Will sustainable access to credit and financial literacy ease the affordability crisis?

By Gerv Tacadena

Sustainable access to credit and financial literacy are two important things to solve the affordability crisis

Whilst Australia's housing macroprudential policies are worth commending, more can still be done to make the market affordable for home buyers.

Industry watcher and CoreLogic's Olumide Soroye said a better housing blueprint, a competent financial literacy for homebuyers, and sustainable access to credit are three things which can promote market affordability – especially in city-centres like Sydney and Melbourne.

With regards to housing supply, Soroye that the state and its local government units should work in unison to be able to determine sturdier and more effective strategies to tackle affordability.

"Responsible groups must think of a more holistic housing supply strategy that includes both infrastructure and transport strategies as well. Someone needs to plan how many multifamily and single-family dwellings for purchase and rental and decide where they want to be," Soroye said.

Also Read: The social and economic impact of the housing affordability crisis

While the new Greater Sydney Commission is close to achieving such blueprint, Soroye argued that the time frames might be too long, suggesting a five to 10-year goal instead.

Meanwhile, Soroye cautioned against stacking on layers of bureaucracy, which can hurt the credit supply, especially for those individuals who qualify for home loans.

Australia can learn a thing or two from how the US housing market deals with affordability woes, Soroye mentioned, as they look to boost wage growth alongside skyrocketing home prices.

"We are adopting policies that drive income growth ... a lot of the tax cuts, even though they are late in the cycle, go to businesses and middle-income families as well. This applies to Australia to start thinking about driving income growth," he said.

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