Can the Senate address housing affordability?

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By Catherine Cashmore

In the final hours of Federal Parliament for 2013, Labor Senator Jan McLucas succeeded in establishing an enquiry by the Economics References Committee, in addressing Australia’s growing housing affordability crisis, stating; “…pressures on affordability of housing in Australia have continued to intensify, especially in capital cities and mining communities..”

This appears to be ‘good news’ and something a growing ground swell of homebuyers and renters, limited by budget and feasible supply have been hoping for.

The inquiry is set to investigate the role of all levels of government in facilitating affordable home-ownership and affordable private rental, social, and public accommodation.

Importantly, it will, also look into policies designed to increase the supply of housing – perhaps the most critical and well proven factor in the potential long-term effectiveness of any sustainable solution.

However, as welcome as any enquiry into housing affordability is, I question why we are using taxpayer dollars to produce a repeat version of the investigation undertaken under the Rudd administration, in June 2008?

The 2008 report entitled “A good house is hard to find: Housing affordability in Australia” was detailed in its content, drawing on evidence from organisations such as the Housing section in the Department of Families, the Master Builders’

Association, the Planning Institute, the Urban Development Institute, the Housing Industry Association, NATSEM, and the Treasury.

It addressed Australia’s tax policies, such as capital gains tax and negative gearing, which under the current structure, are widely recognised as having a negative impact on affordability and market activity – and an assessment of the construction industry’s, future skilled labour workforce – a job to be undertaken by the National Housing Supply Council, which has subsequently been abolished by the Abbot government, thus giving a very clear indication where their priorities lie (not with housing.) It also covered rental accommodation, and social housing policy.

The report correctly stated “the need for greater responsiveness of land release and housing supply to market demand.” Stressing, “efforts to this end should occur in a variety of contexts.”

Some of the highlights included;

• Recognition that state and local governments’ planning processes are too complex and often involve long delays and high costs.

• Housing supply not adequately facilitated with community infrastructure.

• Developer infrastructure charges being too excessive and further restricting supply and inflating purchasing costs.

• The negative impacts of the ‘urban growth boundaries’ implemented by the Victorian and South Australian governments, resulting in land banking and increased prices.

• The type and quality of housing being constructed – i.e. not appealing to elderly downsizers or single parent buyers.

• And notably – a critical assessment of New South Wales, with the suggestion it had ‘probably’ done more than any other state in Australia to restrict the opportunities for urban growth on fringe land.

The 238 page document contains many submissions, including this one, by the New South Wales Division of UDIA (Urban Development Institute of Australia) in which Mr Blancato recommends the Commonwealth government expedite the release, rezoning and servicing of Commonwealth land with critical lead infrastructure to support the supply of new dwellings to the market;

“We are proposing that there should be an amount of land—a forward train of land of maybe 20 years—that is released and serviced.

The word ‘released’ is something that is very difficult to get a handle on. You will have successive governments release the same patch of land five times but not a dollar will be spent on infrastructure. ..

The government used to invest in it—20 years ago you would go out to a release like Blacktown and the main sewer carriers were in and the sewage treatment plant was built. You would go out there and you could develop this five-acre parcel or that five-acre parcel. You might do a little bit of a lead-in, connecting infrastructure, but it was affordable.”

Whilst I wouldn’t advocate all the recommendations concluded in the paper, it’s five years later and we seem to be no further forward.

Prices continue to rise from a bull run on established property in our most populated states – and first homebuyers are barely treading water against a speculative investment sector.

Urban boundaries and a propensity towards land banking, hefty tax overlays and poor infrastructure development, ensure land on the outskirts, continues to be priced at a level that doesn’t incentivise buyers to correctly evaluate the trade-off between price and time, and therefore demand remains marginal, with a downward slide in the number of new dwellings completed per annum.

There is no forward thinking on infrastructure financing, or a full understanding that people don’t purchase houses as much as they buy into communities.

Additionally, there is little diversity on the type of housing built in greenfield developments to enable newly created suburbs to market to a broad socioeconomic mix of residents, who do not just want McMansions built to the edges of a 400-500sqm blocks of land.

Rents continue to rise, with vacancy rates in areas such as Sydney, close to 1%.

Crowded houses – with three or more families sharing accommodation, has increased nationally by 64% to 48,499 (ABS.)

The ACT is abolishing stamp duty over a slow transitional 20 year period and reverting to a land tax system, and some states have reduced stamp duty payments for first home buyers, however there has been no action federally on recommendations in the Henry Tax review on negative gearing, capital gains tax, or the rapid rise of residential investment and gearing in SMSFs.

So what happened?

In one respect it’s the deluded thinking perpetuated by policy makers, who theorise urban sprawl to be essentially bad, imagining it’s possible to develop affordable housing on expensive land in inner urban localities, whilst painting a picture of a bright ‘future’ where residents live a handbreadth apart, compacted in small apartments around existing infrastructure hubs within computable distance to the CBD, as if nothing exists outside of our capital city gates – questioning ‘isn’t this where everybody wants to be anyway?’

As if to prove their point – when fringe land is released, and an additional abundance of ‘roof space’ is built, it fails to lure a diverse range of homebuyers because – as the 2008 report correctly highlighted – the housing lacks diversity, the cost of raw land remains too high, and the developments are burdened with hefty taxes transferred onto the buyer.

More importantly, the surrounds are not adequately facilitated with infrastructure such as schools, transport, medical and recreational facilities, to cater for an individual and family’s personal needs.

Therefore, our outer suburbs tend to be black listed as low socio economic hubs, populated by those who are deemed to sit at the ‘bottom’ of the housing ladder.

I listened to an auctioneer’s pre-amble a few days ago, which summed it up perfectly. After he elucidated the various attributes of the modest 2 bedroom home, he threw his hand’s up and with a flourish, exclaimed, “and let me tell you what you get for free!” – and proceeded to point out the local school, shopping strip, and park.

Accordingly, if a buyer is able to travel to work, the supermarket, and any other amenity on the priority list within a 30-40 minute period, the distance from the CBD is not an imposing factor – the decider is in the time it takes to drop the kids off to school in one direction, and travel to work in the other.

Furthermore, an acknowledgement that the value of land, and the capital gains achieved by its owner lays in the facilitated connections around it, forms the argument for broad based land value tax, as I explained here.

The Annual Demographia International Housing Affordability Survey has aptly demonstrated, in cities where supply is not artificially constrained by poor policy and planning, which fails to cater for community needs, house prices remain affordable and relatively stable.

