While house prices have moderated over the last year, CoreLogic’s latest report warns we could enter a new period of price rises if we don’t take action. And that means tackling stamp duty.
Perceptions of Housing Affordability 2019, released last week, delves deeply into Australians’ attitudes to housing and affordability.
While affordability has deteriorated over the last decade, the report finds the Australian dream hasn’t been tarnished; 81 per cent of Australians believe it is still important to own a home.
CoreLogic finds affordability has “moderately improved” following recent price retreats, and just over half of Australians believe affordability has improved in the last year.
But CoreLogic warns “we could be entering a new period of price rises” as interest rates remain at record lows.
Headline statistics in this report include:
- 6.5 times – the ratio of household income to dwelling value ratio (compared with a 4.5 ratio 20 years ago).
- 83% – percentage of non-property owners concerned about being able to afford their first or next home (down from 87% in 2017).
- 8.7 years – the time it takes the typical Australian household to save for a 20 per cent deposit (down from 9.2 years in mid-2017).
- 35% – the percentage of gross annual income that the average household dedicates to service a mortgage (down from 37% in mid-2017).
- 63% – the percentage of Australians who are still living with their parents because they can’t afford to move out of home (up from 62% in 2017).
- 29% – the percentage of homeowners with a mortgage that would struggle to meet repayments if interest rates rose by two percentage points.
The report points to the “unholy trinity” of obstacles to buying a house: saving for a deposit (an obstacle for 47% of respondents); loan approval in a tougher lending environment (45%); and stamp duty costs (44%) of roughly three per cent of the purchase price.
CoreLogic recommends transitioning from a stamp duty-based property tax scheme to a broad-based land tax “as a priority”, arguing that “stamp duty is inefficient” as “new customers carry the burden”.
Australians also want stamp duty addressed, CoreLogic argues, with 79 per cent of respondents agreeing that eliminating stamp duty was the best strategy to improve housing affordability (up from 73% in 2017).
“We can’t rely on house price falls alone to solve the affordability problem,” says CoreLogic International’s CEO Lisa Claes.
“We need to fundamentally reshape the foundations to address factors that are entrenching affordability as an issue. Improvements to transport infrastructure, additional jobs in affordable areas and rethinking stamp duty are all ingredients of the solution,” Claes says.
Download CoreLogic’s new report: Perceptions of Housing Affordability 2019.