96 Flakemores Road, Eggs and Bacon Bay, Tasmania
The Road from Eggs and Bacon Bay: Australia’s Mainstream Media and its Generational Housing Failure
In late 2000 I had a life choice to make. I was living in Tasmania’s Huon Valley and working at the Antarctic Division up the road in Kingston. The decision I was trying to make was between comfort and boredom on the one hand – I had a solid job and a good income – and the general sense that if I remained there I would go crazy with boredom and miss having done something else in life.
With that in the background I bumped into a guy I worked with on the main drag of Huonville one day and mentioned I was thinking of buying a house. He quite literally turned to the guy alongside him and introduced me to him as a local real estate agent. The second guy beckoned me a couple of doors down and called out to someone in the office ‘Can you give him the keys to Flakemores Road.’
In less than half an hour I was at a house in the small lugubriously named location of Eggs and Bacon Bay – 96 Flakemores Road. The house I was looking at was a simple 3 bedroom fibro cement abode of the type which existed in thousands of places around the country, with a corrugated iron roof, a 1980s shower and bath, an electric stove in the kitchen, and cheap tacky fake timber paneling interior walls. Inside there was a wood heater, outside was a small yard perched on an escarpment right above the waters of the Huon estuary, with some of the most magnificent views you could ever want to wake up to. It was a touch more than my annual income, I had no debt, and I knew my bank would hand over the cash to buy the place and do it up. The asking price was $60 thousand dollars.
I didn’t buy it. Fear of a lifetime spent in the backblocks of Tassie wondering what else there was to do in life got the better of me. I do sometimes regret it.
The Great Surge in House Prices
Whenever I think of the epic house price insanity Australia has experienced since the early 1990s, I think of that house. Still knowing people in the region I was recently in touch with another real estate agent who, when I asked, proffered the idea the place would ‘probably go for maybe 600 thousand, mainly because of the location.’ That’s more than 10 times what I could have had it for in 2001, 22 years ago.
People all over the country can tell similar stories. Small country towns, suburbs of the major cities, and even a number of those inner cities have experienced similar types of price growth. It has delivered incredible capital gains to those who could access to the money to get in – either the deposit on a mortgage, or a gift from someone like mum and dad. It has sure beat working, and only the savviest of financial managers have achieved that – notwithstanding the odd market collapse. Apart from the more affluent end of society it was those who had been in employment long enough in the 1990s to hope of being approved for a mortgage who were the prime beneficiaries.
The Mainstream Media
For all of that time rising house prices have been a sine qua non as far as the mainstream media has been concerned. There have been TV programs about how to maximize the value of a house, numerous series about houses in lands glamorous or mundane, and any given advertising break on TV or radio has been about mortgages or new property developments. New migrants with whom I watched the 2013 AFL Grand Final were shocked when the news broadcast after the game had a report about the best prices gained at auction as the main non football related news item.
For Australia’s mainstream media rising house prices was never about reporting, it was about barracking. It didn’t matter if it was TV, Radio, or the print media – all with a direct organizational pecuniary interest in those rising prices, in Australia’s fish barrel media space, through either Realestate.com.au or Domain.com.au – they were all wedded to the idea that not only were house prices rising, but that house prices should rise. The ABC even talked up house prices, no doubt under political pressure to do so, and hosed down anything which looked like commentary on the negative consequences. Even more than that, the entirety of Australia’s media were wedded to the idea that there were all sorts of incredible benefits to rising house prices – rising house prices made people feel more affluent so they would spend more, more people buying and selling houses meant that state governments would get ‘windfalls’ in stamp duty, and lowering lending standards and mortgage buffers meant that ‘more people can get onto the ladder’ and begin being lifted like everyone else – all while pushing the idea that ordinary people could watch a few videos, build up portfolios of real estate, taking on whatever debt they could get access to, and live the high life. All without any economic downside or any recognition that those renting or in more precarious economic straits were being taken to the cleaners. All ever more under the financial stress pump with the rise of Google and the march to the 5G and beyond age. All ever more beholden to advertisers and profitable sectors of the economy for their advertising revenues as Australia’s exposed economic sectors, not selling off the national bequest, went beneath the waves.
If you wanted any meaningful analysis of what it all meant you had to avoid the mainstream media. The only place to get data backed analysis of the phenomena, let alone any semblance of the idea that not only was it not all peaches and cream, but may even have negative implications, was Macrobusiness or a very small handful of other fringe commentary sites. As far as the average Australian was concerned it didn’t exist.
The Mixed Emotions
So to see the once was Fairfax Press churning out a series of articles noting those negative implications is to surf the concept of ‘mixed emotions’.
Action on Australia’s housing crisis is well overdue
Where the hell has this commentary been for 20 (or 30?) years? Have the powers that be at Nine decided that there is no more financially to be gained from catering for the rising prices lift all peoples line of thinking, and that it is now time to harvest the housing bear demographic? Could they really believe a market they have denied existed for 20 years will give them credence now?
Why are they coming out with this line now, when it has been palpably true for more than a decade? Is this because someone has decided they need to do so for financial reasons, or is there an element of care for those they have ignored for that era? Is there some kernel of social concern still lurking in the corridors of what was Fairfax? Or has someone concluded that they may struggle to retain whatever it is they value from the credibility and influence they upheld for that time and this will help them retain it? Can it simply not be ignored any longer?
That compromised view of houses and their role in the socio-economy – are they an asset class or a social good? Should we prioritise those owning or renting for societal support? – is central to a socio-economic malaise that has engulfed Australian society.
