Demographia, based in St Louis, has issued its third annual survey of housing affordability.
The survey covers 159 cities in North America, England, Ireland, New Zealand and Australia. It measures average (median) house prices and compares these with average family incomes.
On this basis, Australia has higher housing costs than any of the other surveyed countries. The average Australian house requires 6.6 years of income to buy, compared with 3.2 in Canada, 3.7 in the US and 5.5 in Britain.
Traditionally, the cost of a house has been at the level of threefold average family income. But last year there was no major housing area in Australia where houses could be bought for such a price. The only cities where houses could be bought for less than three times average family incomes were in North America. Many were major cities, including Quebec, Pittsburg, Atlanta, Houston, Dallas and Detroit.
Melbourne, Sydney, Perth and Hobart were in the ignominious top 25 unaffordable cities. Adelaide and Brisbane were not far behind. The study this year contained a special feature on Australian trends. This shows how affordability has deteriorated in the past 20 years or so. And, as every aspiring home buyer knows, the position has become worse over the past few years.
Australia has arrived at its present poor position despite having one of the most efficient and low-cost house building industries in the world.
The cost increases are partly produced by rising government taxes, charges and regulatory requirements on houses. But, above all, they are due to planning restrictions.
Gradually over a 40-year period the role of urban planners has switched. Planners used to determine where people wished to live and arranged roads, sewerage, school developments and other infrastructure to meet the demands. More urban planners have tried to dictate where people live, and designating this to be confined to within an "urban growth boundary".
This sort of development is in line with the preferences of those who want to transplant to Australia the densely packed European-style city. Such people see this as ideal to promote culture and facilitate public transport.
But that sort of city is a thing of the past. No longer do we all troop to work to the urban centre using buses, trains and trams. For the most part, we work in dispersed locations and prefer to travel by car to work and for entertainment. Most of us also prefer a house rather than an apartment and, to the bewilderment of some urban planners, many of us actually prefer to live in the suburbs.
Imposing constraints on developments means an alarming inflation in the cost of land. Land is like any other product -- if the Government restricts its availability, its price increases.
There are those who argue that we are running out of land, that "urban sprawl" is eating into the countryside. Such claims are laughable in Australia, where only 0.2 per cent of the area (0.5 per cent in Victoria) is urbanised. The regulations that prevent land being zoned for housing bring windfall gains to those fortunate or savvy enough to have their land made eligible.
They also vastly restrain the value of land owned by those who are denied the ability to sell their land for housing -- to sell for the most valuable uses. Land use restrictions are crippling the affordability of housing. This is denying thousands of young people an opportunity to own a house. It also brings personal misfortune to those who are denied home ownership because of government restrictions on land use. And it means a different sort of Australia is being created -- one that comprises the "haves", who own their homes, and the "have-nots", who have to rent all their lives.
It also means a building industry that is smaller than it should be if demand were not priced out of the market. And this means fewer jobs.
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