A decade ago, those following government advice to secure a well-paying job with the aim of entering the housing market are now finding their dreams more elusive than ever, as highlighted by recent research from the Australia Institute’s chief economist, Greg Jericho.
In 2013, purchasing a median-priced home in Sydney required a deposit of approximately $154,600. If a typical full-time male worker had been diligent in saving 15% of their income over the past ten years, they would have accumulated around $126,096, which is still significantly short of their original target and even further from the current deposit requirement.
As of now, the median deposit for a home in Sydney has skyrocketed to $281,500. This means that after a decade of saving, the same hypothetical buyer would still be lacking an additional $155,404 to meet the current requirement. The situation is similarly dire in other major cities, although Sydney has been particularly affected by soaring prices, with a buyer in Melbourne facing a shortfall of $42,059 and other cities like Brisbane and Adelaide also reflecting considerable gaps in required savings.
Only in Darwin does the scenario shift positively, where the hypothetical buyer might manage to meet their deposit goal. Jericho pointed out that for many with ‘good jobs’, home ownership is slipping out of reach unless they receive support from partners or family. He emphasised the challenges faced by those in lower-paying professions, stating that for workers such as teachers and nurses, achieving home ownership has become an increasingly unattainable aspiration.
Jericho further argued that housing affordability should be a priority in the upcoming federal elections. He attributed the crisis partly to 25 years of tax policies promoting housing speculation, such as the 50% capital gains discount and negative gearing. These measures are costing the government around $12 billion annually, with a significant portion benefiting the wealthiest Australians. He contends that after so long, it is vital to reassess these ineffective strategies and initiate real reform to address the housing affordability crisis in Australia.