size-fits-all solution. To propose a solution, the report voiced the following recommendations:
The Commonwealth Government should –
- Limit negative gearing and reduce the capital gains tax discount
- Include more of the value of high priced homes (above a threshold of say $500,000) in the Age Pension assets test
- Enforce laws covering foreign investment in residential real estate
- Develop an explicit population policy
- Encourage greater density in inner and middle ring suburbs
- Establish a National Housing Research Council
Furthermore, State Governments should –
- Broaden land taxes to include owner-occupied housing
- Set housing targets and ensure local governments meet them
- Release more greenfield land (undeveloped land for agriculture or landscape design; unfenced open land), namely in Sydney
- Reform property taxes to improve housing affordability
- Amend tenancy laws to make renting more attractive
The report cut immediately to who they believe is to blame, stating: “…it took neglectful governments two decades to create the current housing affordability mess…they preferred the easy choices that merely appear to address the problem.”
If our governments continue pretending that there are easy answers, idly implementing piecemeal measures to ‘fix’ housing affordability, prices will continue to snowball. With Generation Y might be our nation’s single largest population group, it seems that they’ll be locked out of the market, barring the appearance of a parental benefactor, or those who navigated their formative years sans the financial/career mistakes most of us endured.
The report has a rather more sobering prediction.
“Older people will not be able to downsize in the suburb where they live, and our children won’t be able to buy their own home,” states the study. While our society may have developed technologically, shuffling away from the idea of white picket fences and the nuclear family, some old desires do not change – the idea of a place to call our own.