House Ownership Falling
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What are the current trends in home ownership in Australia?
it's the real estate podcast brought to you by ray white the largest real estate and property group in australasia and welcome to another episode of the real estate podcast we're talking with peter tulip who is the chief economist at the center for independent studies Now, just a little bit of a background from Peter. His previous work included the research department of the Reserve Bank for Australia and his stint at the Federal Reserve Board of Governors. And his recent research focuses on housing and monetary policy. Hey, Peter, welcome to the Real Estate Podcast.
G'day, Craig. Glad to be with you.
Nice to have you on, and I guess housing and monetary policy keeps you pretty busy these days, particularly given the incredibly challenging times ahead in the current market that we're all living in.
Yeah, they're two very big policy issues. I think they're two of the biggest problems Australia's facing at the moment.
Why is home ownership declining among young families?
Well, let's have a look at home ownership because that's a little bit of a problem. It's always been a fundamental goal in the Australian psyche. It's been a mindset that has been passed down. It can be argued from generation to generation to own your own home. However, it is on the decline. So tell us a little bit about some of your key findings around this.
Yeah, so amongst our parents' generation or our grandparents' generation, it was very common for young families to buy a home of their own, but that's just not happening anymore. So it used to be that home ownership amongst 20 to 30-year-olds was something like 60% back in the 1980s, and now it's fallen to below 45%. So there's been this huge fall in home ownership of young families, and the reason for it is the cost. That families just have real difficulty getting their deposit together.
What impact do planning restrictions have on housing prices?
That saving for, typically, you want to put down 20%, and with prices rising as quickly as they have, families just don't have that money anymore.
And, you know, the worst part about this is that there's no silver bullet. It's not like in 2022 this is going to change or in 2023. What are some of your thoughts around that whole aspect?
Yeah, so, Craig, that's the thing that we've been working on a lot at the Centre of Independent Studies. We think that the reason housing is so expensive in Australia is because of planning restrictions or what a lot of people call zoning or land use restrictions. It's just very difficult to supply housing. Just simple economics. When you restrict the supply, the price goes up.
And rental stress is also on the rise, and I don't think that comes as any great shock to people that are listening to the podcast, but there are also some other aspects surrounding that.
How do zoning laws affect housing supply and affordability?
So tell us a little bit about what other factors are at play.
Right, so it's not just a problem for homeowners. About a third of the population typically rents. It's actually an increasing share. They're being squeezed really badly. The housing cost is not just the price, but rents have also risen a lot. So we've done a lot of work trying to estimate the effects of planning restrictions and zoning restrictions on housing costs. A common finding is that the effect is huge. So in terms of house prices, we estimate that land use restrictions increase the cost of housing by about 73%. And then that's for Sydney, it's a bit less in the other big cities.
What are the implications of rising rental costs for tenants?
And then for apartments, cost of buying an apartment by 68%.
So they're very large effects. And sometimes research numbers and figures around land restrictions being a problem, which is what you're talking about, increasing property prices, they are at times shot down by people who will argue that high prices have nothing to do with land restrictions because the land restrictions have barely been changed for decades. So what is the counter to that assertion?
So that's true. It's actually because the restrictions haven't changed that's the problem. That we have steadily increasing demand, you know, higher incomes, higher population, lower interest rates, but supply is not adjusting to meet that extra demand.
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Chapters
7 chapters
1
What are the current trends in home ownership in Australia?
0:02–1:02
2
Why is home ownership declining among young families?
1:02–1:57
3
What impact do planning restrictions have on housing prices?
1:57–2:55
4
How do zoning laws affect housing supply and affordability?
2:55–3:41
5
What are the implications of rising rental costs for tenants?
3:41–4:51
6
What role does the Federal Parliament play in housing policy?
4:51–5:52
7
How can urban density contribute to economic growth?
5:52–11:50
Speakers
2 identifiedMore from Aussie Real Estate Podcast
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