Housing Woes in Australia

Apparently, Australia is going through the most difficult period in its housing history. The latest Australian Bureau of Statistics (ABS) figures show that Queensland has the highest homeless population in Australia. The figures show more than 26,000 people were homeless in Queensland in 2006.  Mission Australia spokesman Tony Stevenson says thousands more are homeless now. He says rapid urban sprawl has reduced the amount of affordable housing across the state. Soaring rent prices in mining towns like Mackay and Mount Isa are also a major reason. The report shows the Queensland’s homeless population rose by 2,000 in five years and that more than half of Australia’s homeless are under 24 years of age. (see: http://www.abc.net.au/news/stories/2008/09/05/2356036.htm?section=justin)

The situation is not any better in terms of housing affordability. Prices have been particularly soaring in Western Australia lately because of the population boom (influx of population from other parts as well as migrants to the state due to its booming mining and energy industries). In fact, Perth has become the most expensive city for housing after Sydney and if the trend continues, it may just beat it by 2010-11.  Median price for a small house in Perth today is around 480k which is way too high for any ordinary Australian, let alone the new migrants. Similar upward pressure on prices have been witnessed in other parts of Australia, which have gradually made housing, a basic facility taken for granted in the vast lands of down under in the past, a challenge to many.

Past couple of months have witnessed a clear slow down in the property market in many places throughout Australia, including western Australia because people are increasingly unable to afford housing due to soaring prices. Lowering of interest rates by  the government down to 7 percent is likely to boost both the demand as well as borrowing for the construction. However, experts believe that this is too little, too late and more aggressive cuts in the interest rates should be made to boost the economy and the housing sector. 

In a market where demand has been outpacing the supply, increased investment in the housing sector is what should the government be aiming at.