According to a report prepared by PwC Australia and commissioned by Genworth Mortgage Insurance and Teachers Mutual Bank, home ownership constraints in Sydney and Melbourne could be triggering an exodus of nurses, teachers, paramedics, ambulance officers and emergency services personnel (or “key workers”).
The report, titled The Deposit Gap Dilemma – which is based on a CoreData survey of 1,084 respondents (506 key workers and 578 members of the general population), coupled with analysis, research and in-depth key worker interviews undertaken by PwC Australia – found that 79 per cent of key workers in Sydney and Melbourne believe that home ownership is not achievable for them, with almost one in four looking to either relocate or change careers.
“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 per cent of the general public believe a shortage already exists,” Steve James, CEO of Teachers Mutual Bank said. “If our key workers can’t find homes, our cities can’t function.”
The research found that despite having the ability to service a home loan, key workers were finding the time taken to save for a deposit to secure a loan was a major barrier to buying a home in Sydney and Melbourne.
The report noted that the challenges in saving for a deposit have been exacerbated by the fact that many key workers are required to be “on-call”, which can restrict their access to homes in more affordable suburbs.
According to the research, it takes a key worker over 12 years to save for a 20 per cent home deposit in Sydney and more than nine years in Melbourne.
“[It’s] clear something needs to be done to help them secure a home sooner,” the CEO and managing director of Genworth, Georgette Nicholas, said.
The report states that recent home price depreciation in Sydney and Melbourne has not been significant enough to ease the affordability crisis for key workers, with a PwC Australia analysis revealing that a 50-60 per cent fall in prices is needed before key workers can contemplate buying a home within a five-year period.
PwC observed that housing affordability pressures are resulting in “significant personal sacrifices” among a disproportionate number of key workers, which include:
- 47 per cent working overtime – nearly twice as much as members of the general population
- 23 per cent moving in with family or friends to save a deposit
- 29 per cent delaying starting a family
PwC Australia partner Jeremy Thorpe called for increased government assistance to ensure that key workers aren’t forced out of Sydney and Melbourne.
“Key worker shortages are not unique to Australia’s major cities,” Mr Thorpe said. “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.”
The CoreData survey found that 80 per cent of the general population surveyed want the government to do more to help key workers in Sydney and Melbourne buy a home.
The PwC report proposed the following two possible policy solutions on a state and federal level to help ease affordability pressures for key workers:
- NSW and Victorian government could offset stamp duty costs associated with securing a 10 per cent deposit with lenders mortgage insurance (LMI) and costs associated with buying a home (conveyancing costs, valuation costs, title searches)
- The federal government could allow borrowing expenses/home buying costs to be tax deductible against a key worker’s salary
“We need to discuss and identify a range of solutions that help support key workers buy a home. The viability of essential education, health and emergency services in our two biggest cities could depend on it,” Ms Nicholas said.
Teachers Mutual Bank CEO Steve James added: “Key workers, like most other Australians, want to own their own homes, provide for their families and establish stability and security in their lives.
“Helping them buy a home in a reasonable time frame is a tangible and significant way to retain key workers in Sydney and Melbourne and support the smooth functioning of vital services.”
[Related: Coalition urged to do more on housing]
Charbel Kadib is a journalist on the mortgages titles at Momentum Media.
Before joining the team in 2017, Charbel held roles with public relations agency Fifty Acres, and the Department of Communications and the Arts.
Charbel graduated from the University of Notre Dame Australia with a Bachelor of Arts (Politics & Journalism).