Australasian Housing Institute, AHI

THE GREAT DIVIDE: Australia's housing mess and how to fix it

Finance presenter and columnist Alan Kohler traced the trajectory of Australian housing in the November 2023 edition of The Quarterly Essay. This is an extract of that article, republished with the kind permission of the publisher and author.   

Alan Kohler's Quarterly Essay

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My parents were married in 1951 and, with a war service loan, bought a block of land in South Oakleigh, eight miles from Melbourne’s CBD. I don’t know what my dad was making then, but he was a carpenter and apparently the average wage of a carpenter in 1951 was about 80 shillings a week, or £350 a year. And judging by average prices back then, they would have paid about £1000 for the land. (By the way, the median house price had more than doubled in 1950, recovering the big fall caused by price controls during World War II, on which more later.)


Dad built the house himself, including making the bricks, working on weekends and at night, and Mum and Dad lived in a garage, to which I was brought home when I was born and where I spent the first three years of my life. But if they had bought a house and land package, which was rather more common than building it yourself, they would have paid around £1250. So, like the median family at the time, they would have paid about 3.5 times household income (Mum didn’t work) for their first house, which was about average for the time.


When my wife and I bought our first house, in 1980, we paid roughly the median house price of $40,000, and I was making around the average weekly earnings as a young journalist – $220 a week, or $11,500 a year. So we also paid about 3.5 times my salary for the house, although we were better off than my parents because my wife was working, for about the same salary as mine, and my mum didn’t, which was normal for both times. Workforce participation for thirty-year-old women had increased from 32 to 50 per cent by 1980, as a result of the social/sexual revolution of the 1960s and ’70s.

Over the past four years, our three children and their partners all bought their own first houses. They’re doing it later than we did, and much later than my parents, so they’re making better money, and both partners are working, of course, but they paid about 7.5 times each income for their houses. That was typical: in August 2023, the median Australian house price was $732,886, which was 7.4 times annualised average weekly earnings.


"My children – and all young people today – are paying more than twice the multiple of their income for a house than their parents – and their grandparents – did."

In other words, my children – and all young people today – are paying more than twice the multiple of their income for a house than their parents – and their grandparents – did, and it’s only vaguely possible because both partners work to pay it off.



What happened, and when it happened, is evident in Figures 1 and 2.

The problem started with the new millennium.



It is impossible to overstate the significance to Australian society of what happened then. The shift that began around 2000 in the relationship between the cost of housing and both average incomes and the rest of the economy has altered everything about the way Australia operates and Australians live.

"In the Australian economy, the price of houses is not everything, but it’s almost everything."

Six per cent compound annual growth in the value of houses over the past twenty-three years versus 3 per cent annual growth in average incomes has meant that household debt has had to increase from half to twice average disposable income, and from 40 per cent of GDP to 120 per cent. This is the most important single fact about the Australian economy. The large amount of housing debt Australians carry means that interest rates have a much greater impact on their lives, and this in turn affects inflation, wages, employment and economic growth. In the Australian economy, the price of houses is not everything, but it’s almost everything, as economist Paul Krugman once said of productivity.


Land and energy are the two basic economic inputs apart from labour, but while Australia has more of both than just about any other country, we export most of the energy and price our own at global parity, so there’s no home-grown advantage there, and we crowd into a few cities and pay each other seven to eight times our salaries for land.


High-priced houses do not create wealth; they redistribute it. And the level of housing wealth is both meaningless and destructive. It’s meaningless because we can’t use the wealth to buy anything else – a yacht or a fast car. We can only buy other expensive houses: sell your house and you have to buy another one, cheaper if you’re downsizing, more expensive if you’re still growing a family. At the end of your life, your children get to use your housing wealth for their own housing, except we’re all living so much longer these days it’s usually too late to be useful. And much of this housing wealth is concentrated in Sydney, where the median house value is $1.1 million, double that of Perth and regional Australia.


It’s destructive because of the inequality that results: with so much wealth concentrated in the home, it stays with those who already own a house and within their families. For someone with little or no family housing equity behind them, it’s virtually impossible to break out of the cycle and build new wealth.


As I will argue, it will be impossible to return the price of housing to something less destructive – preferably to what it was when my parents and I bought our first houses – without purging the idea that housing is a means to create wealth as opposed to simply a place to live.


That’s easier said than done, as China’s president, Xi Jinping, has found. He’s been banging on about this for five years, saying that housing is not for speculation but for living in, but no one seems to be listening in China, and no one would be listening here either if the prime minister was saying the same thing. But anyway, he’s not.


