Research led by UNSW has found that the property market is now a “triple threat” to Australia’s economic future, with the continuous surge in housing prices creating instability and affecting the lending policies of major banks.
“A system that raises housing costs for all Australians, that raises instability and lowers productivity, does not serve the nation well,” said the researchers, headed by the university’s City Futures Research Centre’s Duncan Maclennan and Hal Pawson.
“And as for rising housing wealth, it is not like the wealth created from effort and innovation, for that creates gains for all. Rather, it makes some Australians, the affluent and older, better off by making younger and poorer Australians, as also future buyers, worse off.”
This isn’t great news for us.
Interestingly, the thought of one day buying a house is definitely something in my subconscious mind, but it’s never seemed easy. Renting is the norm in young society today, especially in bigger cities such as Sydney and Melbourne.
Now that I think about it, it does seem pretty impossible to ever have the funds to buy a house. Perhaps that’s because I’m not the world’s best saver (I love shoes and wine too much), or perhaps it’s because house prices are rising by the millisecond.
Globally, house prices have accelerated since mid-2020, as government stimulus and record low-interest rates have been funnelled into property markets, according to The Sydney Morning Herald.
Melbourne’s average house price has reached $908,000, while in Sydney, it’s $1.2 million. Houses in Sydney are said to be rising up to $1,145 a day, and they probably won’t come down.
The findings show that Australia’s house prices have experienced the fourth largest increase in after-inflation prices across the OECD, up by 120% between 2000 and 2020. The only countries to experience bigger increases were New Zealand, Canada and Sweden.
They also state that ownership is now out of reach for anyone under the age of 35, as governments continue to repeat failed policies. Since the mid-1990’s, house prices have overtaken income growth which clearly contributes to national home ownership, specifically among under-35s, which has halved since 1995.
The UNSW research is based partly on a survey of Australia’s leading economists and housing policy experts, which suggest that the government’s approach, including $25,000 grants for first-home buyers and new policies, won’t do anything to make homes more affordable.
The researchers suggest that all governments should end stimulus measures aimed at the property market and focus on the social rental sector instead, with the research revealing that Australians are among the most indebted in the world.
Given this, it doesn’t really make sense that we’re able to loan so much money from our banks. In Victoria, the average loan is now $523,000, up from $488,000 and for a first-home buyer it’s at a record of $451,500. That’s a hell of a lot of money to pay back, and researchers are arguing it is too much, given our current economic instability.
Another issue is the growing independence on the “bank of mum and dad”, with the UNSW report noting that the chances of young people being able to buy homes independently is less common, and a dependence on the financial status of their parents is growing.
Basically, the poorer are getting and poorer and the richer are getting richer. It’s a classic scenario of evolving capitalism and it honestly makes me uncomfortable to think about because I feel completely helpless.
Money is an uncomfortable topic at the best of times and I’ve always felt grateful and privileged for my life. I’m lucky to have a full-time job that I love, live in a buzzing suburb in Melbourne and able to afford everything I need.
I am by no means struggling, but the fact that I don’t have wealthy parents who could support me in buying a property, that my salary isn’t overwhelming and definitely not enough to put down money for a house in the near future, not to mention that there are so many things I want to do and endless things to save for, a house of my own has never felt so far out of reach.