Affordability Crisis Deepens
As Australia approaches its federal election, the nation’s housing crisis remains a central issue. The combination of skyrocketing property prices, soaring rent, and the decline of public housing has made buying or renting a home unaffordable for many Australians.
With both major political parties pledging solutions, voters are closely watching how each party will tackle the crisis. Housing affordability is becoming a key election issue, with many Australians facing financial pressure, making it a defining factor for many at the ballot box.
Figure 1: Homelessness at its peak amid affordability crisis
Supply Shortage Drives Housing Affordability Crisis
Australia’s housing affordability crisis has been building for years, primarily due to a lack of new housing supply. The country’s population continues to grow rapidly, but the number of homes being built has not kept up. This has created a shortage that drives up prices, making it harder for people to buy or rent homes, particularly in major urban centres.
Planning laws in Australia, especially in large cities like Sydney and Melbourne, have made it difficult to increase housing density. As a result, these cities have failed to build enough homes to meet the demand. Urban development in popular areas is restricted, causing many Australians to look for housing further from their workplaces, often leading to long commutes.
Figure 2: Sydney is currently the second least affordable city in the world to buy a property
The average Australian now faces a tough road to homeownership. It now takes an average of 10 years to save for a 20% deposit on a median-priced home. This issue is further compounded by rising rents, which have increased by 36.1% since the onset of the COVID-19 pandemic, according to the latest figures.
Rising Rent Pressures
While buying a home has become more out of reach, renting has become just as difficult. The rising cost of rents has significantly impacted households, particularly those in major cities. In Sydney, renters now pay an average of A$773 per week, with other cities like Perth and Canberra seeing similar increases.
Nationally, rents have risen by an average of A$171 per week, placing further financial strain on renters. With limited availability of affordable housing, more Australians are finding themselves in overcrowded or insecure living conditions. The number of people in need of public housing continues to grow, with waiting lists becoming longer each year.
Figure 3: Nationally, rents have risen by an average of A$171 per week
Climate Change and Policy Failures
Australia’s housing crisis is also being exacerbated by climate change. Natural disasters such as bushfires, floods, and storms have destroyed homes and created additional barriers to securing stable housing in affected regions. As areas become increasingly unliveable, the demand for housing continues to increase, further pushing up prices.
Decades of government policies have also contributed to the crisis. Housing has increasingly been viewed as an investment opportunity rather than a basic human right. The commercialisation of property ownership has made it harder for everyday Australians to access homeownership. Public housing stock has drastically declined, now representing only 4% of all housing in the country, a figure much lower than in other developed nations.
Foreign Buyers and Immigration: Limited Impact
The issue of immigration and foreign investment in housing often comes up in discussions about the housing crisis. However, experts agree that these factors have a limited impact on the overall housing market.
Many of the migrants coming to Australia are temporary, such as international students who tend to live in dedicated student accommodation rather than entering the housing market. As Michael Fotheringham, head of the Australian Housing and Urban Research Institute, states,
“The impact [of migrants] on the housing market is not as profound as some commentators have suggested.”
Data from the Australian Taxation Office confirms that foreign buyers represented less than 1% of home sales in the 2022–2023 period. While the government has implemented policies to curb foreign investment, these measures have had minimal effect on easing housing pressures.
Political Parties’ Plans for Housing
Both Labor and the Coalition have promised to address the housing crisis, with competing policies aimed at increasing supply and improving affordability.
Labor’s plan includes the construction of 1.2 million new homes by 2029, with 100,000 of those designated for first homebuyers. They also promise to expand a shared-equity scheme, allowing first-time buyers to purchase homes with a deposit as low as 5%. Additionally, Labor plans to build more social housing and offer subsidies for low-to-moderate-income earners.
The Coalition, in contrast, has committed to building 500,000 new homes and has allocated A$5 billion for infrastructure to support housing development. They propose allowing first-time buyers to access up to A$50,000 from their superannuation savings to help fund their home purchase. The Coalition also plans to cut immigration, reduce the number of international students, and impose a two-year ban on foreign investment in existing homes.
Expert Opinions on Housing Policies
Despite the promises from both parties, experts remain concerned that neither plan will be sufficient to resolve the housing crisis.
Brendan Coates from the Grattan Institute notes,
“A combination of both parties’ platforms would be better than what we’re seeing from either side individually.”
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He also warns that the Coalition’s immigration cuts could hurt the economy by reducing skilled migration and lowering tax revenue, ultimately creating further financial strain for Australians.
While both parties are addressing the issue of housing affordability, experts agree that the crisis has been years in the making and will take significant time to resolve. Michael Fotheringham says,
“We’ve been sleepwalking into this as a nation for quite some time. [Now] the nation is paying attention, the political class is paying attention.”
Looking Ahead
As Australians head to the polls, housing affordability will remain a key issue. With rising house prices and rents, more people are struggling to find stable housing. The outcome of the election will depend on which party can deliver solutions that restore the dream of affordable, secure housing.