The growth in the value of Australian land has fundamentally changed society, in two ways. First, generations of young Australians are being held back financially by the cost of shelter, especially if they live somewhere near a CBD and especially in Sydney or Melbourne; and second, the way wealth is generated has changed. Education and hard work are no longer the main determinants of how wealthy you are; now it comes down to where you live and what sort of house you inherit from your parents.


It means Australia is less of an egalitarian meritocracy. Material success is now largely a function of geography, not accomplishment. Moreover, the geographic wealth gap is being widened by climate change, as floods and bushfires make living in large parts of the country uninsurable and financially crippling, but many families have no choice but to stay where they are because those areas are low-priced and they can’t afford to move.

"The houses we live in, the places we call home and bring up our families in, have been turned into speculative investment assets by the fifty years of government policy failure."

The houses we live in, the places we call home and bring up our families in, have been turned into speculative investment assets by the fifty years of government policy failure, financialisation and greed that resulted in twenty-five years of exploding house prices. The doubling of prices as a proportion of both average income and GDP per capita has turned a house from somewhere to live while you get on with the rest of your life into the main thing, and for many people a terrible burden.


The problem of housing affordability now dominates the national consciousness and has affected the lives of everyone, dividing Australia into those who own a house and those who don’t; those whose families have housing wealth to pass on and those who don’t. And what’s more, most people now believe that the way to build wealth is to buy a house, and then another one, and another one after that, or to keep upgrading the one you live in. Or both.


A home is no longer what Australia’s longest-serving prime minister, Robert Menzies, who championed home ownership and what he called “little capitalists,” once extolled: “One of the best instincts in us is that which induces us to have one little piece of earth with a house and a garden which is ours; to which we can withdraw, in which we can be among our friends, into which no stranger may come against our will.”


There have been many fine words spoken before and after Menzies by both well-meaning and cynical politicians, but the political class as a whole has failed Australians at all levels – federal, state and local government – for a simple reason that former prime minister John Howard once put into words: “No one ever came up to me to complain about the increase in the value of their home.” Howard did more than anyone to make housing unaffordable, but at least he was honest about why.


In my view, the quiet political conspiracy identified by Howard to preserve and increase the value of houses to keep the majority of voters happy has been amplified by the banks doing the same thing to increase their profits. Australia is in the grip of a “bankocracy,” in which four banks control our access to money. Their profits, and therefore the salaries of their executives, depend on both the volume and the value of their assets growing.


The volume of their assets (that is, the number of loans) increases because Australians believe the only way to increase their wealth is to borrow 80 to 100 per cent of the value of one or more houses; and the value grows because the banks’ customers compete with each other to buy the houses and push up their prices and therefore the size of their loans. The more house prices rise, the greater the banks’ profits. As US investment guru Charlie Munger says: “Show me the incentive and I’ll show you the outcome.”

"The way real estate works in Australia is that the federal government and banks encourage demand for it and state and local governments restrict the supply of it."

The way real estate works in Australia is that the federal government and banks encourage demand for it and state and local governments restrict the supply of it. The states restrict supply through zoning, and local councils do it by their planning decisions every day. Federal government decisions increase demand for housing in four main ways: first, through interest rates; second, with immigration; third, with tax breaks for investors and home owners; and fourth, with grants to first home buyers.


In recent years, interest rates have been the main thing determining house prices, although they are not controlled by federal politicians but rather by the independent Reserve Bank of Australia. It is a federal body, appointed by the treasurer, and it manages the economy mainly through housing. That is, interest rates regulate the cost of housing and therefore the demand for it, and to a lesser extent the supply. By reducing or increasing the cost of shelter, the RBA controls our spending on everything else, which in turn governs the level of employment and inflation.


Incidentally, the result of the thing called monetary policy is that borrowers bear the entire burden of economic adjustment. And not just all borrowers – it’s the ones who are already living on the edge. Rich borrowers are fine – they’ve got plenty left after higher repayments, so their spending doesn’t change and they don’t contribute to the economic adjustment. The spending cuts that result in slower economic growth are entirely made by those who are already struggling to make ends meet: the use of housing to regulate the economy is essentially a policy of cruelty.


As I will explain in more detail later, three main things pushed up demand for housing after 2000: a sharp lift in immigration that increased the number of people needing a place to live; capital gains tax breaks and negative gearing, which represent a $96 billion per year subsidy for buying houses; and federal first home buyer grants, which represent a $1.5 billion direct addition to house prices each year.


