The underlying fundamentals of housing affordability: the Sydney dynamics

Abstract

Once recognised as one of the highest home ownerships in the world, Australia has been experiencing a decline in housing affordability over the past decade or so. Whilst the reason for this is fundamentally increasing dwelling price in relation to household income, the underlying factors are varied. Much of the discussion has centred on the increase in dwelling price in Australia and in particular the capital cities with Sydney being the least affordable. But there have also been twelve consecutive increasesin interest rates, which add to the repayment of loans. Furthermore, on the supply side, amidst all this, there has been a declining trend in new dwelling building supply. This paper will identify the various underlying factors, including demographic, economic, government and building activity and show why there is no one solution to the problem.