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The quarter century record on housing affordability, affordability drivers, and government policy responses in Australia

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  • Andrew C. Worthington

Abstract

Purpose - The purpose of this paper is to analyse the record on housing affordability in Australia over the period 1985 to 2010, conceptually link this with the purported demand and supply drivers given in the literature, and comment on government policy responses. The paper also provides a suggested framework for future research on housing affordability. Design/methodology/approach - The paper employs descriptive analysis of measures of affordability using commercial and other information. In addition, the paper undertakes analysis of the affordability drivers and government responses using recent governmental inquiries and other research into housing affordability. Findings - Housing affordability in Australia has worsened significantly in the past quarter century, including in both urban and regional areas, and is now among the world's most unaffordable. The main contributor at the national level has been the escalation of housing prices because of continuing strong demand arising from strong economic and population growth, the availability of cheaper and more accessible finance, and tax and other incentives for home and investor housing ownership. An additional contributor is unresponsive housing supply resulting from an extensive governmental role in land release and zoning, infrastructure charges, and building and environmental regulation. Research limitations/implications - As an analytical paper, the central aim is to summarise the findings and conclusions of other work and provide a suggested framework for future research. Accordingly, no attempt made to model directly the relationship between housing affordability, its demand and supply drivers and government policy responses. Practical implications - There is a need to reassess government policy at all levels as it relates to population, economic, urban, and environmental planning and government regulation and taxation and housing affordability. Need for future empirical work to quantify the causes and co
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Suggested Citation

  • Andrew C. Worthington, 2011. "The quarter century record on housing affordability, affordability drivers, and government policy responses in Australia," Discussion Papers in Finance finance:201114, Griffith University, Department of Accounting, Finance and Economics.
    • Handle: RePEc:gri:fpaper:finance:201114
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    File URL: https://research-repository.griffith.edu.au/bitstream/handle/10072/390425/2011-14-the-quarter-century-record-on-housing-affordability-drivers-government-policy-responses.pdf
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    1. repec:bla:ausecr:v:41:y:2008:i:2:p:215-221 is not listed on IDEAS
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    Cited by:

    1. Anna Granath Hansson, 2017. "Boosting affordable housing supply: Could type approval of serially produced housing be a piece in the puzzle? [Erhöhung des Angebots an erschwinglichem Wohnraum: Könnte die Typengenehmigung des se," Zeitschrift für Immobilienökonomie (German Journal of Real Estate Research), Springer;Gesellschaft für Immobilienwirtschaftliche Forschung e. V., vol. 3(1), pages 49-68, April.
    2. Gilbert, Catherine & Gurran, Nicole, 2021. "Can ceding planning controls for major projects support metropolitan housing supply and diversity? The case of Sydney, Australia," Land Use Policy, Elsevier, vol. 102(C).
    3. eccleston, richard & Verdouw, Julia & Flanagan, Kathleen & Warren, Neil & Duncan, Alan & Ong, Rachel & Whelan, Stephen & Atalay, Kadir & Hayward, Richard Donald, 2018. "Pathways to housing tax reform," SocArXiv 8xrbe, Center for Open Science.
    4. Valadkhani, Abbas, 2013. "The pricing behaviour of Australian banks and building societies in the residential mortgage market," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 26(C), pages 133-151.
    5. Valadkhani, Abbas & Worthington, Andrew, 2014. "Asymmetric behavior of Australia's Big-4 banks in the mortgage market," Economic Modelling, Elsevier, vol. 43(C), pages 57-66.
    6. Valadkhani, Abbas & Costello, Greg & Ratti, Ronald, 2016. "House price cycles in Australia’s four largest capital cities," Economic Analysis and Policy, Elsevier, vol. 52(C), pages 11-22.

    More about this item

    Keywords

    Housing affordability; Affordability drivers; Tax and regulatory policy;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General

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