Realistically, a well developed city, which has policies flexible enough to meet the demands of its home buying demographic, should see price rises track only the rate of inflation, with growth in household incomes somewhat influential in those areas in which there is greater demand.

Not the well spruiked figures of 7 per cent + median growth per annum we experienced in some suburbs prior to the GFC, – or figures outpacing both wage

growth and inflation.

Across Australia, every state faces its own intrinsic economic and geographical challenges, for which housing policies need to be flexible enough to adhere, local resident voices need to be heard, and councils need to have the freedom to respond.

However, if the only options we offer first home buyers are candy style incentives in a low interest rate environment, which must stay at rock bottom levels in order to support the inflated levels of debt it encourages – then over the longer term our real estate obsession from which so many feed, will become a noose around the neck, provoking broader concerns.

It’s very important we correctly understand where our policy makers have let us down in the delivery of affordable housing stock, because a worrying trend is starting to emerge which was highlighted in a recent news report, showing footage of Julia Gillard’s Altona house auction.

In the post auction interview, the sales agent said that the Chinese purchaser wanted her to express to everyone that ‘she is an Australian citizen…’

The comment speaks volumes – emphasising how important it is to stop blaming current high prices solely on ‘foreign buyers’ whilst at the same time, singling out a unique demographic – a large proportion of which are Australian citizens, work and pay their taxes, and have a right to purchase residential real estate.

One of the most powerful tools for the regulation of any market is transparency. Without it, speculation ensues and leads to undesirable assumptions – such as the belief that every Asian face seen at an auction is ‘foreign’ – and clearly this Chinese lady has noted the negativity.

The reason real estate prices are high in Australia, is due to years of poor government policy and planning – and this is where the blame should be placed and this is where the pressure should be directed.

Comments

  1. A very small step in the right direction.

    I’m hopeful that with all these new faces in the Senate next year we might get a bit more noise generated around the “Blind Freddie” problem of housing affordability.

    • I, for one, hope that this flurry of activity leads to a dead end, like the Rudd housing report and the Henry review.

      My logic is that any government action that is implemented to cheapen housing (land) can and will be reversed when the squealing from the vested interests (and behind the scenes lobbying from the banks) gets intensive enough (ie when the policy starts to work).

      Instead, I would like to see housing continue to run towards whatever ‘natural’ upper limit is implied by current policy settings, crash into it at 150kmh and burn. The change produced then should be lasting.

      • Sometimes it takes a crisis to get people agitated enough to beat the vested interests but crisis bites both ways. Obama is leveraging his crisis to reward wall st and attack social security. What would Tony (or Labor) do with a good crisis?

        Any progress will require change in thinking either in the Politicans or the people. Which is why HnH keeps flogging that dead horse, sometimes it moves and its our only ride out of here.

  2. A couple of great points made in this article…. “people don’t purchase houses as much as they buy into communities”. So true. As the gap between the two tiers that exist in Sydney & Melbourne (and other cities too I suppose) continues to widen, many young people are desperate to remain close to the areas in which they grew up. This is especially true once they start thinking about a family of their own and is one of the key drivers of rising property prices in certain areas.

    Second, I love the point about stopping blaming ‘foreign’ buyers for high prices. I’ve been shocked at some sections of the MB readership being so open in their attacks on Chinese purchasers, as some of the comments have been rather scandalous. The hypocrisy is crystal clear to anyone who can be bothered to acknowledge modern Australian history. While people blaming ‘foreigners’ when they miss out is nothing new, I do get a little frightened when people start speaking this way. Especially when said people are supposedly educated.

    Probably the best point of all though is about new land releases not attracting the necessary infrastructure. Who in their right mind wants to live 50kms from the city in a house (no matter the size) where you have to drive everywhere? I’ve said it before; it’s time for regional areas to market themselves more aggressively, using cheap(er) housing as their numero uno weapon.

    • TurnItUp, you found the second part of your second point of hypocrisy on mutual membership of two situations, one of those situations being the opposite of the situation you found your first part of your second point on. That is your proposition is undeterminable.

      Lets put it simply.The question here is:

      Is a local entitled to ask government in these situations to act to stop foreign ownership, and to ask that funding for housing purchase flow from loans through our banks, or from revenues substantially from our economy?

      A simple Yes or No, where do you stand?

    • Who in their right mind wants to live 50kms from the city in a house (no matter the size) where you have to drive everywhere?
      Well the obvious answer is people with cars who don’t need to go to “the city” every day.

      Further, the scenario you describe is daily life for tens of thousands of people living outside of capital cities. I grew up living ~50km from the nearest “city” (of ca. 40k people) and 10km from the nearest town (of ca. 3k people). Somehow I, and the other few thousand people in the same situation, managed to get by.

      Personally, if I could <45 minutes from work on acreage, even if I had to "drive everywhere", I'd be all over it like a rash. It wouldn’t be difficult if we didn’t have a system so intent on concentrating the population into a handful of tiny spaces.

      • Agree Drsmithy, if there was carrigeway that allowed traffic to travel @ 150 – 200 Km/H and was designed to keep vehicles moving rather than backing up – like the autostradas or autobahns in Europe – I’d move to the Penninsula/Gippsland/Surf Coast in a heartbeat! Melbournes become so goddamn hard to live in, I’m within 5ks of the City on the south side and getting to the North side – say South Yarra to Brunswick – regularly takes 30+ minutes at ANY time of day, with 60+ between 4-7 pm! It sucks! And it rains too bloody much to make trains and trams attractive. Urgh!
        I suspect most of Melbourne would move out given the opportunity to commute in easily…

      • Spot on, Smithy.

        It can’t be repeated too often, the CBD share of regional employment is seldom over 20% in any first world city today. Some American ones are below 10%.

        The UK has the densest cities in the OECD and also the worst traffic congestion and the longest commute to work times.

        http://news.bbc.co.uk/2/hi/uk_news/3085647.stm
        “British commuters have the longest journeys to work in Europe with the average trip taking 45 minutes, according to a study. That is almost twice as long as the commute faced by Italians and seven minutes more than the European Union average…..”

        The US average is 26 minutes……and they have the lowest average urban density.

        Another analysis corroborating this, here:

        http://economix.blogs.nytimes.com/2011/10/14/world-of-commuters/

        Planners and activists are pursuing a bunch of myths and shallow assumptions that are the exact opposite of real life outcomes. It is all pain for no gain. Even the alleged gains are not even true. Not transport efficiency, not energy efficiency, not infrastructure cost savings, not social capital, not economic productivity, not health, not anything. And the increased costs of housing are tangible, quantifiable, and massive. Not to mention the social injustice of these costs falling inequitably on younger generations.