The economy
We have a profoundly uncompetitive people and economy, solely reliant on resources extraction or cultivation, employing miniscule numbers of them, peopled by amongst the most expensive people on the planet, using the most expensive energy and internet, who happen to be right up there with the most indebted on the planet, with the world’s highest rates of employment casualization. Successive governments have told us we are wealthier than ever before and rank amongst the world’s wealthiest nations too.
But those same successive governments have known for the entire period that their scope to fund help for quality of life issues were increasingly compromised. Any time forward of the resources boom of the early 2000s reliant on commodity revenues, after the surge in private debt of the 1990s and early 2000s, as the meaningful competitiveness of Australia’s economy crafted by the economic reforms of the Hawke-Keating era dissipated in the face of policy inaction by particularly the Howard government, and the priorities of the Abbott, Turnbull and Morrison eras.
Robert Menzies observation that people are committed to their country when they own their own house and more people can aspire to owning their own homes, has morphed into a society which entitles and facilitates housing speculation like no other. And it punishes and blames those not into the game. And it wants the game to go on for ever.
The issues they look away from
Governments from both sides of Australia’s political spectrum have bent almost every policy to the interests of Australian housing prices. They have done that behind a façade of glib speciousness which is exhibit A for the collective psychopathy which has engulfed Australia’s political class, as well as corporate administrative and academic leadership. The following policy positions have all in part ensured a failure for the Australians of tomorrow, while underpinning rising house prices for those beneficiaries of rising house prices today:-
Superannuation: What was originally intended to be a pension replacement scheme, and ensure working Australians didn’t spend their retirements in near poverty or be a burden on the national budget, morphed into a wealth accumulation and preservation vehicle for the more affluent. House prices got the boost as these accumulated properties and negatively geared inside superannuation funds essentially designed to mean those affluent individuals never to paid tax, could generally still claim some form of social support in their dotage, and could organise government subsidised bequests to their families. The trashing of Superannuation reached a high point of ‘what is this for’ during Covid when the Morrison government enabled taking out some accumulated reserves (costing future returns) and was egged on to enable more.
Negative Gearing: An accounting principle which enables housing speculation to be essentially subsidized by taxpayers for those who can ‘carry the gear’ (have no need for the funds outlaid on real estate speculation or maintenance until their tax return). Both sides of politics have known for a generation that it was wrong in principle, yet reform has been political poison fueled by Real Estate funded scare campaigns.
Capital Gains: Changes to capital gains taxes made in the late 1990s by the Howard Government, in conjunction with Negative Gearing, made real estate speculation far more lucrative than it had previously been. The combination of CGT changes with the Negative Gearing allowable meant that an entire generation of Australian real estate speculators assumed they were ‘investing’ in an asset class which the government, any government, had to make sure succeeded.
Foreign buyers and the Foreign Investment Review Board: Foreign buyers were initially lauded as a good phenomena, as they enabled new construction. But it was easily established that they were often also purchasing existing real estate and tended to have the impact of taking stock off the market and pushing prices higher, as well as enabling the laundering of foreign corruption proceeds in Australian real estate. The Albanese government has recently announced changes to anti money laundering legislation after 15 years of delays by Australian politicians, but the ramp up of immigration numbers means foreign buyers will be a factor for housing availability, and prices for the forseeable.
Australia’s University and vocational education system: As the external facing side of the Australian economy vanished in the face of ‘Free Trade Agreements’, a stronger currency in the mining boom era, and the ideological obsession of the Howard and subsequent LNP governments with de-unionisation by removing large scale capital investment outside resources, Australia’s university and vocational education sectors ramped up promotion of foreign students coming to Australia. Setting aside questions of the impact on Australian students, the promotion often centred on promoting an ability to migrate to Australia, and buttressed by rights of student visa holders to, you guessed it, buy Australian real estate – on easier conditions than foreign students in other developed economies. The vast ramp up in student numbers added to pressure on particularly inner city rentals, the property ownership rights meant that Australia was importing migrants desperate for work while here (and vulnerable to exploitation), often focused on living rather than studying here, and for whom there often wasn’t work available in the fields they had come here to study, when they graduated. All those extra people require somewhere to live, and they represent additional demand on housing.
Immigration: The biggest single driver of Australia population growth for more than a decade, Australia has seen an average annual Net Overseas Migration figure of about 75000 per year in the 30 years to 2005, become an average of more than 240000 in the years after then, with more than 400000 arriving in 2022. Along with issues about the long term need for immigration running at that level, their immediate housing need has underpinned price growth and rental costs, notably in major cities. The issue isn’t so much the migrants themselves but the context in which they come to Australia, and Australia’s housing capacity. Without the capacity, increased demand for a limited resource sees the textbook economic response.
On all of these issues the mainstream media has essentially run quiet. Questions about immigration or students are invariably seen as racist. Calls for change to tax or Superannuation run into advertising vested interests. All the while every last RBA Monetary Policy position is seen through the lense of mortgage repayments, and politicians are allowed to get away scot free when they equate housing affordability with access to a mortgage. Politicians write utter nonsense on their pages and come out with pure crocodile tears about housing affordability and nobody in the Mainstream Media questions them.
The future?
So, it is refreshing to see the mainstream media coming out about issues raised at Macrobusiness for more than a decade. But we should never miss that the mainstream media has been the vessel which has ignored the interests of ordinary Australians for quite some time, and has enabled politicians and decisionmakers to ignore their interests too.
And let’s see how far they go into some of the above mentioned issues, and more, as well. Will Australia’s mainstream media restart barracking higher property prices when they begin to surge again? And if they did would that make the SMH and Age reporting of this week just another fig leaf over their credibility?