Housing affordability crisis to last more than 40 years: CEDA report

Australia's housing affordability crisis is set to last another 40 years with low-income earners the worst affected, a new report says.

Housing demand pressures and supply problems are set to continue, according to a new Committee for Economic Development of Australia (CEDA) report.

A decline in interest rates and the end of credit rationing has caused housing prices to surge worldwide, with housing prices in cities including Sydney, Vancouver and San Francisco following a similar trend.

Housing markets in big cities are being fueled by a surge in international and interstate migration. 

Professor Rodney Maddock, the Research and Policy Committee Chairman of CEDA, said Australia's major cities are very popular among new migrants.

"A lot of migrants want to come and live in those big cities because cities offer lots of advantages in terms of finding jobs, finding multiple jobs if you and your partner need a job, all of those sorts of things," he said.

The report has made a number of recommendations to improve housing affordability, including relaxing council planning restrictions, and increasing housing density; and changing tenancy laws to provide certainty for long-term renters.

"You can't be thrown out just because the landlord decides to sell," Prof Maddock said.

Chief Economist at Property group Domain, Dr Andrew Wilson, weighed in on the recommendations.

"We're a market that is under-supplied and anything we can do to provide more supply into the Melbourne and Sydney market will only put downward pressure on what will continue to be strong growth on prices and rents," he said.

Major city house prices, from the Housing Australia report. Source: Housing Australia

The report also recommends a shake up of land tax and stamp duty.

Speaking at the report launch, Victorian Treasurer Tim Pallas said the state was taking action and moves by the federal government aren't helping the matter.

"The state and commonwealth governments should play to their respective strengths," he said.

"For the commonwealth government that means a focus on tax concessions together with the laws around foreign investment.

"For us, it means the ability to implement our own initiatives and direct much-needed funds to those most in need."

Mr Pallas said the state government was taking steps to improve affordability, including cutting stamp duty for first homebuyers to "help level the playing field" and the opening of 17 new suburbs.

Federal Assistant Minister to the Treasurer Michael Sukkar noted the report.

"We are taking real steps to address challenges across the entire housing spectrum, from first home buyers, to renters, to those looking to downsize, to those in social and community housing, and those suffering homelessness," he said in a statement.

The measures include a $1 billion fund to help finance local government works allowing development, releasing enough surplus Commonwealth land for 6000 dwellings, and working with state and territory governments to develop a united approach.

- With AAP