Interest rates can no longer be held as the sole cause for the housing affordability crisis, the Housing Industry Association said today.
Interest rates are just one factor in a toxic equation, which is forcing tens of thousands of Australians to abandon the prospect of home ownership.
HIA’s Executive Director, Industry Policy and Services, Chris Lamont, said the worst affordability situation in at least a quarter of a century, coupled with low vacancy rates and soaring rents, has the potential to create social upheaval the like of which has not been seen since the Great Depression.
“If people cannot afford to buy a home and there is nowhere for them to rent, then what is left? It is a desperate situation,” he said.
Interest rate increases are playing a role for existing mortgagees who took on mortgages three or four years ago and now commit more than 30 per cent of household income to service repayments, placing them in mortgage stress.
The average mortgage servicing rate exceeded 30 per cent for the first time in history in December 2006.
“It is simply too easy to blame interest rates and heightened consumer demand for the housing affordability crisis,” Mr Lamont said. “The cause of the problem lies in an under-supply of ready-to-develop land, the multiple planning hoops developers must jump through in order to get a building completed, and the fact that state and local governments regard housing as a cash cow to be milked to underwrite their budgets.”
The cost of labour and materials for a new home has risen at broadly the rate of inflation over the past 10 years. The Australian housing industry remains extremely competitive - it is among the most efficient home-building sectors in the world.
“Unfortunately the industry is hamstrung by a range of imposts and other factors completely beyond its control.”
What is needed is a collaborative approach involving the industry, consumer representatives and all levels of government. “This is a complex problem, one that should be treated with the same urgency as climate change, after all we all need somewhere to live.” he said.
“If the industry is released from artificial supply constraints and red-tape, it is more than capable of providing affordable housing for today and tomorrow.”