In 2000, the house price to income ratio in the ACT was around 5.1 – meaning it would take around five years for someone on the median income in the Territory to pay off the principal on a median home. By 2020, this had risen 9.7 – an almost doubling to ten years. This measure quantifies the state of the housing market in the ACT, and demonstrates why we are in the midst of a housing crisis where demand for social housing continues to rise, leaving many homeless. Current social housing wait times exceed four years, with even priority applicants having to wait more than a year. These statistics are reflective of a broader trend across the country.
As a measure that accounts for changes in house prices and income, setting a target house price to income ratio would provide an effective way for the Commonwealth Government to monitor its commitment to improving housing affordability and provide policy clarity on exactly what the Government aims to achieve. However, this target would be meaningless without a plan to achieve it and a deadline for when it should be achieved.
Furthermore, once the target has been achieved, a commitment to maintaining housing affordability at that level would ensure that the housing crisis currently being experienced across the country, particularly by young Australians, is never experienced again.