The other day a young couple bought a nice three-bedroom house in Brady Road, Bentleigh East, 23 kilometres from Melbourne’s CBD, for $1,263,000.

I don’t know what their deposit was, but if it was 20 per cent, they borrowed a million dollars. Repayments: $6576 per month.

But here’s the reality of what has happened to housing affordability in Australia: If the overall house price to income ratio in Australia had stayed what it was in 2000, and what it had been for decades before that – that is, four instead of the current eight – that family would have paid half the price they did, and their repayments would be $3293 per month.

But because house prices have been rising at roughly twice the rate of incomes over the past 25 years, they had to pay twice the equivalent of what their parents paid for a home, and fork out more than $3000 extra per month to the bank.

At a national level, ABS data shows that quarterly housing loan interest paid to the banks has gone from $9.9 billion, or 3.7 per cent of total disposable income, in 2004 to $31.8 billion, or 6.7 per cent of disposable income in December 2023.

If housing interest had stayed at 3.7 per cent of disposable income because the house price to income ratio had stayed the same, it would be $17.7 billion per quarter, or $14.1 billion less than it is.

That’s an extra $4.7 billion per month going to the banks, and out of the pockets of Australian households and the other businesses where they would be spending it. This is the cost-of-living crisis.

And, of course, it’s also why the banks are making so much money and the executives are being paid so much.

That’s the banal evil of housing affordability that was highlighted for the umpteenth time last week by the new National Housing Supply and Affordability Council (NHSAC) appointed in........

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