Everything old is new again in Australia’s parasitic media. Nothing more so than house prices as we head into another monetary policy easing cycle.
The media, which largely relies on real estate revenues to exist, loves to pretend to care.
These days, ABC is dedicated entirely to pretence.
This small gathering of homeowners and politicians is just one of the many local fronts of resistance to the Albanese government’s plan to deliver 1.2 million homes across the country by June 2029.
The prime minister recently conceded it is “too hard” to build housing in Australia and promised to cut red tape to help boost supply.
While many are saying no to development in their suburbs, there is a growing appetite for “housing abundance” helped by Australia’s blossoming Yes In My Backyard (YIMBY) movement.
YIMBYs want denser cities, they want more housing in places people want to work and live, and they want them built yesterday.
While rolling back regulations and boosting construction isn’t usually associated with those on the left of politics, support for a “liberalism that builds” is gathering momentum globally.
It has been helped by the popularity of Ezra Klein and Derek Thompson’s book Abundance, in which the authors attempt to reorient progressive politics around the provocation: “can we solve our problems with supply?”
Err, no. Sorry, and YIMBY’s trying to sell books on it are cashing in on suffering, not helping.
There are many reasons YIMBYs are full of it:
- Building approvals are fine; it’s the starts that are weak because there’s no money in construction post the great COVID inflation.
- Therefore, house prices will need to rise dramatically to get private sector developers moving.
- Much of the inflation in house prices has been in the price of land, which is never going to be released because land-banking developers will go bust if it is.
- There is no federal or state appetite for these reforms.
- Addressing supply without demand is intrinsically half-arsed.
YIMBYs are fig leaves for never building enough because they distract from the much larger problem, which is pump-primed demand.
This is where pretence turns mind-numbingly corrupt and intellectually dishonest.
As usual, the ABC didn’t mention immigration. Neither does The Guardian as it pretends to care.
Australian house prices started to decouple from wages in the late 1980s, before a surge in the 90s and early 2000s propelled the country into an epoch of unaffordable housing that is only getting worse.
The Howard-era decision to halve the rate of capital gains tax made dwellings even more attractive to investors, while a string of state and federal governments failed to plan for supply shortages. Investors have also taken full advantage of negative gearing, which allows the owner of an investment property to deduct the interest payments and other costs against their income.
While Labor under Bill Shorten tried to tilt the tables in favour of owner-occupiers by tightening negative gearing and the capital gains tax discount, the measures proved unpalatable to many voters. The policies, which were never implemented, were also designed to push investors towards new builds with the aim of increasing supply.
Yes, we need tax reform, but guess what? It is only half the demand picture. The other half is more important.
Immigration is the keystone of high house prices. It ensures shortages of stock, reassures investors using the tax breaks that demand is endless, and does nothing to boost the skills needed to build houses because it excludes tradies.
For lower house prices, Australia needs a new way of thinking that is prepared to break things. Otherwise, the corruption wins:
- Corruption in the political class.
- Corruption in unions.
- Corruption in banks.
- Corruption in the media.
- Corruption in immigration.
- Corruption in monetary policy.
The system was built and supported by vested interests, and it still is. It is getting worse, not better.
Long ago, I forecast that house prices would never fall as long as there were monetary and/or fiscal resources to prevent it.
Pretending to care with half-solutions that upset nobody is only icing that hideous cake.
