The study by researchers at Flinders University of national home ownership rates has painted a grim picture of the difficulties both low and medium-high income earners face getting into the housing market, as average house prices have trebled since 1996.
It shows that despite strong economic growth and relatively low interest rates between 1996 and 2006, home ownership only grew by 0.8% and actually fell by 15% for both low income earners over the age of 45 and medium to higher income earners under 45. ‘Australia’s housing market is in a very dangerous and unstable situation,’ it concludes.
‘The country that promised limitless land, cheap housing and near universal home ownership to all comers now has the most expensive housing in the world amid very tight housing and land markets and little prospect of restoring the balance,’ said adjunct professor Joe Flood.
Flood criticises the Australian government, the public and the media for not facing up to reality.
He pointed out that many lower income earners between the ages of 25 and 44 were unlikely to ever own their own homes because baby boomer parents were spending their inheritances and property prices remain high.
‘As long as the government, the public and the media remain in denial, and self-congratulatory rhetoric continues that Australia has cleverly avoided the housing market correction it needed to have, there is little chance that matters will improve,’ Flood said.
‘The only ways that this would happen are through a US style price collapse or a complete re-evaluation of the situation and a coordinated effort by governments, planning and financial institutions to restore the balance between housing supply and demand – or tax away the imbalance – so that all Australians may benefit,’ he added.
The outlook is of a country with low home ownership where people live with their parents or in small houses by international standards, he predicted.
However, David Airey, president of the Real Estate Institute of Australia, said Flood was taking an ‘extreme view’ and there was still a secure supply of housing.
