Residential Sector Faces the Affordability Challenge

The challenge of housing affordability as well as wider economic factors were the key talking points during the Residential Outlook 2017.

The event heard from UBS Executive Director and Senior Economist George Tharenou who outlined the economic landscape.

The room heard that real GDP has slowed to two per cent growth year on year and nominal household income has slumped to three per cent year on year. Housing approvals are also slowing with taller developments four stories or more making up a third of approvals.

Population growth is to continue to grow at 1.5 per cent growth per hear, or an extra 400 thousand people per year and growing demand and a lack of supply in Sydney means that it is still leading the nation in terms of price growth.

High price growth is magnified by the fact that stamp duty now makes up about 38 per cent of the average yearly household income and household debt is at record highs.

“The economic data shows us that prices for housing continues to rise in Sydney and approvals are slowing which means housing supply needs to be boosted urgently,” Property Council NSW Deputy Executive Director Cheryl Thomas said.

“Initiatives such as planning system reform and code assessment need to be supported and fast tracked by the government if we are to release the pressure on the community”

“The data also showed us that home ownership has slumped for younger households which means we need to pull the right economic and policy levers to ensure this generation still has the opportunity to own their own home.”