Housing affordability has far-reaching impacts on Australia’s economy and the wellbeing of the population. The dramatic increase in house prices experienced in Australia in recent years has not been accompanied by a similar level of wage growth. Consequently, home purchase and renting, particularly in capital cities, is now significantly more difficult than before.
This paper provides insights into housing affordability and housing stress in Australia, and specifically in Victoria, over the last decade.
As this paper will outline, the way Victorians live and engage with the housing market is changing.
- Victoria’s population is growing rapidly and is increasingly urbanised;
- More people are renting;
- Fewer young people are entering home ownership and they are doing it later;
- Housing is becoming more unaffordable; and
- More people are experiencing housing stress and taking on greater debt burdens.
The present housing situation is the result of several interconnected factors, including historically low interest rates and rising household debt, as well as rapid house price growth that has outstripped wage growth. Population growth and current taxation settings have also contributed to current housing affordability conditions.
There are a number of options available that may address the significant problem of housing stress and decreasing housing affordability in Victoria. This paper provides a jurisdictional comparison of some of the key strategies applied by governments in Victoria, New South Wales, Queensland, South Australia and Western Australia to address housing affordability and affordable housing supply.