Australian house prices: Why are they so high?

Buying or renting a home has become unaffordable for the average Australian, driven by a perfect storm of astronomical house prices, relentless rental increases and a lack of social housing.

With less than a month until the federal election, housing remains among the top issues for voters, and the country’s two major parties – the Labor Party and the Liberal-National Coalition – have both pledged to tackle the crisis in a range of ways.

Australians are now dealing with rising living costs and anticipating Donald Trump’s impact on the world economy. And whether either party’s campaign promises to restore the American dream did win the election.

Just put, Australia hasn’t been producing sufficiently homes to meet the needs of its rapidly expanding people, leading to a shortage that makes any available house more expensive to purchase or lease.

The issue is exacerbated by Australia’s restrictive planning regulations, which prevent new homes being constructed in areas like big cities where the majority of people want to survive.

Popular urban areas like Melbourne and Sydney are significantly less deep than comparable-sized cities around the world due to red tape.

People are being pushed into poverty or overcrowded living conditions as a result of the steadily declining public enclosure market and the exploding waitlists that are currently filling the air.

Numerous other places are becoming increasingly unlivable as a result of natural disasters like wildfires and severe hurricanes destroying large swathes of land.

Home ownership has been commercialized in the wake of ages of government policies. The notion of owning a home, when viewed as a proper in Australia, has now become an investment opportunity.

In essence, it depends on your location.

According to a 2023 Demographia International Housing Affordability study, Sydney is now the second-least cheap city in the world for purchasing real estate.

The most recent data from CoreLogic, a provider of property analytics, shows that the average Sydney home costs almost A$ 1.2 million ( £570, 294,$ 742, 026 ).

The average home price in each of the nation’s capital cities is really over A$ 900,000.

Overall, house prices in Australia have increased by 39.1 % over the past five years, and wages have struggled to keep up.

According to a report from the 2024 Status of the Housing System, the typical prospective renter now needs about 10 years to save the 20 % loan needed to purchase a typical household.

Prices have increased by 36.1 % nationwide since the start of Covid, or an equal increase of A$ 117 per week, which is negated by the rental market.

Sydney topped the tables, according to CoreLogic’s most recent hire evaluation, with a median regular book of A$ 773. The second-highest prices, Canberra at A$ 667 per year, were paid for in Perth, with average prices of A$ 695 per month.

Immigration and buying of foreign real estate are frequently cited as the causes of Australia’s housing crisis. However, researchers contend that they don’t mathematically contribute significantly.

According to Michael Fotheringham, head of the American Housing and Urban Research Institute, many people who move to Australia are temporary immigrants, such as foreign students who live in designated student housing more than attempting to buy real estate.

According to Mr. Fotheringham,” The impact ] of migrants on the housing market is not as significant as some observers have suggested.”

According to Brendan Coates, a public policy think container from the Grattan Institute, home buying are” a very small problem” with little significant impact on housing pressure.

Homes purchased by international buyers in 2022-23 represent less than one cent of all income, according to the most recent information released by the Australian Taxation Office.

According to the current international funding regulations, it’s already very difficult for foreigners to buy homes. They are content to a wide range of income, especially in some states, Mr. Coates explains.

Labor and the Coalition both pledged to invest in more houses, with the Coalition promising to uncover 500,000 while Labor offered 1.2 million by 2029.

In their most recent finances, Labor made a$ 33 billion housing investment plan that promises to assist first-time consumers in getting shared-equity money to buy properties with smaller deposits.

Additionally, they have pledged to increase social enclosure and grant incentives to aid low-to-moderate-income people in renting and owning more comfortably.

Cutting movement, reducing the number of foreign students, and enforcing a two-year restrictions on international investment in existing properties are key components of the Coalition’s housing affordability strategy.

Additionally, they have promised a$ 5 billion boost to the infrastructure to pay for the construction of housing development sites ‘ water, power, and sewerage costs.

Meanwhile, the Greens ‘ policies have focused on lowering renters ‘ demands by calling for national rent caps and freezes.

Additionally, they have stated that they will work to reform taxes incentives for owners in the event of a minority government.

In summary, according to experts, neither Labor nor the Coalition’s guidelines are effective at resolving the housing crisis.

According to Mr. Coates,” a combination of the parties ‘ systems may get better than what we’re seeing individually.”

According to an Urban Development Institute of Australia statement from 2025, the federal government may fall short of delivering its goal of 1.2 million new houses by 2029, or about 400,000.

According to Mr. Coates, the Coalition’s efforts to reduce emigration will only contribute to Australia becoming less affordable in the long run while reducing the cost of cover.

He claims that the relocation cuts will result in fewer skilled migrants, and Australians may pay more in taxes as a result of the loss of income from those migrants.

Decades of underinvestment in social housing also result in a marked increase in demand in that sector, which, according to Mr. Fotheringham, is considerably lower than supply, which accounts for 4 % of housing inventory.

Additionally, there is problem about grants for second consumers, which increase costs even further.

While he applauds the progress made in taking these issues really, Mr. Fotheringham believes it will take years to get Australia out of a housing crises that has been raging for years.

He claims that the country has been” sleeping into this for a while.” The political class is paying attention, according to the statement,” Now ] the nation is paying attention.”

Kellie Highet provided further monitoring and videos in Sydney.