Podcast: A high price tag for the Australian Dream

Homing in on housing affordability

Ben Phillips, Cukkoo Joseph, Martyn Pearce

Economics and finance, Government and governance, Social policy | Australia

20 April 2018

On the latest Policy Forum Pod, we chat with ANU researchers Ben Phillips and Cukkoo Joseph about how to repair Australia’s housing affordability problem.

A recent survey has found that the overwhelming majority of Australians believe the dream of home ownership will be out of reach for future generations. But just how big a problem is housing affordability in Australia? Does the country really face a housing shortage, or are there other factors at play? On this week’s podcast, we ask experts Ben Phillips and Cukkoo Joseph all our burning questions about housing affordability, as well as a few of yours. Listen here: http://bit.ly/PFPhousing

Ben Phillips is a Principal Research Fellow at the Centre for Social Research and Methods. He has nearly 20 years of experience as an economic and social researcher in Australia.

Cukkoo Joseph is a Research Assistant in the ANU Centre for Social Research and Methods, where she works on models of Australian Government taxes and social welfare payments.

In 2017, Ben Phillips and Cukkoo Joseph helped conduct research which found that one in five Australians are struggling to keep up with their housing payments.

“House prices have become extremely expensive over the last 15 or 20 or so years,” Ben says.

“The typical house price in Australia today is about $540,000 – that’s for a detached house. That’s about four times higher than back in the late 1990s, when it was around just $130,000, which just seems like a cute little number these days.”

And while the ongoing costs of repaying a mortgage is undoubtedly a challenge for many Australians, the real issue with housing affordability is around getting the deposit together to purchase that first home, Ben says.

“If you’re a renter and you’re wanting to get into the housing market, and you don’t have parents who have lots of money who can help you out in that regard, pulling together that deposit is the real challenge.

“You can easily be looking at having to stump up well over $100,000 of cold hard cash, which is very difficult for most young families.”

So how big a problem is housing affordability in Australia compared to other countries? Cukkoo says that a common tool for comparison among OECD nations is what’s called the ‘housing cost overburden rate’, which measures the proportion of households that spend more than 40 per cent of their disposable income on housing-related costs.

“Looking at the statistics in Australia, the median housing cost as a share of disposable income for rent is about 24 per cent, and for mortgage repayment it is about 21 per cent, which are broadly consistent with the OECD average.

“In comparison, Australia’s housing cost is relatively high, but I should note that it’s much worse in other countries.”

So for an issue that is clearly affecting many countries around the world, what steps can policymakers take to make housing more affordable?

“Unfortunately in housing policy in Australia, we’ve had many many years where federal governments of all colours have probably not paid a lot of attention to policy,” says Ben.

“Areas which I’d probably focus on would be tax concessions. At the moment there are some pretty strong tax concessions there for the investors… An area where you could make the most impact in the short-term is to put a little more money in public housing.”

Policy Forum Pod is available on SpotifyiTunesStitcher, and wherever you get your podcasts. Got feedback for us on this pod? Email podcast@policyforum.net, tweet us @APPSPolicyForum or find us on Facebook.

 Ben Phillips and Cukkoo Joseph were in conversation with Martyn Pearce. This episode of the pod was produced, written and edited by Martyn Pearce. This blog post was written by Nicky Lovegrove.
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