For Australians under the age of 35, home ownership – particularly in metropolitan and outer metropolitan suburbs – has become almost impossible. The great Australian dream has steadily morphed into the great Australian nightmare. Couch surfing, rental serfdom, living with parents and in-laws for decades, gargantuan debt, and mortgage stress are now the norm.
A recent survey of more than 1000 Australians by Mortgage Choice and Core Data has revealed:
53.9% of Australians believe that traditional home ownership (a free-standing home in the suburbs) is no longer relevant;
- 70% believe that traditional home ownership is out of line with reality;
- 87.3% believe that traditional home ownership is increasingly difficult due to the rapid escalation in property prices; and
- 62.3% believe that only those with “with money” (surplus capital) can realise the dream of traditional home ownership.
A key driver of housing unaffordability is supply and demand. According to the 2015 Senate References Committee Report, Out of Reach? The Australian Housing Affordability Challenge, the annual supply of new dwellings in Australia has not increased since the 1980s.
The 2018 Grattan Institute Report, Housing Affordability: Re-imagining the Australian Dream, supports this claim, arguing that the number of dwellings per Australian resident has declined in the last decade, when similar developed economies (Austria, Denmark, France, Germany, Ireland, Netherlands, New Zealand, Norway, Switzerland, UK, USA) have experienced trends in the opposite direction.
Other drivers of housing unaffordability include record low interest rates, irresponsible commission driven lending, rapid population growth, speculative overseas buyers, negative gearing and capital gains concessions.
As median house prices have soared – in some cases doubling in just eight years – successive Coalition governments have refused to meaningfully intervene, fearing that if home equity were to decline even marginally, a backlash among older homeowning voters would follow.
Tellingly, the President of the NSW Young Liberals, Harry Stutchbury has argued against the Coalition’s hands-off policy:
[The Coalition] is terrified of taking serious steps to tackle housing affordability… We should not foster a society where the largest determinant of your future living standards is whether or not your parents bought a home in metropolitan Sydney 30 years ago. But with a convoluted array of capital, taxation and planning distortions that is exactly what we are doing.Fixing this situation will require political bravery, but if done right, the Coalition government could tap into millions of aspirational, politically unaligned young Australians desperate for a feasible path to home ownership, just as Sir Robert Menzies did decades ago.
Former Coalition leader, John Hewson, has similarly broken ranks with current policy, characterising stratospheric home prices as akin to “intergenerational theft”. Rather than continuing with the status quo, he has called for a reduction in benefits investors can receive via negative gearing and capital gains concessions:
It will work in the direction of slowing the investor demand for housing, which has been a major reason I think demand has outstripped supply and, in those circumstances, it is something that should be done.
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