Like some carnival mystic, before the last election I wrote some predictions in an envelope and sealed it, with instructions only to open it after the election was over. Lo and behold, when I opened the envelope afterwards my prediction proved right: ”That neither party will do anything about making housing more affordable.”
They say that neither of the major parties can agree about anything, but they have certainly continued their conspiracy of silence about the ruinous price of housing in this country. Large parts of New South Wales and the rest of the country are desperately crying out for action on both reducing the price of housing and freeing up more land for residential development, but the reply during the election has been a deafening silence.
We’ve been distracted by a wide variety of carnival tricks, with politicians from both sides busy dancing around marginal electorates in NSW, Victoria, Queensland and elsewhere, but yet no action on one of the most pressing issues of our times.
Neither party is willing to touch the negative gearing issue, perhaps in fear of offending their backers in the business community (although New Zealand seems to have the courage to). The NSW state government still remains addicted to stamp duty. Wage increases in the past 10 years have come nowhere near close to matching the stratospheric rise in house prices. Houses in NSW are at least 10 times the average wage (which is in itself a ridiculous way of measuring affordability — that assumes that the average person on $60,000 has no expenses as they pay off their house, perhaps existing on thin air and hope. A more accurate figure would be 20 times the average wage, taking into account minimum expenses of $30,000.)
Relaxed Foreign Investment Review Board rules of home availability means that Australians are competing with the rest of the world for their local resource. The Liberal Party says it will ”reduce the debt”, but it neglects to say that our public debt is tiny compared to other countries — instead, the nation is hocked to the gills on private debt, partly credit card debt but mostly housing debt.
We’ve reached the point where people are actively praying for that long-awaited major collapse in the housing bubble so they can possibly afford a home, something akin to planning one’s retirement strategy on a win at lotto or a punt on the dogs. Sydney and Melbourne’s western suburbs, traditionally the working-class heartland of Labor, might have gone aspirational but they still want affordable homes, something state Labor seems unable to provide.
Meanwhile, the housing affordability time bomb ticks away — a growing population and a shortage of land promises a price explosion in the future, locking out yet another generation from home ownership. Soon we will reach a point where only the richest of Australians — and cashed-up investors from overseas — will be able to own a house. And with our banks finding it harder and harder to compete for capital overseas, money for home lending may become harder to obtain.
There are many models we could follow around the world — the German model for long-term renters signing a contract with their landlords, reducing housing speculation; or the Denmark model where tax benefits are given mainly to purchasers of residential property who intend to live in their home – but we refuse to do so, because they aren’t enough votes in it, and because it’s the sweetest racket for the rich apart from mining.
Perhaps millions of us will just have to settle on being renters in our own country. That is, until a leader or a political party comes along with the guts to do something about it.
Charles Purcell is a Fairfax writer. Story from the Sydney Morning herald