Housing affordability consequences

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Housing affordability pressures in Sydney and Melbourne brought about a serious problem as the capitals face a shortage of key workers such as nurses, firefighters, teachers, and ambulance officers, according to a report prepared by PwC Australia for Genworth Mortgage Insurance Australia and Teachers Mutual Bank.

The survey showed that 79% of key workers in Sydney and Melbourne believe that home ownership is not achievable for them. Nearly one in four are looking to either relocate away from these cities or change careers altogether.

“We are potentially looking at a drain of key workers from Australia’s two largest cities when demand for their services is growing and at a time when 57% of the general public believe a shortage already exists. If our key workers can’t find homes, our cities can’t function,” said Steve James, CEO of Teachers Mutual Bank.

Essential workers deem the time taken to save a deposit to secure a loan one of the major barriers to buying a home in Sydney and Melbourne. The respondents held this sentiment despite having the ability to service a home loan.

Many key workers are also required to be “on-call”, which restricts their access to homes in more affordable, outer suburbs.

“Given that it takes a single-income key worker over 12 years in Sydney, and more than nine years in Melbourne, to save a 20% deposit, it’s clear something needs to be done to help them secure a home sooner,” said Georgette Nicholas, CEO and managing director of Genworth.

The report found that recent home price depreciation in Sydney and Melbourne has not been significant enough to ease the affordability crisis for key workers. A 50%-60% decline in prices is needed before key workers could contemplate buying a home within a five-year timeframe, according to PwC Australia’s analysis.

Many key workers are making personal sacrifices to be able to own a home, according to the survey. Forty-seven percent of those surveyed are working overtime – nearly twice the rate of the general population. Twenty-three percent are moving in with family or friends to save a deposit, and 29% are delaying starting a family.

“Key worker shortages are not unique to Australia’s major cities. Overseas experience shows that governments can successfully halt the loss of staff in the education, health and emergency sectors by implementing programs to assist them in buying homes in metropolitan areas,” said PwC Australia Partner Jeremy Thorpe.

Notably, 80% of the general population surveyed want the government to do more to help key workers in Sydney and Melbourne buy a home.

 

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