The Housing Crisis: When Dreams Meet Financial Reality
Reading through recent discussions about housing affordability brings back memories of endless spreadsheet calculations and sleepless nights when I was house hunting a few years ago. The current debate about 2% deposits for $1.3 million homes has me both concerned and frustrated.
The numbers simply don’t add up. Someone earning $100,000 trying to service a $1.3 million loan isn’t just ambitious – it’s financially reckless. Even with government schemes offering to cover 40% of the purchase price, we’re still talking about massive repayments that would consume virtually every dollar of take-home pay.
What’s particularly worrying is the mindset I’m seeing in some of these discussions. There’s this dangerous notion floating around that interest rates will definitely drop back to historic lows, or that future wage growth will somehow make these massive mortgages manageable. Living through the recent interest rate hikes should have taught us all about the risks of making financial plans based on best-case scenarios.
The reality is that housing prices have completely disconnected from wages. What used to buy you a decent family home now barely gets you a dated three-bedroom weatherboard an hour from the CBD. Just the other day, I drove past a fairly basic house in Reservoir that was advertised for $1.2 million – a property that would have been worth maybe $400,000 a decade ago.
This isn’t just about individual financial decisions; it’s about the kind of society we’re creating. When working professionals can’t afford homes without taking on crushing levels of debt, something is fundamentally broken. The government’s solution seems to be pushing people into taking on more debt rather than addressing the underlying affordability crisis.
Looking at my daughter’s generation, I wonder what kind of housing market they’ll face when they’re ready to buy. Will they need three incomes to afford a basic home? Will they be forced to take on multi-generational mortgages like we’re seeing in some other countries?
The solution isn’t encouraging people to take on unsustainable levels of debt. We need meaningful policy changes: better urban planning, limits on property speculation, and a serious commitment to affordable housing. Until then, we’re just watching this crisis deepen, one desperate home buyer at a time.