Tuesday, April 14, 2015

Australia world's tenth most socially advanced nation - but scores badly on housing affordability

A survey out today shows Australia is the world's tenth most socially advanced nation.

But while Australia scores well on personal rights - such as freedom of speech, freedom of movement and political rights - it's falling well behind in housing affordability.

Listen to my report from this morning's edition of AM

The study comes as spiraling real estate prices in Sydney fuel fears about a potentially dangerous housing bubble especially if the Reserve Bank cuts interest rates in the coming months.

The report also underscores that the end of the resources boom, illustrated by the falling iron ore price, has the potential to damage living standards of Australians.

The Social Progress Index which is published by the US not-for-profit group, Social Progress Imperative, ranks Norway as the world's most socially advanced nation.

Norway is followed by Sweden, Switzerland, Iceland, New Zealand and Canada.

At number ten, Australia is in the middle of the rankings but ahead of the bigger economies such as Britain, Germany, Japan and US.

Australia ranks in the middle, but ahead of Britain, Germany, Japan, the United States in terms of social progress.

But Lynne Pezzullo, lead partner of health economics and social policy at the accounting firm Deloitte, says Australia only ranks 19th in the world when it comes to shelter and 51st in terms of housing affordability.

"Access to affordable housing is a key issue and Australia is not doing particularly well in that area, even though we have very low interest rates at the moment," Ms Pezzullo told AM.

"But importantly it's our housing pricing and our access into the housing market, both in terms of rent and also in terms of purchase, which are driving the poor performance we have in that area."

Ms Pezzullo says deepening worries about housing and basic shelter have potential psychological impacts that could ultimately lead to suicide.

"There's a link between housing affordability and homelessness and then through to domestic violence and suicide rates," Ms Pezzullo said.

"Australia performs particularly poorly relative to other countries in relation to our high suicide rates."

Ms Pezzullo also warns that the fallout from declining commodity prices could ultimately hurt living standards in Australia.

"Australia has had a really good free kick in the last three decades from particular factors, which have been very gracious to us," Ms Pezzullo said.

"But this coming decade we've got the baby boomers exiting the population and therefore reducing participation rates, we haven't had major investments in infrastructure or micro reforms to benefit from and of course we've got the iron ore price in particular falling and the coal price falling," Ms Pezzullo said.

"Other commodity prices are falling which means we have got particularly issues across the Australian economy - particularly in the Western Australian and Queensland economy."

The Social Progress Index is closely-watched because it does not use gross domestic product as the sole factor in measuring a nation's wealth.

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