In this short paper, KPMG’s Chief Economist Brendan Rynne discusses the factors contributing to demand and supply, median house prices, demographic influences, intergenerational equity and interventions and reforms both systematic and targeted to alleviate housing affordability.
There is no doubt that Australia, like other international jurisdictions, is experiencing a worsening housing affordability problem. The driver of reduced affordability has clearly been the rapid increase in the price of housing, relative to a more benign adjustment in household incomes.
Many of the drivers of house price increases and affordability pressures on some households are occurring globally, are largely macroeconomic and are the product of a complex interaction of demand and supply side factors. No single policy intervention will address the entire issue, because as the Treasurer rightly acknowledged in his recent speech (24 October 2016), ‘there is no single housing market in Australia’.