An audit of housing affordability in Australia by the Urban Development Institute of Australia (UDIA) has confirmed the steady decline of affordability in all states, with the level of affordable housing dropping to just 39% across the country.
The UDIA released the national report,An industry report into affordable home ownership in Australia, on 6 August, after researching the changes in housing affordability in 70 designated population centres across the country from 2001 to 2006.
The report shows that affordability in Australia has slumped from 96% in 2001 to less than half that amount in 2006, with just 39% of centres considered affordable and 27% deemed unaffordable.
UDIA president Grant Dennis said that declining housing affordability would impact the entire Australian economy and urged the federal and state governments to act quickly.
“We’ve seen some state governments … taking some initial steps to address land supply and other supply factors in their states, and have had acknowledgement from both the federal government and federal opposition that declining affordability is now a national problem,” Dennis said.
“However, the industry’s concern is that immediate and concerted action from the federal government and all states is required urgently to restore affordability in the foreseeable future.”
Dennis said that leading economists such as Saul Eslake and property commentator Michael Matusik have stated that it is “their opinion that the current situation will continue to worsen for at least three years” if measures are not adopted now to combat unaffordability.
The UDIA report, which includes state-specific chapters outlining local issues in each jurisdiction, delivers a series of recommendations designed to help restore housing affordability.
“Managing the way out of the current situation is incredibly complex,” Dennis said.
“Complex and independent economic modelling needs to be undertaken – this is the only way that we’ll see the end of uncoordinated and unmanaged consequences of government policies adversely affecting affordability.
“Failure to implement this level of public scrutiny will mean there is every likelihood that the situation will continue to worsen.”