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The View | Australia needs a dose of ‘common prosperity’ to fix housing affordability crisis
- While growth in Australian home prices slowed in April, the underlying factors making property unaffordable are still in place and will remain so
- The policies proposed by the new Labor government are unlikely to touch the core factors or change the coddling of domestic investors
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The slowdown in Australia’s red-hot residential property sector is accelerating. House prices grew just 0.6 per cent in April, the slowest rate since October 2020. In Sydney, the largest and priciest market, home values recorded their third straight month-on-month fall, according to data from CoreLogic.
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Even in some of the more resilient smaller capital cities, price gains are moderating. With the Reserve Bank of Australia having started raising interest rates to rein in inflation, the growth in prices is likely to decelerate further in the coming months.
However, the slowdown needs to be put into perspective. During the past 20 years, house prices have soared 190.5 per cent, equivalent to a rise of A$485,000 (US$347,000) in the average cost of a home, which stood at A$748,635 in April, according to CoreLogic.
A decade ago, just over 10 per cent of transactions in Sydney were above the A$1 million mark. By March last year, this had risen to 40 per cent, compared with 25 per cent in Melbourne and 10 per cent in Brisbane.
The dramatic increase in housing costs has catapulted Australia to the top of the league of the world’s most expensive property markets. According to Demographia, all five of the nation’s largest housing markets have been “severely unaffordable” since the early 2000s, with Sydney and Melbourne ranked as the second- and fifth- priciest markets respectively out of 92 cities surveyed across eight countries.
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