Even though Australia is considered as one of the developed countries, it has been facing a serious problem in the recent times which is generally found only in developing countries. The country has a serious housing crisis and many feel that the country is not building enough affordable houses to meet the demands of its own citizens, let alone the people who come to the country to work or study.
Such situation has arisen not only because overall living expenses in the country have gone up but also because of increase in interest rates. Now, lesser people find it possible to build or buy their own home.
The official figures present a grim picture. According to the available information, way lesser housing projects saw the commencement of work. There has been a fall of 3.3% as compared to the quarter that just passed. Shane Oliver of AMP Capital Investors has bad news to share. Oliver tells that while there is demand, the supply in the housing sector has been going down constantly. He says that the blame for such a condition is to be laid on rising rates of interest. Home construction in the Australian territory has become ill affordable. The degree of affordability has rarely gone this low.
Oliver says that the country is building anywhere between 30,000 to 40,000 houses short of what the people actually need in any year. He informs that because of high rates of interest, people find it harder to even commence the construction work of their homes. To a certain extent, the blame for this fiasco also lies on the carelessly planned and improperly implemented policies of the Federal, State and local governments. Higher interest rates are also coupled with irrational taxation regimes.
In a number of cases, the taxes are so high that people are increasingly paying a huge chunk of their income as property taxes. City councils are increasing taxes and people who plan to buy their first home are hit really hard. In Brisbane for example, the tax structure for apartments was recently revised. In 2009, experts say that some properties may be subject a 700% tax increase. Lord Mayor of Brisbane however says that even in the highest case, the tax would not go up by more than 300%!
This kind of policy has decreased the incentive of having own home but the increasing rentals still drive the demand. On the other hand, supply is dismal. Getting a home building approval is a really complicated task whereas in a number of countries no such thing as a home building approval has ever been heard of. The housing sector of Australia has seen much better times and has the potential to grow at a faster pace. What is required is the popular, political and entrepreneurial will to get the sector back in order. Failing this, it can cause a serious setback to the overall growth rate of the Australian economy.