To: Mr. Chris Quagliata
Dear Mr. Quagliata:
Re: Your 23 January Column
There is nothing inconsistent about our housing affordability survey, which ranks the Townsville urban centre as one of the least affordable markets in six nations and the Collier study, which finds Townsville to be among the most affordable in Australia. Both are true. Indeed, our housing affordability calculator shows that the purchasing and paying the mortgage on the median priced house in Townsville costs $500,000 less than in Sydney (http://www.demographia.com/dhi-aus.XLS). This is the equivalent of 8.5 years of median household income in Sydney. It is not surprising, therefore that many Sydneysiders are moving to Queensland.
However, Townsville should take no more than modest satisfaction in this. House prices across Australia have generally doubled relative to incomes and even tripled in some markets in the last decade. This means that future home owners will pay much larger mortgage payments and will have less discretionary income than they would have if housing prices had not exploded. This is neither good for Townsville, nor for Australia.
The tragedy is that all of this was unnecessary. The excessive house price inflation resulted from the naïve "urban consolidation" land use regulations of state and local governments. Too little land has been released for new housing and not surprisingly, land prices have exploded. Excessive infrastructure levies have raised the price of housing even further.
It will be important for governments to begin to dismantle these destructive policies and to implement programs that permit people to buy inexpensive housing on the urban fringe. The Great Australian Dream of a owning a home on quarter acre is not yet dead, though it is, at best, on "life support." It needs to be fully restored.
Metropolitan St. Louis (USA)
Visiting Professor, Conservatoire National des Arts et Metiers, Paris
Co-author, Demographia International Housing Affordability Survey