Why Housing Affordability Matters to All Australians
Kent Andrew Lardner
Property Data Consultant | Real Estate Market Researcher | Data Visualisation Specialist (Flourish) | Empowering Strategic Decisions with Data-Driven Insights.
Introduction
Housing affordability is a pressing issue that impacts everyone, not just those struggling to buy a home. According to the 2024 Demographia International Housing Affordability report, housing costs have skyrocketed, outpacing income growth and creating significant economic and social challenges.
The Importance of Housing Affordability
Housing affordability affects various facets of life, from economic stability to health and well-being. Here’s why it matters to all Australians:
Economic Stability
High housing costs drive up the overall cost of living, reducing disposable income and straining household budgets. When more of a household’s income is dedicated to housing, less is available for other essential needs, such as education, healthcare and savings. This can lead to broader economic instability as consumer spending, a key driver of economic growth, is curtailed.
Opportunity for All
Affordability issues limit upward mobility, particularly for many young people, widening social inequality. When housing becomes unaffordable, it prevents many from buying homes, which has long been a traditional path to building wealth. This exacerbates social disparities, creating barriers to financial independence and long-term economic security.
Migration Patterns
Unaffordable housing forces people to relocate, impacting local economies and labour markets. This trend has been around for decades, especially in Sydney. The more expensive cities around Australia with high housing costs are experiencing a talent drain as workers move to more affordable areas. This can affect local businesses, reduce economic dynamism and strain public services in areas experiencing rapid population growth.
Health and Well-being
Secure, affordable housing is vital for mental health and community stability. Housing insecurity and high costs can lead to stress, anxiety, and other mental health issues. Additionally, stable housing contributes to better community cohesion, safety, and overall quality of life.
Demographia Affordability Method
The Demographia report uses the “median multiple” to measure housing affordability. This is a price-to-income ratio, calculated by dividing the median house price by the median household income. The affordability ratings range from “Affordable” to “Impossibly Unaffordable,” reflecting how accessible housing is in different markets.
The 2024 Demographia International Housing Affordability report categorises housing markets as follows:
? Affordable: Median multiple of 3.0 & under
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? Moderately Unaffordable: Median multiple of 3.1 to 4.0
? Seriously Unaffordable: Median multiple of 4.1 to 5.0
? Severely Unaffordable: Median multiple of 5.1 to 8.9
? Impossibly Unaffordable: Median multiple of 9.0 & over
June 2024 Housing Affordability Results - Australia
To produce the June results, we selected residential property types, including apartments, duplexes, flats, houses, terraces, townhouses, units and villas. This gave us a final sample size of 21,094 records for the month using agent advised sales. Each sold property’s latitude and longitude were matched to its corresponding SA1. We then used Census data for the SA1 to determine the household income level, which was indexed to provide a June 2024 household income estimate.
Check out the chart below to see how Australia’s property sales from June 2024 match up to household income levels. The data highlights the urgent need for policies that promote housing affordability.
Conclusion
The 2024 Demographia International Housing Affordability report underscores the critical nature of housing affordability. High housing costs affect economic stability, social equality, migration patterns and health and well-being. By understanding these impacts and the methodology behind affordability ratings, policymakers and stakeholders can work towards creating more affordable housing markets, ensuring a better quality of life for all Australians.
Join the Conversation
Share your thoughts on housing affordability in the comments below. How has the housing market impacted you or your community? What solutions do you believe could help address this issue?
Buyers Advisor and Expatriate Specialist at Brady Marcs Buyers Advisory
4 个月Thank you for sharing, agree that the anxiety and stress caused by housing affordability is having a huge impact on our wellbeing and community cohesion.
CPV Valuer | Rural Property Specialist | Land Economist
4 个月Interesting rating methodology Kent, looking at this change over time would be insightful, especially compared against the indicators we have of inflation and purchasing power.