Is owning a home still affordable? Craig Turnbull

Every day I read that the Great Australian Dream, home ownership, is becoming more a nightmare than reality.

It is reported that buying a home is no longer possible as it is completely unaffordable.

That is itself is a very loose statement and if I might say, incredibly sensational. But big bold bad news sells. If all homes were unaffordable no one would be buying them. And if no one was buying there would be no boom nor a bubble. And prices wouldn’t be rising in Sydney & Melbourne – though they are pretty much sideways elsewhere in Australia.

Let’s examine this thing called “home ownership” and ask ourselves why it is such a dream. A place called home, a roof over our head, a place to retreat, to feel safe and secure, where you are the King, (or Queen) and you have a store of wealth. Your home – complete with yard, a fence, a dog and maybe a Holden car in the garage.

It’s not an idea unique to Australians either – all over the world people aspire to that comforting feeling of the security and privacy of their own four walls. The concept isn’t new either – the ancient Romans had a good sense of what it meant to own your own home. 

What more sacred, what more strongly guarded by every holy feeling, than a man’s own home? – Cicero

Over 2,100 years ago, owning a home was important to the psyche of the dominant culture of the Western world. Not much has changed, except the level of angst around the subject. Exacerbated by the ability of the public to discuss the idea more widely.

According to a recent Neilsen survey, in most states of Australia just about 50% of respondents said that home ownership was viewed as unattainable. Only in Tasmania, where prices are much lower, did about a third of people hold the same view. Yet the same survey revealed that about two thirds of respondents actually owned a home and this is consistent with other statistics on home ownership such as those provided by the ABS. So a lot more people owned a home than what they thought was reality. 

It is not easy to determine, exactly why people think more negatively than what is fact, but my instinct is that people tend to believe what is repeated over and over in the media – we have a bubble, prices are too high and will surely crash. Well frankly, there are none of the conditions that I can see in our marketplace now that could lead to a real crash in values. Oh, you will certainly see Sydney peak and prices ease back from their highs as their cycle ends – there is nothing new here, it has been happening for a long time and will happen again in future cycles.