There’s only one way to make housing more affordable


So, we seem to want Australia’s housing to become affordable.


Well, there is only one way that this can be achieved.

The price has to drop – and in some places, sharpish.

An accepted affordability benchmark sees dwelling prices as sustainable at 3 to 4 times household income.

Now, for the sake of agreement, how about we lighten up this range a little and agree that Sydney and Melbourne are a bit precious; and that 6 times earnings is appropriate there and the wannabes, being south east Queensland, Canberra and Perth, come in with a 5 times benchmark.

And for rest of the country, we accept a 4 times dwelling price to household income.

So, how far do house prices have to fall – using these markers – before we reach a housing affordability goal?

Have a lookeyloo at the table below:


Scary stuff, hey?

And again, one must question if this is what is really wanted.

Lots of hot air about the issue, but will we really see any action?

For mine, if we really wanted to do it, then it could be done and in a somewhat controlled manner.

It would take three things:

  1. Reducing demand
  2. Increasing supply
  3. Removing outside interference

So, how exactly? 

  • No Australian passport – No buy, regardless of property type or status.
  • Direct overseas migration to where we want it i.e. towards regional Australia.
  • Simplify and change taxation – away from the current leniency towards capitals gains to favour investment income.
  • One set of measurable planning regulations, allowing for climatic variances, Australia-wide.
  • No government-funded buyer incentives, period, including first home buyers.
  • Limit (and police) use of superannuation monies to buy speculative property and no superannuation access for owner residents.
  • Standardise (and reduce, dramatically) all property-related sales fees and commissions.

But implementing such a list will be way too hard.

So, we will, no doubt, continue doing what we have done for the past 20-odd years – kicking the can down the road, so to speak – by easing credit and spruikinpropertyg  more government incentives.

The property cycle has become more turbulent as a result; and of late, unhinged from reality.

I will leave you this week with a couple of thoughts.

Firstly, debt is consumption brought forward and growth is the expectation of future consumption.

Secondly, high debt is like flying a plane with one engine – you can bring it home, but you don’t want to run into any more trouble.

And I think that there is plenty of turbulence ahead.

Thirdly, does what you are planning to build or buy factor into this new paradigm?

Or maybe I should just shut my mouth.


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Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive

'There’s only one way to make housing more affordable' have 1 comment

    Avatar for Michael Matusik

    March 24, 2017 Chris D'Sousa

    I fully agree with all your recommendations. It needs a major overhaul with all items suggested, if not, wait for the storm ahead – it is coming. The only item holding up the market is demand and supply which is being fueled by off-shore buyers and population growth objectives. When (and when, not if) the economy starts to slow down and un-employment starts to increase, immigration will be reduced. Additionally we are going through a generational change. These will be the catalysts. Other issues with regard to selling commissions and planning laws 110% need a significant review – planning laws should be nationalised rather than leave it to an interpretion of various individuals.


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