Yahoo Finance Cashed-up Boomers attacked for refusing this housing crisis fix as wild income needed to buy a home revealed
Interest rates are causing pressure, but there's no doubt high prices are keeping some out of the housing market and some are blaming cashed-up owners.
The Reserve Bank of Australia (RBA) warned borrowers not to count on an interest rate drop this year as the cash rate was kept on hold at 4.35 per cent. There's no doubt that's playing into house price pain.
But the cost of buying a home has again reached record highs and with them, the amount Australians need to earn to afford one. You'd need an income of $263,000 a year to buy an average home in Sydney.
There's a group that has claimed there are Australians contributing to rising prices by limiting housing supply, all in the name of protecting the benefits they established decades ago, before huge booms in population.
"All these Boomers have incredible amounts of wealth locked up in their homes," Dr Max Holleran told Yahoo Finance. "We're not asking them to move, we're just asking to build something a little bit bigger next door so we can live in the same neighbourhoods that they've been enjoying for 30 years."
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Make way for change so others aren't left behind
You've probably heard of the movement, or maybe even the countermovement.
The group campaign under the slogan of Not In My Backyard (NIMBY) has given rise to the Yes In My Backyard (YIMBY) crowd, a conflict often pegged as political and generational.
The wealthy, older homeowners who bought when it was cheaper (and often with government subsidies) now oppose new developments and high-rises that would open up housing in their local. Some are even in a position to buy a new property without getting a mortgage: cash upfront.
The younger millennials argue they can't afford to buy because there's nothing being built they can afford, that's in a place they'd actually like to live in.
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Holleran, a University of Melbourne social policy lecturer, acknowledged there's no silver bullet to bring down rent or sale prices. But said cities need to start focusing on building up, rather than out if the housing crisis is ever going to be dealt with.
"People need to understand that cities are going to change and that just happens," he said.
The author of Yes To The City: Millennials And The Fight For Affordable Housing said rejecting development in areas that "are not really dense enough" creates problems for those expected to rent or buy further out as they are commuting too long and often don't have access to acceptable amenities.
Holleran is not alone. New research by Finder discovered 58 per cent of property experts agreed the NIMBY movement had driven up prices across the country by fighting against development.
"The NIMBY attitude has pushed high-density housing further and further out of city centres, putting pressure on public transport and keeping inner-city properties at sky-high prices," Finder's Graham Cooke said.
CEO of Laing+Simmons and President of the Real Estate Institute of Australia Leanne Pilkington said she understands people might not want their neighbourhoods to be dominated by high-rise apartments.
But claimed “too many councils have passed the buck on new housing delivery” and is among those calling for more housing density.
Holleran said there is a "gentle density" that could be embraced in Australia. This would mean townhouses or small apartment buildings over high-rise developments, which some in the NIMBY crowd argue would diminish the value of their properties.
There are also issues like a lack of social housing, negative gearing and intergenerational wealth transfer that need to be addressed, Holleran added.
How much do I need to earn to buy a home in Australia?
Housing prices are being impacted by a lack of supply and new data from Finder revealed the Aussie dream of having the keys to your own castle can be a pipe dream unless you have decades to save (or are expecting help from family).
The average Aussie living in NSW now needs to spend around 22 years saving for a deposit for a house and 15 years for a unit. It's a bit better further south, with those in Victoria only needing 16 years for a house and 11 years for a unit.
Cooke said it’s becoming increasingly difficult for people to afford a home in major areas in Australia as the minimum salary required is well above the average.
Minimum household income required to afford a house
Sydney | $1,333,000 | $263,195 |
Melbourne | $860,000 | $169,804 |
Brisbane | $837,250 | $165,312 |
Hobart | $685,000 | $135,250 |
Adelaide | $760,000 | $150,059 |
Perth | $660,000 | $130,314 |
Darwin | $570,000 | $112,544 |
Canberra | $940,000 | $185,599 |
Prospective homebuyers in Sydney need to be earning $263,000 to comfortably service their mortgage, while those in Melbourne have to be raking in close to $170,000 a year.
Brisbane’s minimum salary to avoid mortgage stress is $165,000, while Canberrans need to earn $185,000.
“Those living in major capital cities now require a substantial household income just to be able to comfortably service the average mortgage, without even considering saving for a deposit,” Cooke said.
But it's not just those looking to buy who are facing obstacles. Finder research found more than a third of homeowners struggled to pay their mortgage in April, while for renters the number was even higher at 42 per cent.
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