A new report by the Grattan Institute has addressed the ongoing issue of housing affordability, citing contributing factors and offering solutions to be implemented by the government to combat rising house prices.
Falling home ownership rates, particularly among young and poorer Australians, is highlighted in the report.
It also states that without interference, many more young people will be 'locked out' of the housing market.
Despite record low interest rates and rising house prices, the report says that housing costs would have risen less if more homes had been built.
It reveals that if an extra 50,000 properties are built each year for 10 years, the cost to buy and to rent could be 20% lower than they would be otherwise.
"Increasing housing supply will only restore housing affordability slowly," the report says.
"But without a concerted effort to boost housing supply in Australia, housing affordability will likely get worse."
Grattan's report also says that Australia has among the least housing stock per adult in the developed world.
The report outlines the issue of supply and demand, pointing towards a lack of new housing being built to meet the needs of the growing Australian population.
The report also referenced reforming tax, welfare policies, and reduced demand as ways to improve housing affordability.
"It should reduce the capital gains tax discount from 50% to 25% abolish negative gearing; and include owner-occupied housing in the Age Pension assets test," the report said.
Halted migration added upward pressure on house prices
A recent housing outlook report by insurer QBE highlights a key theme for shifts in the housing market: the 'abrupt' changes to domestic and international migration.
The typical influx of migrants and outflow of Australians isn't at its 'usual' levels, as new arrivals have fallen from 250,000 each year to less than 72,000 - this has had a significant impact on the housing market according to the report.
Returning citizens and the number of new permanent residents, however, have rebounded 'substantially', which is adding a new source of demand to the property market.
Additionally, domestic migration patterns shifted - inflows from regional areas are back to normal, but outflows to regional areas are well above pre-pandemic levels.
"The ability to work from home, coupled with affordable housing opportunities outside of city centres and a preference for space, are partly responsible for the upturn," the report said.
The report also highlighted factors at play that caused the sharp increase in house prices: government support; savings accumulated during lockdowns; historically low interest rates; and a desire for more space as people work from home.
New approved dwellings rose 6.8% in August
The Australian Bureau of Statistics (ABS) released its seasonally adjusted estimate for total new dwellings approved for August which is up by 6.8%.
This makes up the 3.5% rise in private sector houses, and 13.7% increase in private sector units.
This increase is following the 8.6% decrease in new approvals in July, with Western Australia leading the surge with a 21% increase in total dwellings approved.
Total dwellings approved also rose in South Australia (11.8%); Victoria (10.5%); and Queensland (4%).
However, approved dwellings dropped in Tasmania by 18.9%, and in New South Wales by 2.3%.
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