The housing crisis Down Under

BY ALL accounts Australia’s major cities are in the grip of a housing crisis. Prospective home buyers, especially young couples, are locked out because of soaring prices and there is a shortage of homes for rent. And those with mortgages are finding it difficult to service their loans, that now bear much higher rates. For some families, it has meant a distressed sale of their property. The problem seems to be most acute in the economically dynamic cities of Sydney and Melbourne.

Although land and housing are matters within the purview of the states, the federal government of Prime Minister Anthony Albanese has become the target of mounting public anger. National policies, such as migration intake numbers and rising interest rates, are blamed for this state of affairs.

Indeed, it is true that the Australian central bank’s decision to keep interest rates low for so long greatly contributed to surging demand for housing, long considered an ultra-safe asset class. Following the 2008 financial crisis, interest rates trended steadily down until last year. This supercharged demand for housing, much of which was speculative, and led to steadily rising home prices.