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A new report detailing a housing affordability crisis in two capital cities is “mostly accurate”, says Mortgage Choice CEO John Flavell.
Mr Flavell says The Australian Population Research Institute’s report, Sydney and Melbourne’s Housing Affordability Crisis, presents a largely authentic representation of the two major cities.
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“In the report by The Australian Population Research Institute, it was suggested that while property demand is strong, the supply coming onto the market isn’t the right type,” he said.
“An increasing number of high rise apartments are being constructed in the capital cities, and while this type of property is needed, the report suggests that there is only a limited market for this type of dwelling. As such, we could see an oversupply of apartments in the near future.”
While Mr Flavell agrees with the report’s finding that the right type of supply isn’t being built, he does not believe property prices will collapse as a result.
“If we were going to see a massive slump on house prices, not only would we need everybody to sell their properties at the same time, but we would need to see a significant oversupply of properties. I do not expect this to happen,” he said.
Mr Flavell said more needs to be done from a state planning perspective to ensure the right type of properties are being built.
“In Australia, we are wedded to the idea of the family home being three bedrooms and several bathrooms all sitting on its own block of land,” he said.
“For supply to keep pace with demand, what we need to see is a huge influx of three-bedroom homes with their own backyard.
“Of course, we cannot manufacture more open space in the inner city suburbs. As such, any houses currently being built are constructed on the outer fringes – far from the city and where public transport linkages aren’t great.”
Mr Flavell noted that if the issue of housing affordability is to be properly addressed, the government “needs to take a more consistent and efficient approach to planning and investment in infrastructure”.
“Rail links in particular need to be given special attention so that people can easily access jobs and services,” he said.
[Related: Rising home loans 'largely behind' affordability decline]
