Source : THE AGE NEWS
Over the past three years, I’ve called three cities home. But one, above all, was responsible for my housing affordability awakening.
I had no say on my starting square: Perth. Born and raised on the west coast, I was lucky to stay in my parents’ nest – and to continue to clear out their fridge – long after their caring obligations had expired.
Running repairs to the hot water system in Millie Muroi’s former Sydney apartment.Credit: Millie Muroi
Starting my first job as an economist, I lived rent (and care) free. My parents had paid off their mortgage in the 1990s, so while Mum mulled the idea of rent, it never came into serious consideration.
The median house price in Perth during the early 1990s was a touch over $100,000 (about $240,000 in today’s terms) compared to about $800,000 in 2024. It’s a pattern reflected more drastically in major cities such as Sydney and Melbourne, while our wages have failed to keep up.
In the 1990s, the average dwelling across Australia was worth about 9.5 times average household income. By 2023, they were fetching 16.4 times the average household income.
There’s no doubt my parents’ generation and those before them worked hard. But even with interest rates briefly touching 17 per cent in 1990, I know which housing market I would rather attempt to crack into.
In 2022, I made the leap to Sydney to pursue my dream job. My parents warned me of the pay cut I’d be taking and the state of the housing market, but it didn’t quite sink in until I’d set foot in it.
After tossing up the impossible trifecta (well located, affordable and structurally sound), my flatmate and I landed in an old apartment: reasonably priced, 20 minutes walk from work and with a bathroom that ended up falling apart in every way possible.
The toilet was blocked on the first day; the water ran either infernally hot or freshly thawed from Antarctica; and the bathroom would flood if we took more than two minutes to shower.
Our landlord insisted it must be our hair blocking the drain. We resorted to feeding drain cleaner down the pipes every week.
The bathroom was never without surprises in Millie Muroi’s former Sydney apartment.Credit: Millie Muroi
A year later, we got the dreaded news: our rent would be increasing by more than 30 per cent. With the vacancy rate at record lows, there was no room for negotiation and very little we could do except relocate further out of the city and foot the moving costs – or pay up.
I fell in love with Sydney but with rent chewing up 40 per cent of my income last year (you’re considered to be in housing stress after 30 per cent), it was painful.
Even worse was the realisation that the escape from renting – buying – was drifting further away as my savings remained stagnant and dwelling prices continued to climb.
Moving to Canberra in the second half of last year, I felt relief. Rent was cheaper and, though I wasn’t in the position to buy a place, my curiosity whisked me to unit inspections where real estate agents seemed eager to sell to me, even at a discount.
While wage growth has finally started outpacing inflation over the past year, house prices in many of our capital cities are still growing faster. In my home town of Perth, often the cheaper cousin to our biggest cities, house prices have soared by about 25 per cent over the past year: seven times the rate of wage growth.
The glimmer of hope for those yet to claim a slice of the housing market can be found in cities such as Melbourne. House prices there have ground ever so slightly backwards over the past year. Why is that?
CoreLogic research director Tim Lawless says it’s largely a result of the city delivering a lot more new housing over the past 15 years compared to other cities.
Part of that is thanks to Melbourne’s favourable geography, which makes expanding outwards easier compared to Sydney, which is sandwiched between mountains to the west and a harbour to the east. But it’s also a result of choices Melbourne has made to increase density in inner and northern suburbs.
As Grattan housing expert Brendan Coates says, we have strong evidence supporting density from New Zealand, too. In 2013, Auckland Council allowed denser types of housing across the city. The rate of new housing construction in Auckland doubled and rents fell by about 28 per cent compared to other cities in New Zealand and Australia that hadn’t upzoned.
There’s more that could be done, including limiting negative gearing to new properties and abolishing the capital gains tax discount. But if I’m ever to move back to Sydney, I need to see less blockage: both in my drains, and by NIMBYs standing in the way of density.
