Buying a home in Australia has become increasingly out of reach for many people, with prices almost tripling in the last 20 years. This has left many wondering why the housing market is so out of control and how it has come to this point. There are several factors that have contributed to the high cost of buying a home in Australia, including limited land supply, onerous planning approval processes, low rates, poor housing supply, and domestic migration. The lack of immigration has also played a role in the high cost of buying a home, but domestic migration could have had a greater impact on the housing market.
In 1945, politicians convened a national conference in Melbourne to discuss Australia's urgent homelessness issue. This led to the creation of a ministerial portfolio for housing for the first time in 1947 and a boom in the number of houses built. At the same time, rental controls were put in place which discouraged people from buying houses just to rent them. This, combined with low rates and poor housing supply, has resulted in the cost of buying a home rising from two to three years of family income after taxes to three or four years of income.
This increase is expected to continue for at least another year. The most fundamental measures to improve housing affordability should focus on increasing housing supply and decentralizing away from major cities. This could help reduce the cost of buying a home and make it more accessible for people who are struggling to afford it. It's clear that something needs to be done about Australia's housing market if we want to make it more affordable for people who are looking to buy their own homes. Increasing housing supply and decentralizing away from major cities are two key measures that could help reduce the cost of buying a home and make it more accessible.