Australia’s Housing Market in a Triple Crisis

Australia’s economy is in a “triple crisis”, prompting calls for a royal commission into the future of housing.  A new report,, of which Prof Leishman is one of the lead researchers, found banks and the government are responsible for fuelling the frantic housing market. Among its findings were that the number of homeowners under the age of 35 have halved since 1995, with most properties concentrated in the hands of 65-year-olds or older. Prof Leishman said he is “seeing evidence that people (under 35) are giving up” on buying a house as a result. According to the research, the home ownership is now out of reach for any Aussies under the age of 35. Australia is one of the most indebted developed countries, beating the US, UK and Canada. The inequality gap is widening as the housing market continues to surge. Australia’s houses are taking on average just 32 days to sell as the economy recovers from COVID-19. The housing sector is fuelling a problem threefold – creating an unstable economy, generating inequality and perhaps most surprisingly, reducing productivity. Expensive houses are driving young professionals from the city, into the outer suburbs or the regions to afford a house. “As housing markets get more and more expensive, more productive workers are displaced,” Prof Leishman explained. “We think the RBA’s remit should be wider, (it) should include the housing market,” Prof. Leishman said. He is particularly concerned about interest rates, which are currently at record lows. “It wouldn’t take very much for a shift in interest rates to cause a great deal of harm in the housing system,” he said. The report wants housing stimulus packages to switch from housing to the social rental sector while the market is re-evaluated. The report’s lead author, Prof Duncan Maclennan, said something needs to be done. “The recent explosion in house prices brings a fresh and troubling dynamic,” he said. Rampant price growth has returned to the larger cities and is now spreading to regional Australia. This is in part due to the pandemic-fuelled work-from-home revolution but is also because so many younger Australians can no longer afford the life they want as homeowners in the larger cities.