Inflated House Prices

• Over the last half century Australia has seen a rapid incline in house prices.
• The below graph shows that at minimum house prices have increased by 4163% since 1973.

Annual Income to House Price Ratio

• To fairly judge this increase we can contextualise these numbers in terms of wage inflation.
• Looking at the median wage per person in 1973 and 2024, the below graph displays the rounded annual income to house price ratio for Capital Cities in Australia.
• The average wage in 1973 was approx. $5,500 and has increased to $74,500 in 2024.

Decrease in Home Ownership

• This disproportionate increase in house pricing has had a dramatic impact on home ownership and the rental market.
• With wages unable to keep up with inflated house pricing Australia has seen home ownership without a mortgage fall, and a rise in the amount of renters.

Rental Vacancy

• This increasing demand for rentals has put a strain on the rental market, with the national rental vacancy rate dropping to the lowest in recent history.
• The percentage of available rentals has plummeted to below even pandemic levels, when the market saw a huge drop in demand due border closures and lock downs.
• According to the Australian Treasury, a national rental vacancy rate of 3% indicates a balanced market, with equal power between tenants and landlords. In Feb 2024 the rental vacancy rate dropped to 0.7%

Change in Rental Vacancy

• This is a drop of -1.7%
• This drastic decrease in only 5 years is incredibly alarming and falls well below the target of 3%.
• These unusually low vacancy rates expose the rental market to volatility and competition.
• This directly contributes to housing instability and housing stress, which disproportionately impacts Australians in the lower-economic brackets.

Rental Affordability

• With low availability, high demand, and no laws in place to protect renters rights, Australia has seen rents rise at alarming rates.
• A rental is considered affordable if it costs up to 30% of the households total income. Anything exceeding this is deemed unaffordable.
• In 2024 almost all states are living in unaffordable rentals.

Rental Pain Index

• The Rental Pain Index is a measure of the combined impact of rental affordability and availability.
• Extreme rental pain is defined by a Rental Pain Index score of above 75%. The data below displays the percent of suburbs in each state in extreme rental pain.
• This paints an extremely dire picture for renters across the nation, with 67% of Australian suburbs experiencing extreme rental pain.

Summary

• Urgent action must be taken, or the housing crisis will only continue to worsen.
• The government must focus on increasing the number of social housing and reforming a system that has allowed housing, a fundamental human right, to be treated as a lucrative commodity primarily benefiting the wealthy.
• These measures are just the beginning of a journey to ensure equitable access to housing for all Australians, particularly those who are disadvantaged or marginalised.

References

• Abelson, P., & Chung, D. (2004) . Housing Prices in Australia: 1970 to 2003. Retrieved May 12, 2024, from the McCrindle website: https://mccrindle.com.au/app/uploads/images/Abelson_9_04.pdf

• Suburbtrends. (2024). Rental Pain Index, February 2024. Retrieved May 21, 2024, from the Suburbtrends website: https://suburbtrends.com/products/rental-pain-index-february-2024