Property investors are hurting the affordable property market, and negative gearing must be abolished
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It’s always interesting to see the outrage provoked in the real estate industry by housing affordability reports – whether they come from the Annual Demographica survey or publications in magazines such as The Economist that analyse the relationship between house prices and rental income.
If nothing else, it’s the opposite reaction to that provoked when median increases in capital city values are released. Such data is immediately celebrated, along with an inaccurate assumption that the increase has produced an equivalent dollar-by-dollar rise in individual house prices. There is rarely clarification as to what the figures actually mean.
The former publications somewhat agree with the suggestion that Australian housing is unsustainably overpriced – or to express it in more general terms, ‘unaffordable.’
Sensationalist headlines they may be, but no matter how exaggerated you perceive the claims, the crunch remains that we need as a community to provide housing for a growing population of low-income earners – and therefore affordability and supply are understandably red hot topics of concern.
In response, Australian property agents and economists dig out graphs along with various ABS and RBA statistics to prove that when compared with other “comparable” international markets we’re not so bad after-all – no bubble fear here!
“Australia is now broadly in line with other comparable countries, having risen relative to other countries since 1980 when it was at the lower end,” states the RBA in its latest study of house price to income ratios. And I’m sure many have grown tired of being lectured on the many viable reasons why we’ve seen prices and subsequently household debt increase. Reasons such as the inflation of dual-income households, ease of lending, lower borrowing rates, wage and population growth to name but a few.
These “comparable countries” include the UK, New Zealand, Denmark, the Netherlands, Canada etc. – and while it may be contextually useful to find some kind of affordability barometer on an international scale, I fail to see why it should result in the swept under the carpet conclusion that this makes our own levels of inner-suburban unaffordability somehow OK. This is a conclusion based in part on the principle that consistent demand from a dominant buyer demographic and a relatively stable job terrain mean we’re not in line for a ‘crash’ anytime soon.
Or – to put it another way – if the sky’s not falling in, forget sustainability, we can throw a few home buyer grants at the bottom end of the market as a temporary Band-Aid, waft a dismissive hand in the direction of some outer suburban nether land, and carry on ad infinitum with our ‘it’s all right Jack’, prop up the market housing policies.
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