The New Australian Reality: Skyrocketing House Prices and Creative Housing Solutions

Australia’s housing market has recently shown a trend that might seem counterintuitive: despite rising interest rates, house prices continue to soar. This phenomenon has led many to believe that the old adage, “nothing is more certain than death and taxes”, needs an update to include rising house prices.

Greg Jericho, in a recent piece, shared that the latest data from the Bureau of Statistics indicated a surge in property prices during the first three months of the year. This is noteworthy because it defies the general expectation that rising interest rates should curb price hikes. Jericho mentions, “No longer is nothing more certain than death and taxes; it’s now death, taxes and rising house prices.” He further sheds light on the taxation statistics for 2020-21 which demonstrated that more property investors claimed a profit than a loss for the first time on record.

Yet, while these numbers suggest a thriving housing market, a parallel trend tells a different story. Emilia Terzon reports on how rising rents and property values are pushing Australians into alternative housing solutions, like share houses, granny flats, and house-sitting.

One such case is Mike Coates, a 44-year-old who is constructing a granny flat in his mother’s suburban backyard. Mike’s story epitomizes the current housing situation many Australians find themselves in, especially when trying to find a rental. “A lot of people are struggling. I’m fortunate that I’ve had a mum that’s been able to do this for me,” Mike laments.

Interestingly, the notion of a granny flat being used for grandmothers is becoming an outdated concept. Matt Chapman from Granny Flats and Cabins Victoria says, “The granny flat is no longer just for the granny. We’ve been building a lot more for the kids coming back and the in-laws, due to, obviously, rent prices going up.”

This shift towards unconventional housing isn’t only affecting the younger generation. Data from Flatmates.com.au suggests that one of the fastest-growing groups searching for a share house has been middle-to-older-aged women. Moreover, the number of women over 55 facing homelessness has surged.

Jericho emphasizes, “Perhaps the old adage should not be changed to ‘death, taxes and rising house prices’ but ‘death, taxes, rising houses prices and a generation of people locked out of the housing market’.”

These trends emphasize the need for a comprehensive solution to the housing crisis. While the situation might appear bleak, CoreLogic economist Eliza Owen is hopeful about future interventions from state and federal government regarding social and public housing, which might ease the pressure on vulnerable renters.

Yet, until a long-term solution is established, Australians like Mike are likely to seek solace in alternative living arrangements, grateful for any shelter they can find, even if it’s in their mother’s backyard.

References:

“Forget death and taxes, the real certainty in Australia is rising house prices” by Greg Jericho. ↩ https://www.theguardian.com/business/grogonomics/2023/jun/15/forget-death-and-taxes-the-real-certainty-in-australia-is-rising-house-prices 

“How rising rents and property values are pushing Australians into share houses, granny flats and house-sitting” by Emilia Terzon. ↩ https://www.abc.net.au/news/2023-10-05/housesitting-granny-flat-rents-sharehouses-property-prices/102934508