The ongoing housing challenges in Australia are comprised of related but separate crises, according to the latest whitepaper from PEXA Research and LongView.

Putting into perspective the drivers of house prices based on decades worth of data, the whitepaper identified three related housing crises currently happening in Australia: purchase affordability, rental affordability, and rental experience.

PEXA CEO Glenn King said containing the analysis of the housing crisis to just supply-demand arguments would only yield simple solutions that, he believes, would not be enough to work.

“What we have sought to do to is forensically analyse Australia’s unique demographic and urbanisation profile to help explain Australia’s upward trend in house prices over so many decades,” he said.

Here are some of the findings of the whitepaper:

  • Australia’s unusually high population growth and increasing urban concentration have a large effect on house prices.
  • The scarcity of well-located residential land means many homebuyers are missing out on the benefits of city living.
  • It is often assumed that interest rates are the primary driver of house prices, but this is not backed up by the evidence.
  • Government ‘affordability’ policies have had surprisingly little impact on house prices over decades.

Mr King said the reasons above make homeownership increasingly out of reach for many Australians.

“Many first-home buyers, who are forced to buy far from the centre of cities, are denied the opportunities that may increase their quality of life, including access to the higher paying jobs that are in the central city and employment hubs,” he said.

“They aren’t reaping the economic benefits that living in a city should bring, benefits that generations of Australian city and suburb-dwellers have enjoyed.”

LongView Executive Chair Evan Thornley said the housing issue goes beyond interest rates and tax policies.

“Nearly every developed country has had record low interest rates, supply constraints and government subsidisation for housing — what sets Australia apart is its consistently high population growth rates and urban concentration,” he said.

“Australian cities are unusual – they are few, they are large, and they all have dense CBDs and expansive suburbs, with not much in between.”

In fact, the value of land alone accounts for most of the growth in property prices over the past 30 years in the country.

“Land appreciates, buildings depreciate – and Australia’s population dynamics mean our land appreciates faster and more consistently than almost anywhere else in the developed world,” Mr King said.

Given that buying a home is the biggest economic decision in most people’s lives, Mr King said it is crucial to shape solutions that concern a wider range of factors affecting housing.

“It is vital we understand what is driving the Australian property market so that we can come up with solutions that actually work — or as we say, solutions that swim with the economic tide,” he said.

“Otherwise, we are pretending that we can ignore or overcome the realities that shape our housing market.”

Australia’s three housing crises

The three related but separate housing crises Australia is facing are due to different causes with their respective solutions. Below is an overview of each of the crisis according to the whitepaper:

Purchase affordability

  • Homeownership has fallen across nearly all age groups over the last four decades.
  • There is little evidence to suggest that interest in homeownership has declined in Australia.
  • Buyers face two barriers when acquiring mortgages: serviceability and the required deposit.
  • Homeownership is now largely available to people with access to private assistance, in the form of gift, personal loan, inheritance,

Rental Affordability

  • More than 2.9 million households rent in the private rental system.
  • In 2021, 31% of Australians rented, higher than the 26% share recorded in 2006.
  • Renting can no longer be seen as a form of transitional housing. Rather, it is a permanent reality for an increasing number of Australians.
  • Australians relying on government allowances are increasingly priced out of the private rental market.

Rental Experience

  • Australian renters face significant insecurity and instability, with renters moving more frequently than they want.
  • Landlords also face the challenge of poor capital growth.
  • Changing regulations can be complicated, increasing compliance costs.

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
Principal & Interest
Featured Online ExclusiveUp to $4k cashback
  • Immediate cashback upon settlement
  • $2000 for loans up to $700,000
  • $4000 for loans over $700,000
5.99% p.a.
5.90% p.a.
Principal & Interest
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.14% p.a.
6.16% p.a.
Principal & Interest
  • Find out your loan eligibility in 2 minutes or less
  • Complete your application in less than 20 minutes
  • Low fees and fast approval times
5.95% p.a.
5.95% p.a.
Principal & Interest
5.94% p.a.
5.95% p.a.
Principal & Interest
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .


Photo by steinchen from Pixabay.