Housing Affordability

Housing Affordability


How much a house costs is really an economics question of ‘demand’ and ‘supply’.

Whether people should or should not be allowed to buy a property – apart from legal restrictions such as foreigners being prevented from buying ‘existing housing’ – is not something we generally want the Government telling us to do, or not to do.

Whether you want to buy a property is your business. You don’t want the Government telling you not to buy one, or 10 properties.  The choice, and the benefits, and the risks, are yours.

The level of immigration, of course, affects ‘demand’, and if the Government brings in 50,000 people a year or 200,000, will obviously affect demand. Particularly if you add it up, over 5 or 10 years.

But immigration has many benefits, including to help keep the working age population up to help fund and take care of our otherwise ‘aging’ society. And given we have such a beautiful and desirably place to live, after fulfilling proper (and appropriate) human rights obligations for right-fit refugees Australia can ‘pick and choose’ those people who will contribute positively to our extraordinary country.

Otherwise, if you want to reduce demand to ‘help’ house prices, then stop or reduce all forms of immigration and let the natural death rate (ie deaths exceeding replacement births) reduce demand over time. You’ll have some other catastrophic economic consequences, but you’ll also achieve your objective of reducing house prices, along with a lot of other prices and living standards. The quality answer to house prices is to provide adequate supply.

But supply is a solution Australia’s political and bureaucratic ‘elite’ are either (or both) incompetent or gutless:

  • To grow, be prosperous, and mobile, Australia must open up its vast land by providing fast, efficient, and reliable ground transport. That it is ‘easier to drive’ between Sydney and Canberra than to fly, is an indictment of our transport options. A ‘very fast train’ (VFT) linking Queensland Sunshine Coast, Brisbane, Central Coast, Sydney, Melbourne and Adelaide, with some limited regional stops, would open up Australia for a far more mobile population, with many thousands of square kilometres of housing options and communities. Having travelled through Japan, where the Shinkansen can get you from Tokyo to Osaka around 600kms away in 2.5 hours, made me wonder what Japan would be like without a VFT. It would be an immobile, backward looking nation even more crammed into a few massive cities and would be tremendously expense. In other words, Japan without a VFT is Australia. We either continue to sit on our hands, or Australia builds a VFT;

  • ‘encouraging’ older couples to sell (supply) their home that they are scared to sell to downsize to more suitable accommodation options (the supply of which, would also need to increase). At present, people hang onto their large family homes (1) to keep the ‘exempt’ asset for social security purposes for selfish qualification reasons (2) to keep their largest asset that has performed so well for so many years, tax free (3) to stay in the community that they have enjoyed for so many years. Workers are travelling for hours each day, often straight past largely empty homes occupied by retired pensioners, and paying tax to the Government to fund the pensions of the same retirees. It seems the Government is even considering subsidising this strategy, by providing social security and tax incentives, but should the Government first limit the value of pensions homes from being exempt from the ‘assets test’?

  • Interest rates – these have been too low for too long, with the RBA inappropriately and overly focussing on the Government-set objective of achieving long-term inflation of 2-3 per cent. Too many people have borrowed too much money and will be burnt when interest rates need to increase. An increase of just a few percentage points, is going to double loan repayments, which will be impossible for many highly geared households to bear.

If it were not for the gold rushes of 150+ years ago, how much of Australia and her major cities and regional centres would be accessible with train networks and road systems that we have today?

Why did Australia, and its politicians, stop being nation builders and more interested in protecting their own hides than leading the country?

So is the solution to the housing problems Australia, to build a bigger Australia, opening up more land and housing with fast, efficient and reliable transport options and making it easier for people (singles, couples, families, retirees) to access suitable housing appropriate to their changeable needs, without the transaction costs being too high?

Federal Budget ahead, but Act Now on Superannuation Changes

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Accessing Super to a Buy Home

Accessing Super to a Buy Home