Restoring home ownership requires substantially lower house prices – and for most existing homeowners, falling property values need not leave them materially worse off.

Housing affordability has declined dramatically over the last half century, and particularly in this century. As a result, home ownership has fallen substantially, particularly among young people who want to buy their first home.

For example, census data show that home ownership among 30–34-year-olds fell from 64 per cent in 1971 to 50 per cent in 2021, and for 25–29-year-olds it dropped from 50 per cent to 36 per cent.

The overwhelming reason for the decline in housing affordability has been the increase in dwelling prices.

According to research by the Grattan Institute, average dwelling prices represented around two to three times average disposable incomes in the 1980s and early 1990s. By comparison, today the national median dwelling price is approximately 8.2 times the median, or typical, annual income. While in Sydney – one of the most unaffordable housing markets globally – the median house price-to-income ratio is around 13.5.

As a result, it now takes 1.9 average incomes to comfortably service a mortgage for a median-priced dwelling in Australia’s capitals, whereas an affordable home loan should be........

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