A friend of mine sent me a link to a report through delicious about the housing market which read: you should read it. So I did. It’s about the housing crisis… something to which I recently *cough* shameless self-promotion *cough* wrote about for a journal article here. Let’s have a look at the numbers and see where we stack up as a city here is a peek at the top ten report on housing affordability from a leading guru. Firstly however lets look at the overall problem… housing has outstripped median income in most Australian cities. Please note all of these pictures have been pawned borrowed referenced from the above report, these are not mine:
What this actually means in terms I can understand is this: Housing has gone up in this country while the income we make has not multiplied by the same amount. That is, if we are to measure housing affordability and median income over time we are to see that this graph shows that while housing prices have risen, income has not by same factor. The following is even more staggering:
This report shows a stunning fact that the place I grew up (well since 1985-1995) is now the least affordable region in the entire world! The numbers in the top column that read 9.6 represent the amount of median income you would need to purchase a house in that area. The another represents a rank score in terms of overall affordability (please see the report for more details). An example from my own life is someone I know bought a place for around 2.4 times their income in 1990 on the Sunshine Coast and now it would take 6.4 times their income in same location. They have had pay rises and dual income, yet the gap continues to widen.
That aside (POP goes my dream), here is another astounding fact about this report. The city I presently live in (Brisbane), scores marginally better:
I thought this to be bullshit at first but I looked into it. I checked my income (as a family) and did the maths. A house in our area is 6.1 times what I earn when compared to the median price of 430k. 6 times! This is a major concern for those of us that are this far behind the eight ball. Yet, if we take the strategic view and say that 68% (as of 2006) are mortgage owners then 32% are in the minority which has me fighting a losing battle. I would like to say though that if we don’t take steps to correct this situation, as the demographia report suggests (i.e. government control of land ownership, increasing of supply of land and other solutions… read it!) then we are placing plummeting home ownership rates in conjunction with plummeting rental availability which also ties into things like government housing (a 9 year wait at present) and a host of other issues (homelessness for example).
Towards a solution
I think it’s time we discussed this and began addressing the plummeting levels of affordability in Australia and the regions beyond. We simply cannot allow this situation to become so bad that we see housing affordability slip below the 50% mark. I think we need to engage stakeholders like government, developers, economists, practitioners, renters and home owners to begin to come up with new ideas to beat this crisis… yes we need a strategic systems view and a systems solution. Yet, I can’t see one… can you?