The McKell Institute’s release of their report “Homes for All – The 40 things we can do to improve supply and affordability,” written by Dr. Tim Williams and Sean Macken, has shed some light as to why the Australian dream remained a dream, even a nightmare to some people.
Houses have become very expensive, nine times the median salary,costing more than those in New York and London. While the ages of people owning properties in Sydney are getting older.
Australia’s typical family structure has also changed because of the high prices with people being forced to live with their parents to save on rent, or while they come up with a loan deposit, or worse, not being able to afford rent.
Renting has been the most practical solution for some but even the cost or renting has driven a lot of people out of the city and into places where jobs are meager. The list of those availing public housing has grown longer as those who have no choice have nowhere to turn to.
The unaffordability of housing is primarily due to the lack of supply. The report also stated that because of the scarcity of supply houses have become, “even more of a commodity, an asset class, an investment, to be leveraged to fund retirement, transfer wealth to children, support consumption and buy second homes.”
It is not that housing has become universally unaffordable, some people with existing properties are said to have no problems staying in the property market and acquiring more properties as they have a secret weapon, negative gearing.
An article in brisbanetimes.com.au reports Tim Williams saying, “Home ownership is becoming something that older people do. I remember my head reeling when I discovered how generous negative gearing was. There’s nothing like it in the known world in terms of its generosity and in terms of its middle-class welfare. I just think it’s an astonishing gift to the wealthy and it has perverse effects on the housing market. You are squeezing young people out of home ownership while some people have two, three or four units – the incentives are just wrong.”
Williams is suggesting that negative gearing be phased out or just be used as a targeted incentive.
The report has also been used as a contribution to the debates happening currently in the government. Other aspects like stamp duty and land taxes are also being looked into. The development of new properties is also being hampered by other forces like the NIMBY (Not In My Back Yard).