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Australia’s housing crisis: unmasking the real culprits and solutions

The housing crisis is the hot topic on everyone’s lips, and with last week’s Federal Budget, and the release of the third and final whitepaper from LongView and PEXA examining the conundrum released this week, it’s not going anywhere fast.

But while many have been good at outlining the problem, few have posed workable solutions.

Until now.

LongView and PEXA this week advocated for shared equity schemes and rental investment trusts, funded by private capital, to mitigate the ongoing housing crisis, stating the problem has outgrown governmental capabilities.

To refresh your memory of the entire issue, including the causes, the impact of the problem and the solutions we’ve compiled all of the whitepapers below.

1. What Drives Australian House Prices Over the Long Term?

The first whitepaper analysed the driving forces behind Australia’s house prices and concluded the nation’s distinctive population patterns and lack of residential land near job hubs have had a greater impact than interest rates or government subsidies.

It said factors, such as the first-home buyers grant and negative gearing, contributed less than 2 per cent to the recent multi-trillion-dollar increase in house prices, while population growth and urban density were major contributors to price growth.

The country’s population is particularly concentrated, with 51 per cent residing in Sydney, Melbourne, or Brisbane. This concentration places increased pressure on limited desirable land, causing land values to appreciate faster than almost anywhere else in the developed world.

Read the full story on what drives Aussie house prices here.

2. Private Renting in Australia: A Broken System

The second LongView and PEXA whitepaper revealed Australia’s residential rental system is dysfunctional, failing to provide affordable and secure housing for tenants or a reliable investment option for landlords.

The study emphasised the need to address the conflicting needs of renters and landlords in order to deliver long-term solutions for the 2.9 million renting households and 2.2 million property investors.

Despite the perception of wealthy landlords, the research demonstrated that the rental market is not benefiting property investors and exacerbates renters’ insecurity and poor housing conditions.

The number of Australian households renting has increased to 26%, with 43% renting for a decade or more, yet security of tenure remains elusive, as 36.5% of renters have moved at least three times in the past five years.

Moreover, the private rental system also fails to work for two-thirds of property investors, with a median post-tax return of just 6.3 per cent compared to 7.4 per cent from a balanced superannuation fund.

Read the full story on Australia’s broken rental system here.

3. Mobilising Private Capital for New Housing Solutions

In the third, and final, whitepaper in the series, PEXA and LongView said shared equity schemes and rental investment trusts, funded with private capital, offered the best chance to address Australia’s national housing crisis.

The study argued that governments alone would not be able to bridge the widening affordability gap in housing for Australians. The housing crisis, which threatens the Australian way of life, has grown too big for governments to handle on their own.

Shared equity schemes reduce mortgage deposit barriers and provide exposure to capital growth, while rental investment trusts offer a more professional ownership experience and greater tenure security for renters.

However, reform of land tax regimes would be necessary to incentivise large landholders to invest in affordable housing.

The study also called for better data and a centralised national social housing register to support the provision of social and affordable housing.

Read the full story on solutions for Australia’s housing crisis here.

Elevate podcast: Evan Thornley on the real reason property prices are unaffordable, fixing the housing crisis and what the downturn means for agents

LongView CEO Evan Thornley sat down with Elite Agent Managing Editor Samantha McLean on the Elevate podcast to discuss the root cause of the current housing crisis.

He revealed the major driver behind the housing crisis is often overlooked by economists and experts, and that neither increased supply nor government intervention would resolve the situation.

Mr Thornley, who transitioned from management consultant to tech entrepreneur and then to a property management business, emphasised the need for urgent action to address a problem that took decades to create.

The conversation also covered the rental crisis, investment into residential property, and the future of property prices. Listen to the podcast here.

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Kylie Dulhunty

Kylie Dulhunty is the Editor at Elite Agent.