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Developer incentives and inclusionary zoning will be key to stemming Australia’s growing housing affordability crisis as the impact of surging property prices emerges as a critical issue in this year’s federal election.
According to affordable housing peak body PowerHousing Australia, median dwelling prices soared by more than 20 per cent in 87 of 151 electorates across the country in 2021.
In a review of Corelogic mortgage and rental data, mapping indicated that price increases over the 12-month period had “conservatively” set back Australians late to the house-buying party by up to 10 years in loan repayments.
“The need for affordable housing is clearly there … it has become irrefutable, like smoking causes cancer,” PowerHousing Australia chief executive Nicholas Proud said. “Government knows it has to respond.
“We’ve got a federal budget on Tuesday … we expect the Coalition will make statements about this.
“The Opposition has already put its card on the table at the budget reply last year, committing to a future fund that will deliver 6000 homes per year over a five-year period.”
Proud said providing enough affordable supply at a price point that will soak up the increasing demand would “require development to factor in an affordable component”.
“There’s a couple of ways of doing that. There’s inclusionary zoning, which the Victorian government ran from two weeks ago.
“But that type of approach at first principle can be done, it just requires a bit of a timeline in advance.”
He said the other approach to counter the rising affordability challenge was “incentivisation” for developing and investing in social and affordable housing.
“We’re building the most homes in our history … supply has been coming through but there hasn’t been enough of the affordable and no one’s catering for it.
“To cater for that you need some sort of government involvement because the market has clearly moved well beyond what is affordable … nothings keeping up with it.
“Federally, we need a plan to ensure we’re structuring in the future development of housing and making sure we’re putting enough affordable housing out there.”
Proud said although the data showed house price rises would provide paper gains of up to 40 per cent in median values and more than 20 per cent increase in rents, it was also expected to cause considerable hardship and longer, deeper trails of debt.
“As the May election gets close, these substantial unpredicted gains will be seen as a positive by some ... [but] while a paper gain may be there today, it has only pushed younger generations and low-income earners further out of reach.
“With almost 60 per cent of electorates seeing over a 20 per cent increase in median dwelling prices in 2021 this adds to the payback period for those late to the house buying party with the bank of mum and dad getting hit harder than ever on the back of these rises.
“Those with paper gains of $200,000 to 300,000 have what seems to be a great outcome but they are left having to reverse mortgage to extract that gain to assist their kids to buy a home."
Proud also said with the outlook heading for a 2 per cent increase in mortgage rates by 2024, investors would inevitably pass that on to tenants with rental hikes.
New research from the Property Council of Australia indicated public concern over housing affordability had leapt and voters expected national action.
It showed 70 per cent of Australians now believe the ‘great Australian’ dream of home ownership was out of reach for most people, and 90 per cent of aspiring homeowners say it will be one of the most important issues in deciding their vote at the federal election.
“Australians of all ages are concerned about this issue, and the time is right for all policy makers – at federal, state and local levels – to get on and tackle it,” Property Council chief executive Ken Morrison said.
