Over recent decades, the price of Australia's housing stock has continued to soar. Now in 2016, we have reached a crisis point where, for so many Australian families, the dream of owning their own home is no longer achievable.

However, Australia’s ‘unaffordable housing syndrome’ did not happen inadvertently or unexpectedly. Rather, successive governments’ long-term pertinacious policy is the cause of today’s disparity of opportunity. Worst of all, the inequitable outcomes were anticipated and absolutely avoidable.

Australians’ dreams disappear

With each passing year, we watch the dreams of more Australian families disappear as evermore of them face the realization that they are locked out of buying a home. Whilst this subject is of paramount importance, it has only gained traction with the media in recent times. However, this issue is by no means a recent phenomenon – it was just expertly concealed and for decades kept under the radar.

As the issue of rising house prices has reached the public, the genie is out of the bottle – and the details decry any past delusion. A recent 4 Corners program called ‘Home Truths’ provided the cold, hard facts. A few decades ago, the price of a house was three or four times the family’s gross annual income. Now it is 10, 20 or even 30 times annual income.

New Zealand researcher Hugh Pavletich states if housing is to be accessible and affordable, housing costs should not exceed three times a household’s income. But as we know, this ‘affordable’ formula was now surpassed, and with it many Australians’ dreams of home ownership have fallen by the wayside.

The Australian Bureau of Statistics (ABS) figures shine a light on the pattern over time. In 1982, an ABS survey found that 10 per cent of home buyers spent more than 30 per cent of their gross income on housing. By 2011, It was 21 per cent of home buyers, with the increase in housing costs reflecting the increase in housing prices. The ‘now reality’ revealed is that this trend is on target to worsen and the gap between rich and poor is likely to grow ever wider.

Sydney and Melbourne are now two of the most expensive cities in the world in which to buy housing. In Sydney, houses are well beyond the reach of families, even with two combined incomes of $180,000 per year. Today, the median house price in Sydney is more than $1 million (and Melbourne is not far behind). And the huge debt incurred requires an average payment of $50,000 a year just to service the loan, despite historically low interest rates. For many of our young people, no matter how hard they might work and save, repayment of debt is unreasonable and owning a home unaffordable.

In recent years, we have had a boom in apartment buildings, especially in Sydney and Melbourne. This has served the needs of Australian and overseas investors, but as Governments well knew, this was not the right kind of housing for low and middle income families. As Dr Kate Shaw from the University of Melbourne noted, we have had a pattern of “buying, selling, demolishing, rebuilding (very badly), buying more,” and so on. This pattern effectively pushed up sale prices and rental costs, which provided good news for the winners, those already in the market. But this was at very great cost to those young Australians seeking to enter the housing market, and as their dreams disappear, they are the unmistakable losers.

House prices a prickly issue

For the major parties, the trend of ever-increasing house prices has been a prickly issue, in particular the consequences for low and middle income families. Thus, this was determined a most unpalatable subject and relegated to the fringe as if the shattered aspirations of Australians were of negligible significance. The pollies’ expectation was that if the subject was out of sight, it could effectively be out of mind – and all at fault could escape any public scrutiny and accountability. And it has worked a treat!

So what’s the strategy?

  • Bad Government policy, predicated on pandering to the interests of business was at the core of planning policy. Planning, not building, was the number one priority, and there has been no official housing policy.
  • There has been no supply side problem, just the wrong mix of housing. This has suited developers, building interests and, incidentally, investors.
  • The corollary is that our young low and middle income families’ interests were totally ignored. As consumers with no voice on any government board or committee, their views were easily discounted – and unsurprisingly they became the disadvantaged.
  • The cost of land, together with the need for developers and their buddies to snatch a bigger piece of the pie, forced land and house prices to continue to rise
  • Disincentives for many older Australians to downsize or sell their investment properties – think stamp duty and capital gains tax – contributed to the spiral of increasing house prices.
  • Focus on the economy, with all considerations rationalized in economic terms, has underpinned all policy ‘strategies’ – an enormous mistake, with the ramifications for people totally inconsequential.
  • Those most impacted have had no access to pollies, no forum for consultation and no part in any decision making – as all consumers, their voices have been effectively non-existent.

Electioneering

For this election, the focus is again on the economy, Mr ‘Jobson Growth’ the sloganistic prime mover of the Liberal platform. The Libs’ housing policy is to retain the status quo, with Malcolm Turnbull’s referring to the idea of limiting negative gearing and decreasing capital gains tax as “an assault on economic freedom.” He obviously means an assault on those who profit from directing policy.

The Labor Party’s position is no different; ‘Budget Repair that’s Fair’ – the focus on ‘budget’ as for the Libs, combined with Labor’s ‘fair’ slogan as a fallacious con. Then we have both parties in sync on ‘consumer policy,’ which incidentally sits under Treasury and Finance. Yes, as befits ‘consumer matters’ which we now know do not concern consumers, all consumer matters are simply of economic and business significance. The only ‘consumer’ issue is “how can consumers be used to boost business, sales and increase profits?”

In this campaign, there is nothing anywhere about new polices on housing or building, despite shelter being our most basic need. There’s nothing about the increasing the disparity of wealth among Australians and nothing about people – full stop.

For many low and middle income Australians, owning a home for their family is now out of reach. In the ‘lucky country’ we know that attaining this milestone of unaffordable housing was not inevitable. It was not the result of a weak economy, nor too few resources, nor for that matter a lack of planning. Rather it was predictable, the natural outcome of bad policy, one predicated on pandering to the interests of business and ignoring the incremental detriment to consumers.

Unquestionably, the policy makers were cognizant of the inequity and injustice, and yet as per business and bureaucratic demands, they shamelessly committed to policy which they knew would make unaffordable housing for ordinary Australians utterly unavoidable.