Social Justice Australia

Home Affordability: A Path to Economic Stability

Housing Affordability in Australia

Discover how home affordability impacts economic stability in Australia and explore strategies to make housing accessible. Learn about the role of currency sovereignty in affordable housing solutions.


Explore the crisis of home affordability in Australia and discover innovative strategies to foster impactful change, enhancing economic stability. Learn how sustainable housing is pivotal not only to personal prosperity but also to national economic health.

Who Will Find This Article Worthwhile?

This article is about home affordability and targets disheartened potential home buyers, particularly young adults who are finding the market inaccessible, as well as policymakers and influencers capable of driving change. Our aim is to both inform and empower you with knowledge and tools to advocate for improved housing policies and practices.

The Importance of Housing Affordability

Housing affordability is a cornerstone of financial security and a balanced economy. Affordable homes increase inclusivity, foster diverse communities, and stimulate economic growth by enhancing disposable income. We’ll explore strategies to maintain affordable housing and balance socio-economic inequalities, ensuring a stable and prosperous future for all Australians.

What Salary Do You Need to Afford a House in Australia?

Understanding what salary is needed to afford a home is crucial as median house prices often outpace income growth. Here’s what you might need in major cities as of early 2023:

Sydney: Typically requires a household income of $150,000 to $200,000.
Melbourne: Comfortable with an income of $120,000 to $160,000.
Brisbane and Adelaide: An income of about $90,000 to $110,000 might suffice.
Perth: Similar requirements to Adelaide.

Additional Homeownership Costs

Owning a home involves more than just the mortgage. Prospective buyers should also budget for:

Stamp Duty: Often a significant expense depending on the home’s value.
Legal and Inspection Fees: Essential for lawful and secure property acquisition.
Maintenance and Council Rates: Ongoing costs that can impact long-term affordability.
Insurance: Necessary to protect your investment.

Impact of Interest Rates

Interest rates directly influence mortgage repayability. An increase can significantly raise monthly payments and overall affordability. For instance, a 0.5% increase on a 30-year loan can considerably affect the monthly costs.

Deposit Savings

The size of your deposit also affects how much you need to earn. A larger deposit reduces the amount you need to borrow, which decreases your income requirements.

In summary, while the figures provided give a rough benchmark, the exact income needed can vary. Prospective home buyers should consider their personal financial situation and speak with financial advisors to plan appropriately. Factors like credit score, other debts, and personal savings goals are also crucial in determining what you can afford.

For more detailed and personalized advice, consulting with a financial advisor or mortgage broker would be wise. They can provide guidance based on the latest market conditions and your financial health.

What is the current property trend in Australia?

As of early 2024, the property market in Australia continues to exhibit distinct trends shaped by several economic factors including interest rates, population growth, and government policies. Here’s a detailed look at the current trends:

Cooling Prices in Major Cities

After the significant boom during the COVID-19 pandemic, where many Australians sought more spacious living arrangements and interest rates were at historic lows, the major markets of Sydney and Melbourne have seen a cooling off. This trend is partially due to:

-Increased Interest Rates: The Reserve Bank of Australia has raised interest rates in response to inflationary pressures, making mortgages more expensive and cooling some of the demand.
– Market Saturation: There is a high supply of new properties coming onto the market, including apartments and townhouses.

Regional Growth

While the largest cities are cooling, regional areas continue to attract attention due to:

– Affordability: Compared to major cities, regional areas offer more affordable housing options.
– Lifestyle Factors: The pandemic-induced remote work trend remains partially in place, allowing people to live further from traditional workplaces.
– Infrastructure Developments: Improvements in local amenities and infrastructure are making regional living more feasible and attractive.

Rental Market Tightness

Rental markets across Australia are extremely tight, with vacancy rates at historic lows in many parts of the country:

– High Demand: With the return of international students and immigrants post-pandemic, along with locals moving for work or lifestyle reasons, the demand for rentals has surged.
– Limited Supply: Construction delays and a shift towards owner-occupier purchases have limited the availability of rental properties.

