Experts warn that current conditions for first-home buyers in Australia remain challenging amid shifting economic and policy landscapes. Dr. Oliver, an economist monitoring the housing market, noted that while interest rates were higher in the early 1990s, the income-to-price ratio then was significantly more favorable compared to today. He projects that Sydney house prices could decline by approximately 11 percent from their peak, with recently implemented tax changes under the Labor government accounting for about five percentage points of that drop.
Dr. Oliver cautioned that a sharp fall in housing prices could have broader implications for the economy, potentially leading to increased unemployment and further complicating the housing affordability situation for prospective buyers. “It’s a case of being careful what we wish for,” he said. To address the housing affordability crisis, he suggested that easing building regulations to boost supply and reducing immigration levels to temper demand would be the most effective measures.
The difficulties facing first-home buyers are reflected in the experiences of young couple Jean Selos, 24, and JJ Virrey, 27, from Hornsby, Sydney. Despite both working full-time, they have considered relocating interstate in search of more affordable property options, noting that comparable homes in Melbourne come at a lower cost. While government initiatives such as low-deposit guarantees and shared equity programs have provided some assistance, Selos believes these efforts fall short of addressing the scale of the problem.
Contrasting views on policy approaches come from Opposition housing spokesman Andrew Bragg, who attributes affordability pressures to higher immigration rates under the Labor government and increasing housing taxes. Bragg also argues for simplifying the national building code by easing energy efficiency and accessibility requirements, which he contends have driven up construction costs and made affordable housing unattainable. “It’s illegal to build a cheap home in Australia. You’ve got to build super-duper, gold-plated homes,” he stated, emphasizing the burden this places on lower-income households.
The recent policy shifts come despite Prime Minister Anthony Albanese’s campaign promises before the last election not to change the 50 percent capital gains tax discount or negative gearing arrangements. However, the Labor government moved to significantly restrict both measures in its first budget, a change now enacted into law. These tax adjustments are considered among the factors influencing the real estate market’s volatility and government efforts to manage housing affordability.