      • @ drsmithy….’It wouldn’t be difficult if we didn’t have a system so intent on concentrating the population into a handful of tiny spaces.’

        Agreed drsmithy, but I’d say it’s more like concentrating the JOBS into a handful of tiny spaces (read Sydney and Melbourne)

        I’ve said it before, and I’ve said it again, and I’ll say it again (and again, and again….) – tax breaks for businesses to set up outside of the Sydney/Melbourne Megalopolis. Jobs first, then people – not the other way around. If people could earn a decent wage with their skills outside of these two mega cities they would do so in a heartbeat. Nice house for $500k. 5-10 min commute. Beaches/bushland on the doorstep. What’s to stop them? Oh that’s right. No jobs…..

      • Common Phil, don’t leave this here. Urban planning is obviously very close to your heart and your knowledge is extensive. The detailed and real world experience references you site are illuminating. Share them with this Senator directly – soon.

        In passing, I was a little perplexed with your views on Labor Govt’s on another topic today. If any political ideology is ever going to address Affordable Housing it isn’t IMHO going to be the Conservatives who more ( relatively ) closely identify with those currently skimming the cream.

      • In passing, I was a little perplexed with your views on Labor Govt’s on another topic today. If any political ideology is ever going to address Affordable Housing it isn’t IMHO going to be the Conservatives who more ( relatively ) closely identify with those currently skimming the cream.
        Phil has a tendency to attribute anything he doesn’t like to “the left”.

    • Turn it up, there is no hypocrisy. Govt policy should benefit EXISTING residents. Our massive immigration program is designed to benefit rent seekers (and it indirectly benefits immigrants who move from less prosperous countries but this is not the intent). Lets at least be honest about that. I am all for humanitarian policies for refugees etc, I’m not for packing more and more people into our cities so we can continue to put pressure on asset prices.

      … that said, anger should be directed to policy makers NOT immigrants who are simply doidn what the rest of us would do given the choice.

      • … that said, anger should be directed to policy makers NOT immigrants who are simply doidn what the rest of us would do given the choice.

        +Inf.

    • @Turnitup….I cannot believe we’ve become so fricken PC we can’t challenge the sense in letting foreigners buy Australian houses without someone screaming “racism”…., “Especially when said people are supposedly educated.”

      Seriously, while considering what’s causing price rises, do we really have to contend with this BS?

      • Sorry lads but I see it differently. When people start directing their anger at a particular race (yes that’s right, only the Chinese are being blamed. The lack of anger directed toward our Anglo friends from the UK is deafening) I get worried. Have you ever stopped to seriously consider why we tolerate people from that part of the world overstaying their visas and making a mockery of our citizenship laws by way of de facto visas and the like? I bet most of us know at least one Pom who’s done this.

        Look if people want to fear the Chinese, they’re entitled to do that. But just remember, it is a choice. I choose to embrace our Chinese friends as neighbours, friends and colleagues. Much more enjoyable that way as that’s where we’re heading. In fact, most schools in my area (Bayside in Melbourne) are abandoning Japanese, Italian and German in favour of, you guessed it, Mandarin.

      • turnitup, agree. But the concern might have something to do with the fact that it is the Chinese who are having the biggest impact. If i found myself always being outbid by yanks my reaction would be no different.

      • Where you see people directing their anger at a particular race, most of us see it as directing our anger towards the policies that allow unfettered foreign investment into Australian property.

        Perhaps by your standards you would decry the real estate industry targeting Chinese investors with ads in Chinese newspapers and online media or setting up offices in China as racist?

        People overstaying visa’s is just a straw man.

      • @squirell, then let’s stop mentioning their race. No one mentions race when they’re outbid by Poms, this is my point.

      • @turnitup Chinese is a nationality, like Chilean or Estonian or British, Asian is a race. Seems your bringing up race fallaciously and then complaining its been brought up. Sensitive much? Incidentally if you’ve ever been to China you’ll know they are truly racist! No two wrongs don’t make a right but PC makes one side weak

      • @migtronix, I can assure you I’m not the one who made race an issue. Plenty on here have. You know that. Stop being silly.

        Yes I’ve been to Japan & China. Is there a racist element? You betcha. Do I care? Absolutely not. No idea what you’re on about.

        Am I sensitive much? Well I’m taking on most of the MB posters and am doing so with good grace, a smile on my face and a sense of humour. If that makes me too sensitive then there it is, you’ve got me! And as for the term racist…. I never mentioned it, but at least a couple of you guys/girls have. Me thinks you protest too much. Paranoid perhaps?

    • Nick the GreekMEMBER

      Have to disagree on your minimizing of the foreign ownership problem. I live in Singapore, married to a local and I can tell you all her friends want to talk to me about where to buy Australian property. To the average Singaporean (who is used to paying north of $600k for a 3 bedroom government housing project) the idea of buying a landed house in a place like Australia for under $3mm is exceptionally good to them. Most of the local banks here will offer Australian investment mortgages in Sing dollar for under 3% all in.

      They are buying new build and established housing (they typically have family in Australia who they put the property in the name of), and they love units as well.

      I own a couple of units on the Gold coast that I’ve had for a long time, I often let our Singaporean friends stay there for free, half of them have since bought apartments in q1 or the new one that has gone up recently. My point is that the foreign buyers are real and they are buying.

      • Move on Turnitup…It’s a non issue…..Before you suggest it doesn’t affect me, I’m half Asian…Get over it, stop being so fricken PC.

        So can we politely ask our politicians to put a stop to foreign buyers?

      • There would be no need to put a stop to foreign buyers if Australia simply built freakin’ houses instead of playing Ponzi games with rationed amounts of urban dirt.

        No-one in Houston or any affordable US city gives a toss where the money is coming from, that is flowing into their housing market and getting more houses built, not pushing prices up. If there is too much investment and too many houses get built, that merely makes things 20% or so more affordable than ever for renters and FHB’s. It is not a bad system when the people at the bottom of the socio-economic heap benefit from a market “failure” and those at the top “lose”, is it?

      • I was in Singapore a few weeks ago at a meetfest of investment banking types. I can guarantee you that the most surreal presence in the room (many of the brochures carried loads of advertising for Australian RE mortgages by ostensibly Australian banks) and most pervasive subject of discussion when not focusing on what the conference was about (how many times Sydney suburbs being bandied about) was Australian RE. In the NY I am going to another one in Hong Kong and I am reliably informed it will be ‘pretty confronting’ to see the tout on Australian RE there, which is apparently much greater than even Singapore.

