Australia’s housing affordability crisis is accelerating, experts say, but would be worse if the Reserve Bank hadn’t begun raising the cash rate in 2022.
But over the 10 years to March, affordability fell by a smaller 13.4 per cent. PRD chief economist Dr Diaswati Mardiasmo said this indicated the crisis is worsening. “That makes a big difference to your mortgage repayments,” he said. “It probably gave people a bit more confidence to leverage themselves up a bit further.”
Zigomanis said it was likely prices would have been higher without the 2022-2023 rate hikes; if rates stayed low, more Australians would have kept their jobs, which would have supported prices. “In about 2005, with the mining boom, we saw a surge in population growth that wasn’t matched by construction. It has been getting a lot worse over time and with the absence of a decent supply response it will continue to deteriorate.”Oliver said efforts by governments to add more stock to the market through the housing accord ironically had been hampered by the high interest rates, an economic headwind that weighs heavily on the construction industry.