According to a parliamentary inquiry, Millenials could see lower housing prices as supply catches up to demand in a few years.
Younger generations are currently paying 7.3 times more for their first home than their parent’s generation.
The housing market has grown highly competitive as a result of record-low interest rates and a fast-growing population.
On Tuesday, Crystal Ossolinski, the Treasury’s Macroeconomic Division head, told a parliamentary committee that housing supply had not kept up with population growth.
“In Australia, we’ve had some periods of strong population growth, particularly in the early 2000s, when population growth was fairly rapid,” she explained.
“In the housing market, supply is limited. It takes a long time to build dwellings”.
She then added that there’d been a response to supply issues that should ease the prices in the future.
Ms Ossolinski also mentioned that the number of houses had increased significantly last year, with over 200,000 (construction) approvals.
She claimed that interest rates would not drop anymore and would rise over the next few years.
These factors point to a period where supply is surging and demand is levelling off or stabilizing.
In addition to that, John Springer, the head of the department of Treasury Social Policy Division, mentioned the surge of people studying at university before starting their jobs, as well as the transition to contract and temporary work, were putting barriers in the way of getting into the real estate market.