As for supply, in 2018, researchers at the RBA figured out that zoning restrictions raised the average price of detached houses by 73 per cent in Sydney, 69 per cent in Melbourne and 29 per cent in Brisbane. For apartments, the figures were 85 per cent in Sydney, 30 per cent in Melbourne and 26 per cent in Brisbane. Those are astonishing numbers, and that’s without including the effect of local government planning decisions, which are, by definition, haphazard and unquantifiable but mostly aimed at keeping local councillors in a job by keeping the existing residents happy by making sure they don’t let in too many new ones.


As Figure 3 shows, house prices started trending higher for the first time after World War II, but up to the turn of the millennium they were more or less keeping pace with incomes and the size of the economy.

At the same time as everybody was worrying about the world’s computers grinding to a halt with Y2K, there was a collision between demand and supply and house prices started to depart from the rest of the economy, and from our incomes. What happened in the year 2000? Well, that’s what this Quarterly Essay is about; as I’ll explain, the nitro of a surge in demand around that time mixed with the existing glycerine of restricted supply to create an explosion that has blown up the Australia that our parents knew.


And each of those things was almost entirely due to government policies, either the unintended consequences of misguided ideas or deliberate policies designed to preserve the wealth of the majority of voters – that is, those who own a house. If governments caused the problem, can governments fix it? Theoretically yes, but it’s politically easier to make an asset worth more than to make it worth less. As I’ll explain in the final chapter, actually doing something about housing affordability would require courage, Minister.


Quarterly Essay is offering readers of HousingWORKS a discount of $3 on RRP with free shipping within Australia using promo codes - HW3 (discount code), FREESHIP (shipping code) -  at www.quarterlyessay.com


This is an extract from Alan Kohler's Quarterly Essay The Great Divide: Australia's Housing Mess and How to Fix It. 

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Brighter Future Awards nominations now open!!

February 14, 2025
It is with great pleasure that we announce nominations are now open for the ahi: 2025 Brighter Future Awards .

