Housing affordability in Australia is at its worst, with experts divided on the best solutions. While some argue lowering house prices is key, others warn against significant falls that could damage the economy. The debate centers on the balance between supporting existing homeowners and making housing accessible to first-time buyers and renters.
Lowering house prices is the best way to make housing more affordable, but experts say “heartless” major parties have almost completely discarded the approach.
It was former Liberal prime minister John Howard who famously said in 2004 that no one had ever stopped him in the street to complain about the value of their house going up. “So, in order to make housing more affordable, we could increase wages … or we could ensure wages could grow at whatever pace they do, but we establish a mechanism to make house prices go down.”
“Out of this 64 per cent of people, 74 per cent live in a house they own or have a mortgage on. So of the voting core, only 26 per cent are renters and potential home buyers. The vast majority have no interest in prices going down.” AMP deputy chief economist Diana Mousina agreed that falling prices could help affordability but said the falls needed to make a difference – about 30 per cent – would damage the economy.
“If and when I came to sell my house, and the price was lower, I’d be selling my house to buy somewhere else, so the value of that house would be lower,” he said. “It’s not clear that I’d really be worse off.
HOUSING AFFORDABILITY HOUSE PRICES ECONOMY GOVERNMENT POLICY RENTERS
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