Australia is grappling with a housing crisis that has been developing over decades, according to Federal Housing Minister Clare O’Neil. Speaking at the AFR Property Summit, Minister O’Neil explained that the gap between incomes and house prices began widening in the 1980s and has accelerated since the late 1990s. “At the turn of the century, the median household price was about four times the average income. Today, it’s nearly eight times,” she said.
The reason for this dramatic rise in house prices, according to O’Neil, is a chronic undersupply of homes. “For a long time in our country, we have not been building enough homes,” she said, noting that Australia now has fewer homes per person than comparable nations like Canada, the UK, and France.
The lack of sufficient housing stock has had a direct impact on affordability. “Fewer homes mean less affordable housing because the same number of buyers and renters are spread across fewer homes,” Minister O’Neil explained. “It sounds trite – but what happens when we build more homes? Housing becomes more affordable.”
The federal government has set an ambitious target to facilitate the construction of 1.2 million new homes between July 2024 and 2029. However, many experts doubt whether this goal is achievable, given the current rate of construction and the ongoing challenges in the residential development sector.
Australia’s housing shortage has far-reaching implications for both buyers and renters, and the need for immediate action is becoming more pressing as housing affordability continues to deteriorate.