Submission in response to the Draft NSW Homelessness Strategy 2025 - 2035

February 14, 2025
About the Australasian Housing Institute The Australasian Housing Institute (ahi) is a professional body for workers in the social and affordable housing and Specialist Homelessness Service (SHS) sectors across Australia and New Zealand. It has Branch Committees in each state and territory, as well as in New Zealand. The ahi is submitting a response to the Draft NSW Homelessness Strategy (the Strategy), representing the collective feedback of the NSW Branch Committee, with the support of the entire ahi organization. With over 2,000 members across NSW, ahi members work in both government and non-government housing organizations. The ahi has a long history of collaborating with SHS, Specialist Disability Services, and other mainstream services, including health, education, and local councils. For the past 25 years, ahi has been proudly delivering training for industry housing professionals across a wide range of areas, including tenancy management, asset management, and governance. The ahi also hosts masterclasses and networking events to support its members. The ahi provides professional development to the workforce through: Training and knowledge-building on a range of issues relevant to social housing professionals, from induction programs for new workers to advanced and specialized training in areas such as asset management, trauma-informed approaches with applicants and tenants, personal development, and community participation. A mentoring program that pairs experienced professionals with newer or younger members to help them achieve their career aspirations and goals. A certification program for social housing professionals to uphold professional standards and ensure success in their area of expertise. Leading the Annual Brighter Future Awards, which recognize excellence in the social housing industry. Promoting active, engaged, and connected membership through the delivery of topical events, seminars, webinars, masterclasses, and more. As a member-based professional body, the ahi is uniquely positioned to build trust, enhance skills, and foster relationships across both the government and non-government sectors, as well as between organizations. Summary The ahi congratulates the NSW Government on its significant investment of $6.6 billion in the 2024 budget, aimed at tackling the unprecedented housing stress and the rising numbers of individuals experiencing homelessness driven by the ongoing rental crisis in both the private rental and social housing sectors. The Strategy for 2025-2035 is highly commendable, with its three core goals—rare, brief, and non-repeated—standing out as ambitious and impactful objectives aimed at addressing homelessness. These goals are set to bring about significant changes in the social housing system and provide a clear policy framework to guide efforts toward achieving meaningful outcomes over the next decade. The ahi recognizes the importance of this Strategy and the critical role that the social and affordable rental housing system plays in meeting these goals, emphasizing the need for genuine, whole-of-government collaboration in delivering results. This approach involves collaboration across government, the not-for-profit community housing sector, and mainstream services, all supported by SHS’s within a Housing First framework and guided by a clear governance structure. It marks a shift from a deficit-driven perspective to a solution-focused, positive approach. The success of this transformation relies on collective efforts through co-design, co-evaluation, and co-delivery, ensuring the long-term effectiveness of the change. For this paradigm shift to succeed, it will require a skilled, committed, and dedicated workforce, as outlined in Principle 8 (The Workforce is Strong and Capable). Recognizing the need for a sustained, locally connected workforce is crucial to addressing the diverse needs of individuals experiencing homelessness across all three phases of their journey. In its feedback on the Strategy, the ahi emphasizes the importance of focused attention on homelessness and social housing workforce planning, professional development, industry support, and the need for culturally competent workers—both paid and voluntary—who bring diversity, inclusion skills, and lived experience. Finally, the ahi urges that Principle 8, which highlights the strength and capability of the workforce, be prioritized, particularly in supporting First Nations people experiencing housing stress and homelessness, with a long-term vision extending beyond the next 10 years. Detailed response The following is more a detailed response from the ahi to the questions outlined in the consultation paper for the Strategy. SECTION 1: The Guiding Principles of the Strategy 1. What do we need to consider as we implement services and system reform guided by these principles (total 9) over the next 10 years? As we implement services and system reform guided by these principles over the next 10 years, the ahi suggests the following approaches be prioritized: Workforce planning should be a key focus in the first rolling action plan (2025-2027), with an emphasis on forecasting the ongoing skills and competency needs throughout the life of The Strategy. This will ensure the workforce is equipped to meet evolving demands. Increasing the supply of dwellings to address crisis, transition, and permanent housing needs must be matched by a parallel increase in the workforce. This includes expanding both paid employees and volunteers within social housing, community housing organizations, and Specialist Homelessness Services (SHS). A well-supported workforce is essential to ensuring the successful and sustainable delivery of outcomes envisioned by the Strategy. Skilling workers who assist First Nations people experiencing homelessness should be prioritised. This requires a culturally competent workforce at all levels to provide high-quality services and ensure that First Nations people do not experience repeated homelessness. By focusing on cultural competence, we can foster better outcomes and long-term stability for these communities. 2. Which Principle should be prioritized and why? The ahi fully supports all nine Principles, with particular emphasis on Principle 8: Workforce is Strong and Capable, as being foundational. Addressing homelessness is a person-centered solution that requires culturally competent employees and volunteers who can establish strong, supportive networks with wraparound services at the local community level. This is essential to meeting the evolving needs and remains a high priority in the First Action Plan (2025-2027). Ongoing professional development for workers is crucial to ensuring long-term success in meeting the changing social, economic, and environmental needs of those living in quality housing. It is also vital for ensuring tenants not only live well but stay connected to their communities. Supporting the workforce’s safety and wellness is key to maintaining a capable, resilient workforce, which in turn ensures the best possible quality of housing, management, and support for tenants. SECTION 2: Strategy focus areas: 1. To make homelessness rare, what should NSW prioritise for action and why? The ahi believes that adequate funding for SHS’s is essential to ensure they are properly resourced to assist individuals at risk of or in a crisis state of homelessness at the point of need. The ability to identify risks and allocate resources effectively for intake assessments and service coordination is key to early intervention and prevention. A triage system is vital for facilitating positive outcomes, aiming to make homelessness a one-off experience. The ahi also supports dedicated funding for staff training and development in this field, recognizing its importance in preventing homelessness from becoming a long-term issue. Investing in training allows for timely and appropriate interventions, helping to break the cycle of homelessness early on. 2. What opportunities and risks are there for implementing actions under this outcome? Delaying action in assisting individuals experiencing homelessness can lead to a loss of faith and hope in the NSW housing system, pushing them toward the justice system or, in the case of older people or women escaping domestic violence, even premature death. Implementing this outcome presents an opportunity to build a culturally competent, and trauma-informed workforce, a key factor to transforming lives while simultaneously increasing the supply of housing. Supporting a resilient workforce, where high job satisfaction is fostered, creates committed and effective workers who can make a lasting difference. 