Affordability Issues And How To Combat Them

Affordability Issues And How To Combat Them

Read time: 3 minutes, 48 seconds.

You can’t be a property investor and not have an opinion on the affordable housing debate. While everyone has their own views on affordability, most agree there is a problem with property prices in Sydney and Melbourne.

Affordability is the main driver behind property prices. If property was easily affordable, it wouldn’t be an issue. Data shows that there are some serious affordability issues with properties in most Australian states and territories. 

Since World War II a lot has changed, especially when it comes to affordability with a large number of homes being built in bigger cities and towns. Most of these have been bought up by residents. Still, a lot of new homes have been going overseas. Of late there has been a huge increase in demand from Chinese buyers. They have been buying up new homes in Australia with the hopes that one day they will sell at a good margin.

Today, property affordability issues in Australia are at an all-time high. Three out of five families can’t afford to buy in the capital cities. Plus many young people are skipping homeownership. So why is property so expensive nowadays?

Why do property prices keep rising?

It’s no secret that the Australian property market is in the midst of a boom. Year on year, home prices are increasing, and across Australia, the top-end of the market is leading the way.

The rapid price growth has been fuelled by a combination of factors, from low mortgage rates to a growing economy. But while lower interest rates and a strong economy are no doubt two important factors, they’re not the only ones.

“The mismatch between demand and advertised supply remains a key factor placing upwards pressure on housing prices.”  – Tim Lawless, Research Director, CoreLogic

Housing affordability is also a key driver in today’s property market. The low supply of homes, combined with high demand from investors, has helped push up prices. The situation doesn’t look set to improve any time soon. There are, however, ways that we can combat rising house prices.

  • New Developments
    Property affordability issues in Australia are causing a lot of stress for home buyers. However, new developments are helping to combat the problem. Developers and local councils in Australia are building more new housing for first-time homebuyers. This is done to create new housing that is affordable and attractive to new buyers.

    Property affordability issues in Australia have been a hot topic recently, with many buyers finding it difficult, and even impossible, to buy their first home. Now, many first-time buyers are renting for longer, rather than buying. This is simply because buying their first home simply isn’t a viable option.


  • Keep monitoring lending rules
    When property prices start to rise rapidly, there is usually a gold rush mentality among buyers. The boom in property prices in Australia has been no exception.

    The truth is that just because rates are low and allowances are being made, it doesn’t mean lenders should do away with proper lending regulations. We don’t want to be too restrictive and lock some people out of the housing market. While at the same time, we should ensure that legal requirements are met.

    Since the pandemic, the government has put measures and schemes in place like the FHLDS to help. This ensures that first-time buyers can stand a chance in the market. Since then, the number of home loan commitments made nationwide has steadily increased.


  • Plan for the future
    While we want to personally plan for the future as property investors and homeowners, we want to also plan for what the future could look like for us as a nation. Earlier on, people were moving quickly to snatch up property at low interest rates. Now, however, a few are getting more and more suspicious about where we’re headed.

    “You don’t usually get crashes after three years of nothing. You get crashes after three years of unbelievable price growth.” – Dr. Cameron Murray, University of Sydney

So what does this mean? Should we be looking out for a crash sooner rather than later? Well, the government is already making talks about how the levies on new developments are impacting first-time homeowners.

The fact is, living in Australia is becoming more challenging by the day. We have record levels of property unaffordability in most capital cities. This leaves potential homeowners wondering if they can afford a home in the country they live in. So if you want a slice of the Australian Dream, you have to start paying attention to the subtle movements in the market.

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