Housing affordability set to be a problem for at least 40 years

Housing affordability is likely to be an issue for at least 40 years, with the demand for new homes needing bold policy, a major new report says.

The report by the Committee for Economic Development of Australia, to be released on Tuesday, says policy needs to reflect the great Australian dream of owning a home is over for many people.

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"What the CEDA report highlights is that ... the issue is far more complex and without changes now, could have longer-run consequences," CEDA chairman Rodney Maddock says in the report.

It finds a decline in interest rates and the end of credit rationing has caused housing prices to surge worldwide and the poorest will struggle to find homes.

One of the report's authors suggests Australia needs 20,000 new dwellings that are affordable to low-income people each year.

The paper also recommends measures including:

• Council planning restrictions need to be relaxed and more consistent, and housing density should be increased.
• Changes to tenancy laws to provide certainty to long-term renters.
• A move towards charging an annual land tax instead of transaction taxes such as stamp duty.
• A larger component of capital gains should be taxed.

The committee's report suggests long-term housing affordability issues will mean more people enter retirement without owning a home.

Or those from lower socioeconomic households are left to move to the regions or outskirts of cities where there are fewer transport and job options.

"In the long term, this could have budget implications for governments as more people become reliant on government assistance," Professor Maddock says.

AAP