        Anyone suggesting that foreign, non-resident, buyers of Australian RE – often without any visa at all, for they are never asked for it unless they dob themselves in – are not a major factor in the market in certainly Sydney and probably Melbourne and Brisbane (at least) as well is deluding themselves.

        I fully agree with Catherine that there is no issue with Australian residents (citizens and visa holders) having every right to buy whatever they like – the lady who bought Gillards Altona place included. But the need for people to emphatically declare that they have that right as citizens and visa holders wouldnt be as pronounced if the wider public wasnt aware that there are significant purchases of Australian RE by people not ostensibly in a position to do so (sans citizenship or visa) who are doing it, and widespread awareness that FIRB and government policy is to look the other way on the issue and point the finger saying ‘racist’ at anyone questioning it.

      • Rich42, I stand by every word. Move on? But I’m not the one grinding a massive axe! You’re half-asian? Terrific. Tell your buddies to stop buying our RE! Yes you can ask our pollies anything you like. This is contemporary Australia, not communist China.

      • @Gunna I’ve a few mates that have in Singapore around 5 years + and that same story has blown their minds! What’s worse the people they know buying apartments in Docklands/Southbank aren’t occupying OR renting! Apparently they’d rather keep it prestine never lived in because of depreciation on the banks books. Insane ! Just like youve said before Melbourne is a Chinese ghost city.

      • @gunna & mig Thanks for the first ( or second) hand accounts of this.

        I think it is a way for the banks to essentially bypass the overseas borrowing restrictions. They are lending foreign capital to foreign citizens.

      • Thanks Gunna, speculators and foreign buyers are setting prices at the margin this is old news.

        We need to get investors investing in business and out of rent seeking on established property it is excruciatingly simple.

      • aj,

        What we are witnessing is a global capital flight to perceived relative safety of cash into hard assets. Negative int rates/ cash confiscation cyprus style are on the way so hard assets are bid up. I just spent an hour watching/reading this below. Janet posted this morning and it gives a heads-up on what the big decision makers/policy setters are thinking. F..n scary really.

        http://www.macrobusiness.com.au/2013/12/larry-summers-expands-on-secular-stagnation/#comment-308223

        Follow the link, and click the inserted text link for Summers speech.

  3. interested party

    Here’s a late night thought.
    How about we cap the big 4 banks profits at 1 billion each and the rest of the profit goes to a society fund that pays for the infrastructure costs on land developments.( essentially turning the banks into utilities) To purchase these blocks you need to be an Australian citizen, 2nd generation minimum, have no prior RE, and cannot claim negative gearing. Some deal struck with a big 4 bank to build on the land could be incorporated to bring the big 4 on board.
    Foreign investment welcome in RE but be aware that there is now a %20 sales tax on the purchase price and the proceeds of this tax goes to the society fund as well.

    • Banks can set their profit level wherever they wish! You could specify $zero, and the banks can produce that figure for you – and they’d still be doing the same business that they do today. Profit, is a product of many sets of financial engineering calculations. Taxation Planning Committees sit around a table and decide how much tax to pay, and where and when, and therefore how much profit to declare…..

      • There is some truth here, they will work out the franking level and profit/dividend requirements and work towards this in the final calcs.

        A good example is the bad debts and default provision that was ramped up by the banks in the ‘hard times’ – it’s not a good look to be getting the tax payer to cover your back while reporting record profits.

      • Janet,
        Yes, it was quite late with several rums internally.

        My main idea is to draw of some of the cash that the banks bleed from society and put that to work to the benefit of society. A $1 billion “donation” per bank per year perhaps, or print cash to the value of 15 % of their capitalization and buy shares on market to collect dividends…….dunno…….but the banks have played a large part in the social disparity we have around us so should play their part in rectifying it also.

  4. Crowded houses – with three or more families sharing accommodation, has increased nationally by 64% to 48,499 (ABS.)
    That caught my eye. It’s the type of evidence I would expect to see that supports the shortage argument. You could almost call that sort of situation a mini slum.

    Interested party, 2nd generation minimum?? Can’t agree with that at all, it would have ruled out my father from buying, and you are creating separate classes of citizens. In fact, the more I think about it, the more it appals me, as it says you can only be truly Australian if you were born here. I can only assume you hadn’t thought it through fully yourself.

    • Immigrants have been hotbedding since at least the 1960’s. The house opposite where I grew up was used this way, by Italians in that case.

      Two families rent a house. One works day shifts, the other night shifts. They halve their rent and live uncomfortably for a few years so they can get ahead.
      One family that lived like this bought a house in a nearby suburb within 3 years after they had permanent employment, a savings record and a deposit.

      Other times they divide the house in two, but the principle is the same, halve the rent to save money to get ahead.

      • Same here, when / where I grew up eight adults and assorted children shared a three bedroom house. Three generations, the beds never got cold. It was a circus come Sundays where the one car ran a shuttle service to get them all to church and back. Within five years each family had there own properties.

    • As I replied to Janet above, it was late. This idea hit me as I was reading the article so I suppose its along party lines…….you know…………policy on the run!

      The 2nd generation part is to stop foreigners from jumping in front of our youth……….not to be class separation.I had no intention to offend anyone. We could argue that we are placing offshore money and investors above the occupants of the houses with 3 or more families in them also. It is a very contentious subject no matter which way you look at it, and some exited debate would no doubt take place. I fully expected comments such as yours and am happy for all to comment, add to it, change it, or discard it……… after all this IS a forum where ideas do meet.

      • IP – too broad a set of opponents

        Don’t make enemies of those impartial to the issue, in fact see if tyou can bring them in as an ally

      • IP, I can see where you are coming from, but it’s quite a discriminatory idea against all the genuine migrants who just want to settle down, have a family etc. We really should be able to provide for them without disadvantaging the existing populace.

        It’s the offshore investors that aren’t a real part of our society that I’d like to see kept out of our housing market.

  5. Australian speculators and foreign buyers are the same thing, they are just loose central bank liquidity chasing asset markets to corner and rent seek. Every single person renting in Australia or sitting on massive mortgage that would rather be an owner can personally write to the RBA and the banks and thank them for stealing their dreams.

    Of course there is no equality in who gets access to the cheap debt to speculate, and ordinary families get caught in the cross-fire between the staggering immigration rates, the political inability to release new land and the easy money.

    There is an equality issue here of much more pressing importance than the one that occupied the headlines the other day but don’t expect the language of equality to be used here.

    • Aj, I think the difference between Aussie and foreign investors, is the sheer potential numbers of the latter. We are only a small population, and uncontrolled , foreign money has the potential to utterly overwhelm us – on top of our own investors as well.

