Australia’s already poor housing affordability is set to worsen as property prices take off again — and asset owners and higher-income earners reap the benefits.
This is part two in a series on inequality. Read part one here.
One of the few economic positives expected to emerge from the pandemic in 2020 was a fall in house prices, with banks forecasting a 10% decline in prices as lockdowns began, with gloomy scenarios bandied about of a 30% decline. Coupled with interest rates cut to the bare minimum, this would have represented a significant boost to housing affordability in Australia.
But while the RBA’s eventual reduction of rates to 0.1% improved affordability, our relatively successful handling of the pandemic and the government’s fiscal support for the economy helped propel property prices to a national average rise of 1%, according to CoreLogic, compared to before the pandemic — not a decline.
