Misery loves company, as global housing crises prove
From Canada and Spain to the UK, US and New Zealand, developed countries are wrestling with the same stubborn housing crises issues confronting Australia, with no easy political fix in sight.
Australia’s housing crisis feels uniquely frustrating when you’re living through it, but look around the developed world and a more uncomfortable truth emerges.
Almost nobody has worked out how to make housing genuinely affordable.
Australians, quite rightly, have their share of grievances about the property market and housing situation.
Until recently the government was being lambasted for standing by as property prices soared and a generation of young people was watching the home ownership ladder being pulled up and out of reach.
After six months of prices declines, the government is again (or still) copping it for taking away the negative gearing a capital gains tax discounts that critics argue helped fuel investor demand and price growth.
But the social and political unrest over housing is far from a uniquely Australian issue.
In Spain, riots and protests are rolling through streets around the country, including 70,000 in Madrid over the weekend. The eviction of an 87-year-old woman has become the embodiment of a housing crisis that, like Australia, has seen rents soaring.
Housing crises are far from an isolated international occurrence.
From Japan to Canada, housing has become a globally ubiquitous problem.
What exactly constitutes the basis for each crisis are as varied as the cultures themselves.
The catalysts include severe affordability problems, supply shortages relative to demand/population growth, high prices/rents relative to incomes, and related issues like young people delaying the formation of households, and aged home owners being disincentivised to downsize.
Outside Australia’s home girt by sea, major Organisation for Economic Co-operation and Development (OECD) countries widely described as facing a housing crisis include Canada, Ireland, New Zealand, the Netherlands, the United States, the United Kingdom, and Portugal. Others such as parts of Germany, Spain, France, and Switzerland also show significant pressures, especially in cities, though intensity varies.
OECD reports and data highlight a broad affordability crisis across many member countries driven by house prices rising faster than incomes over decades.
Real prices are up nearly 60 per cent on average over 30 years, while other drivers are supply lagging demand, restrictive land-use rules, construction constraints, demographic pressures (including migration in some places), and higher interest rates after the low-rate period.
Price-to-income ratios remain elevated relative to 2015 baselines in many places, with young and low-income households particularly affected. The result is that many young adults are living with parents longer and high rent burdens are placed on lower-income tenants.
No easy housing solutions
If housing policy had a simple formulaic fix, there wouldn’t be so many nations facing the same problem.
Canada, Ireland, New Zealand, the UK, US, Portugal and parts of Europe are all struggling despite very different governments and policy settings, suggesting that perhaps the problem is bigger than whichever party happens to be in office.
Australians feeling that their political leaders are uniquely unqualified to address the issue can perhaps take a small degree of solace in knowing that those at the helm around the world are finding it just as difficult a course to navigate:
Canada: Frequently ranked among the worst for deterioration in affordability (sharp rises in price-to-income ratios over the past two decades). Major cities like Vancouver and Toronto are highly unaffordable; supply has not matched strong population growth. OECD economic surveys specifically address Canada’s housing affordability challenges.
Ireland: Acute supply shortage relative to population growth (one analysis showed 3.8 new people per new housing unit 2015–2023). High costs, OECD recommendations for long-term reforms in land use, taxation, and construction productivity; completions lag needs.
New Zealand: Long-standing severe unaffordability (historically high median multiples), though some recent improvement in prices/rents after policy shifts and reduced migration pressure in places.
Netherlands: High and elevated price-to-income ratios; overvaluation noted in EU analyses; significant household debt and affordability pressures.
United States: National price-to-income ratios have risen substantially (median house often requiring more than five times median income in recent years vs. lower historically); acute problems in high-cost coastal metros (e.g., California cities). Affordability worsened post-pandemic with higher rates.
United Kingdom: Persistent high costs relative to incomes, supply shortfalls vs. targets, and high housing cost burdens; part of the broader Anglosphere pattern of strained affordability.
Portugal: Among the highest house-price-to-income ratios in recent OECD-linked data; strong recent price growth and overvaluation signals.
Japan: House-price-to-income ratio of 113.8 in 2024 (2015 = 100), showing moderate pressure with prices outpacing incomes by about 14 per cent since the base year; overall less severe than the most stretched OECD markets.
Australia may have its own policy mistakes to answer for, but pretending Canberra has created a problem unique to Australia misses the bigger picture.
Across the developed world, housing has become caught between population growth, restricted supply, high construction costs, expensive finance and prices that have outpaced wages for years.
The uncomfortable lesson is that there is no magic policy switch. Fixing affordability means changing the economics of housing itself and that takes considerably longer than an election cycle.
Australia is also carrying a heavier rate burden
There is another complication for Australian borrowers that is easy to overlook when comparing housing markets around the world: interest rates.
Australia is currently carrying a higher policy rate than most of the other developed economies facing similar housing affordability pressures.
That means Australian borrowers are dealing with a heavier financing burden at a time when property prices remain high relative to incomes.
Australia’s cash rate is now 4.60 per cent (its highest level in 15 years), compared with 4.00 per cent in the US, 3.75 per cent in the UK, 2.65 per cent across the euro area, and 2.25 per cent in Canada.
Heavily indebted households are bearing the brunt of this load.
Higher rates reduce borrowing capacity, increase mortgage repayments and make it harder for would-be buyers to bridge the gap between wages and property prices.
For property investors, the equation is even more complicated. Higher finance costs can turn an asset with an apparently reasonable rental yield into a cash-flow drain, while also reducing the amount an investor can borrow for subsequent purchases.
Australia is therefore confronting a particularly awkward confluence of problems.
Property prices remain expensive relative to household incomes, there is a shortage of housing in many markets, and the cost of borrowing is currently higher than in most comparable developed economies.
It is another reason there is unlikely to be a quick or painless solution to Australia’s housing affordability problem. Much like the rest of the world.
