Did Australia miss its chance to fix housing affordability?

By Leith van Onselen

Fairfax’s Jessica Irvine claims that Australians voted against affordable housing on Saturday, and now the problem may never be fixed:

In time, we will look back at this election and think: “That was the moment.”

That was the moment when, amid plunging property prices, we decided what kind of a nation we truly wanted to be.

The moment we acted to protect the Great Australian Dream: namely, our collective commitment to leveraging heavily into property ownership, working our guts out to service the debt and voting collectively for policies to protect any windfall gains.

The moment we eschewed a policy platform to rein in generous tax breaks which inflate demand for housing – pushing it out of reach of many – and instead elected as our Prime Minister a former employee of the Property Council of Australia.

The aftermath of the federal election has seen a lurching change in the prospects for Australian property prices… alongside other moves to relax restrictions on investor lending, the effect will be to enable borrowers to borrow more.

Irvine is partly correct. Yes, Labor’s negative gearing and capital gains tax reforms would have put further downward pressure on prices and helped reduce leveraged speculation into future cycles. And perhaps APRA would have been less inclined to drop its interest rate loan buffer if Labor was re-elected.

That said, Labor matched the Coalition’s first home buyer deposit subsidy, which would have inflated prices and eroded affordability (other things equal).

Worse, Labor promised to unleash potentially millions of older migrants into Australia (Sydney and Melbourne in particular), many of whom would have been cashed-up, thus dramatically lifting housing demand, lifting prices, and destroying affordability for young Australians.

Ultimately, housing affordability is an intractable problem in Australia that neither side genuinely wants to fix.

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Comments

  1. It is (or should be) abundantly clear to all that the only thing capable of exerting meaningful negative influence on Australian house prices will be an external shock. All layers of govt, regulatory institutions and big business have made their policy positions crystal clear.

    (re)act accordingly……

  2. I think Labor’s insane geriatric importation policy would have far outweighed the NG and capital gains changes in terms of the effect on house prices. I dunno if they would have actually gone ahead with it, or backed out after discovering “costing challenges”, but they said they were gonna do it and I believed them.

    It’s going to be fascinating to see whether the ALP can swing massively towards extreme far right racism and populism adopt some sensible policies that appeal to punters, particularly on immigration, or whether that clown Chalmers and the other open borders SJW nutters will prevail. I suspect the latter will occur, and the ALP will drift further into irrelevance. When you think that the ALP has won a majority of the lower house only once in almost a quarter of a century, “irrelevance” is certainly the first word that springs to my mind.

    If the ALP brains trust actually had any brains, they’d be thinking “Hmm…Trump, Salvini, Orban, Farage, Le Pen…hmmm…something’s going on here across the western democracies. Maybe we don’t want to go entirely that way, so perhaps as supposed representatives of the people, we should attempt to understand what the people want, and attempt to develop sensible centrist policies that reflect their interests. Perhaps if we did that we could even get elected and implement those policies”.

    • +1

      The key issue here is that most of that ‘brains trust’ has zero interest in what their electorate thinks, they are currently lamenting how stupid and backwards their electorate is and brainstorming how to continue with the same agenda next time around without actually letting punters know they are doing it.

      “the problem isn’t what we want to do, its that we told people we were going to do it, lets not make that mistake again!”

      • @ Brent

        Nailed it.

        To blame the “hillbilly” Queenslanders and uneducated old white men is lunacy from the loony ALP. The loss is staring them in mirror and now they may chose Chalmers.

        Remember that in the 2016 USA election result the Democrats ( who have a donkey as a symbol on their flag ) blamed the “hillbilly” mid west and the over 55 uneducated white guy/voter for H Clintons’ loss.

        Who will they blame the next time ? BS Shorten is a Gen X as is most of the ALP parasites.

  3. Yep, the election was, effectively, a young-person’s referendum on the environment and housing, which young people (having a job without the prospect of an affordable house that your can own is just a prospect of a life of debt slavery…ignoramuses should speak of jobs without also speaking of affordable housing a historical norms).

    Australia voted, and revealed its colours to young people.

    Young people need to rally and vote accordingly – everyone else doesn’t really net-care. Sorry to be blunt.

    My 2c

    • For young people, the solution to their problem is incredibly simple – pack up, move overseas, expand your horizons, get ahead and come back when you can afford it (assuming you still want to).

    • Strange Economics

      Half the “young people” are dependent on parents and future high house price inheritances – and get house deposits from Bank of Mum and Dad. They got told good over Sunday dinners.
      So voted against the “retiree tax” whatever that really was..They don’t want the self funded oldies to lose their average30k dividends and 15K dividend rebates (cf pension of only 20k)..Self funded should be retermed “50% govt funded”

      Half the young people are not going to rally, no way. The others are too busy trying to survive the gig economy to get political.

    • I know plenty of “young people”. I am one of them and the ALP almost had their votes (I’m talking young engineers, doctors, layers and bankers here). They started with “brave” tax changes and the appearance of “at least doing something” but then quickly descended into all out class warfare, meaning any ‘young voter’ with aspirations of being more than a faux environmentalist barista suddenly saw a target on their backs.

