The perennial discussion over housing affordability reared its head this week as Scott Morrison launched a fresh crusade to keep the dream of home ownership alive.
The treasurer concedes housing affordability is not a new problem: “It has never been easy to buy a home.”
Just ask Ken Henry.
Who would believe the formidable former Treasury boss and now National Australian Bank chairman as a young man couldn’t get a bank mortgage.
Addressing a Senate hearing back in 2010, Henry relayed how he and other young families of the time were forced to find a mortgage elsewhere, such as a building society, and pay higher interest rates.
Unless, of course, you were rich and could jump the mortgage queue at the bank.
That was back in the days of tighter credit regulation and rationed mortgages.
But it is becoming increasingly difficult for young Australians to find the enormous deposit needed these days just to get a home loan, let alone being able to find a suitable property.
While there is an increasing inner-city glut of expensive apartments in Sydney, Melbourne and Brisbane, there’s a limited supply of detached housing in other parts of cities.
Housing will be top of the agenda when Morrison meets his state and territory counterparts in December.
They will look for common ground to tackle supply-side constraints, such as complex land planning and development regulation, insufficient land release, planning costs, infrastructure provisions and taxation.
What Morrison won’t be doing is taking up federal Labor’s package to limit tax concessions for property investors – restricting negative gearing to new properties and cutting the capital gains tax discount.
“You don’t go and fix the housing affordability problem by crashing your economy or crashing the housing market,” the treasurer argues
And presumably he won’t be offering the parental advice gem of his predecessor Joe Hockey.
Hockey’s infamous “get a good job that pays good money, then you can go to the bank and you can borrow money and that’s readily affordable,” last year unsurprisingly went down like a lead balloon.
Housing issues have been trawled over repeatedly through myriad reviews, summits and conferences.
Back in 2007, Kevin Rudd brought together more than 100 experts to thrash out a way of solving the then housing affordability crisis.
Household budgets were stretched from rising interest rates, with more increases on the way as inflation ballooned.
The main victims then were Australians under the age of 35 who typically borrowed too much during the 2000-2004 housing boom.
Morrison’s speech to the Urban Development Institute of Australia this week carried a wealth of facts and figures as to why home ownership is now in decline, especially amongst the younger generation.
Between 2002 and 2014, home ownership among 25 to 34 year olds declined from 38.7 per cent to 29.2 per cent, equating to more than 160,000 young people who have been shut out of the market.
Rising house prices has meant a 20 per cent deposit on the average home loan is more than 100 per cent of annual household disposable income, well above the 60 per cent norm prior to 2000.
Separately, housing finance figures show the proportion of first-time buyers taking out a loan in August was just 13.4 per cent, less than half the 31.4 per cent peak in May 2009.
The “real pinch point”, as Morrison puts it, is being able to get into the housing market in the first place.
“While low interest rates may make it easier to pay down a mortgage, they also make it harder to save to get one in the first place,” the treasurer says.
Those who have already purchased a home are servicing their loan, or paying it off, at better rate than the 20-year average.
According to the present Treasury secretary John Fraser, mortgage arrears are modest, although there has been a small pick-up recently in what he described as an “interesting phenomenon”.
It appears when people are under a bit of stress with their credit, they pay off their credit card first and allow their mortgage repayments to go into arrears.
Mr Fraser told a recent Senate hearing it has apparently become quite a trend and the explanation is so obvious “I was kicking myself for not seeing it”.
“Particularly if you are a younger person … they do not want to lose their credit card because that is what they use – tap and go and all these other things,” he said.
“There are very few of us who still carry around cash in our back pockets. I am old fashioned, so I do.”
Let’s hope home ownership doesn’t become something from a bygone age too.