      Otherwise, yep, I agree. Personally I’m pissed off that they have taken he prospect of home ownership at any reasonable sort of cost away from me.

      • Yes, for those hoping for change, the absolutely massive wall of foreign money is a serious problem. Politicians and banks will be able to use this to prop up housing markets even if the Australian economy softens (as Rudd did during the GFC). There is likely to be no respite from this asset boom, rent seekers will win this game.

        Without seriously applied capital controls only a small whiff of this money will remain a price setter, but don’t underestimate the Australian speculator (100+ houses is some serious f.you rent seeking).

        I think we can look to the words of Eomer here…

        “Look for your friends. But do not trust to hope. It has forsaken these lands.”

      • The rich and their children in our own country are buying far more of the houses than the foreigners.

        You are squeezed out by the 10% investing in houses using negative gearing. The reductions in marginal tax rates, the introduction of franking credits to reduce “double” taxation, the use of discretionary trusts to spread income and reduce tax, the use of super funds to reduce tax. All these help the 10% buy the investment properties that you would otheriwse be able to afford.

        But they make them available to rent at a cheaper amount than a mortgage payment would be, gambling on capital gains.

      • Explorer, i agree with almost all your comment above.
        However franking credits to prevent double taxation of profits IS actually a fair, logical and productive policy setting.

  6. Bartley: Why dost laugh, Frank?
    Ilford. To see that we and usurers live by the fall of young heirs, as swine by the dropping of acorns.

    — George Wilkins, The Miseries of Inforst Mariage (1607), Act III.

  7. “The reason real estate prices are high in Australia, is due to years of poor government policy and planning”

    One of the key areas of poor government planning is managing population growth. A deliberately high pop growth rate is putting unnecessary strain on the existing housing stock. This current dangerously high level of pop growth can be slowed to manageable levels today to allow housing supply to catch up.

    Return the pop growth to 200,000 p.a. immediately, until new housing/land supply is fixed.

    • Precisely. Somebody needs to make an explicit target of limiting (total) population growth rate to less than the housing stock growth rate.

      I’d also like to see employers pay much more for 457 visa hires. Possibly a 12.5% salary surcharge.

    • There would be no need to talk about population at all if Australia simply built freakin’ houses instead of playing Ponzi games with rationed amounts of urban dirt.

      No-one in Houston or any affordable US city gives a toss where the buyers are coming from, that are flowing into their housing market and getting more houses built, not pushing prices up. If there is too much investment and too many houses get built, that merely makes things 20% or so more affordable than ever for renters and FHB’s. It is not a bad system when the people at the bottom of the socio-economic heap benefit from a market “failure” and those at the top “lose”, is it?

    • Patrician, I have lost count of the number of times I have reduced most (all) perceived problems to population and consumerism. This one is a classic case. The situation is being created rather than occurring. More migrants, more demand, higher prices. Why should we be suprised? There is no solution in the offing, and the inquiry will simply be a diversion. Not sure about the 200,000/annum>

  8. Only government can provide the solution to a problem entirely created by government.

    But it’s a bit like expecting honesty from a thief.

      • I’m the buffoon? Hilarious. While you lot sit here whinging about political parties not removing NG and so on who’ve shown without a shadow of a doubt that they are rabidly pro high house prices.

      • Generally, I thought the call from MB commenters – certainly from me – is that the problem in housing is “government in the way” and needing to be got out of the way.

        But I agree that some commenters have misguided faith in certain politicians and parties. I see the only hope in politicians who do still have belief in the free market, not politicians who think they are going to “provide solutions” with yet another layer of stifling distortionary interferences in the economy.

        I am disappointed if the Abbott government is no better than the Rudd/Gillard one on housing, but I would not even have the slightest hope of a Labour government and would therefore have no cause for disappointment in them.

        I am hoping a few new faces in the Senate, from minor parties, will finally get this topic on the political agenda. Bob Day, the Katter people, the Palmer people. Say what you like about them, I think there is far more chance of getting sensible reforms of housing proposed by them than there is from Liberal/National; and nil whatsoever from Labour regardless of who is in charge.

      • Seriously Bluebird, the first time you called all MB posters Jews voting for Hitler, I was offended but let it slide. And you continue to compare us to Jews voting for Hitler. You know nothing about my voting preference or the others on here. You made it quite clear in the lead up to the election that you were pro Stable Population Party, even going to far to try to convince others that limiting immigration was an “affordable housing policy”. It isn’t. It is an immigration policy. You are on MB enough to know that there are many issues contributing to unaffordable housing in Australia, of which high immigration is least of the issues. I looked at the policies of the Stable Population Party and there was no mention of housing affordability. Other minor parties had policies addressing housing affordability and that is where I cast my vote. I initially just passed you off as William Bouke’s astroturffer but since they were spectacularly unsuccessful in the election, you have just become nasty. I enjoy reading the comments on MB as most of the posters here are educated and raise good points. If you can’t contribute in a meaningful way then please go away. You are dirtying up the comments section with your offensive posts.

      • Azreal, I find your assertion that reducing immigration significantly won’t make housing more affordable offensive. Please stop posting.

      • General Disarray

        Azreal, I find your assertion that reducing immigration significantly won’t make housing more affordable offensive.

        Housing affordability is multifactorial. The fact you have completely hitched it to immigration says it all for me. Ludicrous.

        Please stop posting.

        Doctor, heal thyself.

      • I didn’t hitch it solely to immigration at all.

        It’s 2013 but it isn’t really is it. We’re still living in deranged times, and you Mr Douchary, are one of the main offenders. I’m sure North Korea would welcome you.

  9. Amazing the senate has found technical solutions to a political problem and then wonders why the Aussie business community is underwhelmed.

    IMHO it’s pointless analyzing Housing affordability until Aussie business and political leaders display a willingness to reform.

    BTW Reform is the last thought on their minds, their newly minted Sydney RE profits are starting to burn holes in their pockets so it’s time to double down on the only game in town. Sydney Re to the moon!

    • +100 CB

      All the more reason to believe that any reform agenda will only materialise after the whole thing crashes and burns.

      • And if no reform agenda does materialise after the crash and all the politicians can talk about is “restoring the housing market”, that is, prices back to the moon again (as they do in California), our civilisation is truly in its final “fall” phase.

    • Then let all those locked out of the market boycott one business and decimate it (pick one that deserves it). It will be front page news and might start the ball rolling.

      This strategy would work.

