It’s Official – Housing Affordability Is a Crisis
A generation of young Australians have a very real fear that owning their own home is fast (if not already) slipping beyond their reach.
Demographia considers a house price to household income ratio of 5.1 or more is “severely unaffordable”, with 4.1 to 5 “seriously unaffordable”. A ratio of 3 or less is considered affordable with Demographia arguing that most cities were at those levels prior to a global property boom starting in the 1980’s and ‘90s. All five of Australia’s major metropolitan areas (those with a population of over 1 million) were “severely unaffordable” for the 12th year in a row.
Adelaide’s ratio sits at 6.4. To put this in perspective, Sydney’s ratio is a whopping 12.2 times what the middle-income household in the city earns in a year. The prices of units are excluded in the study, with only the prices of houses taken into account.
So in search of answers, LJ Hooker conducted a survey of more than 2,600 property owners which found that stamp duty was a major factor in the decision making process for those looking to sell and buy property.
The survey found that 51 per cent of home owners that received an appraisal by a real estate agent but did not subsequently list their property for sale, would, in fact, do so if stamp duty was lower. This figure rose to 61 per cent if stamp duty was abolished altogether.
These numbers highlight the chokehold the current stamp duty tax has on the secondary market; Australian families would like to sell, move and relocate but cannot afford the cost of transacting. According to our data the reduction or removal of stamp duty will see more properties come onto the market, which in turn will help balance the current supply and demand issue.
But solving housing affordability is not a onestep process, nor is there a one bandaid answer. Instead, state and federal governments should work together to look at a number of solutions which could alleviate housing stress, so our children’s children will be able to afford property in all the major cities across Australia.
At LJ Hooker, we think these changes to three policy areas, being Affordable Housing programmes, removal of stamp duty and regionalisation and decentralisation of government services and businesses will help the likes of State Premiers in their quest to solve this affordability crisis.
Original Blog Post: Sarah Lefebvre ljhooker.com.au on January 30 2017 (for Grant Harrod, CEO LJ Hooker)