A conversation with a Sydney restaurant manager led Adelaide Bank general manager Damian Percy to realise that the housing affordability issue has reached crisis levels.
Housing affordability was one of the bigger headlines to come out of this year’s federal budget. A raft of measures was announced with much fanfare. However, many feel it’s a case of too little too late.
More recently the NSW government decided to abolish stamp duty (from 1 July) for first home buyers purchasing properties under $650,000.
Adelaide Bank general manager Damian Percy says that while this and other state government initiatives are a welcome development, much more is required.
“Anything short of a national objective of, at the very least, halting house price inflation in Australia’s major population centres is underestimating the profound impact having some of the world’s most expensive houses in one of the world’s least densely populated nations means to the economic and social wellbeing of the nation,” he said.
The Adelaide-based Mr Percy recently found himself in Sydney talking to the young manager of a restaurant and his staff about the challenges facing them as aspiring home owners in Australia’s largest city.
“It was a genuinely disheartening experience,” he said. “As we discussed the vagaries of the market and what they see as the various forces marshalled against them – policies geared towards incumbent owners, market inflexibility, regulatory constraints, and governments at all levels – their dejection was palpable.”
Young Australians have often been blamed for complaining about high property prices while living extravagant lifestyles. The smashed avocado debate, in particular, garnered plenty of attention.
But Mr Percy explained that the young Australians he spoke with maintained “frugal lifestyles” and had “relatively modest aspirations” — they have simply given up on the prospect of owning their own property.
“They haven’t given up owning their ideal property, or one in their preferred neighbourhood – they have given up on owning anything. Ever,” he said. “We are in the midst of a crisis and need to treat it as such.”
Mr Percy’s comments come after the latest Adelaide Bank/REIA Housing Affordability Report found the number of first home buyers decreased by 11.2 per cent during the March quarter.
The March quarter 2017 showed an improvement in housing affordability nationally with the proportion of income required to meet loan repayments decreasing to 30.4 per cent, a decrease of 1.3 percentage points over the quarter and a decrease of 1.3 percentage points compared to the corresponding quarter of 2016.