      Child care changes, increased taxes on LABOUR as well as capital, unlimited demand driven university for all, open boarders for elderly migrants….. all of it just pandering to a niche voter. Then add some policy on the run (FHO loans??) just to cement the electorates suspicion.

      Sure, QLD seems to be a clear case of voter self interest and the biggest protest vote but labor lost the centre nationally, they lost a chunk of the people whom ACTUALLY pay to keep this country running and despite the LNP having literally ZERO policy, they smashed them because of it. Now of course, any decent policy will be relegated to the dust bin the pure hope of votes next time around.

      My 2c

      • 100% correct. ALP would have had my vote if Shorten had said absolutely nothing for the past month. Every time he opened his mouth it was costing me money. In the end I decided I just didn’t have the spare cash available for a Labour government.

      • Well argued post Brent, as a young person. I think you’re on the money. Maybe the future of the country is in good hands.

    • @ BurbWatcher

      The young people that I know and talk to are go getters, enthusiastic and driven to succeed. They work and play hard, they enjoy life and want a better future for themselves and their kids.

      Unfortunately there are many on this site who only ever whinge and complain and want everything for free and they are still waiting for a 50% fall in house prices and who wish for a recession, even a depression. They live in a Uni cocoon and have not embraced the real world. Fortunately they are few but vocal posters.

      The savvy young did not vote ALP because they saw them as arrogant, big taxing, discriminatory and idealistically foolish future government. Better the devil you know.

      The young that I know, the Gen Y and Millenials are not foolish and also not easily duped. They seem to understand what they can and cannot change.

      The ALP stuffed this up big time and the blame rests with them.

      No naval gazing or blame game antics will fix this

      @ Brent, fair call.

      M 2 c

      • Trout à la Crème

        Shylock who are the many yet few who want, ‘everything for free’? Name them and quote where they have said that they want ‘everything for free’ or admit you are making things up.

      • ” whinge and complain and want everything for free” is a learned facetious response to those who want a fair go and real opportunity. ie a cheap put down. Used in particular buy LNP voting real estate speculators who use it to elevate their moral position in the scheme of things, or just something to hide behind.

  4. The final straw that had me not vote for Labor was its decision to allow a potential doubling of retired immigrants into the country. I understand that under the policy a lot of capital may have been bought into the country, but what tax would they have paid and would pay to justify them being allowed to use existing and upcoming infrastructure and to have shares of our abundant (for now), but limited raw resources.

    • Even StevenMEMBER

      Ditto for me JeffT. I was intending on voting for Labor right up until that disastrously bad bit of policy on Parental Visas was announced.

    • haroldusMEMBER

      Me too! I was all set for voting Bill, until I learned of teh visa.

      Wouldn’t have known about it if it wasn’t for MB.

      For me the most enraging thing was the targeted marketing to niche monocultures, but the silence to the base.

      • In regards to my gaining knowledge of the straw, good chance the same. Is the chance we get a discount or we have promoted an argument to increase prices?

    • Same here JeffT, and i can imagine some pretty needful head wobbling and finger wagging over on SBS Punjabi about how Australians are terribly rac!st for not voting in their aged non-resident non-contributing parental free child care facility.

    • @ JeffT and others on this thread.

      This just proves my earlier comment that the young are savvy and not easily duped.

  5. C.M.BurnsMEMBER

    Sure did ! For the same ideological purity reasons that cost the Greens and all those that care about climate change a working, functioning price on carbon.

    Rather than backing labor’s less than perfect plans and realizing that once new policy is in, it can be modified and improved and increased over time,

    So many people lost their minds at other labor policies and decided to throw the baby out with the bath water this election.

    So now we not only have Scummo and the LNP doing their very best to reinflate the bubble, we also won’t get a federal ICAC, and labor won’t go near changes to tax policy for a decade.

    bravo. Well played. That protest vote to Clive or Pauline sure did wonders.

    • @ C M Burns

      So did you vote ALP ??

      So are you OK with a huge influx of ( elderly ) migrants??

      So you are OK with an unfunded climate proposal ?

      Rhetorical questions only, and a little sarc.

  6. Labor would have stimulated property to the moon as soon as problems became undeniable. Their policies on neg gearing etc would have never cleared the senate especially in the context of falling prices.

    This debacle will not be fixed until it fixes itself with a cleansing but horrific implosion. Until then both sides will do everything to keep it up.

    • Doens’t need to be a “horrific implosion”. Both sides of politics know that businesses can fail, everything else can fail but the housing market can’t. If it does the country as a whole is in “negative equity”. The housing market is the centerpiece of our economic system ever since we move to a fiat currency – it encourages people to work to pay down debts, through new mortgages/more money supply keeps the inflation wheel turning, keeps our dollar higher than it should allowing us to be a first world country without working for it (FX Swaps and the like), and is the store of any wealth that people have worked for through their lifetime of debt. There is no lower bound to free money after all once IR’s hit zero and this can keep the debt/income ratio in balance while both figures increase ad infinitum. A correction is fine as long as there’s enough “equity mate” but not a crash and they know it.