‘Great contradiction’ in housing boom

Sydney home prices have surged more than 25 per cent in the past year, exposing the housing market’s “great contradiction”, a new report has revealed.

The Committee for Sydney said in its Aspirations for 2022 report that future generations would be “locked out of their chance at a fair go” if housing policies did not change.

“This is the great contradiction on Australian housing policy — people say they want affordability, but they also want their home prices to keep going up,” the report read.

It was recommended that a number of measures would allow more people into the housing market and make it more attractive for investors to pour money into other assets.

The Committee for Sydney said increased supply of housing, eliminating stamp duty, and investing in social housing could help.

The think tank also suggested scrapping tax exemptions that benefit investors and tweaking other incentives “so investments in the real economy will be more attractive and housing can return to its primary purpose of providing a secure place to live”.

“Sydney’s housing costs are driving a wedge between the generations, closing off the option of home ownership for everyone who does not inherit wealth,” chief executive Gabriel Metcalf said.

“In many ways, it’s the most urgent problem facing Sydney … the right answer is not to tank housing prices — it is to put in place policy settings so wages rise faster than home prices over a long period.”

Australian Bureau of Statistics data cited by the think tank showed Sydney house prices rose on average by 25.4 per cent between September 2020 and September 2021.

Hobart had an even higher increase than Sydney – 25.7 per cent – and Canberra wasn’t far behind, with a 25.2 per cent change.

Prices in other capital cities rose by between 13.7 and 19.7 per cent.

The mean home price nationally rose $42,000 to $863,700, according to the ABS.

The Committee for Sydney report also made recommendations on other issues, including revitalising urban centres, support sectors affected by the pandemic, and to open the international border.