    • CB,
      In the cold light of day it really IS absurd that we expect/demand the TPTB to change a policy that clearly benefits the greater population for the sake of a minority. When the only thing now supporting society at large is the wealth effect, we can hardly expect any rational person to cut the supports from under it….particularly a politician. I don’t suggest embracing the situation, but we do need to recognize realities.

  10. Peter, governments can only fix a problem when governments acknowledge there is a problem. Until it becomes an election issue I expect nothing to change. In fact, I expect it to continue to get worse.

    • Government know that there is a problem, but the problem is government.

      They rape and pillage housing like banditos, so for them to acknowledge that and then take their hands out of the till would take more fortitude than I think they possess, and it will leave them with a funding hole that would need to be filled at a time when the federal and state governments are falling short on revenue.

      They should tear up the rule book and start again, but I doubt they will. That would be too hard.

      • Actually I’m not a Reaganite – I’m slightly left of centre, but that’s because I know that poor people don’t buy anything, so keeping people in a wealthy country poor doesn’t help the wealthy or the poor.

        Once you understand the problem with housing you have to ask what should they do to fix it, and secondly what will they do – and of course you get two different answers. Naturally we have to act on the second answer.

        What else can we do?

        I’m a bear on constructive change which makes me a bull.

  11. Must get my eyes checked as every time I read the title I always read it as ” Can The Santa address housing affordability ”
    Thanks C.C. & HnH for another good post on this housing topic in Australia.

  12. There have been innumerable senate enquiries into everything (RBA bribery, ASIC negligence, FIRB )… nothing has come out other than a politically correct and bipartisan report with a minority dissenting view. The millionaire bureaucrats and vested interests simply ignore them.

  13. China Bob is spot on. Why are the rule-makers going to change the very rules that benefit them so greatly? As a society we tolerate far worse than high property prices.

    • They have also benefited 95% of people who have bought a house and owned it for more than 10 years.

      Most voting adults would be aghast at the cry for policies to reduce house prices.

      That’s why the politicians won’t do it – the majority of the voters whom they represent don’t want it.

      So the politicians are doing what they are supposed to do, representing the interests of those that elected them.

      • Yes you are right, but it could be done incrementally so that prices don’t crash, and gradually over time the price issue would be rectified.

        A ten year plan perhaps? Something that we have proven to be not good at, planning well ahead. But it can be done. In fact to restore state and local government revenue streams it may have to be done.

      • Most voting adults would be aghast at the cry for policies to reduce house prices.

        Do you have any evidence to support this claim?

      • Umm… years of observing human nature at work?

        I think he is right.
        Which is why we have such a big problem now.

        Classic case of tyranny by the majority (landowners) over the minority (non-owners).

      • Peter, in NZ in the early 1970’s house prices bubbled due to absolutely insane demand-side subsidies from the Kirk (Labour) government. But they never went down in nominal terms at the same time as going down in real terms, during a period of high inflation.

        This left no-one in negative equity as the real prices reverted to norm. The following (Muldoon) government abolished the insane subsidies, of course.

        http://sra.co.nz/pdf/RealHousingChapterOne.pdf

        By Rodney Dickens (NZ economist)

        “…..From the peak in the national average real house price in the December quarter of 1974, the national average house price increased less than prices in general for the next five years. House prices didn’t fall over this period, but because prices in general increased significantly more, the real value or purchasing power of the average house fell 40%. The fact that inflation in general averaged close to 15% per annum over this period meant that the sins of the bubble in house prices between 1970 and 1974 could be washed away over the subsequent five years without requiring actual house prices to fall. This experience will have helped create the myth that house prices never fall much. But be in no doubt about the implication of the 40% fall in real house prices over the five years after December 1974. Anyone buying a house at the peak of the speculative bubble in 1974 and selling it five years later will have lost 40% in terms of the purchasing power or real value of the money they invested. Again, people consume goods and services not dollar coins, so what really matters is real house prices……”

      • I’ll agree with PF here. Slowish melt in real terms would be the best way to fix the problem. A price crash, as much as one may want one, is unlikely to benefit anyone if it crashes us into recession at the same time.

        Hard to buy even an affordable house if you aint got no job, or your business has gone bust.

      • As I see it (somewhat as an outsider) the only downside to business-as-usual is a potential Aussie CAD explosion. However, we now have serious banks suggesting Australia will transition to CAS (in 2014-15) supplying LNG to Asia,
        so possible downside = no downside => Sydney RE to the moon!

        CAD only becomes a problem when the creditor nations says it is a problem, until that day no problem: => Sydney RE to the moon!

        Asset wealthy Aussie boomers can always help their own kids onto the RE ladder so the real cost falls onto foreigners, and who cares it they loose money => Sydney RE to the moon!

        I think I’m beginning to see a trend and its definitely NOT “the meek will inherit the earth” @#$%-that they need to pay-n-pay-n-pay again for their slice of paradise.

        Sorry guys but there are better opportunities in this world than playing the rigged Sydney RE game: it is a sad indictment when all one can say about their birth city is:
        It’s a nice place to visit but I wouldn’t want to live there

  14. small step in the right direction – i’d say Aus is 5 to 10 years behind NZ on this one so dont hold your breath as NZ also has a bubble (but not as bad as in Aus).

    Regarding anti foreigner sentiment this is unfortunate but the fact is that very high levels of immigration have played a major part in this bubble. The anger however should be directed at policy makers.

  15. Let’s face facts. Immigration has & will continue to play a role. But newly arrived migrants are not and never will be the enemy. Surely the biggest issue is the fact that those with enough money can purchase and NG as many properties as their wallets allow.

  16. I like putting things bluntly

    1. Schools won’t be build in areas where new housing estates are being proposed until there are enough people in those areas to justify the cost of a school being built, this is nothing

    2. Reducing the cost of land in the outer burbs won’t reduce prices of homes in Newtown or Newport

    3. Foreign investors and recently arrived New Australians are having a major impact on prices in inner and middle ring suburbs

    4. Prices in inner and middle ring suburbs will continue to rise due to increased demand (higher population/ cashed up overseas and recently arrived buyers)

    5. My tip is to take advantage of the situation if you can, identify areas overseas and recently arrived want to live and buy up, especially if the property is in a school zone.. see Glen Waverley and Balwyn, McKinnon

    6. I’d like more affordable housing but it already exists, it’s called the outer suburbs and has always been affordable, not too many Melbournians have been able to buy their first home in the inner suburbs and this hasn’t changed and won’t no matter what poliicy you implement as the demand is there

    7. Even though I have benefited from NG I can say I am for it’s gradual removal as it does distort the market and I do favour a more level playing field

    • Right, so move on, nothing to see here, $450,000 for a matchstick house 50km from the CDB is perfectly rational, respect your elders, life is tough, take a packed lunch to work, give up the iPhone. Got it.

