House prices roar back to life as pandemic fails to cure affordability crisis

The COVID-19 recession has done nothing to tame Australia’s rampant housing affordability problem and the Victorian government’s $5.3 billion public housing spend is unlikely to make any difference in the state.

Two affordable housing experts and the Victorian Council of Social Service have told The Age they were disappointed the pandemic-induced recession had failed to lead to a more accessible housing market.

A large crowd turns out for an auction in South Yarra this month.Credit:Nine

The government insists its plans to build 12,000 social, public and affordable dwellings in the next four years will help affordability and improve the lives of thousands of families across the state.

Real estate markets in Australia’s big cities and many of the regions are soaring again after shrugging off the COVID-19 recession, launching house prices to record highs and sparking expectations of a sustained new boom.

With Melbourne’s median house price tipped to pass $920,000 next year – more than 10 times the average annual full-time wage – people who cannot get a foot on the property ladder are worried.

University of Melbourne housing specialist Kate Raynor is one observer who hoped to see improvements in the affordability picture during the pandemic, but said the opposite had happened.

Akeel Ahmed Wani and Naveed Bashir outside their new home.

However, some first-time buyers have managed to get a good deal. IT manager Akeel Ahmed Wani, 31, and his wife Naveed Bashir bought their first home in Bundoora last November and say they got a bargain after putting in an offer before the auction.

“COVID hit and houses weren’t on the real estate websites, so I was struggling to find new houses. Demand was more than supply,” Mr Wani said.

“On the day it was advertised I contacted the real estate and offered my price. We negotiated for one week and finally the vendor accepted my price as a private sale before the auction date.

“If it had gone to auction it would have sold for at least $25-$35,000 more than I paid for it.

“For first home buyers I reckon they should buy in a private sale … it’s better than going 20 per cent higher in the auction,” he said.

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