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Housing Affordability – The Big Question

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Housing Affordability – The Big Question

Housing affordability has become the single most concerning socio-economic issue of the decade. With housing prices rising greater than wages, the Australian dream of owning your own home is slowly but surely slipping away from the young Australian.

Financial stress is a common characteristic of one-in-five, modern home buyers, who spend “more than 30% of their gross income paying off their mortgage” (http://www.realestate.com.au/news/qa-how-can-housing-be-made-more-affordable/). And unsurprisingly, those most affected by this trend are essential services employees. Teachers, paramedics, bus drivers, social workers and police, are all faced with the problem of not being able to afford residency where they work.

The disparity between (on a national scale) annual median income and median house prices, is not only created through the various fiscal and monetary policies which experience a multitude of lags (offsetting its desired effect), but is also created through demographic change. With Sydney expected to reach a population of 11million by 2050 (http://www.communityhousing.org.au/HousingMatters/NewsletterApril16.html), residential and social infrastructure development will need to keep up in order to subdue already inflating house prices. But we are currently facing an affordability problem which is not going to be resolved through speculation of the future. You will not find any miracle solutions to the problem in this article, only the reality of some hard-working, true-blue Aussies.

Through an analysis of ABS reports comparing house values and incomes, it is evident that most homeowners will be working to pay off their mortgage. What is also depressing is that essential workers are being crowded out of the housing market around Sydney forcing out to the urban periphery. This is a particularly worrying movement, as inner west, southern and northern suburbs experience a ‘draining effect’ of local, essential workers, which would make the provision and dynamic of those services less efficient. For instance, nurses earning $56,700 a year will only be able to find affordable homes more than 50 kilometres from the CBD around Blacktown, Bankstown or Campbelltown (http://www.domain.com.au/news/where-sydneys-essential-workers-can-afford-to-live-20150610-ghk8sg/). This means that hospitals located out at Randwick, Darlinghurst, or even Crows Nest will be low on nurses due to the commute to these areas taking over 90 minutes from the suburbs listed above. The ripple effect will continue as less people decide to train as nurses and current staff become strained (please refer to all PSAs on nurses for additional information). However, even if essential workers do manage to acquire a home loan in the suburbs they can afford, they will be stuck in a perpetual cycle of repayments and expenses which will almost certainly keep in line with the growth in home values.

So will employees in essential services ever be able to afford property in Sydney – no, well not comfortably anyway. With median house prices floating around the $990,000 and $1,000,000 mark, the nature of the beast is that Sydney is too expensive for those essential workers making between $30,000 and $70,000 annually. As sad as it is, the high maintenance living standards of Sydney have neglected the importance of these personnel and have provided them with a dilemma of borrowing (if they can) to live near their employment, or living on the urban periphery, or changing professions. In any case, the individual is at the mercy of external economic factors.

http://www.realestate.com.au/news/qa-how-can-housing-be-made-more-affordable/

http://www.businessinsider.com/teachers-cant-afford-to-live-where-they-work-2016-11?IR=T

https://www.novoco.com/sites/default/files/atoms/files/nhc_paycheck-to-paycheck_0916.pdf

http://www.communityhousing.org.au/HousingMatters/NewsletterApril16.html

http://www.alp.org.au/negativegearing

http://www.domain.com.au/news/where-sydneys-essential-workers-can-afford-to-live-20150610-ghk8sg/

http://www.smh.com.au/nsw/housing-affordability-crisis-has-essential-workers-fleeing-sydney-20150707-gi70bl.html

http://www.news.com.au/national/nsw-act/housing-affordability-is-in-dire-straits/news-story/118c7adcbabc6e47676943f81a3d0ed3

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