First-Time Home Buyers

The market dynamics present both challenges and opportunities for first-time home buyers:

– Government Assistance: Programs like the First Home Loan Deposit Scheme are helping first-time buyers enter the market by requiring a smaller deposit.
– Affordability Challenges: Despite governmental support, rising interest rates and high living costs continue to pose affordability challenges.

Investment Activity

Investor interest in the Australian real estate market has moderated due to:

– Lower Capital Growth Expectations: The expectation of lower price growth has tempered investor enthusiasm somewhat.
– Rental Yields: While capital growth may be slow, strong rental demand has kept rental yields relatively attractive, especially in suburban and regional areas.

Future Outlook

Looking ahead, the property market’s direction will heavily depend on:

– Interest Rate Movements: Further increases could dampen borrowing and purchasing activity, whereas stabilization might encourage market entry.
– Economic Conditions: Economic recovery post-pandemic, wage growth, and unemployment rates will significantly influence housing affordability and market demand.
– Government Policies: Changes in housing, taxation, and immigration policies could either stimulate or cool the market.

The current trends suggest a nuanced property market in Australia, with significant regional variations. Prospective buyers and investors should stay informed about local market conditions and broader economic indicators to make well-considered decisions. As always, consulting with real estate professionals and financial advisors is recommended to navigate this complex landscape effectively.

The First Home Loan Deposit Scheme

The First Home Loan Deposit Scheme (FHLDS) in Australia is designed to aid first-time homebuyers in entering the housing market by allowing them to purchase a property with a significantly lower deposit than typically required. Here’s an analysis of its effectiveness and its impact on housing prices:

Effectiveness of the First Home Loan Deposit Scheme

Lower Deposit Requirement:

– Traditional Mortgages: Typically, Australian homebuyers need a 20% deposit to avoid paying Lenders Mortgage Insurance (LMI).
– FHLDS Benefit: The scheme allows eligible first-time home buyers to purchase with as little as a 5% deposit while the government guarantees up to 15% of the loan, negating the need for LMI.

Financial Savings:

– LMI Savings: By waiving the LMI, the scheme can save first-time buyers thousands of dollars (LMI can range from 1% to 3% of the purchase price depending on the deposit size and the lender).

Increased Accessibility:

– Market Entry: The scheme makes it easier for first-time buyers to accumulate a deposit and enter the market sooner, which is particularly beneficial in a rapidly appreciating market.

Capacity Limits:

– Limited Spots: The FHLDS has a cap on the number of participants each financial year (e.g., 10,000 spots), which means not all eligible buyers can benefit.

Impact on Housing Prices

Demand Stimulation:

– Increased Buyer Activity: By reducing the barrier to entry (deposit size), the scheme potentially increases the number of buyers in the market. Higher demand, particularly in already competitive or lower-priced segments, can drive up prices, particularly where supply doesn’t meet this boosted demand.

Localized Price Effects:

– Targeted Segments: The impact on prices might be more pronounced in areas and housing segments popular with first-time buyers (typically more affordable housing options).

Price Inflation Concerns:

– Short-Term Boost: There is a concern that such schemes, while helpful for individuals who can take advantage of them, essentially pull demand forward, which may contribute to short-term price inflation. This can create an entry barrier later on, offsetting long-term benefits to overall market accessibility.

Economic Considerations

Economic Stimulus:

– Construction and Employment: Increased housing demand can stimulate construction and related industries, contributing to employment and economic stability and growth.

Comprehensive Policy Requirement:

– Long-Term Solutions Needed: To prevent unsustainable price increases, the scheme should be part of a broader strategy including measures to increase housing supply, such as incentives for new building projects and zoning law adjustments.

