Housing affordability. It’s really a bit of a bummer, eh?
Like many Gen-Yers, my partner and I have been looking to buy our first place for a long while now and we just keep running into roadblocks. They come in the form of big, bulging dollar signs.
Because, as we all know, house prices have more than doubled over the last 20 years.
And in the two cities where 40 per cent of the Australian population lives, Sydney and Melbourne, prices have risen by 70 per cent and 40 per cent respectively since 2012.
Meanwhile, salary rises are barely keeping pace with inflation, putting house prices in some parts of the country at eight times higher than our incomes.
All in all, it’s not a pretty combination.
And yet, here we are: Gifted a Federal Budget with, at best, a whispering mention of the housing affordability crisis.
So what, you ask, was this whisper (contained amongst the many hundreds of pages)?
A few hundred Commonwealth-owned homes in Brisbane will be freed, a new agreement has been made with the Northern Territory for remote housing, and $4.8 million will be funnelled to the Australian Bureau of Statistics over four years to better estimate the amount of affordable housing.
Wow. Wonderful. Thanks.
Like I said: barely a whisper.
It’s been a dramatic change in tune from last year when Treasurer Scott Morrison recognised in his budget speech that the housing crisis was an “important issue” for many, many Australians.
One of the key measures he introduced in 2017 was the superannuation savings scheme, allowing people to stash a portion of their savings tax-free for a house deposit.
His aim, he said, was to “put downward pressure on rising housing costs”.
This year, he did not even acknowledge there was such a problem, despite it being one of the biggest issues facing young tax-payers.
It’s a bitter pill to swallow.
And without wanting to wade into a generational war, it must be noted that baby boomers have been offered the chance to effectively reverse mortgage their home to the government as part of the Pension Loan Scheme, thereby persuading older Australians to stay in the family home.
The result of this is less housing availability for young and growing families, who often rely on retirees – enjoying the highest home ownership rates – to downsize.
Yes, there has been news recently of house prices stabilising. But this can largely be attributed to new state-based measures and the lending crackdown. Not the Federal Government.
So with booming populations and forecasters predicting renewed property price growth, this just isn’t good enough.
Affordable housing advocates have said the Federal Budget has “completely abandoned” renters, first home buyers and people struggling for shelter.
“I don’t know how we go in one year from housing being the centrepiece of the budget to the next year being completely abandoned by the treasurer,” said National Shelter’s Adrian Pisarski. “That’s a tragedy in Australia and a real lost opportunity.”
Property Council of Australia chief executive Ken Morrison also shared his concerns.
“We need the funding, but we also need the planning, we also need to tackle the regulatory issues, to make sure we’ve got the housing our population as it grows needs,” he said.
Ignoring the issue isn’t going to make it go away. It will only make it worse.
Grattan Institute researchers John Daley and Brendan Coates put the current housing situation best:
It took neglectful governments two decades to create the current housing affordability mess. They preferred the easy choices that merely appear to address the problem. The politics of reform are fraught because most voters own a home or an investment property, and mistrust any change that might dent the price of their assets. But if governments keep pretending there are easy answers, housing affordability will just get worse.
The most frustrating part of all this, is that the Federal Government has once again missed an opportunity to make real, meaningful change. They have been reminded countless times that slashing the capital gains tax discount and abolishing negative gearing would almost immediately make way for aspiring buyers to enter the market.
If only the suits in Canberra would listen.
So, thanks for a fat lot of nothing.
Until next year.
What do you think of this year’s federal budget? Tell us in the comments below.
You can follow Sophie Aubrey on Twitter.
– With AAP.
Top Comments
I would much rather our federal budget made sensible and shock horror unpopular decisions that actually benefited our nation as a whole.. Spending money on those less privileged, creating programs to stimulate the economy, revamping the entire tax system.. making hard choices that don't pander to a 24/7 news cycle and a twitter sound bite... remember when budgets weren't about "what you got" but what they were going to do for our country, and how they we going to help people here that weren't as lucky as some.. Maybe we could do that..
Stop being so sensible, it might make the politicians and special interest groups' heads explode
I think if you want to make housing more affordable you should look to State Governments Stamp Duty and other charges, the green tape around releasing more land, charges and zoning policies for Local Councils that further restrict supply. Besides selling Commonwealth land, there’s little a Federal Government can directly do on the supply side.
On the demand side, the two obvious things a Federal Government can do is to cut immigration and clamp down on foreign buyers buying residential property. That’s fine, all the polls show a majority of us think immigration rates are currently too high.
Property is like any other market, price is determined by the economic laws of supply and demand. Just providing more support for home buyers without addressing the supply side merely drives up prices further.
We are very rarely of the same opinion Les, but I wholeheartedly agree with cutting down on immigration and foreign ownership of residential property. My SIL’s street has a number of large family homes that are empty but maintained. They are owned by people from a country that likes red and dragons. It’s a problem. They park their money in Australian property, not really caring about the cost of the property, because it is safe and they will get a ROI. Meanwhile, Australians struggle to secure affordable housing.
I am also increasingly concerned that the polls show Australians overwhelmingly do not want a “Big Australia”, but the politicians and big end of town do, for obvious reasons. We need to have a national debate and a well-funded population planning body as all these newcomers may boost the economy initially but they also cost us in terms of infrastructure and congestion. Dick Smith’s Fair Go organisation is attempting to get this issue into the public domain.
Negative gearing significantly distorts forces in this market and artificially inflates prices. Trouble is, too many voters make use of NG, and if the pin were just pulled, many of them would end up in financial distress. Political poison, but a big factor in fixing price inflation.
There are other (sorta) extra-market forces that push prices up. State governments, that used to rely on revenue from the mining industry, have become more reliant on revenues from property developers as mining has fallen away a little. This means that state governments are making it as easy as possible for development to go ahead. Developers will pay more, per house, to get a block of houses than private purchasers will to buy a home, pushing price tags, in general, up.
In my opinion, these are far more significant upward pressures on demand than immigrants, many of whom are renting.
NG is a bit of a two edged sword. Keating removed it briefly as Treasuer and rents went through the roof, causing a quick policy retreat. No reason to suspect it wouldn’t happen again making it a choice to help home buyers but with the pain inflicted on renters.
I’m not at all against immigration. If I have to go to Emergency I’m aware I’m just as likely to be treated by a foreigner as I am to have one holding up the queue in front of me, but I think it’s just too many at the moment looking at roads, public transport and yes, house prices. I also question if we really need to be importing hairdressers and people who don’t attempt to learn English, hence limiting their job worthiness. Seems to me we are doing this for the benefit of big business, the construction industry and in some cases to import voters for the Left. Maybe if our education system was producing more young people capable of productive work things would be better. Look at Germany, lowest youth unemployment in the world because business and schools work together so by graduation the student has an employer and the specific skills to start working with them.
Germany also has a huge migrant intake. I think biggest in Europe, without fact checking.
Skilled immigrants are undoubtedly best, but not when working under a 457 visa (Thanks, Gina and your LNP connections. You and Barnaby should just pash, already) ), because they place downward pressure on wages - one, of quite a few, of our economy's structural issues holding pay down and reducing housing affordability.
I think that there are very few immigrants willfully refusing to learn English, rather, I think that factors like child-rearing and age limit some immigrant's exposure to the language.