It’s getting harder than ever to find a home in Australia with less than 1% of rental properties available for occupancy. That’s sending rents soaring to eye-watering levels, deepening a cost-of-living crunch.
The population growth of Greater Sydney is also exacerbating its lack of housing supply. Here’s how the housing market’s “vicious spiral” is dragging the country into a deeper crisis. Bloomberg’s Kurumi Mori reports.
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Why Australia’s Housing Crisis Is a Warning for the World
Australia, known for its beautiful landscapes and vibrant cities, is currently facing a severe housing crisis that could serve as a stark warning for countries worldwide. With skyrocketing housing prices, an acute shortage of affordable homes, and a widening wealth gap, Australia has become a cautionary tale of what can happen when the housing market becomes overheated and disconnected from the realities of people’s lives.
One of the most significant issues plaguing Australia’s housing market is the unaffordability of homes, particularly in major cities like Sydney and Melbourne. Over the past decade, house prices have surged to astronomical levels, far outpacing the growth of household incomes. This has made it increasingly difficult for working-class individuals and families to enter the property market, perpetuating a cycle of rental dependency and exacerbating inequality.
The root of the problem lies in the rapid property price appreciation driven by a combination of speculative investments, lax lending standards, and a surge in foreign investment. This has created a speculative bubble in the housing market, where properties are seen as an investment tool rather than a basic necessity. Consequently, this has distorted the housing market, pushing prices far beyond what the average citizen can afford, and contributing to a widening wealth gap.
Another factor contributing to the housing crisis is the chronic undersupply of affordable homes. Australia has failed to keep up with the growing demand for housing, particularly affordable housing, which has resulted in an acute shortage. Decades of underinvestment in social housing and an excessive focus on high-end developments have left many Australians struggling to find suitable and affordable accommodation.
Additionally, a lack of government intervention and regulation has exacerbated the housing crisis. While the government has implemented limited measures to address the issue, such as tightening lending standards and improving rental regulations, they have largely been insufficient to curb the escalating prices or provide sufficient affordable housing options.
Australia’s housing crisis should serve as a warning to other countries that are experiencing similar trends in their own housing markets. The factors driving Australia’s crisis, such as speculative investments, lax lending standards, and insufficient government intervention, are not unique to the country. Other nations, especially those with strong housing markets and a desire to attract foreign investment, should be aware of the potential consequences if corrective actions are not taken.
The lessons from Australia’s housing crisis are clear: it is vital for governments to prioritize affordable housing initiatives and implement tighter regulations to prevent speculative bubbles. Efforts should be made to address the chronic undersupply of affordable homes and promote social housing initiatives. Additionally, measures to increase transparency and curb foreign investment in the housing market may be necessary to prevent housing prices from disconnecting further from local wages.
Ultimately, the housing crisis in Australia is a wake-up call for the world. It demonstrates the perils of uncontrolled speculation and the dangers of ignoring the need for affordable housing. By learning from Australia’s mistakes and taking proactive measures to address their own housing challenges, countries can avoid similar crises and safeguard the social and economic stability of their citizens. It is time for nations worldwide to take heed and prioritize affordable housing as a fundamental right rather than a luxury.
Houses were never build for people, they are built for banks to make money
Real Esate is the new Bitcoin, NFT, Tulip etc
i blame the indian and chinese people migrating
A house to live in should be the right of every person. Stop the realestaters from cashing in on this and blowing up the costs for their profits, we know they do this.Housing should be a 1/4 of peoples income no matter there position in life, after all if people are not in the service and lower paid jobs, nothing would happen as the rich need these people.
What do you mean. Im in the UK and the average home is unaffordable to most people.
The demand is fake, 40% of the supply was bought by "investors". It's going to be funny when it collapses.
All because of corporations.
Crikey!
Shitney, what a joke
Our government allows international investors to buy our real estate. So it’s not local competition for properties, it’s international competition. Our government are morons
Property is regarded as a Commodity not a privilege or entitlement so property developers+govt+ banks have created an economic environment that is corrupt and unsustainable
I know this is difficult to believe, but Luxembourg (where I live) is even worse.
SELL AND GET OUT AND LIVE IN A CHEAPER COUNTRY- THIS IS ALL WESTERN GREED AND ITS ALL PURE VANITY- THEY TRAP YOU INTO THE WHITE MANS GREED.
Most people in Australia shouldn't be there. Indigenous land confiscation must be on the peoples agenda in Australia.
Why on earth would you want to live there?
Basically in Australia, you have to work whole life to buy a house with just basics
This is very unfortunate time full of greed
Needs to be more density and affordable government housing urgently.
Crooks
Looks like a UK council house .
I got a solution. Move
The middle class is being strangled in Australia, and we’re increasingly being pushed towards living in horrible shoebox apartments, with views of other apartments.
It’s a disgrace.
Mass immigration will make it all worse.
The cost of living here, from real estate to energy is outrageous.
This used to be “the lucky country”.
FFS this is a global situation
airbnb?
The problem is demand and demand is hugely increased by investors. Investors don't live in the place and in many cases they don't even rent the place. At lease half of those seeking to buy houses are investors. Therefore investors double the demand. Investors can put their money into business, farming, technology and production rather than into a passive housing investment that increase the demand and price and makes life more expensive for the average person.
Houses are limited supply whereas investors are numerous and have access to unlimited money either cash or loan from banks. We have created a housing market. It means we made it something like share market where everyone can put their money in it and buy as many as they want. During the pandemic demand for toilet paper became very high and there were limited supply. Supermarkets limited one or 2 packs per customer because it would be unfair for some to stack most of the papers and others have none. Some customers wanted to buy tons and fill their homes with toilet paper and they did. House and land is limited too. Why can't we do the same for homes? Demand is important and always going to be there from those who want to move there and live in it. Investors buy many homes and bid higher in value than normal people because they have more money and they know the price will rise. They raise the demand sky high. Specially if they're foreign investors. They can buy hundreds of apartments or houses and leave it empty.
As I mentioned, we do need certain amount of demand for housing and that demand is going to be always there by people who want to buy and live in it whether they're local or immigrants. However, when many investors come in and they have greed, the demand becomes sky high and the price will become so high that only investors can afford them. Rent also depends on the value of the property. The higher the price, the higher the rent. So the issue is investors. Too many of them with too much greed.
I'm an estimator for residential projects in Australia, and the cost of construction has indeed increased by 30% in the past 2 years. A $600K house before now costs $800K to build.
unfortunately the whole world (except japan) is in a housing crisis
Australia news lies to its public like Fox News in America. They lie for Rubert and Lachlan murdoch . American hate you
CAPITALISM at its finest