Australia is definitely in the midst of a housing crisis right now. A growing population coupled with high housing demand has driven rental prices sky-high. Currently, Australian residents are finding it impossible to secure safe and affordable housing. Several other issues, like low wages and ineffective government policies have also contributed toward the current situation. However, recently there have been new initiatives to help solve the housing crisis. If you’re in the market for extra space or room for relatives who are struggling to afford accommodation, investing in a granny flat might be a good idea.
What does a housing crisis mean?
A housing crisis occurs when affordable housing significantly declines. For accommodation to be affordable, it should be a feasible rental price for low to moderate income earners. When rental prices skyrocket and these earners can no longer afford basic shelter, we find ourselves in a housing crisis. In Australia, the housing crisis has caused issues for both buyers and renters.
Proper housing, just like food and water, is not something we can go without. Unless we receive safe and secure accommodation, we can’t expect to participate fully in work, education, and other life opportunities. What’s more, housing crises tend to impact low income earners and younger generations much more. This leads to an increase in socioeconomic inequality and, in the worst cases, leaves people without homes.
The housing crisis directly affects renters because affordable housing is moving further and further out of reach. About one in three Australians rent their homes, and are becoming increasingly limited in choice and security. Low supply and high demand has led many renters to pay exorbitant amounts for poor housing quality.
What caused the housing crisis in Australia?
There are several key factors that helped cause the Australian housing crisis. These include population growth, remote working, inflation, and high property prices. Between March 2022 and March 2023, we saw a population increase of 2.2%. The rise in people needing accommodation has led to a higher demand for rental properties. When we pair this with low housing supply, it’s no wonder people are struggling to put a roof over their heads. This issue is particularly prevalent in urban areas like Sydney and Melbourne, which have some of the highest populations in Australia.
Another contributing factor to the housing crisis is remote work. Many Australians worked from home during COVID-19 lockdowns. Years later, remote working has been popularised, resulting in residents placing a greater focus on their home work environments. Spare rooms that double as offices are now necessities rather than luxuries for many Aussie professionals.
Houses aren’t the only expensive necessity. As inflation increases, the cost of groceries, bills, and other life expenses grow. Additionally, wages have failed to meet this inflation along with skyrocketing housing prices. This has put both renters and prospective homebuyers in an awkward position.
How does the housing crisis affect prospective homebuyers and builders?
Homebuyers and builders are also feeling the effects of the housing crisis, with building approvals sitting at a ten-year low. The lack of housing makes it difficult for Aussies to purchase their first home, when high first-time buyer loans loom in the distance. As it is, houses on the market reflect rental prices – unaffordable. In January of 2023, dwelling approvals fell by 27.6% according to the Australian Bureau of Statistics. The cost of building materials and labour has risen dramatically with inflation, further discouraging prospective home builders from investing. All of this creates a perfect storm. Homebuyers wanting to escape soaring rent prices by purchasing a home are met by equally soaring house prices.
What programs are in place to help with housing affordability?
The Australian Government is currently developing a National Housing and Homelessness Plan to help with housing affordability. This ten-year strategy includes reforms to address housing challenges. These reforms include increasing rates of Commonwealth Rent Assistance, building more homes, expanding criteria for the Home Guarantee Scheme, and a Social Housing Accelerator payment.
These reforms, among others, are aimed at creating more homes to support Australia’s growing population and provide more affordable housing. They also aim to support the homeless community by creating more social housing.
Parliament has recently passed a $10 billion Housing Australia Future Fund. In this scheme, 1200 homes will be built in each state or territory within the next five years. The government will be spending at least $500 million per year from the fund. They hope to make a significant difference in the availability and affordability of safe, secure housing.
Some affordability schemes, such as Commonwealth Rent Assistance (CRA), have had little effect on the housing crisis. The way CRA’s cut-in rate works greatly reduces access to the payment, which directly impacts lower income earners. Single people on youth allowance are particularly disadvantaged in this aspect. According to an Anglicare report, this demographic would have to spend a third of their income on rent before becoming eligible for CRA.
Granny flats as an affordable housing solution
In many circumstances, granny flats offer a solution to people struggling with affordable housing. Granny flats cost less to build than larger houses, making them a more affordable option and a better investment. Additionally, they are built on the same lot as existing properties, circumventing the need to buy more land. Having a granny flat as an additional dwelling on your property helps you provide extra housing. If you have young or elderly relatives who are struggling to afford a home, you can offer up your granny flat. You also have the option of renting out your granny flat at an affordable price, helping people who are struggling to find rentals. Alternatively, granny flats are able to solve the issues of remote workers. They are incredibly versatile, and function well as office pods or studio spaces for those who need them.
As a trusted granny flat builder in Perth, Granny Flats WA has years of experience to provide you with a beautiful living space. If it’s additional rooms you’re after, we also build extensions, renovations, and more. Reach out to the friendly team or view our amazing granny flat photo gallery.