Recent research released by Institute of Public Affairs (IPA) revealed that Sydney is the world’s most unaffordable housing market. Melbourne, Perth, Brisbane and Adelaide are also in the top 10 - Apparently the average Sydney home costs over eight times the city’s average household income.

In a detailed 93 page document, Institute of Public Affairs reveals many interesting details about the current Australian Housing market. Here are some points which caught my attention:

1. The inflated land prices in Australia is the major reason for the high property prices.

2. When it comes to releasing land for development, Australia follows a ’smart growth’ philosophy - protecting open space and preventing denser developments.

3. Had land prices remained stable or increased only at the rate of underlying inflation, (as in most US jurisdictions where ’smart growth’ philosophy is not followed), average new house prices would have been 40 percent to one-third lower than what it currently is.

4. The next thing after land prices is the building costs. The Government’s insistence that all new homes follow environmental regulations, has increased the building costs substantially.

5. The report blames Government policies and says that if the Government relaxes rules on land release and on restrictions placed on builders then the houses will become a bit more affordable.

The 93 page report was a bit of a hard read for me. But I think I got the main points (mentioned above).

I hope the Government gives the report due consideration. I love the landscape of Australia and love the fact that we have so many parks in the middle of the city. But having said that I hope the Government does not take the land release rules too far - because the current housing market affordability is a bit ridiculous.

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