Housing promises will dominate next year’s Federal election as affordability reaches record lows.
Aussie housing policies will impact 2025 election,
The quarterly Mortgage Choice Home Loan Report highlights home loan trends, borrower intentions, and potential buyers in Australia.
It revealed that most Australians are seeking a solution to the ongoing issue of housing affordability.
Each quarter, Mortgage Choice surveys consumers about their feelings on entering the property market, providing valuable insights.
This quarter, prospective buyers are moderately more optimistic, with a 46% positivity rating compared to 43% in the previous quarter.
Unsurprisingly, younger generations emphasized the need for more affordable housing and increased support for first-home buyers.
On the other hand, baby boomers prioritized boosting the housing supply as a key policy focus.
Despite generational differences, all respondents agreed that housing affordability is crucial for shaping Australia’s future.
Housing policy is set to be a major factor in the election outcome.
Mortgage Choice CEO Anthony Waldron states that the recent study highlights the housing-related policies that matter most to voters.
According to the report, those with a mortgage support increased government intervention to improve housing affordability, with 71% in favor.
However, opinions are divided on the specific measures that should be used to achieve these goals.
While nearly half (47%) of respondents with a mortgage believe tax policy reform would make housing more affordable,
46% of those surveyed who negatively gear an investment property are opposed to losing their tax concessions.
With a Federal election expected in the next six months, 87% of Australians consider housing somewhat important when voting.
In particular, 93% of millennials stated that housing will be a key factor in their voting decision.
When asked about making homeownership more achievable for future generations, nearly 60% said lowering interest rates is crucial.
Following that, 49% suggested stamp duty reform, while 37% favored a lower interest rate buffer on mortgages.
Affordability has reached record low levels.
In September, the PropTrack Housing Affordability Report 2024 revealed that housing affordability has reached its worst level on record.
A median income household, earning around $112,000 annually, can now afford only 14% of homes nationwide.
This is a sharp decline from 43% just three years ago, highlighting a dramatic shift in housing affordability.
The drop in affordability is largely attributed to persistently high interest rates, which are at their highest since 2011.
This, combined with price growth over the last 12 months, has made homeownership increasingly out of reach for many.
As a result, Australian households can now afford the smallest share of homes since PropTrack began its records in 1995.
“It’s not just home buyers who are struggling,” explains PropTrack senior economist Angus Moore, referring to rental affordability.
“Although renters find it slightly easier to secure a home, they can still only afford 39% of rentals.”
This remains, by far, the worst affordability situation seen to date.
Given these challenges, housing will undoubtedly be a key focus for many as the upcoming election approaches.
Interest rates are the focal point.
Mortgage Choice data shows increased optimism regarding interest rates, with 54% of respondents concerned in October, down from 62% in June.
“With the cash rate remaining steady throughout 2024, home loan interest rates have stayed relatively stable,” Mr. Waldron explains.
He also notes that there has been an increase in the availability of homes for sale.
According to the PropTrack Listings Report, new listings in September reached their highest volume since September 2015, offering more choices.
This increase in listings provides buyers with more options and additional time to make decisions, Mr. Waldron adds.
The research indicates that those planning to buy in 2025 are waiting for house prices or interest rates to decrease.
“If the Reserve Bank reduces the cash rate in early 2025, we could see these purchases occur sooner,” he says.
Mr. Moore adds that while anticipated rate cuts offer some hope, affordability relief will require action from multiple areas.
“Even though a few rate cuts are expected next year, depending on inflation, it won’t result in significant changes,” he says.
“Any cut will help improve affordability but won’t dramatically shift the current affordability situation,” Mr. Moore concludes.
Enhancing supply should be a priority.
The Mortgage Choice report reveals the key housing-related issues that Australians prioritize, including affordability (65%) and housing supply (47%).
Other concerns include increasing support for first-home buyers (37%), implementing rent control (35%), and offering tax incentives for housing investment (31%).
This report follows the Housing Industry Association’s annual Housing 100 Report, which highlights concerns over housing supply meeting future demand.
According to the HIA data, home starts from the nation’s largest builders have remained almost flat from the previous year.
The number of home starts increased slightly from 57,716 in the 2022-2023 financial year to just 59,981 in the past 12 months.
Mr. Moore emphasizes that the only sustainable way to improve housing affordability, both for buyers and renters, is increasing supply.
“While it’s easy to say, it’s much harder to achieve, especially for the Federal government,” Mr. Moore explains.
He further points out that much of the housing supply depends on local councils, making the issue more complex.
However, he acknowledges that federal and state governments can still play a role in addressing the housing shortage.
In recent years, national cabinet agreed to build 1.2 million homes over five years, but we’re not building fast enough.
“At least we are now discussing supply, which is a positive step in the right direction,” Mr. Moore concludes.
