Buying a property has never been easy, especially for people who have low incomes and live in Australia’s major capital cities.
In recent years, though, the housing affordability problem has worsened, at least if media reports are to be believed.
So what can federal, state and local governments do to fix housing affordability? Here are five ideas:
1. Ease zoning restrictions so developers can build more properties
Back in 1984, Australia’s net population was around 15.5 million people. Since then, it’s grown by more than 10 million to hit 25.7 million people in September 2020, according to the Australian Bureau of Statistics. That’s an average of over 635,000 a year.
And while our country might be big enough to support such a booming population, our housing supply is falling behind, with only around 200,000 new homes constructed every year.
When demand outweighs supply in the property market, prices are typically pushed higher. So, boosting supply could help tackle affordability … but only if new homes are built in the right places close to jobs and transport.
The problem is, many local councils have strict planning policies in these locations, particularly around height and density restrictions. Easing these could mean developers build more properties, having a knock-on effect on supply and affordability.
2. Give buyers incentives to relocate to regional areas
More than two-thirds (68%) of Australia’s population live in our eight capital cities. And while the rise of remote working during the pandemic has prompted some Australians to consider sea or tree changes, many regional areas suffer from low populations.
However, they typically have more affordable housing. Encouraging buyers to relocate to these areas by offering incentives could, therefore, kill two birds with one stone. It’s an idea with growing popularity around the world. For example, several Italian villages in remote regions have famously sold properties for €1 as a way of encouraging fresh blood into their communities.
3. Build more public housing
In the thirteen years between 2006 and 2019, our country’s public housing stock decreased by 35,200 dwellings, according to the Australian Institute of Health and Welfare. As such, the national waiting list stretches to just under 150,000 households with those considered in greatest need given priority.
Building more public housing could help ease the pressures low-income households face trying to find a safe, affordable place to live.
4. Abolish stamp duty for buyers on low incomes
Aside from the purchase price, stamp duty is one of the biggest upfront costs of buying a property – potentially adding tens of thousands of dollars onto your final bill. And while some first home buyers are exempt or receive a concession on the tax, thanks to state government incentives, there is no equivalent for buyers on low incomes.
5. Introduce shared equity schemes
Shared equity schemes are when a buyer purchases half the property, with the government buying the other half. They’ve been used to great effect in Singapore, where around 80% of the population has been able to buy a subsidised home with their government’s help.
As a result, property prices within the private sphere are relatively affordable for the average person – costing on average 4.8 times the median household income in 2018. In comparison, the ratio was 12.9 in Sydney for the same year.
While Well Money can’t make buying a property more affordable, we can help cut the costs of your home loan with our award-winning mortgages. Check your eligibility here.