      • Pretty much

        That is the reality, no way around it, cut NG and demand will drop a bit but not a huge amount

        If you have less than $500k to play with then you are looking at the outer burbs, that won’t change as demand determines prices and supply of brick veneer homes can’t be increased in inner suburbs

        I don’t see how you thing that will ever change barring an economic collapse

      • I don’t see how you thing that will ever change barring an economic collapse
        I bet if those fringe houses were $150k instead of $400k, you’d see some change.

      • dr smithy is right (we agree on some things). newly released land should be dirt cheap. If you only pay 150k a la USA then the next suburb in closer to CBD with slightly more convenience might cost only 180k. its not the only solution but it will help. At the same time, even if we add enough supply, whilst we continue to massively grow population with new immigrants then its inveitable that prices will come under further pressure in inner suburbs. In a city of 2 million, perhaps the median house is 8 k from town. If its 4 million maybe 16k. When we get to 8 million maybe Werribee will have the median house.

      • Yes, and don’t have children because you both have to work and will not be able to work, commute for hours a day and see your children on a daily basis.

    • “…..Reducing the cost of land in the outer burbs won’t reduce prices of homes in Newtown or Newport……”

      It would, actually.

      In real life, the shape of the urban land rent curve is remarkably consistent from one city to another. No city with cheap fringe land (always due to absence of a UGB or a proxy for it) does not also have housing closer to the centre, similarly cheaper.

      In fact because the inflation is all in the value of the dirt that houses are sitting on, the price of older homes nearer the centre of the urban area are far more volatile when the “growth containment” effect kicks in (and I believe would also be volatile on the downside if the growth containment policies were abolished).

      Old dilapidated houses near the CBD that are now a million dollars in an Aussie city, can easily be well under $200,000 in an affordable US city. This tends to allow for a heck of a lot more spending on renovations and renewal and even outright replacement, including with higher density development (where permitted).

      The result:

      http://www.realtor.com/realestateandhomes-search/Houston_TX/type-condo-townhome-row-home-co-op/price-70000-150000?pgsz=50

      Ironically, urban planners with their UGB’s assure us they are trying to “promote housing choice” because the poor dear citizens are in a state of false consciousness and being seduced and subsidised into making the bad choice of separate family homes in suburban locations. The result is of course, townhouses near the CBD being $1,000,000 plus instead of $200,000 and less; Hayek would be chuckling at this example, yet another one among many in economic history, of “unintended consequences” of “planning”.

      • Why are townhouses going for $1 million near Melb and Syd CBD, because people are willing to pay that amount, they can still live out in the outer burbs and buy a home for $400k but they don’t want to, heck you can get blocks of land in the outer for $150k, increase the supply (to the moon) and these people won’t all of a sudden say “stuff Newtown, i’m moving to Penrith).

        Remember the demand part of supply and demand. We all want a house in Cantebury or Vaucluse, you can’t increase the supply of houses in these areas, therefore demand is high/ supply is limited and that’s why prices are where they are

        Around the UGB, people live there because they can’t buy closer in, so the demand isn’t as high and the supply is greater = lower prices

        Your theory would work if people had no preference as to where they lived which is nonsense!

        By the way I’ve told my mates about your theory and we are all chomping at the bit to buy up homes in Middle Park and Paddington for $200k

      • OMG, there can be a ripple effect of some sorts from outer ring suburbs. If you have to pay 500 k for an outer melbourne suburb you might think it worth paying 750k to live in blackburn, and likewise 1 mill for boxhill, and 1.5 for camberwell. If you only have to pay 150k then you might consider another 600k for blackburn to not be justified despite the better amenities. And there are regional centres around Melbourne as well which could also do with more liberal land release with the same effects.

      • Why are townhouses going for $1 million near Melb and Syd CBD, because people are willing to pay that amount, they can still live out in the outer burbs and buy a home for $400k but they don’t want to, heck you can get blocks of land in the outer for $150k, increase the supply (to the moon) and these people won’t all of a sudden say “stuff Newtown, i’m moving to Penrith).
        I can’t tell yet if you are just not thinking this through, or spruiking through willful ignorance.

        No-one is suggesting the residents of Newtown will up and move to Penrith.

        What they are saying is that for a $150k house, maybe a bunch of people will move from Mt Druitt to Penrith. Then all those houses being sold will drive prices down in Mt Druitt, so a bunch of people in Parramatta might decide to save some money and move a bit further out. Then as Parramatta houses get cheaper, people in Strathfield will do the same. After that, some Lewisham folks might move to Strathfield. Then, finally, those Newtown residents you are talking about might want to save 20% off their mortgage and move to Summer Hill.

        Lo and behold, houses in Newtown – along with a whole bunch of other areas – have gotten cheaper because of $150k fringe housing, even though no-one from Newtown or any other inner-city suburb has moved straight to Penrith.

        On top of that, lots of people living way out on the fringe of the city now have a lot more money in their pocket, which they can spend on stuff that they’ll want to buy locally rather than driving for hours into Sydney to get. Local businesses will open (or expand) to meet this need, and people who work there will live and spend locally, creating a nice feedback loop.

        Eventually you’ll have enough employment opportunities and local community that people really will move straight from Newtown to Penrith (or wherever) !

      • Thanks Squirrel and DrSmithy

        Both of you are right, there can be a ripple effect, but I have seen it work in the opposite fashion

        As a Melbourne Squirell I know what you are saying with those suburbs

        What has happened following a boom in high demand suburbs like Ashburton and Balwyn is that you end up with cashed up buyers that can no longer buy in those areas and they go to neighbouring suburbs Ashwood/Doncaster and bid prices up there

        Again it comes back to limited supply and high demand, you would know how prized a home is in the Balwyn High zone, this won’t change as it can’t be replicated in other suburbs, the BH zone is the BH zone even if you release hundreds of acres past Mernda

        There are probably thousands of blocks available for purchase in areas like Mernda, Doreen, Officer, and so on, they go for $150k – $200k, if the price dropped to $50k for a lot tomorrow then it would still cost $300k for a reasonable spec home to be built, which is what it costs ($350k) for your average home in Lalor and Narre

        Anyways, you have had decades of sprawl in Melbourne, Balwyn is still Balwyn and prices in the inner suburbs haven’t decreased with huge amount of sprawl because the demand has remained sky high

        The current situation sees an influx of cashed up buyers entering the market, greater demand, with the same limited supply in these areas, so prices in these areas are going up

      • Dr Smithy has saved me a lot of explanation – +100 for that excellent description of “option values” in urban land markets, Smithy.

