The 13th annual Demographia International Housing Affordability Survey  –  a long-winded way of saying the survey that shows how much work it takes to buy a house – has just reported. It makes a depressing read for young Australians.

Only Hong Kong is more unaffordable than Sydney  – and they have a better excuse:  an enormous population living in a shoebox.

The report explained that the average property price in Sydney is 12.2 times the average household income.  Melbourne isn’t much better, at 9.7 times.  Even smaller centres like Bowral-Mittagong, the Sunshine Coast, Port Macquarie, the Gold Coast and Wollongong are at 9 times.

It’s why this morning our national papers are full of hand-ringing youngsters in despair explaining how they can never own their own home.

How did we get in this mess?  How is it that a country with as much land as Australia has managed to price the next generation out of their homes?

For a start, it’s taken us far too long to shrug off the quarter-acre block mentality and understand that the world – and our world – has changed.

It may be un-Australian to say this – particularly on the eve of Australia Day – but holding on to that image has probably blighted an entire generation.  We should have started building high-rise far earlier, which would have taken the pressure off supply.

We shrugged off our sheep-rearing agricultural roots many generations ago.  The majority of us are now latte-sipping urban dwellers – and happily so.

Sure, the lack of infrastructure like roads and rail projects has had an impact.  And so has low or no wage growth. But nothing impacts price like supply.

When I first got married and started our family in the early 2000s, the Sydney property price to household income ratio was 6 times.  So in 15 years, the situation is twice as bad… and I thought it was horrible back then.

I made a lot of sacrifices because I had to work and leave my infant children at long daycare (paying $60 per day) so we could squirrel away a $50,000 deposit.  I can almost hear you laughing at the size of the sum, but in those days it got us a four-bedroom family home (with a pool) in the southern suburbs of Sydney.

We’ve since moved several times, but that same house is now worth in the region of $1.3 million.

The sacrifices I made would now be considered living the dream by people in their early 30s.  Rent is more expensive, the day rate for childcare is often more than the wages earned that day and you get no interest on your savings.  This all means that saving the deposit for a home is out of reach for this generation coming through now.

So what’s the solution?

Well, for a start our Prime Minister, laughed at by the mass media for urging parents to help, probably had a point? And was only articulating what families have known for years.

Second, today’s youngsters have to get a little more enterprising.  Sure, a city pad is expensive.  But how about heading out to Toowoomba and buying a unit in a walk-up block, renovating and returning it to market to generate that deposit.  You may have to do this two or three times, but it is an increasingly popular way to generate enough cash to buy the home you want.

Thirdly, remember that Sydney and Melbourne skies are covered in cranes for a reason.  However much the market denies it, a wall of units will bring down prices.  Our cities won’t be cheap – but they will be a little less expensive.  We talk about the improvement in supply of apartments reducing prices in 2017 in our recent article.

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