There has been much talk for the past few months about the increasing
unaffordability of housing in Australia. As we've heard before
somewhere..."the rich are getting richer and the poor, poorer". It
seems the land of milk and honey and middle classes is eroding, with a
widening gap between the haves and have nots.

Most focus has been on interest rates as a cause for the affordability
crisis, but now that they are steady(ish) what else can be blamed?

HIA's Executive Director, Industry Policy and Services, Chris Lamont
has said that "the worst affordability situation in at least a quarter
of a century, coupled with low vacancy rates and soaring rents, has
the potential to create social upheaval, the like of which has not
been seen since the Great Depression. If people can not afford to buy
a home, and there is nowhere left for them to rent, then what is left?
It is a desperate situation." (HIA Media Release 15/01/07)

Interest rates are definitely a factor for existing mortgagees who
took on large loans 3-4 years ago, however they play a smaller part in
affecting those trying to get into the market. Mr Lamont suggests the
availability (or lack thereof) of ready-to-develop land, coupled with
enormous planning red-tape and the fact that state and local
governments see housing as their cash cow are more responsible for the
crisis.

The actual cost of labour and materials for a new home has remained
competitive and roughly in line with inflation, but there are many
issues affecting the industry outside of its control. The suggestion
to rectify the situation is a much more collaborative approach between
government and the housing industry's consumer reps to reduce the red-
tape and artifical supply constraints. Maybe if this happens, there
can be a clearer pathway to supplying more affordable housing to the
average Australian now and into the future.

It's a scary thought that many Gen X's and Y's won't be able to afford
their own home in the way their parents have. Already it is easy to
see that most new entrants into the home-buying market are spending
far greater percentages of their earnings on the mortgage than ever
before. How sustainable is it? What happens when people can't afford a
roof over their head? What ever happened to "she'll be right mate?"