Loading Domain's figures show the median price for a detached home in Sydney soared by 86 per cent between 2012 and 2017 and has since fallen by 14 per cent. In Melbourne house prices rose by 73 per cent from trough to peak before falling back by 10 per cent. A few years back federal and state governments were under real pressure to improve housing affordability. But the steady flow of headlines about falling property prices lately has overshadowed the issue. So has that price correction done much to alleviate the housing affordability crunch that vaulted to the top of the national agenda during the boom?

There's no doubt conditions are now more favourable for first-time buyers – their numbers have risen sharply since the property market turned. Loading The Housing Industry Association’s latest housing affordability report for the June quarter shows the combination of lower property prices and lower interest rates means affordability has now improved steadily for two years. But the analysis shows it still takes 1.6 average incomes to service a mortgage on a typical Sydney dwelling without financial stress. In Melbourne that ratio was 1.4 average incomes. Sydney’s median house price is still above the $1 million mark and looks likely to remain above that daunting threshold. Melbourne’s median detached house has settled around $820,000.

Grattan Institute economist Brendan Coates, who researches housing, says recent house price falls have not dealt with housing affordability challenges. Not enough has been done to address the underlying causes of the problem, especially by providing more housing supply in well located neighbourhoods, Coates says. Tim Readon, an economist with the Housing Industry Association, says it could take a decade to significantly improve housing affordability in Sydney and Melbourne. There have been two reminders during the past fortnight that housing affordability remains a major social challenge, despite the recent price corrections. The property price slump in Sydney and Melbourne may be over. Credit:Arsineh Houspian

First, new polling shows housing costs still rank among our biggest worries, especially in Sydney and Melbourne. According to the latest quarterly Ipsos Issues Monitor, which asks respondents to select the three “most important issues” facing the community, housing is still the No. 1 worry in NSW. Housing was ranked the third biggest concern in Victoria. Loading The share of survey respondents worried about housing costs rose in both states last quarter. Sydney and Melbourne have both experienced two big property booms since the late 1990s. That’s made the reaction to rising property prices much more complex than in the past.

The cost of housing has become a source of public unease, even trepidation. And that’s changed the way politicians speak about property prices. Back in 2003 – at the tail end of Australia's last great housing boom – then prime minister John Howard dismissed concerns about high property values, saying: "I don't get people stopping me in the street and saying, 'John, you're outrageous. Under your government the value of my house has increased.'" Loading Replay Replay video Play video Play video According to Howard, "most people feel more secure and feel better off because the value of their homes has gone up". Political leaders don't say things like that anymore because polling suggests the reaction of many home owners to rising prices is now tinged by anxiety.

During the last property price rally, which peaked in 2017, the cost of housing began to register as an acute public concern. It began to rank alongside more traditional bugbears including healthcare, crime and the cost of living. There are signs public unease over the cost of property has became deeply entrenched. The second reminder came from the Australian Bureau of Statistics, which released a survey earlier this month showing the share of Australians who own their own home continues to fall. The proportion of households that owned their own home fell to 66 per cent in 2017–18, down from 70 per cent two decades earlier. The survey also found 20 per cent Australian households now own one or more residential properties other than the home they live in (5 per cent of them own four or more properties).

But the share of renters climbed to 32 per cent, 5 percentage points higher than in 1997-98. Coates says home ownership has fallen fastest among the poorest 40 per cent of Australians, particularly the poorest 40 per cent of younger Australians. “Go back three decades and home ownership was fairly constant regardless of what your income was – there was just as much chance of owning your own home if you were low-income or if you were high-income, although the home you owned was obviously quite different,” he says. “Fast-forward to today and home ownership among the poorest 40 per cent of income earners has crashed whereas home ownership trends among the top 40 per cent are relatively unchanged compared with three decades ago.” The recent improvement in the share of first-time buyers in the housing market might slow this trend.