Disclaimer: These views are my own, and do not necessarily represent the views of the Australian Affordable Housing Party, Dick Smith’s Fair Go, the Australian Labour Party, the Liberal Party (of the Menzies era), or any other individual or organisation.
For years I’ve been concerned about rising housing unaffordability in Australia. Rational Radical’s graph here covering the period from 1880 to 2014 describes it better than I can.
Australian governments, such as the Menzies government in the post-WWII period knew owning your own home (at a reasonable price and thoughconnected to appropriate infrastructure) was first and foremost for shelter and security, basic human needs not currently provided in the rental market. Owning a home is a critical core piece of the presently smashed Australian Dream that laid the groundwork for the 1970s multicultural pact and is a huge driver of intergenerational wealth inequality within Australia.
Our investment-property laden politicians deserve to be reminded of that reality, or they too can continue to ignore the lessons of history (and perhaps be doomed to repeat it).
So that’s why when Andrew Potts decided to start something called the Australian Affordable Housing Party, I was ready to jump up and say “me too” and pitch in with support when I can between my other responsiblities – to serve God as best as I am able to, to keep myself in good health, to put food on the table via the good job (thanks Joe) I currently have, and my hobby of teaching robots to play soccer.
Most likely I’ll continue watching this from the sidelines, perhaps even from the US (presently the land of Trump, for better or worse, whether or not “The American dream has failed”), if I can engineer an opportunity to build some perspective, while Australia wonders collectively about the underlying drivers of its lost decade when for instance real incomes grew just $3 per year.
That’s the balanced me that would accept a slow melt. A part of me would actually welcome a recession and a >50% fall in prices – because “Price is what you pay, value is what you get”, and I suspect most people know a family home isn’t really worth $1.3 million, it’s still just 3 bedrooms, a bathroom, kitchen/dining and car space. As a thought experiment, it could be government-mandated that housing is priced exclusively in housing stamps (a play on food stamps) and you can only get them by working for the government.
The current system is a trade that I believe happens to be a very poor one resulting in a massive transfer of wealth from the younger millennial generation who are often still laden with tens of thousands of dollars of student loans, to a select few investment property owners and developers, such as Harry Triguboff. And to be honest, I actually voted for developers in the recent local council elections, developers have a responsibility to maximise their shareholders (which could be just themselves) return on investment so they can stay in business; it is governments which have a responsibility to ensure there are enough developers in the marketplace that there is reasonable competition between them, and most importantly that there is enough housing supply available to meet the demands of the expected future population.
Thus the fixes to this engineer’s mind are potentially very simple – reduce demand by reducing immigration to the long-run average of 70,000 per year, such as Dick Smith’s Fair Go campaign has proposed, reduce demand by reducing tax incentives encouraging speculative “pina colada” investment in property such as halving the very generous 50% capital gains tax discount and allowing negative gearing for new builds only; or increasing supply through releasing more land and enabling developers to build on it, and building the infrastructure to service that land.
It doesn’t really matter whether new infrastructure comes through governments or developers – last I checked I’d rather pay a new infrastructure levy to finance some kind of municipal bond (or equivalent) than actually dig up a front yard to build a sewerage pipe, lay fibre optic cable or electrical cables, and I certainly wouldn’t be wanting to build a school or hospital myself. Well-connected high-speed rail or better yet a hyperloop could also be wonderful alternatives.
A bit more about me – I have participated in the rental market for the past 3 years after living with parents for 8 years (so after 5 years of university, I’m currently at 6 years saving for a house dwelling deposit), and as I have a good job, don’t own a car or have addictions like smoking or drinking and paid off my HECS-HELP debt early, this is telling me the system is currently broken.
That doesn’t make it my responsibility to fix this broken system, but I’m happy to contribute towards anything that I believe might fix it, like being a founding member of and donor towards the Australian Affordable Housing Party.