Housing Affordability in Australia

Running head: HOUSING AFFORDABILITY IN AUSTRALIA
Housing Affordability in Australia
Name of the Student
Name of the University
Author Note

1HOUSING AFFORDABILITY IN AUSTRALIA
Introduction:
Housing Affordability is an index that is used to measure the reasonability of
adequacy of hosing for lower and middle income households which does have a high cost and
does not impede the ability of the families to cover their basic needs. In Australia the cost of
housing is very high, especially in the metropolitan areas and the increase in housing prices
are increasing disproportionately compared to the average household incomes, making the
housing increasingly unaffordable for middle and low income groups (McGreevy, 2018).
The topic of this report is to analyze housing affordability and the social as well as
economic impacts of housing affordability on individuals and families and develop
recommendations for policy makers to support the need for affordable housing.
The key problems that would be analyzed in the report include housing stress, gap in
housing supply and demand and deficit in affordable rental properties.
In the report, aspects such as household incomes, home ownership rates, rent to
income ratios, home ownership by age groups as well as the social and economic impacts of
affordable housing on individuals and families will be analyzed followed by
recommendations for policy makers to improve the affordability of housing across Australia
(Chappell & Campbell, 2018).
Discussion:
Housing in Australia is not affordable for ordinary citizens:
Studies have shown that the rates of increase in housing prices over the last decades
have far outpaced the growth in individual as well as household incomes, as a result of which
Australians; especially the younger people are facing an increased challenge to find
affordable housing for them (Baker et al., 2016). The affordability of the Australian citizens

2HOUSING AFFORDABILITY IN AUSTRALIA
to get affordable housing for themselves have been further restricted because of an increase in
the costs of other essential elements such as costs of food and fuel expenses which have
resulted in an increase in financial stress especially for medium and low income households.
Due to this there is a steady decline in the affordability for housing as the individuals are no
longer able to afford a decent housing while trying to make savings from their restrictive
salaries (McLaren, et al., 2016; Bryant, 2017).
It has also been pointed out that because of these disproportional rates of growth for
housing expenses and salaries, there is a widening gap between supply and demand, as the
demand for affordable housing increased while there is not enough supply for affordable
housing solutions. Moreover, this gap is expected to increase further as the high demand and
low supply of affordable housing is expected to cause further increase in housing prices
(McGreevy, 2018).
The Private rental market of Australia fails to meet the housing needs of the people:
Due to an increase in the price of house ownership more Australians are now opting
for renting of houses which are cheaper and more affordable. However, according to some
authors, the current rental housing market in Australia is not adequate enough to meet the
demands of the market. One of the biggest reasons for the lack of adequate rental solution is a
lack of investors in the rental housing sectors (Hulse & Yates, 2017). The primary investors
currently are the individual house owners and small household investors who have a limited
attachment to the rental market. Due to this the growth in the rental market in Australia is not
sufficient enough to meet the growing demand for rental housing. Additionally, due to
limitations of the rental market, sufficient regulations do not exist for the rental agreements
which can provide a long term security for the tenants and rental agreements are often made
for very short terms followed by termination of rental contracts after the agreement is over