Australia has among the most expensive housing in the world. High housing costs are a major source of financial stress, especially for private tenants on the lowest 20% of incomes, with four out of five paying more than 30% of their income in rent. Housing costs are also the main cause of Australia’s dangerously high household debt levels, with average house prices 4-5 times average annual household earnings.
One reason for high housing costs and debt levels is that the tax system favours debt-financed speculation in home prices, through the combination of generous Capital Gains Tax concessions and ’negative gearing’.
Australia has a huge shortfall of affordable housing, including a shortage of over 500,000 rental dwellings that are affordable and available to the lowest-income households.[2]
One reason for this shortfall is the lack of investment in social housing for people on the lowest incomes, which has shrunk from 5.6% to 4.7% of all housing over the past decade and a half. Also, too many new private rental properties are expensive apartments in inner city and resort locations.
[1] Fox R & Finlay R (2012): Dwelling prices and household income, Reserve Bank of Australia Bulletin, December Quarter 2012
[2] National Housing Supply Council (2013): Housing supply and affordability issues 2012-13
Key proposals
- The development of a new National Housing and Homelessness Strategy with targets to increase affordable housing for low-income households and reduce homelessness;
- Major investment in new social housing meeting, growing to $10 billion in ten years;
- A 30% increase in Rent Assistance for people on low incomes renting privately;
- A rental investment incentive to encourage investment in the construction of new affordable rental housing, including social housing for people with low incomes;
- A new national Aboriginal and Torres Strait Islander housing strategy, with funds earmarked in the proposed National Housing Agreement to support culturally appropriate housing, including growth of the Indigenous Community Housing sector and a new remote housing funding agreement between the Commonwealth and State and Territory governments.