A new report by the Grattan Institute has addressed the ongoing issue of housing affordability, citing contributing factors and offering solutions to be implemented by the government to combat rising house prices.

Falling home ownership rates, particularly among young and poorer Australians, is highlighted in the report.

It also states that without interference, many more young people will be 'locked out' of the housing market.

Despite record low interest rates and rising house prices, the report says that housing costs would have risen less if more homes had been built.

It reveals that if an extra 50,000 properties are built each year for 10 years, the cost to buy and to rent could be 20% lower than they would be otherwise. 

"Increasing housing supply will only restore housing affordability slowly," the report says.

"But without a concerted effort to boost housing supply in Australia, housing affordability will likely get worse."

Grattan's report also says that Australia has among the least housing stock per adult in the developed world.

The report outlines the issue of supply and demand, pointing towards a lack of new housing being built to meet the needs of the growing Australian population.

The report also referenced reforming tax, welfare policies, and reduced demand as ways to improve housing affordability.

"It should reduce the capital gains tax discount from 50% to 25% abolish negative gearing; and include owner-occupied housing in the Age Pension assets test," the report said.

Halted migration added upward pressure on house prices

A recent housing outlook report by insurer QBE highlights a key theme for shifts in the housing market: the 'abrupt' changes to domestic and international migration.

The typical influx of migrants and outflow of Australians isn't at its 'usual' levels, as new arrivals have fallen from 250,000 each year to less than 72,000 - this has had a significant impact on the housing market according to the report.

Returning citizens and the number of new permanent residents, however, have rebounded 'substantially', which is adding a new source of demand to the property market.

Additionally, domestic migration patterns shifted - inflows from regional areas are back to normal, but outflows to regional areas are well above pre-pandemic levels.

"The ability to work from home, coupled with affordable housing opportunities outside of city centres and a preference for space, are partly responsible for the upturn," the report said.

The report also highlighted factors at play that caused the sharp increase in house prices: government support; savings accumulated during lockdowns; historically low interest rates; and a desire for more space as people work from home.

New approved dwellings rose 6.8% in August

The Australian Bureau of Statistics (ABS) released its seasonally adjusted estimate for total new dwellings approved for August which is up by 6.8%.

This makes up the 3.5% rise in private sector houses, and 13.7% increase in private sector units.

This increase is following the 8.6% decrease in new approvals in July, with Western Australia leading the surge with a 21% increase in total dwellings approved.

Total dwellings approved also rose in South Australia (11.8%); Victoria (10.5%); and Queensland (4%).

However, approved dwellings dropped in Tasmania by 18.9%, and in New South Wales by 2.3%.

Advertisement

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
Filters
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
70%
 Featured Online ExclusiveUp To $4K Cashback
  • Immediate cashback upon settlement
  • $2,000 for loans up to $700,000
  • $4,000 for loans over $700,000
5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
 Featured Apply In Minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.14% p.a.
6.16% p.a.
$2,434
Principal & Interest
Variable
$0
$250
60%
 Featured Unlimited Redraws
  • No annual fees - None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
  • Redraw freely - Access your additional payments when you need them
  • Home loan specialists available today
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Image by Blake Wheeler on Unsplash



Ready, Set, Buy!


Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!

With bonus Q&A sheet and Crossword!

Download Free
By subscribing you agree to our privacy policy