Image: ABC The Drum 14 June 2021
THE DRUM ON HOUSING AFFORDABILITY 14 JUNE 2021
TONIGHT, 14 JUNE 2021 view the video, and skip along to about 47.52 minutes, and JULIA BAIRD introduced the topic of Housing Affordability.
‘Now most Australians grew up being taught that if they worked hard, saved money, cut down on the avocado toast, that one day they would be able to buy a house, but new research shows that this dream is out of reach for our younger generations.
The Australia Talks National Survey found 65% of participants agreed that for most young people owning a house just isn’t an option … ‘
CAAN particularly looks at the conversation with Nicki Hutley, economics consultant for Social Outcomes and the Climate Council.
JB: How are we to read this Nicki?
Nicki Hutley: It’s hardly surprising we have had a housing crisis in this country probably for two decades, and all levels of government hold responsibility for this. It is around local government planning, it’s around state government planning and legislation …
KEY POINTS FROM NICKI HUTLEY:
-to make housing more affordable for more people by extension that means that ‘housing is potentially going to go down in price’
-many Australians hold a lot of their wealth in housing
-the economic consequences of the wealth effect when house prices go down it flows through the economy; a very delicately balanced issue
When we look at the drivers::
-a whole host of issues including self-interest and nimbyism
Host Julia Baird then raised the issue of how expensive the housing market is becoming here.
JB: This is a two-bedroom house in Sydney’s inner-city suburb of Darlinghurst; a 90 sq metre block; a buyers guide of $1.7M. … It would be more than a lick of paint to be liveable. How can this be sustainable? The prices going so far up year upon year especially since the Pandemic.
NH: it is certainly not sustainable. I would have thought we already got to that point.
… but what recent research tells us:
-wealthy boomers are helping their kids out now; an intergenerational transfer of wealth from older Australians to help their kids get into the market
–60% of first home buyers are getting support from parents or grandparents to the tune of an average of $93,000
-whereas a normal average couple on an average income it would take them a decade to save for the deposit
-the big issue, interest rates are incredibly low; those who already own property it is much easier to access the finance to then dab more in investment properties
-we are creating this cycle where we have got more and more of the haves concentrating, and then this group that are being shut out of the market
JB: We have seen the political will in New Zealand to tackle a very heated market to crack down on investor buyers over people who want a roof over their head. Every time we talk about capital gains and negative gearing – that every time we do it ends in a bog. What is going to happen here?
Which levers will be pulled?
NH: There are some short term and long term things. To actually properly address housing affordability without having a double collapse in the economy there are things we can do in the short term:
–get rid of Negative Gearing and Capital Gains Tax * to bring down prices *
.it wont be catastrophic; there are always some winners and losers; the losers will be very vocal
CAAN: Can anyone recall if this was raised on ‘The Drum’ during 2019 in the leadup to the election? When Bill Shorten announced that if elected Labor would grandfather negative gearing and address capital gains tax?
House prices have been escalating since the early 2000s, and again particularly during 2015 and 2017! (due to the high temporary migration visas inviting investment in our housing).
NH Points cont’d:
-a lot of costs are driven by ‘supply and demand’ and the cost of land
-and also government charges; dealing with infrastructure charges particularly in new areas you can be slammed
-those who live in more central parts of Sydney have all the infrastructure paid out of general revenue
-regionalisation policies need to be looked at more carefully
–latest intergenerational report that the Sydney population will increase to 11 million in 4 decades *
CAAN: Whose side are our Liberal Coalition Governments on?
WHY do we have to have 11 million people living in Sydney when at some 5.5 million we have a shortage of affordable housing, and sit in gridlock? Our infrastructure is inadequate! And much of our heritage and urban bushlands have been bulldozed!
Perhaps this is explained with the ‘integenerational report’ being written for the Berejiklian Government, and whose interests does it serve?
WHY not build housing for the incumbents? Those who sold in 2020 have also been locked out by the price hike of January 2021!! And continuing …
Alexander Downer agreed with Nicki Hutley.
KEY POINTS FROM ALEXANDER DOWNER:
–interest rates are at record lows which inevitably pushes up prices
–government subsidies for First Home Buyers push up housing prices
-unless you push up the supply – it’s a phenomenon at the moment everywhere in the US, the UK, and so on.
-in combination with the very low interest rates
VIEW VIDEO 14 JUNE 2021