Planning, infrastructure the key to addressing affordability

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Australia’s governments do have a role to play in addressing housing affordability according to the head of a major mortgage broking network; however, it should be done through better planning and infrastructure spending rather than other methods such as taxation changes.

John Flavell, chief executive officer of Mortgage Choice, believes housing affordability is deteriorating as a result of supply issues, with much of the new housing supply in Australia unattractive to many buyers.

Flavell points to the recent report from The Australian Population Research Institute (TRAPI), Sydney and Melbourne’s Housing Affordability Crisis: No End in Sight, which shows Sydney and Melbourne are due for more than 40,000 new apartments over the next two years as a prime example of the current supply issue.

"An increasing number of high rise apartments are being constructed in the capital cities, and while this type of property is needed, the report suggests that there is only a limited market for this type of dwelling. As such, we could see an oversupply of apartments in the near future," Flavell said.

Flavell says Australians still have a strong preference for detached houses and that governments, at the state level in particular, have a responsibility to help meet that demand.

“I would strongly agree that more needs to be done from a state planning perspective to ensure the right type of properties are being built,” he said.

“In Australia, we are wedded to the idea of the family home being three bedrooms and several bathrooms all sitting on its own block of land. For supply to keep pace with demand, what we need to see is a huge influx of three bedroom homes with their own backyard.”

But while affordability will only be improved if the right type housing is supplied, he said policy makers need to do more than simply open up land on city fringes.

“Of course, we cannot manufacture more open space in the inner city suburbs. As such, any houses currently being built are constructed on the outer fringes – far from the city and where public transport linkages aren’t great.

“Our transportation systems do not provide quick and easy access to jobs and services in the city.

“If the issue of housing affordability is to be properly addressed, the government needs to take a more consistent and efficient approach to planning and investment in infrastructure. Rail links in particular need to be given special attention so that people can easily access jobs and services.”

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