The information in this article is derived from: (1) A nationwide poll of 1,515 Australians aged 18 years and older, conducted by Galaxy Research in September 2017; and (2) An online forum data analysis of around 44,306 posts on Housing Affordability, conducted by La Trobe University’s Research Centre for Data Analytics and Cognition.
Most Australians are affected by the housing affordability crisis
3 in 4 Australians (75 per cent) say housing affordability has affected them in some way, including 25 per cent who say that they cannot afford to buy a property. In fact, housing affordability is not only a concern for home buyers yet to purchase a house, but also for those that already own property – 48 per cent of mortgage holders say that they have had to cut back on other expenses in order to afford their mortgage and half say mortgage repayments are putting pressure on their household budgets.
Our poll also revealed another group being hit hard by housing costs - renters. Renters are pessimistic about ever being able to afford a house – 50 per cent say they see home ownership as out of reach for them and now view renting as a long-term solution. Many in this group are families – 61 per cent of renters who have children now see renting as a long-term solution. Despite renting becoming a lifelong reality for many, only a meagre 4 per cent of renters see renting as a choice.
Similarly, in an analysis of online social forums that discussed housing, although the number one issue that forum users were discussing was related to ‘costs’, our analysis showed the second most discussed issue was related to ‘rent’. Among those discussing rent, many forum users were sharing their rental ‘horror stories’. They were also seeking advice about issues such as rent increases, landlords not allowing pets and being rejected in rental applications. Another popular discussion topic was whether the portion of income that tenants have to spend on rent is justified.
Although renting is often seen as a less costly solution compared to buying a house, many renters are still struggling to keep up with rent payments. According to our poll, most renters (55 per cent) say that they still have to cut back on other expenses to afford their rent and 70 per cent say their rent is putting pressure on their household budgets.
Our poll results also revealed that many renters are unhappy with their current housing arrangement. When asked about the best measures to improve housing affordability, only 28 per cent of renters picked ‘increase the pool of rental properties’, while 55 per cent of renters chose ‘provide grants to first time home buyers’, indicating that most renters would still prefer to buy property rather than continue renting.
Considering that almost one in three Australians now rent and renting is becoming a mainstay of Australian society, it is noteworthy that as many as 85 per cent of renters in our poll believe that “every Australian deserves to own the home that they live in”. Perhaps a cultural shift in how we as a society think about home ownership must first occur in order for us to begin a discussion about solutions beyond home ownership, like, for example, how we can improve tenant regulations and improve renting conditions and security.
When it comes to the reasons for rising house prices, Australians believe that the top three reasons are foreign investors (60 per cent), over-population in major cities (50 per cent) and investors taking advantage of negative gearing (40 per cent). This comes as little surprise as these three issues have also been the ones most cited in the media, although when it comes to foreign buyers, experts have concluded that foreign investment has at best only a modest effect on house prices in Sydney and Melbourne and practically no effect in other capital cities.
As to how to solve the housing problem, the most popular measures that Australians think government should introduce in order to make housing more affordable are to: reduce stamp duty (56 per cent); provide first home buyer grants (48 per cent); and ensure interest rates remain low (43 per cent).
It is interesting to note that Australians appear to have a preference for demand-side measures of the housing solutions equation. Measures to increase housing supply such as making more land available for housing (32 per cent) was less popular among those surveyed.