3. What types (s) would be most useful to measure our impact and why? A key target in the First Action Plan (2025-2027) is to reduce the number of people on the social housing waitlist during the reporting period. This measure will serve as an indicator of success and validate the effectiveness of early intervention policies in preventing homelessness. Additionally, setting targets for the number of employees and volunteers in the social housing and SHS sectors, as well as tracking turnover rates, is essential to assessing the success of building a stronger, more capable workforce. 4. To make homelessness brief, what should NSW Priorities for action & why? Domestic violence, family abuse, and coercive control are major causes of homelessness among women, with the number of homeless women and children increasing according to the latest data. Adequate funding for this vulnerable group is a top priority. Supporting these women has a profound impact on their recovery, resilience, and ability to raise their children, leading to positive generational outcomes in the long term. The rising trend of older women experiencing homelessness for the first time also requires early intervention to prevent premature death. 5. What opportunity and risks are there for implementing actions under this outcome? The continued trend of women dying as a result of domestic violence and family abuse is deeply concerning. In 2024, 14 older women aged 55 and over were killed, a distressing statistic according to the Commissioner for Domestic and Family Violence, Michaela Cronin. These women are at a higher risk of vulnerability, often with no support systems to rely on. Implementing actions under this outcome presents a crucial opportunity to save lives, reduce the number of women experiencing both domestic violence and homelessness, and help them rebuild their lives. 6. What types of target(s) would be useful for measuring our impact and why? Reducing the number of women who die as a result of domestic violence and family abuse during the First Action Plan (2025-2027) is an important metric to track and report, demonstrating the efficacy of The Strategy. Individual success stories are powerful testimonies that show the goals of the Strategy are benefiting both individuals and the housing system. The skills required for employees and volunteers in this area demand dedicated funding and training resources. Implementing a measure to evaluate the outcomes of training courses would be valuable, helping to refine and improve the content and application of these programs. 7. To ensure homelessness is not repeated, what should NSW prioritize for action and why? First Nations people are overrepresented in experiencing homelessness and face significant challenges in breaking the cycle. Priority should be given to this group under the Housing First Principle, supported by skilled and capable staff and volunteers, to empower them and prevent repeat homelessness. Rental tenancy laws in NSW should be reviewed, particularly regarding the cessation of tenancy due to prolonged absences. Cultural customs related to death and bereavement (Sorry Business) should be recognised as acceptable reasons for absences and incorporated into tenancy policies. 8. What opportunities and risks are there in implementing actions under this outcome? The risk of not achieving the goals outlined in the National Agreement on Closing the Gap for the NSW Government is significant if priority is not given to properly housing and supporting First Nations people. There are valuable opportunities in collaborating with Aboriginal leaders through a co-design, co-evaluation, and co-delivery approach. Their collective commitment to improving the lives of Aboriginal and Torres Strait Islander people can lead to positive outcomes in housing, health, education, employment, justice, safety, and inclusion. 9. What types of target(s) would be most useful to measure the impact and why? Increase the number of Aboriginal workers with certified qualifications across various areas of the Aboriginal housing sector. Aboriginal tenants depend on highly qualified and culturally competent workers and volunteers to help build their resilience and prevent repeated homelessness. Regular customer satisfaction surveys should be conducted to measure tenants’ satisfaction levels and identify areas of strength and improvement. Conclusion The ahi supports an ambitious supply growth program throughout the life of the Strategy to address homelessness in NSW. With 63,260 households (based on 2023-2024 data) currently on the waiting list, it is crucial to reduce this number over the next 10 years through the rolling action plans. Successfully delivering the Strategy will require a skilled, trauma-informed, and competent workforce to implement an integrated housing system. While workforce planning is mentioned as one of the nine principles, its lack of detailed planning is concerning. The ahi strongly suggests that the principles of co-design, co-evaluation, and co-delivery be incorporated from the outset in developing the rolling action plans. The ahi thanks the NSW Government for the opportunity to submit feedback and for its ongoing consideration of building a strong and capable workforce that is recognised and supported by a broad range of industries. The value of including people with lived experience and their unique knowledge and skills cannot be overlooked as an essential voice in this transformative process. Contact NSW Branch Committee - Australasian Housing Institute admin@housinginstitute.org www.theahi.com.au (02) 6494 7566 Date submitted: 11/2/25 Submitted to: Homelessness.strategy@homes.nsw.gov.au

Appointment of new auditor

October 24, 2024
Australasian Housing Institute (the Company) wishes to announce that effective from today, 24th October 2024, Accounting & Audit Solutions Bendigo (AASB) has been appointed as auditor of the Company. The change of auditor has occurred due to the resignation of Kelly Partners (Sydney) as the company’s auditor. The company received approval from the Australian Securities and Investments Commission (ASIC) to change its auditors in accordance with section 329(6) of the Corporations Act 2001 (Cth). Accordingly, the Company has accepted the resignation of Kelly Partners (Sydney). AASB’s appointment is effective until the next Annual General Meeting of the Company. In accordance with section 327C of the Corporations Act, a resolution will be put to members at the 2025 Annual General Meeting to appoint AASB as the Company’s ongoing auditor.
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