It is the Aussie dream to own your own home. But in the last 15 years, housing affordability has made it tricky for some. The average cost of owning a property is now of the average income. Fifteen years ago, it was only .
While incomes have also increased in that time, Australians own their own home in 2016 than they did a decade earlier.
The CPA Changemakers, a group of thought leaders, got together last year to discuss housing affordability in the current climate. They help us understand contributing factors and pose solutions. Here, we summarise some of their findings.
What factors influence housing affordability?
There are four key factors influencing housing affordability:
- Record low interest rates have been driving up property prices
- Moderate income and employment growth has not necessarily kept up with house prices
- Increased housing demand, due to a rise in population in the last ten years
- Housing demand has, until now, outweighed supply, though the scales look to be tipping with increased construction in Australia.
What is making it hard for Aussies to own their own home?
Barriers to housing affordability vary between regions. For aspiring home-owners in Sydney and Melbourne, the key barrier is high property costs, including the deposit and progressive stamp duty, which increases as the value of the property increases.
In regional areas, lack of employment is a significant barrier to housing affordability.
What are the solutions to housing affordability in Australia?
To address housing affordability, the CPA Changemakers take a three-pronged approach.
- The solution is personal. Individuals need to educate themselves about housing options available to them. Get to know government schemes, like First Home Super Saver Scheme, which allows first home buyers to increase their deposit by salary sacrificing up to $15,000 each year into a super fund. Individuals may also need to adjust their expectations and aspirations. “Knowing your basic requirements and your nice-to-haves could give you more options, and reduce your costs,” says Andy Gooden, Chief Operating Officer of Little Real Estate.
- The solution is policy-based. State and federal governments can help first home buyers by extending home-buying grants and incentives. Governments can also review building regulations, like loosening restrictions on granny flats so they become an affordable housing option. Governments can improve infrastructure and employment in regional areas, to make owning a home regionally more viable and attractive.
- The solution is innovative. Individuals and policy makers need to think creatively to address housing affordability. Fractional investing is an option where unrelated people or organisations share property ownership. More and more individuals consider purchasing property with friends or family. And rentvesting is increasing in popularity.
Whatever the future holds for Aussie home dreamers, your Smartline Adviser can guide you through the process, and help pave the way to possibility.