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A multinational property body has warned that not only is Australia’s affordability problem worsening, it could reach crisis levels.
REA Group chief economist Nerida Conisbee says Sydney and Melbourne are “likely heading straight towards a housing affordability crisis”.
Her comment follows the release of the latest REA Group Property Demand Index – February 2017 which shows prices, especially in Sydney and Melbourne, continuing to rise at an alarming rate.
“Melbourne is better placed to weather the storm for longer, but Sydney, hampered by long-term underdevelopment, needs action. The only long term solution to the city’s affordability problem is to increase the supply of housing,” Ms Conisbee said.
Median prices along the eastern seaboard are continuing to break records and realestate.com.au is still experiencing a surge in demand for properties in these sought-after areas.
Ms Conisbee said several actions need to be undertaken to improve affordability. These include amalgamation of councils to improve planning systems and changes to NSW strata laws.
“Better relationships between state government and developers should be a priority, in order to partner investment in public infrastructure such as roads, schools and shops with new developments. This has led to a lot of success in Melbourne, which despite being an expensive city, is far more affordable than Sydney,” she said.
“Sydney’s lack of affordability is an economic issue. If it’s too expensive to live in the city, people will begin to move to more affordable regions and cities. The first to move will be those in essential services – such as nurses, doctors, teachers, pharmacists, plumbers [and] police – who don’t necessarily need to live in a large expensive city to secure work.”
Ms Conisbee added that even though the RBA announced on Tuesday it would hold rates at 1.50 per cent, it was not guaranteed the banks would pass this on to consumers, which would only continue to make affordability unachievable.
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