Australia’s COVID-19 recovery does not translate into more affordable housing.
Australia’s sustained and continued recovery from the COVID-19 pandemic has continued into the March 2021 quarter. Factors such as the continued easement of restrictions (despite the recent Victorian lockdown) and strong exportation of iron ore and liquid natural gas has been behind Australia’s 1.8% increase in Gross Domestic Product in the last financial quarter.
The success of Australia’s recovery from COVID-19 has not however translated to more affordable housing prices across Australia. Australia’s housing market is currently estimated to be valued at $8 trillion dollars. A combination of factors including, record low interest rates (currently at 0.1%), government incentives such as first home buyer grants, increased demand for housing and rising housing prices have set up the perfect condition to continue Australia’s housing price boom.
In the last financial quarter, Australia’s House-Price-index has risen by 8.0%, following a rise of 3.9% in the December 2020 quarter, with New South Wales becoming the first State or Territory to recorded an increase in mean price of residential dwellings of over $1 million. The benefits of increased house princes include an increase in consumer spending and an overall increase wealth of householders.
However, a report published by UNSW, titled Housing: Taming the Elephant in the Economy, calls upon the Reserve Bank of Australia (RBA) and a Royal Commission to act as the price of housing is rippling through the nation following the worst recession of the last 100 years. The problems with housing price inflations are that they have reduced the standard of living for many young couples or families who are finding it increasingly difficult to purchase their first home. Consequently, this has had the snowball effect of driving the price of rent, causing the cost of living to further increase. The report also calls upon the RBA to expand it forms accountability to include the maintenance of a more stable and function housing market so that house prices do not continue to rise so as to ensure that younger generations are not burdened with the rising costs of housing.
In a move to overhaul the property tax system and improve ownership of property for people under 40, the NSW government will offer $25,000 for first home buyers in the stamp duty overhaul. The NSW government estimates that this proposed reform will increase home ownership by 6%. However, the onset effects of such a reform are yet to be determined as there are fears that the reform may lead to further inflation of house prices.
At Davityan Lawyers, we are committed to working with our clients to achieve the most optimal result in their property and commercial law ventures. Our team is experienced ins providing efficient and detail-oriented assistance on matters not limited to :
- Purchase or sale of commercial and residential property;
- Drafting and advising on commercial lease agreements;
- Disputes over lease agreements and strata titles;
- Transfers of title; and
- Property development (such as acquisitions and options)
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