According to Dr. Matthew Thomas of Social Policy and Alicia Hall, housing affordability in Australia has broadly declined since the early 1980s.

The price to income ratio index shows a tremendous 78% increase between 1980 and 2015.

What can be done about it? The common argument is that there simply not enough new houses being build for those in low-income brackets. The National Shelter chief executive, Adrian Pisarski, estimated half a million extra affordable homes were needed to address demand.

Unfortunately, the current market does not encourage the development of affordable housing. There are challenges and hidden barriers to development, says Professor Rachel Ong, deputy director of the Bankwest-Curtin Economics Centre at Curtin University. Since the house prices are lower, there are less monetary incentives compared to higher prices projects.

“In theory, this shouldn’t be a problem because one would expect that if you have more housing supply in higher segments, then you should start seeing house prices (at the top end) drop and houses trickle down into lower priced segments”, she says. However, over the past nine years, the research did not show any evidence of this trickle-down effect, “This is where it gets really concerning.”

What can be done?

In terms of intervention, Commonwealth Budget recently announced measures that represent a step in the right direction. Pisarski agrees that to slow the growth in home prices tax breaks that had encouraged speculative investment – negative gearing and capital gains concessions – are necessary. “It will take more than a decade to repair the damage done by the last decade of unrestrained home price speculation. A long-term housing affordability plan led by a commonwealth housing minister and backed by the states is vital,” he says.

Australia is currently building a large number of new homes because of the current boom in new residential construction. However, affordable to low and middle-income earners are still lacking housing that is affordable as well as being suitable for their needs.