01.07.2021Skyrocketing Melbourne house prices puts affordable housing squarely on the recovery agenda
Committee for Melbourne’s recent forum held on 8 June with Bank of Melbourne, highlighted just how significant Melbourne house prices have become. Melbourne became the sixth most expensive housing market in the world in 2020.
Record low interest rates, increased household savings and consumer confidence helped support housing demand and prop-up house prices during the pandemic. At a time when COVID-19 has devastated the job market for many and when people’s financial security has been challenged, the availability of affordable housing has become even more of a challenge, particularly for young people and those with low or unstable incomes.
There is no doubt that governments have responded during the pandemic to help people stay in their homes or to find shelter. The Victorian Government has made significant commitments such as the Big Housing Build, with around $5.3 billion dedicated to the construction of around 12,000 social and affordable homes over four years.
However, as Melbourne house prices skyrocket, more and more people are pushed into categories that require support for their accommodation. Longer-term housing solutions focused on generating new supply at scale, across the spectrum of housing needs, must be found.
The Committee has therefore welcomed the Victorian Government’s development of a 10-year social and affordable housing strategy. In the Committee’s submission to the government in early April, we called for the strategy to be extended to 40 years and for consideration to be given to an affordable housing levy. The Committee raised the possibility of a levy given the immediate need to generate significant and ongoing funding, to deliver social and affordable housing at scale. More than just direct investment by governments will be required to fill the supply gap across the spectrum of housing needs.
Affordable housing is essential for an inclusive and productive economy, that supports key workers, innovation and people’s overall well-being. Access to affordable rental housing as well as homeownership is important for economic recovery and success. Organisation for Economic Co-operation and Development research highlights that countries with a higher level of homeownership, are more likely to have lower wealth inequality. The research shows that homeownership is the primary form of wealth for lower- and middle-income households however, rising house prices are increasingly making it more difficult for those families to accumulate wealth and to pass it on to future generations.
The Committee looks forward to working with the Victorian Government on the 10-year social and affordable housing strategy to be released later this year. With Melbourne recently dipping to eighth on the Global Liveability Index 2021, down from its second ranking in 2019, it is more important than ever for the city’s housing affordability problem to be addressed.
The Committee’s submission to the Victorian Government’s consultation on a 10-year social and affordable housing strategy can be viewed here.
The Committee’s recent forum on the housing market with Bank of Melbourne can be viewed here.
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