International capital the key to affordable housing

Property Council chief executive Mike Zorbas said the research provides more reason to support the immediate passage of the Australian government’s legislative agenda, currently before the Senate.

“Australia faces a stark reality; we are not planning for, or supplying, enough homes across the housing spectrum,” Mr Zorbas said.

“Gateway reforms like the Housing Australia Future Fund and National Housing Supply and Affordability Council must pass the Australian Parliament without delay.”

Mr Zorbas said Australia will fail to address the housing gap until we bring down the cost of buying and renting homes by improving our state planning systems, unlocking further supply by becoming the first choice for global capital, as partly anticipated by the National Housing Accord.

“Our reputation for welcoming housing investment must be on par with the UK and US as this report highlights,” he said.

“We need to level the playing field for new build-to-rent housing, purpose-built student accommodation and retirement living communities.”

The NHFIC analysis found many investment barriers such as subsidised housing projects lack sufficient commercial returns, insufficient scale, a lack of information on opportunities, a lack of data on vacancy risks, the need to partner with community housing providers to manage tenancies and access tax incentives, the reputational risks of managing subsidised housing tenancies, and unfavourable market conditions.

“There is an urgent need to accelerate the supply of social and affordable housing,” Mr Zorbas said.

“The playbook is there for Australia to adopt: longstanding government-backed finance, enduring subsidies and incentives including tax credits, and preferential planning treatment.”

Sydney was recently named the second most unaffordable property market in the world after Hong Kong in the 2023 Demographia International Housing Affordability Report.

The report used house price-to-income multiples to measure affordability. While Hong Kong was by far the most unaffordable property market globally with a home costing 18.8 times the average annual income, the report found Sydneysiders need to fork out 13.3 times the average income for a home. Melbourne (10.1) was the only other Australian city in the top 10.

However, Australia was found to be the most unaffordable nation globally, with five property markets all ‘severely unaffordable’, according to the report. Affordable properties were those that could be bought with an income multiple of three times or less.

Australian markets have a median multiple of 8.2, up from 6.9 in 2019. This is an increase of 1.3 years of median household income in three years.

[Related: NHFIC earmarks $33m for affordable housing in Tassie]