Housing affordability a growing concern for Australians

July 08, 2015

New research has revealed that the average home loan has grown almost four times faster than the average Australian full-time wage.   

According to data from the Australian Bureau of Statistics, the average home loan grew by 18.5% in the two years to April 2015 – from $301,800 to $357,500.

During the same time, the average Australian full time wage grew just 3.6% from $77,225 to $80,054.

Speaking about the data, Mortgage Choice chief executive officer John Flavell said the statistics were “worrying”.

“Data from the Australian Bureau of Statistics shows the current average loan size in Australia is approximately 4.5 times larger than the average wage. By comparison, in 2013 the average loan size was just 3.9 times the average full-time Australian wage,” Mr Flavell said.

“These statistics would suggest that property prices are rising at a much faster rate than Australian wages and this is unlikely to change anytime soon.

“Research conducted by RP Data found property values climbed by 2.8% and 2.9% in Sydney and Melbourne respectively over the month of June alone. Worse still, in the last 12 months, Sydney values have soared by 16.2%, while Melbourne values have risen by 10.2%.

“Housing affordability is already a significant problem in many parts of Australia and data would suggest that the problem will only get worse unless something is done.”

Mr Flavell said while government is actively talking about housing affordability in a lot of public forums, including last month's Inquiry into Home Ownership, they are not doing a lot else.

“At the Inquiry into Home Ownership last month, Treasury's acting deputy secretary Macroeconomic Group, Jenny Wilkinson, said demand for housing continues to outstrip supply in many markets across Australia and more needs to be done to address the issue,” he said.

“Sadly, how the problem can be addressed was not discussed. Witnesses in the public hearing were exclusively employees of Government departments, consumer voices were not heard and their opinions were not sought. This suggests these inquiries are designed to allow a lot of political grandstanding and not a lot of action. This feels very much like the Government commissioned inquiry into home ownership, conducted in 2004 and lead by the Productivity Commission, which produced 255 pages of findings with no practical outcomes or actions. The only thing that has changed since 2004, is that the rate of home ownership has continued to decline and the proportion of households with a mortgage has increased. Further, people are increasingly being driven into unaffordable rental properties, while the proportion of people living in public housing has declined.”

Mr Flavell said the time for political grandstanding has come to an end and it is now time to act.

“In order to act, we need to get a true picture of the current state of the property market and how housing affordability affects different buyer groups as well as renters. This is why we have launched an investigation into Housing Affordability,” he said.

“We want all Australians to tell us how housing affordability is affecting them by visiting www.mortgagechoice.com.au/have-your-say and filling out our survey.

“Housing affordability is a function of property prices, income levels, the cost of and access to credit as well as supply of rental accommodation. To have a positive impact on affordability, drive up the instances of home ownership and reduce rental burden, all of these levers should be considered and used”

“I strongly encourage everyone with an opinion to take part by having their say. The more we know and the more data we have, the better placed we will be to help the decision makers in Australia tackle the important issues first.”

Mr Flavell said it was no longer good enough for government to investigate the issue of housing affordability, they need to be given a reason to act.  

“At Mortgage Choice, we are committed to helping all Australians live the life they want. We understand that a growing number of Australians have a need to live close to where they work, where their family and friends are and where they can gain access to the amenities that our major centres provide. “

“But, with property prices rising substantially over the last few years, we understand that regardless of whether Australians want to own or rent, living in or close to our major centres is becomingly increasingly expensive and more difficult to achieve.

“Knowing this, we understand that if we want to help Australians live the life they want, we have to go beyond the data and give people the opportunity to let the Government know how housing affordability affects their lives. We need to let Australians have their say”.