The First Home Loan Deposit Scheme is undoubtedly helpful for individual first-time buyers by reducing the upfront financial burden. However, its effectiveness in broader economic terms and its impact on housing prices need careful consideration.

While it does help bring more buyers into the market, thereby supporting the construction industry and related sectors, without adequate supply increases, such schemes risk inflating house prices further, potentially exacerbating the affordability crisis they seek to mitigate.

For a sustainable approach to housing affordability, this scheme should be complemented by robust measures aimed at increasing supply, such as more aggressive development policies and infrastructure investments that make new areas viable for living and building.

Key Innovations Driving Home Affordability

Around the globe, creative housing models and financial structures are being explored to combat the rising costs of homes. From co-housing and land trusts in the United States to governmental housing subsidies in Scandinavia, these innovations not only provide practical solutions but also inspire policy adjustments. We will look at how these models can be adapted for Australia’s unique market conditions.

Innovative housing models such as co-housing, where individuals and families live in private homes but share common spaces and resources, are proving effective in Europe and North America. Land trusts in the USA are preserving affordability by holding land in trust for the community and leasing it to homeowners. Governmental subsidies, such as those seen in Scandinavia, provide direct financial assistance to make housing more accessible. These models not only reduce the cost of entry for homeowners but also ensure long-term sustainability.

How Readers Can Support Home Affordability

You can influence housing affordability through active civic engagement and advocacy. Support local and national policies that aim to increase housing supply, such as the approval of new housing developments and the relaxation of restrictive zoning laws. Participate in community housing projects and advocate for rental caps and fair housing practices to protect tenants from exploitative rent increases.

The Role of Technology in Home Affordability

Technological advancements are set to revolutionize the housing industry. This section will discuss the integration of these technologies into mainstream housing markets and their potential impacts on affordability.

Prefabricated homes can cut construction costs by up to 20% and significantly reduce build times, making housing more quickly available and affordable. Smart technology in homes can reduce ongoing living costs through energy efficiency and better resource management.

Spotlight on Successful Home Affordability Models

Several countries have successfully integrated innovative housing models with economic policies to great effect. For instance, Singapore’s use of centralized planning and public housing initiatives provides a replicable model of affordability. We’ll examine these international examples to derive lessons that could be applied to Australia’s housing affordability strategy.

Singapore’s approach to public housing, where the government provides subsidized housing to over 80% of the population, is a prime example of effective affordability policies. This model emphasizes long-term planning and substantial government investment in housing, ensuring that public housing is accessible and affordable for most of its citizens.

The Role of Currency Sovereignty in Supporting Affordable Housing

Currency sovereignty allows the government to influence the housing market directly through policies such as subsidized interest rates or direct public housing funding, which can stabilize or even reduce house prices, making them more accessible.

Currency Sovereignty:

Delving deeper, we explore specific policies that utilize currency sovereignty to promote affordable housing, such as targeted subsidies for lower-income families, incentives for builders to develop affordable units, and innovative financing options for buyers.

Currency sovereignty, allows the government to implement tailored monetary policies that can directly influence the real estate market. For example, by adjusting interest rates or altering reserve requirements, the government can influence lending practices and, by extension, the affordability of housing.

Direct interventions, such as providing low-interest loans for housing construction or directly funding public housing through sovereign money, are only possible through full control of national currency.

This approach can alleviate market pressures and provide stable, affordable housing options to the population.

Call to Action (CTA):

Become an advocate for affordable housing. Engage with policymakers, support local housing initiatives, and educate others on the importance of accessible housing. Your involvement can drive substantial change.


By understanding and participating in discussions about housing affordability, Australians can help ensure that affordable housing is a priority. Stay informed and involved to help shape a future where everyone can afford a home.


Australian Housing and Urban Research Institute
The Conversation: Housing Affordability
Reserve Bank of Australia: Housing Prices and Consumer Spending
The Top 10 Countries with Exceptional Housing Policies
This graph shows why it’s so hard to save a house deposit

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