Coates said federal and state governments need to make tough decisions on housing policy to improve affordability as younger Australiansstruggle to get a foothold in the housing market.
“Either people accept greater density in their suburb or their children will not be able to buy a home,and seniors will not be able to downsize in the suburb where they live,” he said in his Henry George Commemorative Lecture.
“This is a problem we can fix,but only if we make the right choices.”
House values across the country had swollen to $10.1 trillion by March this year,driven by a record-low official cash rate of 0.1 per cent andaided by government concessions including HomeBuilder grants. While the property markets in NSW and Victoria have taken a $200 billion hit since the Reserve Bank started ratcheting up interest rates to counter high and rising inflation,prices remain above pre-pandemic levels.
One fix Coates proposes is an increase in medium or high-density development to meet demand.
“It is a myth that all new first-home buyers want a quarter-acre block. Many would prefer a townhouse,semi-detached dwelling,or apartment in an inner or middle suburb,rather than a house on the city fringe,” he said.
Zoning restrictions and local opposition to higher-density development is the problem,Coates said,with Reserve Bank research from 2020 estimating that restrictive rules added up to 40 per cent of the price of homes in Melbourne and Sydney.