A New South Wales-based mortgage broker has written an open letter to the prime minister and the Reserve Bank of Australia (RBA) calling for pragmatic housing reforms across the country.
Joseph Daoud (pictured above), founder of It’s Simple Finance on the outskirts of Western Sydney, said he was compelled to write the letter after the November interest rate rise.
“The time for incremental change is over,” Daoud said in his letter. “We need bold measures to address the pressing issues in our housing sector. It's time we match the hard work of Australians with smart, efficient, and effective housing policies.”
It’s no secret that Australia has been facing a housing affordability crisis for a while now, with the relationship between housing expenditure and household incomes becoming increasingly strained.
The median price of a typical home in major Australian cities has seen a significant increase. In Sydney, the median price of a home jumped from around $615,000 in early 2013 to $1.2 million by 2023, according to ABS data.
While 2023 has seen house prices fall in some areas, there was little relief as inflation set in.
To solve the inflation problem, the RBA enacted 13 rate rises within 18 months, increasing the cash rate by 400 basis points.
But while inflation has passed its peak, the cost of living has skyrocketed, including the cost of owning a home and renting one out.
To solve the housing affordability problem, the government has sought to increase the housing supply, promising to build 1.2 million homes over five years.
However, Daoud said this plan is threatened by “excessive red tape” in the housing sector, supply chain issues and imported inflation.
“This isn’t just about economics; it's about fairness for hard-working Australians who are increasingly priced out of the market due to the lack of government foresight.”
To achieve the government’s ambitious goal, an average of 240,000 net new homes will need to be constructed every year in a five-year period.
However, a forecast from the construction industry’s peak industry body Master Builders Australia showed that only 209,000 new houses are to be built per year between 2022/23 and 2027/28.
Even more concerning is that these projections rely on a variety of factors and are based on a much lower starting point, with only 170,100 homes built in 2022/23.
So, if the demand is there, why can’t Australia meet the supply? According to Daoud, these are many examples of over-regulation that could be reformed to release the shackles.
“From the recently introduced stringent conditions around development consents to the introduction of subdivision certificates and the new rules around CDCs that push up the price of land, there are countless bureaucratic functions that slow everything down,” Daoud said.
Daoud said the endless cycle of delays in approvals and overregulation in development is not just stalling the growth of new housing but also inflating expenses across the board.
“It's a bottleneck that stifles innovation and restricts access to affordable housing, which should be within reach for every citizen,” Daoud said.
“As a nation proud of its blue-collar roots and built on the ethos of a "fair go for all", this situation is unacceptable. Australia should not stand by as the very people who laid its foundations are hemmed in by shortsighted policies.”
The Australian dream of homeownership is increasingly out of reach for many, with soaring housing costs and a complex regulatory environment hindering the development of affordable and accessible housing.
Daoud said Australians deserve better – better access to housing, better consideration in policymaking, and a better understanding from their government of the daily grind that defines the lives of ordinary Australians.
“Moreover, with an ageing population, the time to think and plan for the future is now,” Daoud said. “If we fail to address these challenges, the strain on our housing, healthcare, and social services will only become more acute.”
Here is Daoud’s four-step plan that he urged Prime Minister Anthony Albanese to consider:
1. Overhaul the development application system to remove bottlenecks and speed up the process.
2. Review and adjust restrictive zoning regulations that limit new housing development.
3. Invest in infrastructure, particularly transport, to support a growing and evolving housing market.
4. Develop a strategic plan for our ageing population, with a focus on sustainable and accessible housing solutions.
“This plan is about taking decisive action to give Australians the opportunity to live affordably and with dignity. It's about ensuring that our country’s growth includes everyone, not just the privileged few,” said Daoud.
What do you think about Daoud’s plan to ease the housing crisis? Comment below.
