The Australian dream will only be open to the landed gentry’s children

By any measure, Australia’s housing market is in dire straits. Despite the recent easing of prices, would-be home buyers continue to struggle with affordability. Renters endure record-low vacancy rates and soaring rents while borrowers confront sharp repayment hikes. And demand for shelter will only increase as migration resumes and international students continue to return.

Depressingly, a survey last month for the Australian Housing Monitor showed that while 85 per cent of non-home owners hoped to buy their own property, less than a quarter thought they would ever have the financial resources to do so.

As Shane Wright and Rachel Clun report, in 1994, it took about six years to save a 20 per cent deposit for a median-priced home on the east coast. Despite wage rises and more double-income households, it now takes about 14 years.

Rental vacancies, meanwhile, have hit an all-time low, fuelling double-digit rent increases year-on-year across capital cities. Demand is so high in some Sydney and Melbourne suburbs that long queues are common at inspections with applicants offering over the asking price to beat out the competition, sure signs of a market under extreme stress.

This situation is not going to improve any time soon.

House prices appear to have bottomed and, if history is any guide, will soon renew their relentless climb. The return of international students, working travellers and skilled migrants will increase pressure on rents, bad news for pretty much everybody.

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The Grattan Institute’s Brendan Coates says in future unless a person has wealthy parents their chances of buying the Great Australian Dream will be close to zero. Those young Australians able to draw on generational wealth – the “bank of mum and dad” – effectively help to concentrate property ownership in fewer hands and shut out an ever-growing cohort of have-nots.

This week, The Sydney Morning Herald began a series investigating the housing crisis, starting with a simple question: has the Australian love affair with housing so distorted the economy that it is at the heart of problems plaguing our cities, governments and way of life? We will canvass real solutions, starting from the basic premise: we need more housing stock where people want to live.

The federal government is planning to finance the construction of 30,000 social and affordable homes over five years, and wants to bring together states, local government, the investment community and the construction sector to build 1 million “well-located homes” between 2024 and 2029. It is a start: we must begin to remedy the dozens of ways housing growth is constrained. We need to embrace higher density, and tweak zoning laws to encourage it.