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Monday, 13 May 2024 15:58

Housing crisis in Australia

the housing issues in Australia the housing issues in Australia pixabay

The Albanese government established the National Housing Supply and Affordability Council (NHSAC) in December as part of its efforts to address the housing issues in Australia. Last year, it was announced that from July 1st, construction would begin on 1.2 million new, well-located homes to confront the housing crisis. Authorities also allocated 500 million Australian dollars to support the development of new housing in suitably chosen locations.

What will you learn?

1. What actions has the Albanese government taken to address the housing issue in Australia?
2. How many homes does the Australian government plan to build, and what funds have been allocated for this?
3. How have the incomes of people able to buy homes in Australia changed since 2019?
4. What long-term effects on society result from high housing prices?
5. How do high housing costs affect the productivity and economic abilities of Australians?

Housing affordability increasingly out of reach

Housing affordability is declining as property values and rental rates rise, outpacing the growth of household incomes. The average full-time annual income in Australia reached 98,098 Australian dollars, according to the latest data from the Australian Bureau of Statistics, yet those who can afford to buy a home earn on average more than double that, at 220,000 Australian dollars. This represents a nearly 40% increase from 160,000 Australian dollars in 2019. "The result is a falling rate of homeownership, more pressure on an already tight rental market, and then that cascades to the most vulnerable in our society, for example, greater reliance on homelessness services," said Owen from CoreLogic.

Long-term effects of high housing prices

Furthermore, Owen noted that high housing prices have "ugly" long-term effects. "We're seeing real estate as a bigger driver of the wealth divide between wealthier and lower-wealth households, because income growth can't keep up with prices," Owen said. Higher housing costs for renters and recent mortgage holders also weigh on our productivity and economic capacity because there's less money left over for personal investment. The Reserve Bank of Australia stated in its May monetary policy decision that "household consumption growth has been particularly weak as high inflation and the earlier rises in interest rates have affected real disposable income." The central bank indicated that households are saving and cutting back on discretionary spending.