Australians are set for 40 more years of housing affordability woe if current trends continue unabated, pushing a generation of retirees to live out their twilight years without owning a home.
While more people will enter retirement without owning their home, low socioeconomic households will be pushed to outer or regional areas where transport infrastructure is poor and job prospects are lower, the new report by the Committee for Economic Development of Australia (CEDA) said.
"Barring any major economic jolts, demand pressures are likely to continue over the next 40 years and supply constraints will continue," CEDA Research and Policy Committee Chairman, Professor Rodney Maddock, said.
Key Points:
- Affordability and supply problems likely to persist for another 40 years;
- Recommends adding another 20,000 new affordable dwellings each year for low income people;
- Other solutions such as easing zoning laws to free up more land and more high-density accommodation should be considered.
"This is particularly the case in capital cities with a growing population and where an increasing proportion of Australia's population are expected to reside."
The report also considers the impact of housing affordability on the poorest citizens and includes a recommendation that Australia needs annually 20,000 new dwellings affordable to low income people.
"Prolonged housing affordability issues will result in more people entering retirement without owning their home and low socioeconomic households pushed to outer or regional areas where transport infrastructure is poor and job prospects are lower," said Maddock.
"In the long term this could have budget implications for governments as more people become reliant on government assistance."
Maddock said another key issue highlighted in the report is the current structure of land supply, which may inadvertently make it in developers interests to drip feed dwellings into the market.
"CEDA's report looks at the UK as an example where developers bid high to obtain land for development and it is then in the interests of developers to build slowly to take advantage of rising market prices," he said.
Not much optimism about the future housing affordability:
- Demand pressures are likely to continue over the next 40 years.
- Supply constraints likely to remain, with urbanisation trends expected to continue. The proportion of people living in capital cities are projected to rise from 66 per cent to almost 74 per cent.
- Jobs in the future are projected to grow in service and knowledge based industries with skilled labour being favoured over unskilled, reinforcing the steady growth in earnings inequality that Australia has experienced since the mid-1970s.
"This is an area that should be further examined and CEDA's report highlights that a key difficulty in drawing policy recommendations for Australia is a lack of consistent and rigorous data available on supply of land for development in Australia and its correlation to housing prices."
As part of the 2017 budget, the Federal government announced its First Home Buyer Super Saver Scheme -- whereby first home buyers inject additional funds up to $15,000 a year into their nominated superannuation account.
Earlier this month a survey by law firm Slater and Gordon found 26 percent of Australians aged 16-34 said would need to rely, or already had relied, on an inheritance before they could buy a home.
That figure compares to just eight percent of baby boomers, those aged above 55, who said they needed an inheritance to buy property.
Another report shows debt among younger Australians has doubled since 2002, meaning young people are living with parents longer than before.