Election Focus Turns to Housing Affordability Squeeze

Housing Policies Dominate Early Campaign

With the federal election looming, housing affordability has taken centre stage, with both Labor and the Coalition outlining their proposed policies to address the ongoing challenges faced by Australian homebuyers and renters. Both parties acknowledge the frustration of voters grappling with the increasing difficulty of entering the property market and maintaining homeownership. However, neither side is suggesting their policies will lead to a decline in house prices, a position likely aimed at not alarming existing homeowners.

Coalition’s Stance on Wage Growth

Coalition housing spokesman Michael Sukkar recently stated that, ideally, wage growth should outpace property price growth. While this sentiment resonates with many aspiring homeowners, the reality of the Australian property market, and indeed most developed economies, presents a significant hurdle to achieving this goal. The historical data underscores the extent of the challenge.

The Growing Gap: Wages vs. House Prices

Analysis of Australian Bureau of Statistics (ABS) data reveals a stark contrast between wage and house price growth over the past two decades. Since 2000, wages in New South Wales and Victoria have increased by 107 percent. However, during the same period, Sydney’s median house price has skyrocketed by 352 percent, exceeding $1.4 million. Melbourne has experienced a similar surge, with median house prices climbing by over 330 percent. These figures highlight the widening affordability gap, placing significant strain on prospective buyers.

Across the nation, major capital cities like Brisbane, Adelaide, and Perth also rank among the world’s most expensive housing markets. This places Australia at a disadvantage when it comes to attracting and retaining skilled workers as well as damaging the ability of ordinary Australians to achieve the goal of home ownership.

Historical Perspective on Affordability

At the beginning of the 21st century, a household typically needed around six times their average income to purchase a median-priced house in Sydney. That figure has now ballooned to over ten times the average income. This dramatic increase underscores the escalating challenges for first-time buyers and those seeking to upgrade their homes.

Coping Mechanisms: Mortgages and the “Bank of Mum and Dad”

To bridge the gap between wages and house prices, Australians have increasingly relied on larger mortgages, longer loan terms, and financial assistance from family members. The average mortgage size has expanded significantly over the past 20 years. In NSW, the average mortgage has jumped from just under $290,000 in 2005 to $811,000. Victoria has seen a similar trend, with mortgages climbing from $253,000 to $635,000.

Banks have responded to the increased borrowing by extending loan terms. Standard loan terms have increased from 25 years to 30 years, and a growing number of lenders are offering even longer repayment periods. Furthermore, the “bank of mum and dad” has emerged as a significant player in the housing market, now ranked among the top lenders in the country. This reliance on family support highlights the systemic challenges in accessing affordable housing.

Implications for Property Professionals

These trends have significant implications for property professionals, including real estate agents, property managers, developers, and investors. Real estate agents need to be aware of the affordability constraints faced by potential buyers and tailor their strategies accordingly. Property managers will need to navigate the challenges of managing properties in an increasingly competitive rental market. Developers need to consider the demand for affordable housing options and explore innovative solutions to address the affordability crisis. Finally, investors need to carefully analyse the market dynamics and assess the long-term viability of their investments in light of the affordability challenges.

Source: Brisbane Times and Australian Bureau of Statistics.

This article is based on a report from www.brisbanetimes.com.au titled “Peter Dutton son on campaign trail; Labor, Liberal polling tightens; Trump impact on voters revealed”. You can find the original article here: https://www.brisbanetimes.com.au/politics/federal/federal-election-2025-live-voters-weigh-in-on-trump-impact-to-election-campaign-dutton-quizzed-again-over-son-s-house-deposit-20250415-p5lrrg.html?post\u003dp58i4e