Australian governments at all levels are not known for thinking beyond the electoral cycle. Take the fact that Australia took on 540,000 immigrants last year, whilst births exceeded deaths by 110,000. Hence an additional 650,000 Australians, or 2.5 per cent of our population, at a time when our country is going through an unprecedented housing crisis. 

The promise of one million dwellings over five years, or an average annual 200,000 dwellings, equate to 700 homes per day, assuming a five-and-a-half-day week. According to the Housing Industry Association (HIA), the year to December 2023 saw the commencement of 164,000 new homes, the lowest level since 2012, and only 114,000 completions. Assuming 2.6 people per dwelling, that covers 45 per cent of the net population increase in 2023. 

And with unprofitable building contracts, cost blowouts, planning delays and labour shortages, the number of construction companies entering administration have jumped from 1,200 in FY22 to 2,100 in FY23 to 2,800 in FY24. 

The housing crisis is a function of both the lack of supply and the lack of affordability. For example, the “Demographia International Housing Affordability report”, surveys residential property across eight countries. The report measures housing affordability on a median price-to-income ratio, and then breaks the markets down into five distinct categories.  

Unsurprisingly, most Australian capital cities are categorised as “impossibly unaffordable”, and Australia’s median multiple of 10x is at least twice that of the U.S. and the UK. And this doesn’t really cover the more expensive suburbs in Sydney and Melbourne which are up with Hong Kong, Vancouver and San Jose, California. 

I offer a simple example of my first property – purchased in the 1980s and paying around three times my pre-tax income. I had relatively little savings at the time, and no debt. That same property today would cost someone of similar age at least 14 times their pre-tax income. They must save hard (or get assistance) just to get a deposit, and even if they are lucky, they are already “behind” my generation by 11 multiples of their pre-tax income. And this comparison does not consider the possibility of a large HECS debt, and the enormous amount of stamp duty required on purchase. 

In short, our politicians are misunderstanding the depth of the housing issue and unfortunately, it is largely responsible for the bifurcating economy and society, between the “haves” – those who have unencumbered property and are enjoying the higher rates of return on their cash holdings; and the “have nots” – those struggling with their mortgage, rent and the day-to-day cost of living.