We are in a housing affordability crisis.
House prices have risen faster than wages. Property data analysts CoreLogic found that while Australian wages increased 82 per cent in the past 20 years, home values have grown 193 per cent. Rising prices that benefit investors are central to why housing is less available as homes to many others. We need to change that. Australia needs cheaper houses.
This is certainly the opinion of YourLifeChoices readers, a massive 70 per cent of whom responded to an August poll saying houses should be cheaper.
Cheaper housing gives our citizens more freedom, security and dignity.
Whether it is the ‘child’ who has to live with their parents well into their 20s, the pensioner who has to move house once a year instead of once a decade, the emergency services worker who can no longer afford to live in their hometown or the domestic violence victim forced to return to their abuser – cheaper houses gives people options and dignity.
Read: Bank of mum and dad among top-10 lenders
On the other hand, while some individuals benefit from property speculation the benefits for the country as a whole are much less. As Reserve Bank of Australia governor Philip Lowe said: “the main impact of higher land prices is not really to increase our national wealth, but to change the distribution of that wealth”.
YourLifeChoices readers are clearly seeing through the property industry spin with a whopping 91 per cent of survey respondents indicating that rising house prices only benefit property developers, homeowners and landlords, not the public.
So why can’t Australia have cheaper houses? One reason might be politics.
As Intifar Chowdhury of the Australian National University’s School of Political Science said: “The politics of improving housing affordability is determined by whether there are more voters who are property owners than not.”
This places homeowners and investors in a quandary.
Some can get rich from housing but do this at the expense of tenants and home buyers. Do they want to make money in a way that makes housing less accessible to the younger and poorer among us?
It is unlikely that individual investors are unconcerned with the havoc wreaked on our community by higher house prices. It seems more likely people just aren’t aware of that connection or just aren’t seeing it first-hand.
A big unknown on the path to cheaper houses is the role of the property industry in politics. According to the anti-corruption think tank the Centre for Public Integrity (CPI), the property and construction industries are the second largest political donors in Australia and that is only based on the donations of which we know.
The CPI says that current disclosure regulations allow the majority of political donations to be hidden. We have no way of knowing what conditions the property industry places on its donations. However, it is unlikely that they would be arguing for lower prices for their wares.
Australian politics might be at the mercy of the property industry but Australians are wise to the situation; 74 per cent of YourLifeChoices readers want the property industry to have less influence on housing policy.
Read: OECD calls for cap on housing tax breaks
The power and influence of homeowners and the property industry might explain why discussion of housing affordability always overlooks the elephant in the room: demand.
Every economics textbook explains that prices are driven by supply and demand. Yet the most recent (of many) inquiries into housing affordability by the federal government limited itself to only examining the supply of housing, not demand.
Lower demand means cheaper houses
Demand for housing can be significantly lowered by ending population growth.
The Productivity Commission has said Australia’s de facto population policy is its migration policy.
Sustainable Population Australia (SPA) is calling for Australia’s population to stop growing, citing housing affordability and environmental concerns.
SPA says this can be achieved by about 2040 by lowering migration from 235,000 a year to 60,000 a year. This would mean every year there would be 175,000 people fewer people looking to get into the property market.
Ending population growth would open the tantalising opportunity of Australia being able to say no to both densification (turning our houses into apartment blocks) and urban sprawl (turning bush and farm into suburbia) as we would eventually not need any more houses.
Ending urban sprawl and preserving farmland is critical to Australia’s future. Australia’s economy is currently highly dependent on very carbon intensive industries as coal, oil and gas represent more than 23 per cent of our exports.
Read: Downsizing – is it the right move?
Less well publicised is the fact that 11 per cent of our exports come from international education and travel, which effectively rely on aviation and its tax-exempt aviation fuel.
With a third of our exports on a collision course with worsening climate change, Australia should preserve every last block of farmland.
Of course ending population growth is ending customer growth and the Property Council of Australia has called on governments to in fact continue population growth.
Cheaper houses are good for Australia. Whether or not Australians will demand that from their government is up to us.
If you are concerned about our population you may wish to support Sustainable Population Australia.
Edward Smith is the campaign manager of Sustainable Population Australia’s Let’s Rethink Big Australia campaign.
Do you think the government should cap immigration? Why not share your opinion in the comments section below?
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The National Jobs Summit coming up soon wants us to increase immigration. That’s insane.
I definitely think immigration should be capped. Even though we are at a low unemployment rate, there are still many people underemployed, or in low-paid menial work. The so-called skilled migration schemes never seem to work – many recent migrants simply don’t have these ‘skills’ and end up driving Ubers / taxis or some other menial labour job. The congestion on our roads – esp in south-west Melbourne is making it unliveable. GDP should no longer be the sole measure of how we are doing, as it’s an economic tool, and doesn’t factor in the liveability, impact on resources and nature, etc.
I totally agree with Damien Pederson and Sandra Kanck. Big business are crying out for mass immigration while rejecting so many of our own unemployed and underemployed. We have a significant number of unemployed people with tertiary qualifications, and employers are actively discriminating against people over 50. Fix that before turning on the immigration tap and that will go a long way towards improving housing affordability. Stopping foreigners from buying houses would also help young Australians get into the housing market, they find it impossible to compete with people from other countries with suitcases full of cash.