Australia’s housing crisis could last for another 40 years unless changes are made to the market, a report by the Committee for Economic Development of Australia (CEDA) found.
CEDA said housing affordability is unlikely to improve for the foreseeable future, especially in capital cities. “Barring any major economic jolts, demand pressures are likely to continue over the next 40 years and supply constraints will continue,” said CEDA.
The report said the current structure of land release discourages house developers from getting more supply in the market, leading to increasing numbers of Australians retiring without owning a property.
The committee said changes are needed now at all government levels to avoid longer-term consequences. It made eight recommendations to ease the demand, including providing stronger legal protection for tenants, replacing stamp duty with land-based taxation, increasing capital gains tax and relaxing house planning restrictions.
CEDA research and policy committee chairman Rodney Maddock emphasised the latter, saying the government needs to allow more and bigger residential buildings to be built.
“We’ve got a free market on the demand side but all sorts of restrictions on the supply side,” said Maddock.
“Overall, the conclusion must be that our housing system has been designed – inadvertently, of course – to supply new additions at a lesser rate than needed to keep housing prices and affordability within acceptable limits,” said CEDA.