        One thing I missed out of my original comment, is that the prices throughout cities WAS lower in living memory before the growth constraint regulations stuffed it up in Australia; that is, a dilapidated fixer upper home nearer a CBD WAS CHEAPER than a brand new fringe McMansion; which was half the real price it now is. The fact that the dilapidated fixer upper home is now more than double the price of the new McMansion, means that it has inflated more than fourfold – entirely consistent with the thesis that it is land values inflating some twenty-fold that are responsible.

        Some people are old enough to have observed this effect for themselves, and I believe good data series would support it. There is an excellent time series of urban land rent curves for Auckland NZ, in the recent Housing Affordability report from the NZ Productivity Commission, which show these curves moving upwards over time and maintaining their shape. That is, land price inflates at the fringe, it inflates at a consistent factor everywhere.

  17. @OMG, I find it interesting that people will pay an extra 20% for a house because it’s in a certain school zone. What if the school’s performance drops away a little? Here’s an interesting thought….. If governments really are so gung-ho about keeping property prices inflated, I wonder if McKinnon & Balwyn High’s VCE results aren’t given a little push (if required), just to keep the status quo….

    And a quick tip for anyone thinking of paying an extra 200k to buy a house in Balwyn….. Don’t. Simply rent a house for as short a time as possible in the necessary area, enrol your child, then get the hell out of there.

    • I’ve had that discussion with a developer who builds high spec luxury apartments in areas with well regarded public schools – that is his target – in Melbourne.

      He told me that good schools tend to remain good schools because they attract the best teachers and students from more affluent families.

      Families will pay higher prices in those school catchment areas because it might be saving them as much as $50,000 pa in private school fees if they were in an area with a poorly rated school.

      For those families it’s much cheaper to pay off a more expensive townhouse in a better area than pay the private school fees. He has been very successful over many years with that formulae.

      • I know people who do the opposite – buy or rent the cheapest possible house in a baddest suburban area, and send their kids to a private school instead of the local public one with all the problem kids.

    • For sure

      I wouldn’t be surprised if the government was behind this, them and their sinister plotting

      Last I heard atar scores at Hallam high were going through the roof, suddenly eumemmerring is looking like the place to buy

  18. Great work H&H.
    You are right, the 2008 Good House is Hard to Find Inquiry was thorough.
    It had ample insights & solutions. We do not need another Inquiry.
    Having said that, I would like to see the Senate Economics References Committee make the following recommendation next June:

    Call for a Royal Commission into Housing Affordability with particular emphasis on 2 things:

    1. Why, virtually zero of previous recommendations of housing-related Inquiries (2004 First Home Ownership, 2008 Good House is Hard to Find Inquiry & 2010 Henry Taxreview) were not acted on, but rather arrogantly ignored.
    2. What are the substantial property holdings of members and families of – RBA, all political parties, senior members of all Departments including the Board of Taxation (past & present), and under what conditions were purchases made.

    With luck, political fraudsters, from the top down, could be given chance of rehabilitation with court-ordered weekend community service for the rest of their natural life or until housing becomes affordable.
    Be of service for a change.

  19. From the PM’s Taskforce Report in 2003:

    “……our basic conclusion is straightforward: the high cost of home ownership in Australia appears to be a function of growth in the extrinsic value of land. Furthermore, this is a disease that is rapidly spreading throughout our largest urban centres. And unless radical action is taken, there seems to be no respite in sight……”

    “……The industry believes that the cost of Australian housing has been needlessly magnified by three factors:
    1. A 314 percent (420 percent) increase in land (dwelling) related taxes over the last decade, which have been levied at all levels of government
    2. Ad hoc, inconsistent and highly restrictive planning processes that prevent developers from boosting existing capacity; and,
    3. Reluctance on the part of municipalities and State Governments to release new greenfield and brownfield sites, and fund the essential infrastructure necessary to service such areas……”

    “…….there is an affordability problem, but it has nothing to do with the distribution of income or a dearth of exploitable land. Rather, it is the result of oppressive government regulations (often imposed with the enthusiastic support of proximate
    communities) that severely constrict the stock of low-cost properties. Combined with ever-growing demand, these artificial constraints on supply propagate price rises. And so, despite the fact that many Australians are increasingly concerned about the costs of home ownership, much more intellectual capital needs to be invested in fostering supply-side policies. The good news is that we can do so without spending a cent of public money…..”

    There is a summary of findings here:

    http://www.mrcltd.org.au/publications/item/menzies-research-centre-s-home-ownership-task-force?category_id=60

    But the original report I am quoting seems to have disappeared from the WWW. Strange?

  20. Let’s be completely honest here. We hear about how there are a lot of millionaires in China. We know that already the Chinese have bought up a lot of our real estate. And we also know that there is a whole lot more money to be poured into Australian real estate. How much money? We don’t know exactly, but we do see Chinese investors outbidding Australians. It doesn’t really matter whether they are foreign investors or whether they have lived in Australia for generations – we really are fearful of the Chinese taking over the real estate market, and for good reason. In any case, even if they are immigrants and now permanent residents they have been allowed to move here in multitudes for the same reason as foreign investors have unrestricted access – to keep prices high.

    And it is a disgusting thought to realise that both sides of government have turned against their own. Investors, both local and foreign are given more advantages than Australian citizens. It is clear that no matter who is in government, the one thing they will not do is to let the bubble pop. They don’t care if mining and manufacturing has fallen off the cliff, they don’t mind how many people sign up for a life of servitude to a mortgage far higher than it should be – they only care that property keeps going up and up. And when it seems that it can’t go any higher, they bring in more people to make sure it does go higher.

    The Chinese are limited as to the amount of properties they can buy in China. In Australia there are no limits to the amount of property they can buy. If we weren’t so urbanised, and if we didn’t already have a housing bubble, it wouldn’t matter so much. But the fact that we have a housing bubble (not only due to foreign investment but other factors as well) means that housing here is going to remain unaffordable for a long time.

    Bluebird keeps bringing up the Stable Population Party, and if they are in favour of affordable housing through limiting population growth, that’s great. But it’s always going to be Labor or the Coalition who really have the power. It’s pointless banging on about something that wasn’t going to happen.

    But something needs to be done now. We need to lobby the politicians to stop this foreign takeover. It’s no small issue – it’s huge. Sure, the vested interests will squeal. But there is something severely wrong with selling out Australians, and deliberately locking them out of home ownership just so prices can be kept unaffordable.