The weekend auction battles around suburban Australia are leaving more than just emotional scars on the losing bidders.
Our love affair with property, which has driven the cost of housing to eye-watering levels and left Australians among the most indebted people in the world, is literally destroying our way of life and that of future generations.
The series we start today is not just a response to the high-priced houses and super-sized mortgages we have inflicted upon ourselves this century. It reflects the mounting evidence that one of our most basic needs – shelter – has become a dangerous financial instrument.
People cannot afford to live where they need. Our banks’ business models are based on one asset class – housing. The Reserve Bank must make decisions about the entire economy hamstrung by the huge level of mortgage debt held by ordinary Australians.
We have an army of mum and dad landlords who churn through their properties as they chase a capital gain because of the structure of our tax system.
The young and poorly paid, who a generation ago could afford their own home, now hope for an inheritance or loan from their parents to get a slice of the property market.
According to economists Sam Bowman and Ben Southwood and housing advocate John Myers, housing is more than just the size of your mortgage or inability to find an affordable rental.
They have developed what they describe as the “housing theory of everything”, which argues high-priced housing is at the heart of the many economic ills facing the globe.
Housing costs dictate where people live, the jobs they have, the size of their families and how they lead their lives. They mean we have to spend more on mortgage repayments or rent, giving us less to spend on goods and services. More broadly, people cannot live where they will be most productive. Businesses can’t get access to the people they need to operate to their fullest potential.
The world’s most productive areas, the places where the biggest breakthroughs are made, are in cities. But if we make them prohibitively expensive, the chance of a scientific or technological innovation is reduced.
At almost every point over the past 40 years, when given policy alternatives around housing, Australians collectively have made the wrong choice.
From local council chambers to the federal parliament, the wrong policy road has been taken.
Robert Menzies, and the state governments of the 1940s and 1950s, made Australia one of the great home-owning democracies through their public housing programs. But these have withered for decades.
It’s not just buying a house. Australian renters are, by any international comparison, poorly treated, be it from owning a pet to the length of tenure they might enjoy.
That’s exacerbated by a tax system that effectively encourages investors to own a single property who often struggle to deal with the issues that come with being a good landlord.
This series outlines the problem that is staring us in the face, how we came to make the decisions that created the problem, and some prospective solutions.
The solutions are not easy. If they were, previous governments would have tackled them. Instead, they have again and again kicked the issue off into the future or, even worse, come up with proposals that would make the situation worse.
Unless something changes, we are consigning ourselves to more economic pain. That’s pain that will be passed on to the next generation and the next.
As Grattan’s Brendan Coates warns, we are in danger of repeating the mistakes of the world inhabited by Jane Austen, where property was the way to wealth for just the upper echelons of society.
It is a truth universally acknowledged that the Australian housing industry cannot continue on as if nothing is wrong.
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