Bank executive says approvals, construction settings and productivity must shift to deliver cheaper stock
Australia’s housing affordability problem will not be eased by higher building volumes alone, unless more homes are delivered at prices households on typical incomes can borrow against, according to Westpac chief executive Anthony Miller (pictured top).
In remarks to Alan Kohler on the ABC’s That’s Business podcast, Miller said the national discussion on housing was being shaped by a growing divide between wages and dwelling prices in the major cities.
“We need more houses, and houses at the right price point,” said Miller, who also argued that current price settings in the capitals were out of step with serviceability limits for many borrowers.
“The median house price in major capitals is around $1.1 million, while median income is about $90,000 to $95,000. On those incomes, the maximum purchase is roughly $600,000 to $650,000. So we need more houses in the $600,000–$700,000 range.”
Asked about the Federal Government’s goal of delivering 1.2 million homes over five years, Miller said additional supply was needed to have any prospect of easing pressure. He added that meeting that target would require “changing how housing is approved, how construction is enabled, and improving productivity to drive more supply at the right price.”
“We need society to get to a point where people feel owning a home or apartment is within reach,” the bank executive said. “Right now, a large proportion of the population doesn’t think it’s realistic. You need that level of focus on supply to have any chance of solving it.”
Miller said a shift in demand towards regional Australia could improve the alignment between incomes and purchase prices, and suggested remote and hybrid work could support such a move.
“One unlock is regional Australia,” he suggested. “The median house price there is about $650,000. Encouraging more people to live in regional Australia can help.
“We now have more flexibility than ever to work both in the office and remotely, which feeds into part of the solution.
“There are also opportunities for businesses to invest more in regional centres, attracting talent because people can get a job and buy the house they want in that regional centre.”
On the economy, Miller said the Middle East conflict added uncertainty through its potential impact on supply chains and prices, which can affect household finances.
While interest rates remain a key concern for mortgage holders, Miller stressed that households were also facing other rising costs.
“Another rate rise would return us to where we started… so it wouldn’t be any worse than last year,” he said. But he added, “other prices have gone up - so other stresses are coming through for consumers.”
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